<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 13, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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<S> <C>
LODGIAN FINANCING CORP.
LODGIAN, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 7011
(State or other jurisdiction of (Primary Standard Industrial
incorporation or organization) Classification Code Number)
DOTHAN HOSPITALITY 3053, INC.
DOTHAN HOSPITALITY 3071, INC.
GADSDEN HOSPITALITY, INC.
SHEFFIELD MOTEL ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
ALABAMA 7011
(State or other jurisdiction of (Primary Standard Industrial
incorporation or organization) Classification Code Number)
SERVICO FLAGSTAFF, INC.
(Exact name of registrant as specified in its charter)
ARIZONA 7011
(State or other jurisdiction of (Primary Standard Industrial
incorporation or organization) Classification Code Number)
LODGIAN ANAHEIM INC.
LODGIAN ONTARIO INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA 7011
(State or other jurisdiction of (Primary Standard Industrial
incorporation or organization) Classification Code Number)
SERVICO FT. PIERCE, INC.
SERVICO PENSACOLA 7200, INC.
SERVICO PENSACOLA 7330, INC.
SERVICO PENSACOLA, INC.
AMI OPERATING PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
DELAWARE 7011
(State or other jurisdiction of (Primary Standard Industrial
incorporation or organization) Classification Code Number)
ALBANY HOTEL, INC.
PALM BEACH MOTEL ENTERPRISES, INC.
SERVICO NORTHWOODS, INC.
SERVICO SILVER SPRING, INC.
SERVICO WEST PALM BEACH, INC.
SERVICO WINDSOR, INC.
SERVICO WINTER HAVEN, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 7011
(State or other jurisdiction of (Primary Standard Industrial
incorporation or organization) Classification Code Number)
BRUNSWICK MOTEL ENTERPRISES, INC.
ATLANTA--HILLSBORO LODGING, LLC
LODGIAN RICHMOND, LLC
LITTLE ROCK LODGING ASSOCIATES I, L.P.
(Exact name of registrant as specified in its charter)
GEORGIA 7011
(State or other jurisdiction of (Primary Standard Industrial
incorporation or organization) Classification Code Number)
SERVICO CEDAR RAPIDS, INC.
(Exact name of registrant as specified in its charter)
IOWA 7011
(State or other jurisdiction of (Primary Standard Industrial
incorporation or organization) Classification Code Number)
SERVICO ROLLING MEADOWS, INC.
(Exact name of registrant as specified in its charter)
ILLINOIS 7011
(State or other jurisdiction of (Primary Standard Industrial
incorporation or organization) Classification Code Number)
SERVICO METAIRIE, INC.
(Exact name of registrant as specified in its charter)
LOUISIANA 7011
(State or other jurisdiction of (Primary Standard Industrial
incorporation or organization) Classification Code Number)
<CAPTION>
58-2480614
52-2093696
DELAWARE
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
63-1166288
63-1166287
63-1166289
59-2059817
ALABAMA
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
65-0654227
ARIZONA
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
65-0849714
65-0842533
CALIFORNIA
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
65-0592830
65-0592816
65-0592815
65-0592674
22-2754732
DELAWARE
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
65-0384379
59-1978788
65-0503927
64-0432696
59-3473157
98-0175025
65-0787913
FLORIDA
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
59-1693138
58-2392166
58-2460119
58-2230766
GEORGIA
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
39-1882535
IOWA
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
58-2348777
ILLINOIS
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
65-0654223
LOUISIANA
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
SERVICO COLESVILLE, INC.
SERVICO COLUMBIA, INC.
SERVICO MARYLAND, INC.
(Exact name of registrant as specified in its charter)
MARYLAND 7011
(State or other jurisdiction of (Primary Standard Industrial
incorporation or organization) Classification Code Number)
NH MOTEL ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
MICHIGAN 7011
(State or other jurisdiction of (Primary Standard Industrial
incorporation or organization) Classification Code Number)
MINNEAPOLIS MOTEL ENTERPRISES, INC.
SERVICO ROSEVILLE, INC.
(Exact name of registrant as specified in its charter)
MINNESOTA 7011
(State or other jurisdiction of (Primary Standard Industrial
incorporation or organization) Classification Code Number)
LODGIAN MOUNT LAUREL, INC.
(Exact name of registrant as specified in its charter)
NEW JERSEY 7011
(State or other jurisdiction of (Primary Standard Industrial
incorporation or organization) Classification Code Number)
SERVICO GRAND ISLAND, INC.
SERVICO JAMESTOWN, INC.
SERVICO NEW YORK, INC.
SERVICO NIAGARA FALLS, INC.
(Exact name of registrant as specified in its charter)
NEW YORK 7011
(State or other jurisdiction of (Primary Standard Industrial
incorporation or organization) Classification Code Number)
FAYETTEVILLE MOTEL ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 7011
(State or other jurisdiction of (Primary Standard Industrial
incorporation or organization) Classification Code Number)
APICO HILLS, INC.
APICO INNS OF GREEN TREE, INC.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 7011
(State or other jurisdiction of (Primary Standard Industrial
incorporation or organization) Classification Code Number)
SERVICO HILTON HEAD, INC.
(Exact name of registrant as specified in its charter)
SOUTH CAROLINA 7011
(State or other jurisdiction of (Primary Standard Industrial
incorporation or organization) Classification Code Number)
SERVICO AUSTIN, INC.
SERVICO HOUSTON, INC.
SERVICO MARKET CENTER, INC.
(Exact name of registrant as specified in its charter)
TEXAS 7011
(State or other jurisdiction of (Primary Standard Industrial
incorporation or organization) Classification Code Number)
<CAPTION>
52-2069223
58-2348775
58-2348773
MARYLAND
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
59-2256713
MICHIGAN
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
59-2722347
41-1872737
MINNESOTA
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
58-2460123
NEW JERSEY
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
16-1540702
58-2348783
16-1540703
16-1540701
NEW YORK
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
59-2195645
NORTH CAROLINA
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
62-0962543
62-0788158
PENNSYLVANIA
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
57-1046985
SOUTH CAROLINA
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
65-0654220
58-2348780
75-2708406
TEXAS
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
--------------------------
<TABLE>
<S> <C>
3445 PEACHTREE ROAD, N.E., SUITE 700 KENNETH R. POSNER
ATLANTA, GEORGIA 30326 3445 PEACHTREE ROAD, N.E., SUITE 700
(404) 364-9400 ATLANTA, GEORGIA 30326
(Address, including zip code, and telephone number, including (404) 365-4469
area code, of registrant's principal executive offices) (Name, address, including zip code, and
telephone number,
including area code, of agent for service)
</TABLE>
COPIES TO:
DENNIS J. BLOCK, ESQ.
CADWALADER, WICKERSHAM & TAFT
100 MAIDEN LANE NEW YORK,
NEW YORK 10038
(212) 504-5555
----------------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
CALCULATION OF REGISTRATION FEE
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<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER NOTE OFFERING PRICE+ FEE
<S> <C> <C> <C> <C>
12 1/4% Senior Subordinated Notes due 2009, Series $200,000,000 100% $200,000,000 $55,600
B.....................................................
Guarantees of 12 1/4% Senior Subordinated Notes due $200,000,000 100% $200,000,000 ++
2009, Series B........................................
</TABLE>
+ Estimated solely for purposes of computing the registration fee pursuant to
Rule 457(f).
++ Pursuant to Rule 457(n), no additional filing fee is required, as no
separate consideration will be paid for each of the Guarantees by the
Guarantors.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FIELD WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
THE INFORMATION IN THIS PROSPECTUS WILL BE AMENDED OR COMPLETED;
DATED AUGUST 13, 1999
PROSPECTUS
[LOGO]
LODGIAN FINANCING CORP.
EXCHANGE OFFER FOR
12 1/4% SENIOR SUBORDINATED NOTES DUE 2009
GUARANTEED BY: LODGIAN, INC. AND SUBSIDIARIES OF LODGIAN FINANCING CORP.
INVESTMENT IN THE EXCHANGE NOTES INVOLVES CERTAIN RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 18.
TERMS OF THE EXCHANGE OFFER
/ / The Exchange Offer expires at 5:00 p.m., New York City time, on ,
1999, unless extended.
/ / The Exchange Offer is not subject to any condition other than that the
exchange notes be freely tradeable and that the interests of holders of
outstanding notes not be materially adversely affected by consummation of
the Exchange Offer.
/ / All outstanding notes that are validly tendered and not validly withdrawn
will be exchanged.
/ / Tenders of outstanding notes may be withdrawn at any time prior to the
expiration of the Exchange Offer.
/ / The exchange of outstanding notes for exchange notes will not be a taxable
event for federal income tax purposes.
/ / We will not receive any proceeds from the Exchange Offer.
/ / The terms of the exchange notes are substantially identical to the
outstanding notes, except that the exchange notes will be freely tradeable.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
FORWARD-LOOKING STATEMENTS
This Prospectus includes forward-looking statements, including our "belief,"
"anticipation" or "expectation," within the meaning of Section 27A of the
Securities Act and Section 21E of the Securities Exchange Act of 1934, as
amended. We have based these statements on our beliefs and assumptions, based on
information currently available to us. These forward-looking statements are
subject to risks and uncertainties. Forward-looking statements include the
information concerning our possible or assumed future results of operations set
forth under the sections entitled "Summary," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business."
Forward-looking statements are not guarantees of performance. Our future
results and requirements may differ materially from those described in the
forward-looking statements. Many of the factors that will determine these
results and requirements are beyond our control. In addition to the risks and
uncertainties discussed in "Summary," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business," you should
consider those discussed under "Risk Factors" and, among others, the following:
- general and local economic conditions;
- risks relating to the acquisition, operation and renovation of hotels;
- government legislation and regulation;
- competition in the lodging industry;
- changes in interest rates;
- the impact of rapid growth;
- the availability of capital to finance growth;
- the historical cyclicality of the lodging industry;
- year 2000 matters; and
- other factors described at various times in our filings with the
Securities and Exchange Commission.
These forward-looking statements speak only as of the date of this
memorandum. We do not intend to update or revise any forward-looking statements
to reflect events or circumstances after the date of this memorandum, including
changes in our business strategy or planned capital expenditures, or to reflect
the occurrence of unanticipated events.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549,
7 World Trade Center, 13(th) Floor, New York, New York 10048, and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. Our SEC filings are also available to the public from the SEC's
website at "http://www.sec.gov." Copies of these reports, proxy statements and
other information can also be inspected at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005.
We have filed with the SEC a Registration Statement on Form S-4 (together
with all amendments and exhibits thereto, the "Registration Statement") under
the Securities Act with respect to the securities offered by this Prospectus.
This Prospectus does not contain all of the information set forth or
incorporated by reference in the Registration Statement and the exhibits and
schedules related thereto, certain portions of which have been omitted as
permitted by the rules and regulations of the SEC. For
3
<PAGE>
further information with respect to us and the securities offered by this
Prospectus, reference is made to the Registration Statement and the exhibits
filed or incorporated as a part thereof. Statements contained in this Prospectus
as to the contents of any documents referred to are not necessarily complete
and, in each such instance, are qualified in all respects by reference to the
applicable documents filed with the SEC.
All documents that we have filed pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of all securities to which this Prospectus
relates shall be deemed to be incorporated by reference into this Prospectus and
to be a part hereof from the date of filing of such documents. Any statement
contained in a document incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein, or in any other subsequently filed document which is
also incorporated herein by reference, modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed to constitute a
part of this Prospectus except as so modified or superseded.
Copies of all documents which are incorporated herein by reference (not
including exhibits, unless such exhibits are specifically incorporated by
reference in such documents) will be provided without charge to each person,
including any beneficial owner, to whom this Prospectus is delivered, upon
written or oral request of any such person,. Requests for such copies should be
directed to Kenneth R. Posner, Chief Financial Officer, Lodgian, Inc., 3445
Peachtree Road N.E., Suite 700, Atlanta, Georgia 30326; telephone: (404)
364-9400.
No person is authorized to give any information or to make any
representations, other than those contained or incorporated by reference in this
Prospectus or a Prospectus Supplement, in connection with the offering
contemplated thereby, and, if given or made, such information or representations
must not be relied upon as having been authorized by the Company or any
underwriter, dealer or agent. This Prospectus and a Prospectus Supplement do not
constitute an offer to sell or a solicitation of an offer to buy any securities
other than the securities to which they relate and do not constitute an offer to
sell or a solicitation of an offer to buy any securities in any jurisdiction to
any person to whom it is unlawful to make such offer or solicitation in such
jurisdiction. Neither the delivery of this Prospectus or a Prospectus
Supplement, nor any sale made thereunder, shall, under any circumstances, create
any implication that there has been no change in the affairs of the Company
since the date hereof or thereof or that the information contained or
incorporated by reference herein or therein is correct as of any time subsequent
to such date.
CERTAIN DEFINITIONS
Unless otherwise stated in this Prospectus:
- the "Company" refers to Lodgian, Inc. and its subsidiaries;
- the "Exchange Notes" refer to the 12 1/4% Senior Subordinated Notes due
2009, Series B;
- the "Indenture" refers the Indenture, dated as of July 23, 1999, among
Lodgian Financing, Lodgian, Inc., the guarantors named therein and Bankers
Trust Company, as trustee;
- the "Notes" refer to the 12 1/4% Senior Subordinated Notes due 2009,
Series A and Series B;
- the "Old Notes" refer to the 12 1/4% Senior Subordinated Notes due 2009,
Series A; and
- "we" or "our" refers to Lodgian, Inc. and its subsidiaries.
EACH OF THE OTHER CAPITALIZED TERMS USED IN THIS PROSPECTUS AND NOT
OTHERWISE DEFINED IN THIS PROSPECTUS HAS THE MEANING SET FORTH IN THE INDENTURE.
4
<PAGE>
SUMMARY
YOU SHOULD READ THE FOLLOWING SUMMARY TOGETHER WITH THE MORE DETAILED
INFORMATION REGARDING OUR COMPANY, THE EXCHANGE NOTES BEING OFFERED HEREBY AND
OUR CONSOLIDATED FINANCIAL STATEMENTS AND THE NOTES THERETO APPEARING ELSEWHERE
IN THIS PROSPECTUS. LODGIAN, INC. IS A SUCCESSOR TO SERVICO, INC. ("SERVICO") AS
A RESULT OF SERVICO'S MERGER (THE "MERGER") WITH IMPAC HOTEL GROUP, LLC
("IMPAC"), A PRIVATELY OWNED HOTEL OWNERSHIP, MANAGEMENT AND DEVELOPMENT
COMPANY. THE MERGER WAS COMPLETED ON DECEMBER 11, 1998. BECAUSE THE MERGER WAS
ACCOUNTED FOR UNDER THE PURCHASE ACCOUNTING METHOD, LODGIAN'S RESULTS FOR THE
YEAR ENDED 1998 REFLECT IMPAC'S CONTRIBUTIONS ONLY SINCE DECEMBER 11, 1998
UNLESS STATED OTHERWISE. REFERENCES TO THE TERMS "WE," "US," "OUR," AND "OURS"
MEAN LODGIAN, INC. ("LODGIAN") AND OUR SUBSIDIARIES, INCLUDING LODGIAN FINANCING
CORP. ("LODGIAN FINANCING"), COLLECTIVELY, AND, FOR PERIODS PRIOR TO THE MERGER,
SERVICO, INC. AND ITS SUBSIDIARIES AND IMPAC HOTEL GROUP, LLC AND ITS
SUBSIDIARIES COMBINED, EXCEPT WHERE IT IS MADE CLEAR THAT THE MEANING IS
OTHERWISE.
LODGIAN
GENERAL
We are one of the largest owners and operators of full-service hotels in the
United States, with 134 hotels containing approximately 25,375 rooms located in
35 states and Canada. Our hotels include 124 wholly-owned hotels (including
three under construction), 11 hotels in which we have a 50% or greater equity
interest, one hotel in which we have a minority equity interest and one hotel
managed for a third party. Our hotels are primarily full-service properties
which offer food and beverage services, meeting space and banquet facilities and
compete in the mid-price and upscale segments of the lodging industry. We
believe that these segments have more consistent demand generators than other
segments of the lodging industry and that they have recently experienced less
development of new properties than other lodging segments, such as the limited
service, economy and budget segments. Substantially all of our hotels are
affiliated with nationally recognized hospitality franchises. We own and operate
hotels under franchise agreements with Marriott International, Bass Hotels and
Resorts, the franchisor for the Holiday Inn and Crowne Plaza brands, and the
franchisors of the Doubletree, Hilton, Omni, Radisson and Sheraton brands, among
others. We are one of the largest Holiday Inn franchisees and one of the largest
Marriott franchisees nationally.
Our success in managing, developing, renovating and repositioning our hotels
has resulted in strong relationships with our franchisors. We pride ourselves on
the recognition and awards we have received from our franchisors. These awards
include, among others:
- Seven Modernization Awards during the last four consecutive years from
Bass Hotels and Resorts;
- Torchbearer Award for quality for several hotels from Bass Hotels and
Resorts;
- President's Award for quality for three hotels in 1998 from Marriott
International;
- Best New Hotel Opening in 1997 for the Courtyard by Marriott, Tulsa and in
1998 for the Denver Airport Marriott, in each case from Marriott
International;
- Hotel of the Year for the Club Hotel by Doubletree in Philadelphia from
Promus Hotels; and
- "Best New Franchisee" in 1995 from Marriott International.
Lodgian was formed by Servico's merger with Impac in December 1998. We
believe that the Merger enhances our growth potential and provides significant
opportunities for operating synergies, due to the complementary nature of the
two companies' property portfolios, strategies and core competencies. Both
companies had portfolios consisting of full-service properties in the mid-price
and upscale segments with leading franchise brands, such as Holiday Inn,
Sheraton, Hilton and Doubletree. Both companies pursued a strategy of renovating
and repositioning their hotel properties to achieve growth in revenue per
available
5
<PAGE>
room and profitability and strong returns on capital. Impac developed
significant in-house development and construction management capabilities and
expertise, while Servico generally relied on others, including Impac, for
renovation and redevelopment services. We believe that the addition of Impac's
in-house development capabilities and relationships with high quality
franchisors, such as Marriott, will enable us to take advantage of more
opportunities to reposition our existing hotels, as well as to selectively
acquire and develop new hotels. We also believe that we have opportunities to
improve the operating performance of Impac's hotels by applying Servico's
operating expertise and "best practices." In addition, we believe that we will
be able to generate greater value from our portfolio through operating synergies
(including opportunities for cost savings in overhead, purchasing, insurance and
related activities) achieved as a result of, among other things, national
purchasing contracts.
GROWTH STRATEGY
We have developed a strategy designed to increase our revenues, cash flow
and profitability while focusing on return on investment as the primary
criterion for growth. Our growth strategy consists primarily of (1) realizing
the built-in growth of our existing portfolio, (2) acquiring existing
full-service, mid-price and upscale hotels that are in need of substantial
renovation and repositioning and (3) developing new full-service, mid-price and
upscale hotels, primarily franchised under Marriott brands.
REALIZE BUILT-IN GROWTH. We intend to capitalize on the substantial
investments we have made in the development and renovation of the hotels in our
portfolio. From January 1, 1996 through March 31, 1999, we grew from 65 owned
hotels with approximately 12,533 rooms to 141 owned hotels (including three
under construction) with approximately 26,729 rooms, largely through
acquisitions. In that time, we acquired 65 hotels with 12,643 rooms at an
average purchase price of $37,900 per room. In that time, we have spent
approximately $11,100 per room in our acquired hotels in renovations and other
capital assets and expect to spend an additional $35.4 million for planned
renovations, for a total expected cost per room of $51,800. From January 1, 1996
through March 31, 1999, we completed development of 11 hotels, initiated
development of three hotels and completed renovations on 60 hotels. Through the
implementation of our operating strategies, we expect to be well-positioned to
realize the built-in growth of our recently renovated and developed properties.
We expect to realize significant EBITDA contribution from four newly developed
hotels which were completed in 1998, including the Marriott at the Denver
Airport in Denver, Colorado, the Residence Inn Little Rock in Little Rock,
Arkansas, the Hilton Garden Rio Rancho in Rio Rancho, New Mexico and the
Residence Inn Dedham in Boston, Massachusetts. Furthermore, we expect
substantial EBITDA contribution from recently renovated hotels, including the
Doubletree Club Hollywood in Hollywood, California, the Holiday Inn Anchorage in
Anchorage, Alaska, the Mayfair House Coconut Grove in Miami, Florida and the
Sheraton West Palm Beach in West Palm Beach, Florida. We cannot assure you that
we will realize these expected EBITDA contributions.
ACQUIRE AND IMPROVE UNDERPERFORMING HOTELS. We seek to capitalize on our
management, renovation and development expertise by continuing to acquire
underperforming hotels and implementing operational initiatives and
repositioning programs to achieve revenue growth and margin improvements. We
have generally invested significant capital to renovate and reposition newly
acquired hotels. In certain instances, we re-brand hotels to highlight property
improvements to the marketplace and to improve average daily rates and market
share. We believe that our total cost to acquire and renovate hotels has been
significantly less than the cost to construct new hotels with similar
facilities. We expect that our relationships throughout the industry and our
in-house development capabilities will continue to provide us with a competitive
advantage in identifying, evaluating, acquiring, redeveloping and managing
hotels that meet our criteria.
We believe that a number of lodging industry trends will enable us to
continue to successfully execute our acquisition, renovation and repositioning
strategy, including the following: (1) there has generally been less competition
to purchase underperforming hotels than other properties because of the level of
expertise required to purchase and efficiently reposition such hotels, and (2) a
number of major
6
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franchisors, such as Bass Hotels and Resorts, have launched quality improvement
initiatives under which owners are required to invest substantial amounts of
capital to upgrade older properties or risk having the franchise agreement
terminated. We believe that these initiatives will provide us with new
acquisition opportunities, as individual or small-portfolio owners are unable or
unwilling to invest the capital required to raise quality standards to the level
required by franchisors.
SELECTIVELY DEVELOP NEW HOTELS. We plan to continue to selectively develop
new full-service, mid-price and upscale hotels. We intend to develop these
properties primarily under the Marriott and Courtyard by Marriott brands due to
the high quality image, strong reservations and marketing networks and overall
quality management of these brands. We have focused our development in suburbs
of metropolitan areas that are experiencing significant demand growth where
there have not historically been suitable acquisition targets. We believe that
the expertise required to develop such assets generally limits access to the
marketplace, and that our in-house development capabilities enable us to develop
hotels more efficiently than our competitors.
Our historical objective has been to develop each property as cost
efficiently as possible while meeting quality standards and return on investment
objectives. We have developed 12 hotels with 1,389 rooms since 1995. In
addition, we have three upscale hotels with 552 rooms under construction,
including the Marriott in downtown Portland, Oregon and the Courtyard by
Marriott in Livermore, California, which are both scheduled to open in the third
quarter of 1999, and the Hilton Garden Inn in Lake Oswego, Oregon, which is
scheduled to open in the first quarter of 2000. In addition, at March 31, 1999,
we owned four land parcels and held options to purchase two additional land
parcels that together would permit the development of six new hotels with a
total capacity of approximately 1,270 rooms.
OPERATING STRATEGY
We have developed a highly focused operating strategy designed to maximize
the financial performance of our hotels while providing our guests with high
quality service and value. Key elements of our operating strategy include:
ENHANCE HOTEL PERFORMANCE THROUGH DISCIPLINED CAPITAL INVESTMENT. We seek
to reposition and renovate our hotels based on strategic plans designed to
address the opportunities presented by each hotel and the hotel's particular
market. Renovations include enhancing lobbies, restaurants and public areas,
upgrading guest rooms and converting unprofitable lounge areas to meeting rooms
to accommodate the needs of business travelers. Renovations often include a
substantial exterior renovation to improve the property's overall appearance and
appeal. We believe that these renovations enable us to increase both occupancy
and room rates and generate attractive returns on our investment.
SELECTIVE USE OF PREMIUM BRANDS. We believe that the selection of an
appropriate franchise brand is essential in positioning a hotel optimally within
its local market. Because we are not bound by a single franchise brand, we can
choose a franchise relationship that will maximize a hotel's performance in a
particular market and complement our management strategies and those of the
individual hotel. Since January 1, 1996, we have rebranded 14 hotels to better
position them in their competitive markets. We select brands based on factors
such as revenue contribution, product quality standards, local presence of the
franchisor, brand recognition, target demographics and purchasing efficiencies
offered by franchisors.
INDIVIDUAL HOTEL MANAGEMENT. We seek to maximize the performance of our
hotels by developing marketing and business plans specifically tailored for each
individual hotel. We develop and implement marketing plans that properly
position each hotel within its local market and facilitate targeted sales and
marketing efforts. These plans focus on maximizing revenues and improving market
share, guest satisfaction and cost controls. We believe that experienced and
hands-on management of hotel operations is the most critical element in
maximizing revenue and cash flow of hotels, especially in full service hotels.
In order to maintain strong performance of the individual hotels, we stress
management accountability and
7
<PAGE>
entrepreneurship and provide performance-based compensation at the individual
hotel and regional levels that we believe is among the most attractive in the
industry.
EFFECTIVE CENTRALIZED CONTROLS AND SUPPORT. We have implemented centralized
controls and support that seek to provide corporate and group support services
while promoting flexibility and encouraging associates to develop innovative
solutions. Our hotels are organized into six regions, each headed by a regional
vice president who reports to the chief operating officer. This structure
enables us to provide close oversight of property managers at the regional and
local levels while ensuring that information, standards and goals are
communicated effectively across our entire portfolio. We have established
certain uniform productivity standards and skill requirements for hotel
associates that we believe increase operating efficiencies by enhancing our
ability to measure performance and to allocate associates efficiently within our
hotel system.
LEADING EDGE TECHNOLOGY. We have invested substantial capital in advanced
information systems that allow for increased timely and accurate reporting of
operational and financial data, among many other capabilities. We are also in
the process of implementing Oracle web-based technology, which will permit (1)
more accurate and efficient revenue and expense reporting and forecasting by
providing real-time access to financial information, (2) improved labor and cash
management and (3) the ability to monitor from any location daily revenue
results, labor costs and expenses of every one of our hotels. Through our
intranet, we also can provide real-time reporting, distribute corporate
communications and disseminate critical information to our associates
company-wide.
CENTRALIZED RESERVATIONS AND SALES SUPPORT. We currently operate a revenue
center in Baton Rouge, Louisiana that maintains the reservation system for 51
Holiday Inn hotels, with 31 hotels expected to be added by the end of August
1999. We believe that the revenue center is the first of its kind in the hotel
industry, and we expect it will be able to cover multiple hotel brands in the
near future. The revenue center improves the efficiency of our hotel reservation
process by freeing up hotel associates to service guests and allowing dedicated
reservation agents to focus on taking reservations. We believe that dedicated
reservation agents convert a higher number of inquiries into actual reservations
than hotel associates with multiple responsibilities. Specialists at the revenue
center have complete access to the property reservation systems and price each
room according to market demand, inventory supply and competitor strategies. The
revenue center also has a group sales center which enables hotel salespeople to
focus on direct sales and marketing efforts and building and maintaining client
relationships.
RECENT DEVELOPMENTS
In December 1998, Robert Cole, the President of Impac, became our Chief
Executive Officer and President, replacing David Buddemeyer, Servico's Chairman
and Chief Executive Officer, who resigned from Servico in November 1998. In
addition, in April 1999, Kenneth R. Posner became our Chief Financial Officer,
replacing Warren Knight, who resigned from Lodgian in February 1999. Mr. Posner
previously had served as Chief Financial Officer of the Hyatt Group of Companies
since 1981. Upon completion of the Merger, we closed Servico's headquarters in
West Palm Beach, Florida and relocated to Impac's headquarters in Atlanta,
Georgia.
On July 23, 1999, we issued and sold the Old Notes. We used the net proceeds
of the offering of the Old Notes, together with borrowings under our new credit
facility, to:
- repay approximately $278 million of indebtedness under mortgage notes owed
to Lehman Brothers Holding, Inc;
- repay on September 13, 1999 approximately $132.5 million of indebtedness
under mortgage notes owed to Nomura Asset Capital Corporation;
- repay approximately $5.7 million of indebtedness under mortgage notes owed
to Bank One, Louisiana, National Association;
- pay exit, prepayment and other fees; and
- use as working capital for general corporate purposes.
8
<PAGE>
Concurrently with the closing of the offering of the Old Notes, Lodgian
Financing entered into a $315.0 million secured credit facility with a $50.0
million revolving facility maturing on April 15, 2004 and up to $265.0 million
maturing no later than July 31, 2006. Approximately $107.5 million of the
facility was funded at closing, with the remainder of the facility to be drawn
under certain conditions. The new credit facility is guaranteed by certain of
Lodgian's subsidiaries and secured by the stock or equity interest in Lodgian
Financing and certain of Lodgian Financing's existing subsidiaries and by
mortgages on each of the hotel properties owned through Lodgian Financing.
Morgan Stanley Senior Funding Inc., an affiliate of Morgan Stanley & Co.
Incorporated, acted as co-lead arranger, joint book manager and syndication
agent and one of the lenders under our new credit facility. An affiliate of
Lehman Brothers Inc. acted as co-lead arranger, joint book manager and
documentation agent and one of the lenders under our new credit facility.
On June 24, 1999, we sold our joint venture interest in our European hotel
portfolio, which consisted of six hotels. We received approximately $6.0 million
at closing and expect to receive an additional $1.5 million in net proceeds from
the sale. As a result of this transaction, we no longer have operations in
Europe.
CORPORATE ORGANIZATION
The following diagram sets forth our corporate structure, after the closing
of the offering of the Notes and the establishment of our new credit facility.
[CHART]
- ------------------------
(1) We plan to use borrowings under our new credit facility to repay our Nomura
Impac I mortgage notes in September 1999. At the time of repayment, the
entity owning the 22 Nomura Impac I properties will become a direct
subsidiary of Lodgian Financing Corp. and will guarantee our new credit
facility and the Notes.
Lodgian Financing is the issuer of the notes and the borrower under the new
credit facility. Lodgian, Inc. and each of Lodgian Financing's wholly-owned
subsidiaries guarantee the notes, on an unsecured senior subordinated basis, and
each of Lodgian Financing's wholly-owned subsidiaries guarantee our new credit
facility. All but one of Lodgian Financing's hotel properties is held through
wholly-owned subsidiaries. Certain of Lodgian's other subsidiaries guarantee our
new credit facility but not the notes. Our new credit facility is secured by the
stock or equity interests of certain of Lodgian's subsidiaries and by mortgages
on each of the hotel properties held through Lodgian Financing.
Our corporate headquarters are located at Lodgian, Inc., 3445 Peachtree
Road, N.E., Suite 700, Atlanta, Georgia 30326, telephone (404) 364-9400.
9
<PAGE>
THE OFFERING
THE FOLLOWING SUMMARY IS PROVIDED SOLELY FOR YOUR CONVENIENCE AND IS NOT
INTENDED TO BE COMPLETE. YOU SHOULD READ AND CONSIDER THE MORE SPECIFIC DETAILS
CONTAINED IN THIS PROSPECTUS. SEE "THE EXCHANGE OFFER" AND "DESCRIPTION OF THE
NOTES."
<TABLE>
<S> <C>
Registration Rights............... You are entitled to exchange your notes for freely
tradeable exchange notes with substantially identical
terms. The Exchange Offer is intended to satisfy your
exchange rights. After the Exchange Offer is complete,
you will no longer be entitled to any exchange or
registration rights with respect to your notes.
Accordingly, if you do not exchange your notes, you will
not be able to reoffer, resell or otherwise dispose of
your notes unless you comply with the registration and
prospectus delivery requirements of the Securities Act
of 1933, as amended (the "Securities Act") or there is
an exemption available.
The Exchange Offer................ We are offering to exchange $1,000 principal amount of
our 12 1/4% Senior Subordinated Notes due 2009, Series
B, which have been registered under the Securities Act,
for $1,000 principal amount of our outstanding 12 1/4%
Senior Subordinated Notes due 2009, Series A, which were
issued in a private offering in July 1999. As of the
date of this Prospectus, there are $200.0 million of
notes outstanding. We will issue exchange notes promptly
after the expiration of the Exchange Offer.
Resales........................... We believe that the exchange notes issued in the
Exchange Offer may be offered for resale, resold or
otherwise transferred by you without compliance with the
registration and prospectus delivery requirements of the
Securities Act provided that:
- you are acquiring the exchange notes in the
ordinary course of your business;
- you are not participating, do not intend to
participate and have no arrangement or understanding
with any person to participate, in a distribution
of the Exchange Notes; and
- you are not an "affiliate" of ours.
If you do not meet the above criteria, you will have to
comply with the registration and prospectus delivery
requirements of the Securities Act in connection with
any reoffer, resale or other disposition of your
Exchange Notes.
Each broker or dealer that receives Exchange Notes for
its own account in exchange for outstanding notes that
were acquired as a result of market-making or other
trading activities must acknowledge that it will deliver
this Prospectus in connection with any sale of Exchange
Notes.
Expiration Date................... 5:00 p.m., New York City time, on , 1998, unless
we extend the expiration date.
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
Accrued Interest on the Exchange
Notes and Old Notes............. The Exchange Notes will bear interest from July 23,
1999. If your outstanding notes are accepted for
exchange, then you will waive interest on such
outstanding notes accrued and unpaid to the date the
Exchange Notes are issued.
Conditions to the Exchange
Offer........................... The Exchange Offer is not subject to any condition other
than that the Exchange Notes be freely tradeable and
that the interests of holders of outstanding notes not
be materially adversely affected by consummation of the
Exchange Offer. See "The Exchange Offer--Conditions."
Procedures for Tendering Old
Notes........................... If you wish to tender outstanding notes, you must
complete, sign and date the Letter of Transmittal, or a
facsimile of it, in accordance with its instructions and
transmit the Letter of Transmittal, together with your
notes to be exchanged and any other required
documentation to Bankers Trust Company, who is the
exchange agent, at the address set forth in the Letter
of Transmittal by 5:00 p.m. New York City time, on the
expiration date. See "The Exchange Offer--Procedures for
Tendering." By executing the Letter of Transmittal, you
will represent to us that you are acquiring the Exchange
Notes in the ordinary course of your business, that you
are not participating, do not intend to participate and
have no arrangement or understanding with any person to
participate in the distribution of Exchange Notes, and
that you are not an "affiliate" of ours. See "The
Exchange Offer--Procedures for Tendering."
Special Procedures for Beneficial
Holders......................... If you are the beneficial holder of notes that are
registered in the name of your broker, dealer,
commercial bank, trust company or other nominee, and you
wish to tender in the Exchange Offer, you should contact
the person in whose name your notes are registered
promptly and instruct such person to tender on your
behalf. See "The Exchange Offer--Procedures for
Tendering."
Guaranteed Delivery Procedures.... If you wish to tender your notes and you cannot deliver
your notes, the Letter of Transmittal or any other
required documents to the exchange agent before the
expiration date, you may tender your notes according to
the guaranteed delivery procedures set forth in "The
Exchange Offer--Guaranteed Delivery Procedures."
Withdrawal Rights................. Tenders may be withdrawn at any time before 5:00 p.m.,
New York City time, on the expiration date.
Acceptance of Old Notes and
Delivery of Exchange Notes...... Subject to certain conditions, we will accept for
exchange any and all outstanding notes which are
properly tendered in the Exchange Offer before 5:00
p.m., New York City time, on the expiration date. The
Exchange Notes will be delivered promptly after the
expiration date. See "The Exchange Offer--Terms of the
Exchange Offer."
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
Certain U.S. Federal Tax
Considerations.................. The exchange of Old Notes for Exchange Notes pursuant to
the Exchange Offer will not be a taxable event for U.S.
federal income tax purposes. You will not recognize any
taxable gain or loss as a result of such exchange and
will have the same tax basis and holding period in the
Exchange Notes as you had in the Old Notes immediately
before the exchange.
Exchange Agent.................... Bankers Trust Company is serving as exchange agent in
connection with the Exchange Offer. The mailing address
of the exchange agent is BT Services Tennessee, Inc.,
Reorganization Unit, P.O. Box 292737, Nashville,
Tennessee 37229-2737, fax number (615) 835-3701.
Deliveries by overnight courier should be addressed to
BT Services Tennessee, Inc., Corporate Trust and Agency
Group, Reorganization Unit, 648 Grassmere Park Road,
Nashville, Tennessee 37211, confirm by telephone at
(615) 835-3572. Deliveries by hand should be addressed
to Bankers Trust Company, Corporate Trust and Agency
Group, Receipt & Delivery Window, 123 Washington Street,
1st Floor, New York, New York 10006. For information
about the Exchange Offer, call the exchange agent at
telephone number: (800) 735-7777.
SUMMARY OF TERMS OF EXCHANGE NOTES
Securities Offered................ $200.0 million aggregate principal amount of 12 1/4%
Senior Subordinated Notes due 2009, Series B.
Issuer............................ Lodgian Financing Corp.
Guarantors........................ Lodgian, Inc., Sheffield Motel Enterprises, Inc., Dothan
Hospitality 3053, Inc., Dothan Hospitality 3071, Inc.,
Gadsden Hospitality, Inc., Servico Flagstaff, Inc.,
Lodgian Anaheim Inc, Lodgian Ontario Inc., Servico
Pensacola, Inc., Servico Pensacola 7200, Inc., Servico
Pensacola 7330, Inc., Servico Ft. Pierce, Inc., AMI
Operating Partners, L.P., Servico West Palm Beach, Inc.,
Servico Winter Haven, Inc., Servico Silver Spring, Inc.,
Albany Hotel, Inc., Palm Beach Motel Enterprises, Inc.,
Servico Northwoods, Inc., Servico Windsor, Inc.,
Brunswick Motel Enterprises, Inc., Little Rock Lodging
Associates I, L.P., Atlanta Hillsboro Lodging, LLC,
Lodgian Richmond, L.L.C., Servico Rolling Meadows, Inc.,
Servico Cedar Rapids, Inc., Servico Metairie, Inc.,
Servico Columbia, Inc., Servico Colesville, Inc.,
Servico Maryland, Inc., NH Motel Enterprises, Inc.,
Minneapolis Motel Enterprises, Inc., Servico Roseville,
Inc., Lodgian Mount Laurel, Inc., Servico Jamestown,
Inc., Servico New York, Inc., Servico Niagara Falls,
Inc., Servico Grand Island, Inc., Fayetteville Motel
Enterprises, Inc., Apico Inns of Green Tree, Inc., Apico
Hills, Inc., Servico Hilton Head, Inc., Servico Austin,
Inc., Servico Market Center, Inc., Servico Houston, Inc.
Maturity Date..................... July 15, 2009.
Interest Payment Dates............ January 15 and July 15, beginning January 15, 2000.
</TABLE>
12
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<TABLE>
<S> <C>
Ranking........................... The Exchange Notes will be unsecured senior obligations
of Lodgian Financing Corp. and will rank:
- junior in right of payment to all existing and
future debt that is senior indebtedness under the
Indenture (including obligations under our new
credit facility);
- equal in right of payment with any of our future
debt that is senior subordinated indebtedness under
the Indenture; and
- senior in right of payment to all our debt that is
subordinated indebtedness under the Indenture,
including our convertible debentures (the
"Convertible Debentures") underlying the
convertible redeemable equity structure trust
securities (the "CRESTS") issued by a subsidiary
trust.
Each guarantee will be subordinated to all of the
guarantors' senior debt to the same extent as the
Exchange Notes are subordinated to Lodgian Financing's
senior debt. However, until we repay the Nomura Impac I
loan referred to above in September 1999, the guarantee
of Lodgian, Inc. will be junior solely to the guarantees
under the Nomura Impac loans and the new credit
facility.
The indebtedness under our new revolving credit facility
is secured by the stock or equity interests of certain
of Lodgian's subsidiaries and by mortgages on each of
the hotel properties held through Lodgian Financing. As
of July 30, 1999, we had unused commitments of $
million outstanding under our new revolving credit
facility.
Optional Redemption............... The Exchange Notes will be redeemable, in whole or in
part, at our option, on or after July 15, 2004 at the
redemption prices set forth under "Description of the
Notes," plus accrued and unpaid interest to the date of
redemption. In addition, at any time on or prior to July
15, 2002, we may redeem up to 35% of the principal
amount of the Exchange Notes with the proceeds of one or
more offerings of our capital stock (other than to any
subsidiary), at a price equal to 112.250% of their
principal amount, plus accrued interest to the date of
redemption; PROVIDED that at least 65% of the aggregate
principal amount of notes remains outstanding. See
"Description of the Notes--Optional Redemption."
Change of Control................. Upon a change of control, holders of the notes will have
the right to require us to repurchase their notes at a
price equal to 101% of their principal amount plus
accrued interest to the date of repurchase. See
"Description of the Notes--Repurchase of Notes upon a
Change of Control."
</TABLE>
13
<PAGE>
<TABLE>
<S> <C>
Certain Covenants................. The indenture governing the exchange notes contains
certain covenants that restrict our subsidiaries'
ability to:
- incur debt;
- pay dividends on, or redeem, capital stock, make
investments or redeem subordinated debt;
- dispose of assets;
- sell stock of subsidiaries;
- engage in transactions with affiliates;
- create liens securing subordinated debt; and
- engage in mergers or consolidations
However, these limitations will be subject to a number
of important qualifications and exceptions. See
"Description of the Notes--Covenants."
</TABLE>
USE OF PROCEEDS
We will not receive any proceeds from the Exchange Offer. See "Use of
Proceeds." We have agreed to bear the expenses of the Exchange Offer. No
underwriter is being used in connection with the Exchange Offer.
RISK FACTORS
You should consider carefully all of the information contained in this
memorandum and, in particular, you should evaluate the specific factors under
"Risk Factors" before deciding to invest in the Notes.
14
<PAGE>
SUMMARY FINANCIAL AND OTHER DATA
The following table presents summary historical consolidated financial data
of Lodgian for the years ended December 31, 1996, 1997 and 1998 and the three
months ended March 31, 1998 and 1999 and summary pro forma consolidated
financial data of Lodgian for the year ended December 31, 1998. We derived the
historical consolidated financial data for each of the three years in the period
ended December 31, 1998 from our audited consolidated financial statements. We
derived the historical financial data as of and for the three months ended March
31, 1998 and 1999 from our unaudited consolidated financial statements. We
believe the financial statements for these periods have been prepared on the
same basis as our audited consolidated financial statements and include all
adjustments (consisting only of normal recurring items) necessary for a fair and
consistent presentation of Lodgian's results of operations and financial
position for these periods and as of these dates. The summary consolidated
financial data for the six month period ended June 30, 1999 contains interim
capsule information that has not been previously filed with the SEC under Form
10-Q. Historical results for the interim periods are not necessarily indicative
of the results that might be expected for the entire year ending December 31,
1999.
The pro forma statement of operations data for the year ended December 31,
1998 give effect to:
(1) the Merger;
(2) the 1998 acquisitions of AMI Operating Partners, L.P. (after the sale of
three of the 14 acquired properties) and the Boston Revere Hotel;
(3) the offering of the CRESTS and the repayment of debt with the proceeds;
and
(4) the offering of the Old Notes and borrowings under our new credit
facility and the application of the proceeds thereof, as if each such
transaction occurred on January 1, 1998.
The summary financial data presented below should be read along with
"Unaudited Pro Forma Consolidated Financial Data," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the financial
statements contained elsewhere in this memorandum.
15
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
ACTUAL PRO FORMA ACTUAL
------------------------------- ----------- --------------------
<CAPTION>
1996 1997 1998 1998 1998 1999
--------- --------- --------- ----------- --------- ---------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT RATIOS AND STATISTICAL DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.......................................... $ 239,526 $ 276,657 $ 395,214 $ 568,024 $ 82,881 $ 135,804
Direct operating expenses......................... 96,428 110,527 156,959 220,889 33,156 50,372
General and administrative........................ 9,297 8,973 10,080 16,859 2,387 5,229
Depreciation and amortization..................... 18,677 23,023 31,114 48,099 7,207 13,750
Other hotel operating expenses.................... 77,183 88,036 129,950 195,776 27,650 47,840
--------- --------- --------- ----------- --------- ---------
Income from operations............................ 37,941 46,098 67,111 86,401 12,481 18,613
Other income (expense):
Interest income and other....................... 1,723 1,720 1,260 2,122 454 348
Interest expense................................ (29,443) (25,909) (30,378) (63,649) (7,846) (19,128)
Non-recurring items(1).......................... 3,612 -- (35,324) (46,428) -- --
Minority interests:
Preferred redeemable securities................. -- -- (6,475) (12,250) -- (3,159)
Other........................................... (2,060) (960) (1,436) (1,318) (94) (744)
--------- --------- --------- ----------- --------- ---------
Income (loss) before income taxes and
extraordinary item.............................. 11,773 20,949 (5,242) (35,122) 4,995 (4,070)
Provision (benefit) for income taxes.............. 3,225 8,379 (2,097) (14,049) 1,999 (1,628)
--------- --------- --------- ----------- --------- ---------
Income (loss) before extraordinary item........... 8,548 12,570 (3,145) (21,073) 2,996 (2,442)
-----------
-----------
Extraordinary item, net of taxes.................. (348) (3,751) (2,076) -- --
--------- --------- --------- --------- ---------
Net income (loss)................................. $ 8,200 $ 8,819 $ (5,221) $ 2,996 $ (2,442)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
OTHER DATA:
EBITDA(2)......................................... $ 57,915 $ 69,559 $ 98,225 $ 134,500 $ 19,828 $ 32,857
Ratio of earnings to fixed charges(3)............. 1.4x 1.7x -- -- 1.5x --
Capital expenditures and acquisitions............. $ 96,635 $ 203,406 $ 186,384 $ 118,667 $ 49,669 $ 29,848
Total debt/EBITDA(4).............................. 5.3x 4.7x 8.7x 6.3x N/A N/A
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
EBITDA/interest expense........................... 2.0x 2.7x 3.2x 2.1x 2.5x 1.7x
Number of hotels owned at end of period........... 57 69 142 142 73 141
Number of rooms owned at end of period............ 11,059 14,061 26,889 26,889 15,165 26,729
Occupancy(5)...................................... 64.4% 60.9% 60.9% 60.3% 57.7% 57.8%
Average daily rate(6)............................. $ 69.47 $ 71.90 $ 73.52 $ 73.17 $ 74.25 $ 74.23
RevPAR(7)......................................... $ 44.72 $ 43.82 $ 44.77 $ 44.12 $ 42.84 $ 42.90
Available room nights(8).......................... 3,487,689 4,107,066 5,844,637 9,107,862 1,312,892 2,441,299
</TABLE>
(FOOTNOTES APPEAR ON FOLLOWING PAGE)
16
<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------
1998 1999
--------- ---------
(UNAUDITED)
<S> <C> <C>
CAPSULE INFORMATION(9):
Revenues.................................................................................. $ 185,269 $ 295,667
Operating expenses:
Direct:
Rooms................................................................................. 34,072 57,122
Food and beverage..................................................................... 38,460 50,541
Other................................................................................. 5,318 8,216
General and administrative.............................................................. 4,829 11,367
Depreciation and amortization........................................................... 14,759 27,500
Other................................................................................... 53,634 85,143
--------- ---------
Total operating expenses.................................................................. 151,072 239,889
Income from operations.................................................................... 34,197 55,778
Interest expense.......................................................................... (16,132) (37,139)
Minority interest--preferred redeemable securities........................................ (311) (6,814)
Other income (expense).................................................................... (123) (493)
Non-recurring items....................................................................... (432) --
--------- ---------
Income before income taxes and extraordinary item......................................... 17,199 11,332
Provision for income taxes................................................................ 6,880 4,533
--------- ---------
Income before extraordinary item.......................................................... 10,319 6,799
Extraordinary item, net of tax............................................................ (1,095) --
--------- ---------
Net income................................................................................ $ 9,224 $ 6,799
--------- ---------
--------- ---------
Earnings per common share:
Income before extraordinary item........................................................ $ 0.49 $ 0.25
Extraordinary item...................................................................... (0.05) --
--------- ---------
Net income.............................................................................. $ 0.44 $ 0.25
--------- ---------
--------- ---------
Earnings per common share--assuming dilution:
Income before extraordinary item........................................................ $ 0.49 $ 0.25
Extraordinary item...................................................................... (0.05) --
--------- ---------
Net income.............................................................................. $ 0.44 $ 0.25
--------- ---------
--------- ---------
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF MARCH 31, 1999
------------------------------- ----------------------
<S> <C> <C> <C> <C> <C>
1996 1997 1998 ACTUAL AS ADJUSTED
--------- --------- --------- --------- -----------
<CAPTION>
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Property and equipment, net............................. $ 364,922 $ 534,080 $1,317,470 $1,329,968 $1,329,968
Total assets............................................ 439,786 627,651 1,497,921 1,494,680 1,500,564
Long-term obligations, less current portion............. 284,880 323,320 816,644 818,627 870,043
Minority interests:
Preferred redeemable securities....................... -- -- 175,000 175,000 175,000
Other................................................. 19,627 13,555 15,021 15,642 15,642
Total stockholders' equity.............................. 74,738 239,535 283,767 281,525 265,606
</TABLE>
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<PAGE>
(1) Non-recurring items were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------
<S> <C> <C> <C> <C>
ACTUAL PRO FORMA
------------------------------- -----------
<CAPTION>
1996 1997 1998 1998
--------- --------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Gain on litigation settlement......................................... $ 3,612 $ -- $ -- $ --
Other non-recurring expense........................................... -- -- (432) (432)
Settlement on treasury rate lock transaction.......................... -- -- (31,492) (31,492)
Severance and other................................................... -- -- (3,400) (14,504)
--------- --------- --------- -----------
Total............................................................... $ 3,612 $ -- $ (35,324) $ (46,428)
--------- --------- --------- -----------
--------- --------- --------- -----------
</TABLE>
(2) "EBITDA" represents earnings before interest, income taxes, depreciation and
amortization. EBITDA is provided because it is a measure commonly used in
the lodging industry. EBITDA is not a measurement of financial performance
under generally accepted accounting principles and should not be considered
an alternative to net income as a measure of performance or to cash flow as
a measure of liquidity. EBITDA is not necessarily comparable with similarly
titled measures for other companies.
(3) For purposes of calculating the ratio of earnings to fixed charges, earnings
are determined by adding fixed charges (excluding capitalized interest) and
amortization of capitalized interest to earnings before income taxes. Fixed
charges consist of (i) interest expense (including amortization of debt
issuance costs), (ii) capitalized interest, (iii) dividends paid on the
CRESTS and (iv) the portion of rent expense considered interest. Excluding
the non-recurring items for actual 1998 and pro forma 1998, the ratios would
have been 1.7x and 1.1x respectively. For the year ended December 31, 1998,
actual and pro forma, and the three months ended March 31, 1999, our
earnings were insufficient to cover our fixed charges by $6.8 million, $41.0
million, and $5.1 million, respectively.
(4) Based on debt at the end of the period. Excludes $175.0 million of CRESTS.
(5) Occupancy is determined by dividing the total rooms occupied for the period
by the total available room nights for such period. We include rooms being
renovated or otherwise unavailable in determining the total available room
nights.
(6) Average daily rate is determined by dividing room revenue for the period by
the number of rooms occupied for the period.
(7) "RevPAR" means revenue per available room per day, which is calculated as
average daily rate multiplied by the occupancy.
(8) Total rooms multiplied by number of days in the period. Includes rooms being
renovated or otherwise unavailable. Historically, Servico had not included
rooms being renovated or otherwise unavailable.
(9) Our results for the six months ended June 30, 1999 have been materially
affected by the Merger and the acquisitions of AMI and the Boston Revere
Hotel, that were recorded under the purchase method of accounting.
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RISK FACTORS
YOU SHOULD CONSIDER CAREFULLY THE FOLLOWING FACTORS AND THE OTHER
INFORMATION IN THIS PROSPECTUS. THIS SECTION INCLUDES OR REFERS TO CERTAIN
FORWARD-LOOKING STATEMENTS. YOU SHOULD REFER TO THE EXPLANATION OF THE
QUALIFICATIONS AND LIMITATIONS ON SUCH FORWARD-LOOKING STATEMENTS DISCUSSED
UNDER THE HEADING "FORWARD-LOOKING STATEMENTS" IN THIS PROSPECTUS.
OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION AND
PREVENT US FROM FULFILLING OUR OBLIGATION UNDER THESE NOTES
We have a substantial amount of debt. As of March 31, 1999, after giving
effect to the offering of the Notes and borrowings under our new credit facility
and the application of the net proceeds thereof, we would have had outstanding
debt of $887.0 million and the ability to borrow an additional $20.5 million
under our existing agreements and $75.0 million under our new credit facility.
These additional borrowings under our new credit facility would be for
designated construction projects and for general corporate purposes. The
Indenture permits us to incur additional debt, subject to specified limitations.
See "Description of Certain Indebtedness and Preferred Stock" and "Description
of the Notes."
Our substantial indebtedness could interfere with the ability to pay
interest and principal on the Notes and may have important consequences for our
operations, including:
- we may not have sufficient funds to pay interest on, and principal of, our
debt (including the Notes);
- we will have to dedicate a substantial portion of our cash flow from
operations to the payment of interest on, and principal of, our debt,
which will reduce funds available for other purposes;
- we may not be able to fund capital expenditures, working capital and other
corporate requirements;
- we may not be able to obtain additional financing; and
- our ability to adjust to changing market conditions and to withstand
competitive pressures could be limited, and we may be vulnerable to
additional risk if there is a downturn in general economic conditions or
our business.
In addition, as of March 31, 1999, after giving effect to the offering of
the Notes and borrowings under our new credit facility and the application of
the net proceeds thereof, $437.6 million of our debt would have had variable
rates of interest, which could result in higher interest expense if interest
rates increase.
We have a significant amount of debt that will mature prior to the maturity
of the Notes, and this debt and the Notes may need to be refinanced at their
maturity. Our ability to refinance our debt will depend upon several factors,
including our financial condition at the time, the restrictions in the existing
debt agreements and other factors, including market condition, which are beyond
our control. We cannot assure you that we will be able to obtain any necessary
refinancing on terms that are acceptable to us.
The following chart is presented assuming we had completed the offering of
the Notes and have made borrowings under our new credit facility and applied the
proceeds as they were so applied:
<TABLE>
<CAPTION>
AT MARCH 31, 1999
-----------------
(IN MILLIONS)
<S> <C>
Total indebtedness............................................................................. $ 887.0
Indebtedness senior to the Notes (includes debt of subsidiaries that are not guarantors)....... $ 687.0
</TABLE>
In addition, at March 31, 1999, we had $175.0 million of Convertible
Debentures underlying the CRESTS outstanding. See "Description of Certain
Indebtedness and Preferred Stock--CRESTS."
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TO SERVICE OUR INDEBTEDNESS, WE WILL REQUIRE A SIGNIFICANT AMOUNT OF CASH, AND
OUR ABILITY TO GENERATE CASH DEPENDS ON MANY FACTORS BEYOND OUR CONTROL
Our ability to make payments on our debt, including the Notes, depends on
our future operating performance, which is subject to general economic and
competitive conditions and to financial, business, regulatory and other factors,
many of which we cannot control. If our cash flow from operations is
insufficient, we may take specific actions, including delaying or reducing
capital expenditures, attempting to restructure or refinance our debt, deferring
scheduled CRESTS dividends, selling assets or operations, or seeking additional
equity capital. We may be unable to take any of these actions on satisfactory
terms or in a timely manner. Further, any of these actions may not be sufficient
to allow us to meet our debt obligations. Our existing debt agreements limit our
ability to take certain of these actions. The Indenture will contain similar
restrictions. See "--Our Debt Instruments Restrict Our Ability to Enter into
Certain Transactions." Our failure to earn enough to pay our debts or to
successfully undertake any of these actions could, among other things,
materially and adversely affect the market value of the Notes. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources," "Description of Certain
Indebtedness and Preferred Stock" and "Description of the Notes."
SUBORDINATION OF THE NOTES AND NOTE GUARANTEES; ASSET ENCUMBRANCES--EXISTENCE OF
SENIOR DEBT COULD LIMIT THE ABILITY OF LODGIAN FINANCING AND THE GUARANTORS TO
FULFILL THEIR OBLIGATIONS UNDER THE NOTES AND THE NOTE GUARANTEES
The right to payment on the Notes and the guarantees is subordinate to all
of the existing and future debt of Lodgian Financing and the guarantors that is
senior indebtedness under the Indenture. In the event of a bankruptcy,
liquidation, dissolution, reorganization or similar proceeding, Lodgian
Financing's assets will be available to pay obligations on the Notes, and the
assets of Lodgian and the subsidiary guarantors will be available to pay their
obligations under their respective guarantees, only after all our outstanding
senior indebtedness has been paid in full. There may not be sufficient assets
remaining to make payments on amounts due on any or all of the Notes then
outstanding or on the guarantees. In addition, under particular circumstances, a
default in the payment of some senior indebtedness prohibits Lodgian Financing
or the guarantors from making payments on the Notes or the guarantees. As of
March 31, 1999, after giving effect to the offering of the Notes and borrowings
under our new credit facility and the application of the net proceeds thereof,
our outstanding senior indebtedness would have been $376.0 million (which
includes $136.0 million of guarantees of debt of subsidiaries that are not
guaranteeing the Notes), and we would have had $447.0 million of debt
outstanding at subsidiaries that have not guaranteed the Notes. Although the
Indenture limits the amount of debt that we may incur, the amount of debt we
incur could be substantial and could be senior indebtedness. See "Description of
the Notes."
The Notes and the guarantees are unsecured and effectively rank junior in
right of payment to any of our secured debt to the extent of the value of the
assets securing that debt. Our secured debt includes debt incurred under our
mortgage notes and credit facilities, which is secured by liens on substantially
all of our assets. If an event of default were to occur under our mortgage notes
or credit facilities, the lenders could foreclose on the assets regardless of
any default with respect to the Notes or the guarantees. The assets would first
be used to repay in full all amounts outstanding under our mortgage notes and
credit facilities. There may not be sufficient value to repay the outstanding
principal amount of the Notes or the guarantees.
COMPANY STRUCTURE; STRUCTURAL SUBORDINATION--FUNDS FROM SUBSIDIARIES MAY NOT BE
SUFFICIENT FOR US TO MAKE PAYMENTS ON THE NOTES
Lodgian is a holding company whose primary assets consist of shares of
Lodgian Financing, Servico and Impac. Lodgian Financing is a holding company
whose operations are conducted through its direct or
20
<PAGE>
indirect subsidiaries. As a result, Lodgian Financing will be dependent on
dividends and other distributions from its subsidiaries for the funds necessary
to make payments on the Notes. The Notes are guaranteed on an unsecured senior
subordinated basis by Lodgian and each of the wholly-owned subsidiaries of
Lodgian Financing. Under our new credit facility, our subsidiaries Impac Hotel
Group, LLC and Servico, Inc. are restricted from making distributions to
Lodgian, other than tax distributions, but can make other distributions to
Lodgian Financing.
Holders of the Notes will effectively be junior to all creditors of our
subsidiaries that are not guarantors. As of March 31, 1999, after giving effect
to the offering of the Notes and borrowings under our new credit facility and
the application of the net proceeds thereof, the total liabilities of these
subsidiaries would have been approximately $604.3 million, including trade
payables, and $447.0 million of debt.
The direct and indirect subsidiaries of Lodgian Financing are legally
distinct entities from us and, except for the subsidiary guarantors, have no
obligation to pay amounts due under the Notes or to make funds available for
payment. The ability of our subsidiaries to make these payments is subject to
the availability of funds and the terms of these subsidiaries' indebtedness,
among other things. For example, our mortgage notes and credit facilities
restrict the ability of our subsidiaries to pay dividends or make other
distributions.
SUBSIDIARY GUARANTEES COULD BE DEEMED TO BE FRAUDULENT CONVEYANCES
All wholly-owned subsidiaries of Lodgian Financing guarantee the Notes. The
issuance of these subsidiary guarantees could be subject to review under
applicable fraudulent transfer or conveyance laws in a bankruptcy or other
similar proceeding. Under these laws, the issuance of a guarantee will be a
fraudulent conveyance if either (1) the subsidiary issued the guarantee with
intent of hindering, delaying or defrauding its creditors, or (2) the subsidiary
received less than reasonably equivalent value or fair consideration in return
for issuing the guarantee, and, in the case of (2) only, one of the following is
also true:
- the subsidiary was insolvent or became insolvent when it issued the
guarantee,
- issuing the guarantee left the subsidiary with an unreasonably small
amount of capital, or
- the subsidiary intended to, or believed that it would, be unable to pay
its debts as they matured.
If the issuance of the subsidiary guarantee were a fraudulent conveyance, a
court could, among other things, void the subsidiary's obligations under the
guarantee and require the repayment of any amounts paid thereunder.
Generally, an entity will be considered insolvent if:
- the sum of its debts is greater that the fair value of its property,
- the present fair value of its assets is less than the amount that it will
be required to pay on its existing debts as they become due, or
- it cannot pay its debts as they become due.
We believe, however, that upon issuance of the Notes, our subsidiaries are
solvent, have sufficient capital to carry on their businesses and are able to
pay their debts as they mature. We cannot be sure, however, as to what standard
a court would apply in making such determinations or that a court would reach
the same conclusions with regard to these issues.
21
<PAGE>
OUR DEBT INSTRUMENTS RESTRICT OUR ABILITY TO ENTER INTO CERTAIN TRANSACTIONS
The Indenture restricts our ability to engage in certain transactions. In
addition, certain of our indebtedness requires us to maintain debt service
coverage ratios. See "Description of Certain Indebtedness and Preferred Stock"
and "Description of the Notes--Covenants."
Our indebtedness and the Indenture restrict our ability, and the ability of
our subsidiaries, to:
- incur additional indebtedness;
- pay dividends and make distributions;
- issue stock of subsidiaries;
- make investments;
- repurchase stock;
- create liens;
- enter into transactions with affiliates;
- enter into sale and leaseback transactions;
- merge or consolidate; and
- transfer and sell assets.
The restrictions imposed by our indebtedness may limit our ability to
finance future operations, respond to changing business and economic conditions,
secure any needed additional financing and engage in opportunistic transactions.
Moreover, we may not satisfy the financial ratios and tests due to events that
are beyond our control. The failure to satisfy any of these restrictions could
result in a default under that indebtedness. Following a default, the lenders
could declare all amounts outstanding to be immediately due and payable. If we
could not repay those amounts, the lenders could foreclose on the collateral
granted to them to secure the indebtedness under those financings. If the
lenders accelerated the outstanding indebtedness, we cannot guarantee that we
could repay such indebtedness nor can we guarantee that we could pay amounts due
in respect of our other indebtedness, including the Notes, with our remaining
assets. See "Description of Certain Indebtedness and Preferred Stock" and
"Description of the Notes--Ranking."
WE MAY BE UNABLE TO REALIZE THE ANTICIPATED BENEFITS OF THE MERGER AND THE
ACQUISITION OF AMI
Primarily as a result of the Merger and the acquisition of AMI Operating
Partners, L.P. ("AMI"), the number of hotels we own almost doubled during 1998.
We must fully integrate the Impac and AMI hotels into our hotel portfolio and we
may need additional people and resources to handle the increased work load. If
we are unable to integrate the Impac and AMI hotels successfully into our
portfolio, our business, financial condition and results of operations could
suffer. Similarly, a large number of the Impac and AMI hotels are in the process
of, or awaiting, substantial renovation, development and rebranding. If the
implementation of these plans is significantly delayed or curtailed, or the
improvements do not yield the anticipated results, then we may have paid too
much for these hotels.
RISKS ASSOCIATED WITH THE LODGING INDUSTRY--ECONOMIC CONDITIONS, OVERSUPPLY,
TRAVEL PATTERNS, WEATHER AND OTHER CONDITIONS BEYOND OUR CONTROL MAY ADVERSELY
AFFECT OUR BUSINESS AND RESULTS OF OPERATION
The lodging industry may be adversely affected by changes in national or
local economic conditions and other local market conditions, such as an
oversupply of hotel rooms or a reduction in demand for hotel space in a
geographic area, changes in travel patterns, extreme weather conditions, changes
in governmental regulations which influence or determine wages, prices or
construction costs, changes in
22
<PAGE>
interest rates, the availability of financing for operating or capital needs, or
changes in real estate tax rates and other operating expenses. In addition, due
in part to the strong correlation between the lodging industry's performance and
economic conditions, the lodging industry is subject to cyclical changes in
revenues and profits. Downturns or prolonged adverse conditions in the real
estate or capital markets or in national or local economies, our inability to
secure financing for the development of hotels or an oversupply of hotel rooms
could have a material adverse effect on our business and results of operations.
RISKS RELATED TO THE DEVELOPMENT OF NEW PROJECTS, ACQUISITIONS AND
RENOVATIONS--WE CANNOT GUARANTEE THE SUCCESS OF ANY FUTURE PROJECTS
Part of our growth strategy is to develop new hotels and to acquire and
redevelop underperforming hotels. Acquiring, developing and renovating involve
substantial risks, including:
- identifying acquisitions that meet our criteria;
- costs exceeding budgeted or contracted amounts;
- delays in completion of construction;
- the failure to obtain necessary zoning and construction permits;
- lack of financing on favorable terms;
- the failure of developed or redeveloped or acquired properties to achieve
desired revenue or profitability levels;
- competition for suitable development sites from competitors who may have
greater financial resources;
- the incurrence of substantial costs for abandoned development projects;
- work stoppages;
- relationships with contractors;
- changes in governmental rules, regulations and interpretations; and
- changes in general economic and business conditions.
As of March 31, 1999, we were constructing three new hotels and renovating
19 hotels. We cannot guarantee that present or future development or renovation
will proceed in accordance with our expectations. We also cannot assure you that
we will acquire and redevelop properties or complete the development and
construction of hotels or that any such development or construction will be
completed on time or within budget.
We compete against numerous entities to acquire hotels. Some of our
competitors have greater financial resources or carry less debt than we do. For
successful growth, we must be able to acquire hotels on attractive terms and
integrate the acquired hotels into our existing operations. For acquired hotels,
including those acquired in the Merger, we must consolidate management,
operations, systems, personnel and procedures. Any delays or unexpected costs in
this integration could materially affect our business, financial condition, or
results of operations. We cannot assure you that our newly acquired hotels will
perform as expected or that we will be able to realize any expected cost
savings.
WE MAY NOT BE ABLE TO MANAGE OUR GROWTH
We expect to grow internally and through acquisitions. We expect to expend
significant time and effort in expanding existing businesses and in identifying,
completing and integrating acquisitions and in developing new properties. We
cannot guarantee that our systems, procedures and controls will be adequate to
support our operations as they expand. Any future growth also will impose
significant added
23
<PAGE>
responsibilities on members of senior management, including the need to
identify, recruit and integrate new managers and executives. We cannot guarantee
that we will identify and retain additional management. If we are unable to
manage our growth efficiently and effectively, or are unable to attract and
retain additional qualified management, our business and results of operations
could be materially adversely affected. In making acquisitions, we may have
difficulty combining the operations or realizing the expected benefits and
operating synergies. Our ability to consolidate our business, operations and
personnel (including reducing duplicate functions and costs) with any
acquisitions will affect our growth and profitability. Delays or unexpected
costs in the integration could reduce the expected gains from the combined
business and results of operations. We cannot assure you that we will be able to
accomplish the consolidation and achieve the cost savings in a timely or
profitable manner or that any savings will be realized. See "Business--Growth
Strategy" and "Management."
WE HAVE SIGNIFICANT CAPITAL NEEDS AND ADDITIONAL FINANCINGS MAY NOT BE AVAILABLE
The development, renovation and maintenance of hotels is capital intensive.
As part of our growth strategy we intend to acquire and redevelop additional
hotels and to develop new hotels. To pursue this strategy, we will be required
to obtain additional capital in the future to meet our expansion plans. In
addition, in order for our hotels to remain competitive they must be maintained
and refurbished on an ongoing basis. Moreover, our cash flow from operations may
be adversely affected because portions of the facilities are removed from
service during renovation. We may obtain needed capital from cash on hand,
including reserves, cash flow from operations or from financing, including the
issuance of additional indebtedness. We may also seek financing from other
sources or enter into joint ventures and other collaborative arrangements in
connection with the acquisition or development of hotel properties. We cannot
guarantee that we will be able to raise any additional financing on acceptable
terms on a timely basis or at all. If we cannot obtain such financing, we may be
unable to construct additional hotels, and we may experience delays in our
planned renovation or maintenance of our hotels.
WE DEPEND ON THIRD PARTIES IN OUR JOINT VENTURES AND COLLABORATIVE ARRANGEMENTS
We currently own 12 hotels in partnership with other entities and may in the
future enter into joint venture or other collaborative arrangements. Our
investment in these joint ventures may, under certain circumstances, involve
risks not otherwise present in our business, including (1) the risk that our
partner may become bankrupt, (2) the impact on our ability to sell or dispose of
our property as a result of buy/sell rights that may be imposed by the venture,
and (3) the risk that our partner may have economic or other interests or goals
that are inconsistent with our interests and goals and that they may be in
position to veto actions which may be in our best interests.
COMPETITION IN THE LODGING INDUSTRY COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR
BUSINESS AND RESULTS OF OPERATIONS
The lodging industry is highly competitive. Competitive factors within the
industry include:
- room rates;
- quality of accommodations;
- name recognition;
- service levels;
- reputation;
- reservation systems;
- convenience of location; and
- the supply and availability of alternative lodging.
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<PAGE>
We intend to develop or acquire most of our hotels in geographic locations
where other hotels may be located. We expect to compete for guests and
development sites with national chains, large franchisees and independent
operators. Many of these competitors have greater financial resources and may
have better relationships with prospective franchisors, representatives in the
construction industry and others in the lodging industry. The number of
competitive lodging facilities in a particular area could have a material
adverse effect on our occupancy and rates and, therefore, revenues of our
hotels. See "Business-- Competition and Seasonality."
We believe that competition within the lodging market has increased
substantially and may increase in the foreseeable future. We cannot guarantee
that new or existing competitors will not significantly reduce their rates or
offer greater convenience, services or amenities or significantly expand or
improve hotels in the markets in which we currently or may subsequently compete,
thereby materially adversely affecting our business and results of operations.
WE RELY ON OUR FRANCHISORS, AND OUR FRANCHISE AGREEMENTS MAY RESTRICT OUR HOTEL
OPERATIONS AND MAINTENANCE
We expect to derive substantial benefits from our strategic alliances with
franchisors. Most of the hotels that we own or manage are operated under
franchise licenses, including franchise licenses for the Comfort Inn, Courtyard
by Marriott, Crowne Plaza, Doubletree, Fairfield Inn by Marriott, Hampton Inn,
Hilton, Holiday Inn, Marriott, Radisson, Residence Inn by Marriott and Sheraton
brands, among others. Any significant decline in the reputation of any of our
franchisors could adversely affect our results of operations. Most of our hotels
are affiliated with Holiday Inn and Marriott. If we lose our position as a
franchisee of any of our franchisors, particularly Holiday Inn or Marriott, or
there is a decline in their reputations, our business, financial condition and
results of operations could be adversely affected.
We believe our relationships with our franchisors are good. However, from
time to time, we have terminated relationships with franchisors for quality or
for other reasons and, in addition, one franchisor terminated its franchise with
us on one property that was under notice of termination when we acquired it.
Currently we have received a notice of franchise termination on two hotels. We
expect to convert these hotels to new franchises.
We operate our hotels according to franchise agreements with major hotel
chains. Each franchise agreement usually contains specific standards for, and
restrictions and limitations on, hotel operation and maintenance. These
standards, restrictions, and limitations may conflict with our planned
expenditures and priorities. In addition, franchisors may change their standards
or limit our ability to improve or modify our hotels without franchisor consent.
To comply with franchisors' requirements, or to change a franchise affiliation
for a particular hotel, we may be forced to incur significant costs or make
capital expenditures. Franchisors may usually cancel franchise agreements if the
hotel operator fails (1) to maintain specified operating standards or (2) to
make payments when due under the franchise agreement. If we lose a franchise, we
may suffer in the areas of brand recognition, marketing, and centralized
reservations systems provided by the franchisor, which, in turn, could affect
operations and the underlying value of the affected hotel. Franchise agreements
often define certain transactions as a "change of control" and can require
franchisor approval, or the payment of certain fees, or both. Obtaining approval
for these transactions can take time, and the potential cost of doing so could
have an adverse effect on our business, financial condition and results of
operations.
OUR INVESTMENT IN REAL ESTATE COULD DECLINE IN VALUE, BE ILLIQUID OR EXPERIENCE
UNINSURED OR UNDERINSURED LOSSES
GENERAL RISKS. Our investment in our hotels will be subject to varying
degrees of risk related to the ownership and operation of real property. The
underlying value of our real estate investments depends significantly on our
ability to maintain or increase cash provided by operating the investments. The
value of our hotels and income from the hotels may be materially adversely
affected by:
25
<PAGE>
- changes in national economic conditions;
- changes in general or local economic conditions and neighborhood
characteristics;
- competition from other lodging facilities;
- changes in real property tax rates;
- changes in the availability, cost and terms of financing;
- the effect of present or future environmental laws;
- the ongoing need for capital improvements;
- changes in operating expenses;
- changes in governmental rules and policies;
- natural disasters; and
- other factors which are beyond our control.
ILLIQUIDITY OF REAL ESTATE. Real estate investments are relatively
illiquid. Our ability to vary our portfolio in response to changes in economic
and other conditions will be limited. We cannot guarantee that we will be able
to dispose of an investment when we find disposition advantageous or necessary
or that the sale price of any disposition will recoup or exceed the amount of
our investment.
UNINSURED AND UNDERINSURED LOSSES COULD RESULT IN LOSS OF VALUE OF
HOTELS. We maintain comprehensive insurance on each of our hotels, including
liability, fire and extended coverage, of the type and amount we believe is
customarily obtained for or by an owner of similar real property assets.
However, there are types of losses, generally of a catastrophic nature, such as
earthquakes and floods, that may be uninsurable or not economically insurable.
We use our discretion in determining amounts, coverage limits and deductibility
provisions of insurance, with a view to obtaining appropriate insurance on our
hotels at a reasonable cost and on suitable terms. This may result in insurance
coverage that could be insufficient to pay the full current market value or
current replacement cost of our lost investment. Inflation, changes in building
codes and ordinances, environmental considerations and other factors also might
make it infeasible to use insurance proceeds to replace a hotel after it has
been damaged or destroyed. Under these circumstances, the insurance proceeds we
receive might not be enough to restore our economic position with respect to a
damaged or destroyed hotel. In addition, property and casualty insurance rates
may increase depending on claims experience, insurance market conditions and the
replacement value of our hotels.
THE FAILURE TO COMPLY WITH GOVERNMENT REGULATION MAY ADVERSELY EFFECT OUR
BUSINESS AND RESULTS OF OPERATIONS
The hotel industry is subject to numerous federal, state and local
government regulations, including those relating to building and zoning
requirements. In addition, we are subject to laws governing the relationships
with employees, including minimum wage requirements, overtime, working
conditions, work permit requirements and dramshop laws, which may give an
injured person the right to recover damages from any establishment which
wrongfully served alcoholic beverages to the person who, while intoxicated,
caused the injury.
Further, under the Americans with Disabilities Act of 1990, all public
accommodations are required to meet certain federal requirements related to
access and use by disabled persons. While we anticipate that our owned hotels
and the hotels we manage will be substantially in compliance with these
requirements, a determination that we are not in compliance with these
regulations could result in the imposition of fines, an award of damages to
private litigants and significant expense in bringing our hotels in compliance.
See "Business--Regulation."
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<PAGE>
ENVIRONMENTAL REGULATION MAY ADVERSELY IMPACT OUR COSTS
Our operating costs may be affected by the obligation to pay for the cost of
complying with existing environmental laws, ordinances and regulations. In
addition, if any future legislation is adopted, we may at various times be
required to make significant capital and operating expenditures in response to
such legislation. We attempt to minimize our exposure to potential environmental
liability through our site selection procedures. We typically enter into
contracts to purchase real estate subject to certain contingencies. Prior to
exercising our option to purchase property, we typically conduct a Phase I
environmental assessment (which generally includes a physical inspection and
database search, but not soil or groundwater analyses). Under various federal,
state and local environmental laws, ordinances and regulations, a current or
previous owner or operator of real property may be liable for the costs of
removal or remediation of hazardous or toxic substances on, under or in the
property. These laws often impose liability whether or not the owner or operator
knew of, or was responsible for, the presence of hazardous or toxic substances.
In addition, the presence of contamination from hazardous or toxic substances,
or the failure to properly remediate the contaminated property, may adversely
affect the owner's ability to borrow using the real property as collateral.
Persons who arrange for the disposal or treatment of hazardous or toxic
substances also may be liable for the costs of removal or remediation of these
substances at the disposal or treatment facility, whether or not the facility is
or ever was owned or operated by that person. Certain environmental laws and
common law principles could be used to impose liability for releases of
hazardous materials, including asbestos-containing materials, into the
environment, and third parties may seek recovery from owners or operators of
real properties for personal injury associated with exposure to released
hazardous materials. Environmental laws also may impose restrictions on the
manner in which property may be used or transferred or in which businesses may
be operated, and these restrictions may require expenditures. In connection with
the ownership of our properties and the management of other hotels, we
potentially may be liable for any such costs. The cost of defending against
claims of liability or remediating contaminated property and the cost of
complying with environmental laws could materially adversely affect our business
and results of operations.
DEPENDENCE ON KEY PERSONNEL--LOSS OF MANAGEMENT COULD RESULT IN A MATERIAL
ADVERSE EFFECT
We depend substantially on the efforts and skills of members of management,
in particular Robert S. Cole. Mr. Cole is our Chief Executive Officer, President
and a director. The loss of the services of Mr. Cole or his inability to devote
sufficient attention to our operations could have a material adverse effect on
our operations.
CONSEQUENCES OF FAILURE TO EXCHANGE
If you do not exchange your notes for exchange notes, you will continue to
be subject to the restrictions on transfer of your notes set forth in their
legend because the outstanding Old Notes were issued pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act. In general, outstanding Old Notes may not be offered or sold,
unless registered under the Securities Act, except pursuant to an exemption
from, or in a transaction not subject to, the Securities Act and applicable
state securities laws. We currently do not anticipate registering the
outstanding Old Notes under the Securities Act.
27
<PAGE>
USE OF PROCEEDS
We will not receive any proceeds from the Exchange Offer. In consideration
for issuing the Exchange Notes, we will receive in exchange outstanding Old
Notes of like principal amount, the terms of which are identical in all material
respects to the Old Notes. The outstanding Old Notes surrendered in exchange for
Exchange Notes will be retired and canceled and cannot be reissued. Accordingly,
issuance of the Exchange Notes will not result in any increase in our
indebtedness. We have agreed to bear the expenses of the Exchange Offer. No
underwriter is being used in connection with the Exchange Offer.
For a description of the use of proceeds of the offering of outstanding Old
Notes, see "Summary-- Lodgian--Recent Developments."
28
<PAGE>
CAPITALIZATION
The following table presents our consolidated capitalization as of March 31,
1999 (1) on an actual basis and (2) as adjusted for the offering of the Notes
and borrowings under our new credit facility and the application of the proceeds
to repay portions of our existing indebtedness as described in "Summary--
Lodgian--Recent Developments" as if these transactions had occurred on March 31,
1999. The information presented below should be read along with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the financial statements contained elsewhere in this memorandum.
<TABLE>
<CAPTION>
AS OF MARCH 31, 1999
--------------------------
<S> <C> <C>
ACTUAL AS ADJUSTED
------------ ------------
<CAPTION>
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Long-term debt (including current portion):
Mortgage notes payable--to be repaid with issuance of the Notes and the new credit
facility(1)....................................................................... $ 401,141 $ --
Mortgage notes with variable interest rates maturing through 2011(2)................ 197,558 197,558
Mortgage notes payable, with fixed rates ranging from 8.6% to 10.7% payable through
2010.............................................................................. 234,882 234,882
Other(3)............................................................................ 21,168 14,543
New credit facility(4).............................................................. -- 240,000
Senior Subordinated Notes offered hereby............................................ -- 200,000
------------ ------------
Total long-term debt(5)........................................................... 854,749 886,983
Minority Interests:
Preferred redeemable securities(6).................................................. 175,000 175,000
Other............................................................................... 15,642 15,642
Stockholders' equity:
Common stock........................................................................ 278 278
Additional paid-in capital.......................................................... 262,176 262,176
Retained earnings(7)................................................................ 20,664 4,745
Accumulated other comprehensive loss................................................ (1,593) (1,593)
------------ ------------
Total stockholders' equity........................................................ 281,525 265,606
------------ ------------
Total capitalization............................................................ $ 1,326,916 $ 1,343,231
------------ ------------
------------ ------------
</TABLE>
- ------------------------
(1) $132.5 million relating to the Nomura Impac I mortgage notes are to be
repaid in September 1999 with a deferred funding.
(2) Each note converts to a term loan amortizing over a 20-year period,
commencing in October 2000 and October 2001.
(3) As adjusted to reflect exit fees paid to Lehman Brothers upon repayment of
the Lehman Brothers mortgage notes.
(4) Does not reflect any borrowing expected to be available under our new credit
facility other than the borrowings to fund the repayment of the Nomura Impac
I mortgage notes in September 1999.
(5) The weighted average interest rate on the as adjusted total long-term debt
at March 31, 1999 would have been 9.5% (based on the interest expense
relating to the Notes and the new credit facility set forth in Note 5 under
"Unaudited Pro Forma Consolidated Financial Data").
(6) Represents $175.0 million liquidation preference of CRESTS issued by Lodgian
Capital Trust I, with a $50 par value. The sole asset of the trust consists
of $175.0 million principal amount of our convertible subordinated
debentures due 2010. The CRESTS are convertible into common stock of Lodgian
at the option of the holder at a price of $21.42 per share. Holders receive
distributions at a fixed annual rate of 7%, which are deferrable for 20
quarters under the governing indenture. The CRESTS will be redeemed upon the
repayment of the underlying convertible debentures on June 30, 2010 or their
earlier redemption. See "Description of Certain Indebtedness and Preferred
Stock."
(7) As adjusted to reflect certain exit, prepayment and other fees associated
with the repayment of the debt with the proceeds of the offering of the
Notes and borrowings under our new credit facility.
29
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
The following unaudited 1998 pro forma consolidated statement of operations
of Lodgian gives effect to:
(1) the Merger;
(2) the 1998 acquisitions of AMI (after the sale of three of the 14 acquired
properties) and the Boston Revere Hotel;
(3) the June 1998 offering of the CRESTS and the repayment of debt with the
proceeds; and
(4) the offering of the Old Notes and borrowings under our new credit
facility and the application of the proceeds thereof, as if such
transactions occurred on January 1, 1998.
The unaudited 1998 pro forma consolidated statement of operations of Lodgian
should be read in conjunction with the historical financial statements and other
financial information included elsewhere in this memorandum.
The effect of the offering of the Old Notes and the borrowings under the new
credit facility on the historical consolidated balance sheet as of March 31,
1999 and the consolidated statement of operations for the three months ended
March 31, 1999 is immaterial to the respective statements. Therefore, no
separate pro forma balance sheet or statement of operations for these periods is
included in the unaudited pro forma consolidated financial data.
The accompanying unaudited pro forma information is presented for
illustrative purposes only and is based on certain assumptions and adjustments
described in the pro forma financial statements. Such information is not
necessarily indicative of the operating results or financial position that would
have occurred had the transactions been consummated at the dates indicated, nor
is it necessarily indicative of future operating results or the financial
position of Lodgian. No effect has been given in the unaudited 1998 pro forma
consolidated statement of operations for operating and cost savings that may be
realized from the acquisition of AMI or from the Merger.
30
<PAGE>
LODGIAN, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
----------------------------------------
OFFERING OF
NOTES,
IMPAC THE CREDIT
(JANUARY 1, AMI AND FACILITY,
1998- BOSTON CRESTS
LODGIAN DECEMBER 11, REVERE HOTEL OFFERING AND
HISTORICAL(1) 1998)(2) ACQUISITIONS(3) MERGER PRO FORMA
------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Revenues:
Rooms...................................... $ 267,862 $ 116,495 $ 17,593 $ -- $ 401,950
Food and beverages......................... 107,334 26,425 3,977 -- 137,736
Other...................................... 20,018 7,861 459 -- 28,338
------------ ------------ ------------ ------------ -----------
Total.................................... 395,214 150,781 22,029 -- 568,024
Operating expenses:
Direct
Rooms.................................... 75,316 34,571 4,241 -- 114,128
Food and beverage........................ 81,643 21,714 3,404 -- 106,761
General and administrative................. 10,080 6,437 342 -- 16,859
Other hotel operating expenses............. 129,950 56,067 9,759 -- 195,776
Depreciation and amortization.............. 31,114 14,268 1,010 1,707(4) 48,099
------------ ------------ ------------ ------------ -----------
Total.................................... 328,103 133,057 18,756 1,707 481,623
------------ ------------ ------------ ------------ -----------
Income from operations....................... 67,111 17,724 3,273 (1,707) 86,401
Other income (expenses):
Interest income and other.................. 1,261 56 805 -- 2,122
Loss on asset disposition.................. (432) -- -- -- (432)
Interest expense........................... (30,378) (33,336) -- 65(5) (63,649)
Settlement on swap transactions............ (31,492) -- -- -- (31,492)
Merger related costs....................... (3,400) (11,104) -- -- (14,504)
Minority interests:
Preferred redeemable securities............ (6,476) -- -- (5,774)(5) (12,250)
Other...................................... (1,436) 118 -- -- (1,318)
------------ ------------ ------------ ------------ -----------
(Loss) income before income taxes and
extraordinary item......................... (5,242) (26,542) 4,078 (7,416) (35,122)
(Benefit) provision for income taxes......... (2,097) (10,617) 1,632 (2,967) (14,049)
------------ ------------ ------------ ------------ -----------
Net (loss) income before extraordinary
items...................................... $ (3,145) $ (15,925) $ 2,446 $ (4,449) $ (21,073)
------------ ------------ ------------ ------------ -----------
------------ ------------ ------------ ------------ -----------
Loss before extraordinary items per common
share...................................... $ (0.16) $ (0.76)
Loss before extraordinary items per common
share, assuming dilution................... $ (0.16) $ (0.76)
Basic weighted average shares................ 20,245 27,641
Diluted weighted average shares.............. 20,245 27,641
</TABLE>
(FOOTNOTES APPEAR ON FOLLOWING PAGE)
31
<PAGE>
(1) The historical statement of operations of Lodgian, Inc. for the year ended
December 31, 1998 includes the operations of various properties that Servico
acquired during 1998 from the date of acquisition through the earlier of
December 31, 1998 or the date of disposition (including Impac from December
11, 1998 to December 31, 1998), and the effect of the CRESTS offering
completed in July 1998 from the date of offering through December 31, 1998.
(2) The unaudited historical results of operations of Impac were derived from
information provided by Impac as of the date of the Merger. The statement of
operations for Impac represents the historical operations of Impac for the
period from January 1, 1998 through the date of the Merger. The statement
includes the operations of the Boston Revere Hotel, acquired by Impac on
July 1, 1998, from the date of acquisition through the date of the Merger.
(3) Reflects the operations of 11 of the 14 hotels acquired in the acquisition
of AMI (the other three hotels were sold by Servico) from January 1, 1998
until May 28, 1998, the date of the AMI acquisition, and the Boston Revere
Hotel from January 1, 1998, until July 1, 1998, the date of its acquisition
by Impac.
(4) Reflects the additional depreciation and amortization resulting from the
allocation of purchase price to the Impac properties and recording of
goodwill pursuant to APB No. 16 in connection with the Merger. The
allocation of the cost of the acquired assets between land, buildings, and
furnishings and equipment is based on the fair values of the assets.
Depreciation expense for buildings and furnishings and equipment is based
upon their estimated useful lives of 40 years and 9.5 years, respectively.
Goodwill is being amortized over a 20-year period. Depreciation and
amortization is calculated on a straight-line basis.
(5) Reflects (i) $6.1 million of additional interest expense related to the
CRESTS ($5.8 million of which is reflected in minority interests--preferred
redeemable securities), which includes the amortization of $.3 of deferred
financing costs, (ii) interest expense of $24.5 million relating to the
Notes plus $.7 million of amortization of deferred financing costs, (iii)
assumed interest expense of $13.1 million relating to the new credit
facility plus $1.1 million of amortization of deferred financing costs, (iv)
the elimination of $3.8 million of interest expense relating to indebtedness
repaid with the CRESTS proceeds and (v) the elimination of $34.4 million of
interest expense relating to indebtedness to be repaid with the net proceeds
from the sale of the Old Notes and borrowings under the new credit facility
(and indebtedness that was repaid with such indebtedness). For each .25%
change in the assumed rate on the new credit facility, pro forma interest
expense will change by approximately $355,576 for the year ended December
31, 1998.
32
<PAGE>
SELECTED HISTORICAL FINANCIAL INFORMATION OF LODGIAN
In the table below, we provide you with selected historical financial data
of Lodgian. We have prepared this information using the consolidated financial
statements of Lodgian for the years ended December 31, 1994, 1995, 1996, 1997
and 1998 and the three-months periods ended March 31, 1998 and 1999. The
financial statements for the years ended December 31, 1994, 1995, 1996, 1997 and
1998 have been audited by Ernst & Young LLP, independent auditors. The financial
statements for the three months ended March 31, 1998 and 1999 have not been
audited. We believe the financial statements for these periods have been
prepared on the same basis as our audited consolidated financial statements and
include all adjustments (consisting only of normal recurring items) necessary
for a fair and consistent presentation of our results of operations and
financial position for these periods and as of these dates. The selected
consolidated financial data for the six month period ended June 30, 1999
contains interim capsule information that has not been previously filed with the
SEC under Form 10-Q. Historical results for the interim periods are not
necessarily indicative of the results that may be expected for the entire year
ending December 31, 1999.
This summary historical financial data should be read along with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements included elsewhere in this
memorandum.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------------------------- --------------------
1994 1995 1996 1997 1998 1998 1999
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues:
Rooms....................... $ 93,720 $ 113,902 $ 156,564 $ 179,956 $ 267,862 $ 55,833 $ 96,784
Food and beverage........... 46,945 53,499 68,803 80,335 107,334 22,146 32,070
Other....................... 9,018 11,079 14,159 16,366 20,018 4,902 6,950
--------- --------- --------- --------- --------- --------- ---------
Total revenues............ 149,683 178,480 239,526 276,657 395,214 82,881 135,804
Operating Expenses:
Direct:
Rooms..................... 26,848 32,140 43,667 49,608 75,316 15,509 26,264
Food and beverage......... 36,585 41,474 52,761 60,919 81,643 17,647 24,108
General and
administrative............ 7,944 8,977 9,297 8,973 10,080 2,387 5,229
Depreciation and
amortization.............. 9,465 12,370 18,677 23,023 31,114 7,207 13,750
Other hotel operating
expenses.................. 52,205 59,727 77,183 88,036 129,950 27,650 47,840
--------- --------- --------- --------- --------- --------- ---------
Total operating
expenses................ 133,047 154,688 201,585 230,559 328,103 70,400 117,191
--------- --------- --------- --------- --------- --------- ---------
Income from operations........ 16,636 23,792 37,941 46,098 67,111 12,481 18,613
Other income (expense):
Interest income and other... 325 1,197 1,723 1,720 1,260 454 348
Interest expense............ (12,693) (17,903) (29,443) (25,909) (30,378) (7,846) (19,128)
Non-recurring items(1)...... 539 -- 3,612 -- (35,324) -- --
Minority interests:
Preferred redeemable
securities................ -- -- -- -- (6,475) -- (3,159)
Other....................... (171) (572) (2,060) (960) (1,436) (94) (744)
--------- --------- --------- --------- --------- --------- ---------
Income (loss) before income
taxes and extraordinary
item........................ 4,636 6,514 11,773 20,949 (5,242) 4,995 (4,070)
Provision (benefit) for income
taxes....................... 1,855 2,605 3,225 8,379 (2,097) 1,999 (1,628)
--------- --------- --------- --------- --------- --------- ---------
Income (loss) before
extraordinary item.......... 2,781 3,909 8,548 12,570 (3,145) 2,996 (2,442)
Extraordinary item, net of
taxes....................... 1,436 -- (348) (3,751) (2,076) -- --
--------- --------- --------- --------- --------- --------- ---------
Net income (loss)............. $ 4,217 $ 3,909 $ 8,200 $ 8,819 $ (5,221) $ 2,996 $ (2,442)
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------------------------- --------------------
1994 1995 1996 1997 1998 1998 1999
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
<CAPTION>
(IN THOUSANDS, EXCEPT RATIOS AND STATISTICAL DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA:
EBITDA(2)..................... $ 26,238 $ 36,894 $ 57,915 $ 69,559 $ 98,225 $ 19,828 $ 32,857
Ratio of earnings to fixed
charges(3).................. 1.3x 1.3x 1.4x 1.7x -- 1.5x --
Capital expenditures.......... $ 20,158 $ 99,560 $ 96,635 $ 203,406 $ 186,384 $ 49,669 $ 29,848
Total debt/EBITDA(4).......... 5.7x 5.8x 5.3x 4.7x 8.7x N/A N/A
EBITDA/interest expense....... 2.1x 2.2x 2.0x 2.7x 3.2x 2.5x 1.7x
Number of hotels owned at end
of period................... 32 46 57 69 142 73 141
Number of rooms owned at end
of period................... 6,544 9,031 11,059 14,061 26,889 15,165 26,729
Occupancy(5).................. 64.7% 66.2% 64.4% 60.9% 60.9% 57.7% 57.8%
Average daily rate(6)......... $ 65.15 $ 67.19 $ 69.47 $ 71.90 $ 73.52 $ 74.25 $ 74.23
RevPAR(7)..................... $ 42.15 $ 44.46 $ 44.72 $ 43.82 $ 44.77 $ 42.84 $ 42.90
Available room nights(8)...... 2,211,700 2,550,932 3,487,689 4,107,066 5,844,637 1,312,892 2,441,299
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------
1998 1999
--------- ---------
(UNAUDITED)
<S> <C> <C>
CAPSULE INFORMATION(9):
Revenues.................................................................................. $ 185,269 $ 295,667
Operating expenses:
Direct:
Rooms................................................................................. 34,072 57,122
Food and beverage..................................................................... 38,460 50,541
Other................................................................................. 5,318 8,216
General and administrative.............................................................. 4,829 11,367
Depreciation and amortization........................................................... 14,759 27,500
Other................................................................................... 53,634 85,143
--------- ---------
Total operating expenses.................................................................. 151,072 239,889
Income from operations.................................................................... 34,197 55,778
Interest expense.......................................................................... (16,132) (37,139)
Minority interest--preferred redeemable securities........................................ (311) (6,814)
Other income (expense).................................................................... (123) (493)
Non-recurring items....................................................................... 432 --
--------- ---------
Income before income taxes and extraordinary item......................................... 17,199 11,332
Provision for income taxes................................................................ 6,880 4,533
--------- ---------
Income before extraordinary item.......................................................... 10,319 6,799
Extraordinary item, net of tax............................................................ (1,095) --
--------- ---------
Net income................................................................................ $ 9,224 $ 6,799
--------- ---------
--------- ---------
Earnings per common share:
Income before extraordinary item........................................................ $ 0.49 $ 0.25
Extraordinary item...................................................................... (0.05) --
--------- ---------
Net income.............................................................................. $ 0.44 $ 0.25
--------- ---------
--------- ---------
Earnings per common share--assuming dilution:
Income before extraordinary item........................................................ $ 0.49 $ 0.25
Extraordinary item...................................................................... (0.05) --
--------- ---------
Net income.............................................................................. $ 0.44 $ 0.25
--------- ---------
--------- ---------
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF
----------------------------------------------------- MARCH 31,
1994 1995 1996 1997 1998 1999
--------- --------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Property and equipment, net.................... $ 196,788 $ 277,873 $ 364,922 $ 534,080 $1,317,470 $1,329,968
Total assets................................... 228,900 324,202 439,786 627,651 1,497,921 1,494,680
Long-term obligations, less current portion.... 143,830 210,242 284,880 323,320 816,644 818,627
Minority interests
Preferred redeemable securities.............. -- -- -- -- 175,000 175,000
Other........................................ 3,012 11,766 19,627 13,555 15,021 15,642
Total stockholders' equity..................... 46,740 62,820 74,738 239,535 283,767 281,525
</TABLE>
- ------------------------
(1) Non-recurring items are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1994 1995 1996 1997 1998
--------- --------- --------- --------- ----------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Gain on litigation settlement................ $ -- $ -- $ 3,612 $ -- $ --
Other non-recurring income (expense)......... 539 -- -- -- (432)
Settlement on swap transaction............... -- -- -- -- (31,492)
Severance and other.......................... -- -- -- -- (3,400)
--------- --------- --------- --------- ----------
Total........................................ $ 539 $ -- $ 3,612 $ -- $ (35,324)
--------- --------- --------- --------- ----------
--------- --------- --------- --------- ----------
</TABLE>
(2) EBITDA represents earnings before interest, income taxes, depreciation and
amortization. EBITDA is provided because it is a measure commonly used in
the lodging industry. EBITDA is not a measurement of financial performance
under generally accepted accounting principles and should not be considered
an alternative to net income as a measure of performance or to cash flow as
a measure of liquidity. EBITDA is not necessarily comparable with similarly
titled measures for other companies.
(3) For purposes of calculating the ratio of earnings to fixed charges, earnings
are determined by adding fixed charges (excluding capitalized interest) and
amortization of capitalized interest to earnings before income taxes. Fixed
charges consist of (i) interest expense (including amortization of debt
issuance costs), (ii) capitalized interest, (iii) dividends paid on the
CRESTS and (iv) the portion of rent expense considered interest. Excluding
the non-recurring items for 1998, the ratio would have been 1.7x. For the
year ended December 31, 1998, and the three months ended March 31, 1999, our
earnings were insufficient to cover our fixed charges by $6.8 million and
$5.1 million, respectively.
(4) Based on debt at the end of the period. Excludes $175.0 million of CRESTS.
(5) Occupancy is determined by dividing the total rooms occupied for the period
by the total available room nights for such period. We include rooms being
renovated or otherwise unavailable in determining the total available room
nights.
(6) Average daily rate is determined by dividing room revenue for the period by
the number of rooms occupied for the period.
(7) "RevPAR" means revenue per available room, which is calculated as average
daily rate multiplied by the occupancy.
(8) Total rooms multiplied by number of days in the period. Includes rooms being
renovated or otherwise unavailable. Historically, Servico had not included
rooms being renovated or otherwise unavailable.
(9) Our results for the six months ended June 30, 1999 have been materially
affected by the Merger and the acquisitions of AMI and the Boston Revere
Hotel, that were recorded under the purchase method of accounting.
35
<PAGE>
SELECTED HISTORICAL FINANCIAL INFORMATION OF IMPAC
The following table presents consolidated and combined financial data
derived from Impac's and Impac Hotel Development, Inc.'s ("IHD") unaudited
historical financial statements for the years ended December 31, 1993 and 1994
and for the six months ended June 30, 1997 and 1998 and from their audited
historical financial statements for the years ended December 31, 1995 through
1997. The financial information should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Historical Results of Operations--Impac" and the consolidated and
combined financial statements, related notes and other financial information of
Impac included in this memorandum.
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE
YEAR ENDED DECEMBER 31, 30,
-------------------------------------------------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1993 1994 1995 1996 1997(1) 1997 1998
----------- ----------- ---------- ---------- ------------ ---------- ----------
<CAPTION>
(UNAUDITED) (UNAUDITED) (UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues............. $ 23,927 $ 41,615 $ 55,576 $ 67,813 $ 119,859 $ 52,830 $ 75,884
(Loss) income before
extraordinary
items(2)........... (457) (64) 5,619 14,064 (16,089) (4,589) (8,714)
End of period:
Total assets....... 48,143 71,875 116,248 191,666 417,780 343,614 463,119
Long-term
obligations...... 42,615 61,754 92,849 155,851 355,236 294,970 400,071
Total members'/
partners'
equity........... 3,284 5,375 13,408 19,760 36,970 27,038 27,349
</TABLE>
- ------------------------
(1) On March 12, 1997, Impac was formed through the combination of 22
partnerships, 4 corporations and two operating companies (collectively, the
"Predecessors") through a reorganization. The formation of Impac was
accounted for as a reorganization of entities under common control with the
purchase of minority interest. The operations and financial position of the
Predecessors prior to the reorganization are presented on a combined basis.
The principal activity of IHD was to analyze prospective hotel acquisitions
for Impac. IHD was not acquired by Impac in the above described
reorganization.
(2) Impac is a limited liability company and is not subject to income taxes. The
Predecessors and IHD were each either general or limited partnerships or
S-corporations and were similarly not subject to income taxes. The results
of these entities operations are included in the tax returns of the
unitholders, partners or S-corporation shareholders.
36
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
Management believes that results of operations in the hotel industry are
best explained by four key performance measures: occupancy levels, average daily
rate, revenue per available room ("RevPAR") and EBITDA margins. These measures
are influenced by a variety of factors including national, regional and local
economic conditions, the degree of competition with other hotels in the area and
changes in travel patterns. The demand for accommodations is also affected by
normally recurring seasonal patterns and most of our hotels experience lower
occupancy levels in the fall and winter months (November through February) which
may result in lower revenues, lower net income and less cash flow during these
months.
Our business strategy includes the acquisition of underperforming hotels and
the implementation of our operational initiatives and repositioning and
renovation programs to achieve revenue and margin improvements. During this
period of repositioning, the revenues and earnings of these hotels may be
adversely affected and may negatively impact our consolidated RevPAR, average
daily rate and occupancy rate performance, as well as our EBITDA margins. In
addition, our strategy also includes developing new full service hotels. Newly
developed properties typically require 24 months following completion to
stabilize. To track the execution of our repositioning and development growth
strategy and its impact on our results of operations, we classify our hotels as
either "Stabilized Hotels," "Stabilizing Hotels" or "Being Repositioned Hotels,"
as described below:
- Stabilized Hotels are properties (1) which have experienced little or no
disruption to their operations over the past 24 to 36 months as the result
of redevelopment or repositioning efforts, or (2) newly-constructed hotels
which have been in service for 24 months or more.
- Stabilizing Hotels are (1) properties which have undergone renovation or
repositioning investment within the last 36 months, which work is now
completed, or (2) newly developed properties placed into service within
the past 24 months. Management believes that these properties should
experience higher rates of growth in RevPAR and improvements in operating
margin than the Stabilized Hotels. On average, our hotels which have
undergone renovation have generally reached stabilization within
approximately 12 to 18 months after their completion date, and our newly
developed hotels have reached stabilization in approximately 24 months
after their completion date.
- Being Repositioned Hotels are hotels experiencing disruption to their
operations due to renovation and repositioning. During this period
(generally 12 to 18 months) hotels will usually experience lower operating
results, such as RevPAR and operating margins. We expect significant
improvements in the operating performance of those hotels which have
undergone a repositioning once the renovation is completed. After the
repositioning work is completed, these properties will be reclassified as
Stabilizing Hotels.
We classify each hotel into one of the three categories at the beginning of
each fiscal year. We have not classified our six European hotels, the one hotel
in which we have a minority equity interest or the two hotels we managed for
third parties. We will determine the category most appropriate for each hotel
based on our evaluation of objective and subjective factors, including the time
of completion of renovation and whether the full benefit of renovations have
been realized.
On June 24, 1999, we sold our joint venture interest in our European hotel
portfolio, which consisted of six hotels. We received approximately $6.0 million
at closing and expect to receive an additional $1.5 million in net proceeds from
the sale. We do not expect the sale of these hotels, which were acquired on
October 1, 1998, to have a material effect on our EBITDA or results of
operations. In addition, during July 1999, we sold two wholly-owned hotels in
the United States, and effective August 1, 1999, we ceased managing one hotel
for a third party.
37
<PAGE>
REVENUES. Revenues are composed of rooms and food and beverage (both of
which are classified as direct revenues) and other revenues. Room revenues are
derived from guest room rentals, while food and beverage revenues primarily
include sales from our hotel restaurants, room service and hotel catering. Other
revenues include charges for guests' long-distance telephone service, laundry
service, use of meeting facilities and fees earned by us for services rendered
in conjunction with properties managed for third parties.
OPERATING EXPENSES. Operating expenses are composed of direct, general and
administrative, other hotel operating expenses and depreciation and
amortization. Direct expenses, including both rooms and food and beverage
operations, reflect expenses directly related to hotel operations. These
expenses generally vary with available rooms and occupancy rates, but also have
a small fixed component. General and administrative expenses represent corporate
salaries and other corporate operating expenses and are generally fixed. Other
hotel operating expenses include primarily property level expenses related to
general operations such as advertising, utilities, repairs and maintenance and
other property administrative costs. These expenses are also primarily fixed.
PRO FORMA RESULTS OF OPERATIONS
Our operating results for the period ended December 31, 1998 have been
materially affected by the significant number of acquisitions made during the
period. We acquired 14 hotels in May 1998 (three of which have been sold) from
AMI, one additional hotel in Boston (Revere) in July 1998 and 53 hotels in the
Merger in December 1998. Because these transactions were accounted for using the
purchase accounting method, the results of operations of the acquisitions are
included in our consolidated results of operations from the time they were
acquired. This makes comparisons of our historical results to prior periods less
meaningful. We believe that a discussion of our operating results that gives
effect to the acquisition of AMI and the Boston Revere Hotel and the Merger is
more useful in identifying and explaining trends in our operating results.
The following table sets forth certain summary unaudited pro forma financial
data for the years ended December 31, 1997 and 1998 and the three months ended
March 31, 1998 as well as certain summary unaudited historical financial data
for March 31, 1999. The pro forma data give effect to (1) the Merger, (2) the
1998 acquisitions of AMI (after the sale of three of the 14 acquired properties)
and the Boston Revere Hotel, (3) the June 1998 CRESTS offering and the repayment
of debt with the proceeds and (4) the offering of the Old Notes and the
borrowings under our new credit facility and the application of the proceeds
thereof, as if each had occurred at the beginning of the period presented. Our
actual results for the three months ended March 31, 1999 include the effect of
the above items (other than the offering of the Old Notes and the new credit
facility) for the entire period. The effect of the offering of the Old Notes and
the borrowings under the new credit facility on the historical consolidated
balance sheet as of March 31, 1999 and the consolidated statement of operations
for the three months ended March 31, 1999 is immaterial to the respective
statements. No effect has been given in the unaudited pro forma consolidated
financial statements for cost savings that may have been realized from the
acquisition of AMI or from the Merger. The information set forth below does not
purport to represent what our financial position or results of operations would
have been if these acquisitions had actually occurred as of such dates or to
project our financial position or results of operations for any future date or
period. You should read this information along with the financial statements
included elsewhere in this memorandum.
38
<PAGE>
PRO FORMA RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
---------------------- -----------------------
1997 1998 1998 1999
---------- ---------- ----------- ----------
(UNAUDITED)
ACTUAL
(IN THOUSANDS, EXCEPT STATISTICAL DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues...................................................... $ 544,997 $ 568,024 $ 126,844 $ 135,804
Direct operating expenses..................................... 210,705 220,889 48,853 50,372
General and administrative.................................... -- -- 5,164 5,229
Other hotel operating expenses................................ -- -- 46,110 47,840
Depreciation and amortization................................. -- -- 12,394 13,750
---------- ---------- ----------- ----------
Income from operations........................................ $ -- $ -- $ 14,323 $ 18,613
OTHER DATA:
EBITDA........................................................ -- -- $ 26,717 $ 32,857
EBITDA margin................................................. -- -- 21.1% 24.2%
Number of hotels at end of period(1)
Stabilized................................................ 73 77 77 77
Stabilizing............................................... 13 33 29 33
Being Repositioned........................................ 42 22 22 21
---------- ---------- ----------- ----------
Total(2).............................................. 128 132 128 131
Number of rooms at end of period
Stabilized................................................ 14,608 14,084 14,084 14,084
Stabilizing............................................... 2,109 6,056 5,512 6,056
Being Repositioned........................................ 7,632 4,753 4,753 4,593
---------- ---------- ----------- ----------
Total(2).............................................. 24,349 24,893 24,349 24,733
Occupancy rate................................................ 61.2% 60.3% 56.0% 57.8%
Average daily rate............................................ $ 69.46 $ 73.17 $ 72.95 $ 74.23
RevPAR........................................................ $ 42.51 $ 44.12 $ 40.84 $ 42.90
</TABLE>
- ------------------------
(1) Prior to January 1, 1999, we did not categorize the hotels as "Stabilized,"
"Stabilizing" or "Being Repositioned." For purposes of this table, we have
re-classified hotels as of January 1, 1997 and 1998 in accordance with our
new classifications.
(2) Excludes six European hotels, two hotels managed for third parties, one
hotel in which we have a minority interest and three hotels under
construction as of January 1, 1999.
THREE MONTHS ENDED MARCH 31, 1999 ("FIRST QUARTER 1999") COMPARED TO THE PRO
FORMA THREE MONTHS ENDED MARCH 31, 1998 ("FIRST QUARTER 1998")
For purposes of the following discussion, the Stabilized, Stabilizing, and
Being Repositioned Hotels refers to the classification of hotels on January 1,
1999 for both the results of First Quarter 1999 and First Quarter 1998.
Revenues increased 7.1% to $135.8 million in the First Quarter 1999 from pro
forma revenues of $126.8 million in the First Quarter 1998. Our average daily
rate and occupancy overall were $74.23 and 57.8%, respectively, in the First
Quarter 1999 compared to pro forma average daily rate and occupancy of $72.95
and 56.0%, respectively, in the First Quarter 1998 resulting in a 5.0% increase
in RevPAR. RevPAR increased by 4.4% for Stabilized hotels and 24.1% for
Stabilizing hotels, and decreased by 14.5% for Being Repositioned hotels. The
large increase in RevPAR for Stabilizing hotels is primarily a result of
realizing the benefits of renovations. The decrease in RevPAR for Being
Repositioned hotels is a result of
39
<PAGE>
disruptions that typically occur at hotels undergoing renovations. In presenting
occupancy and RevPAR statistics, we do not reduce the total rooms by rooms that
are out of service. Therefore, our occupancy and RevPAR figures for Being
Repositioned Hotels are significantly impacted.
The following table summarizes certain operating data for our hotels for the
three months ended March 31, 1999 and pro forma operating data for the three
months ended March 31, 1998.
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ADR OCCUPANCY REVPAR
-------------------- -------------------- --------------------
<CAPTION>
CLASSIFICATION AT JANUARY 1, 1999 HOTELS(1) 1998 1999 1998 1999 1998 1999
- ------------------------------------------------ ------------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Stabilized...................................... 77 $ 73.28 $ 73.94 60.4% 62.5% $ 44.25 $ 46.20
Stabilizing..................................... 33 $ 72.22 $ 75.51 49.1% 58.3% $ 35.46 $ 44.01
Being Repositioned.............................. 22(2) $ 72.57 $ 73.81 50.5% 42.5% $ 36.68 $ 31.37
</TABLE>
- ------------------------
(1) Excludes two hotels we managed for third parties and seven hotels in which
we had a minority interest.
(2) Since January 1, 1999, one Being Repositioned hotel has been sold.
Our direct operating expenses were $50.4 million (39.1% of direct revenues)
for the First Quarter 1999 compared to $48.9 million (40.8% of direct revenues)
for the First Quarter 1998. The decrease in direct operating expenses as a
percentage of direct revenues was a result of having fewer hotels undergoing
renovations, certain cost savings for purchasing insurance and related
activities and an emphasis on cost containment.
Our general and administrative expenses for the First Quarter 1999 and First
Quarter 1998 were $5.2 million. Included in the 1999 expenses are $.5 million of
non-recurring expenses, principally severance costs that were offset by cost
savings in overhead realized as a result of the Merger.
Our other hotel operating expenses were $47.8 million in the First Quarter
1999 (35.2% of revenues) compared to $46.1 million (36.4% of revenues) for the
First Quarter 1998. The decrease in other hotel operating expenses as a
percentage of revenues is due to the combined effect of significant revenue
growth, an emphasis on cost containment and Merger-related cost savings.
As a result of the above, our income from operations increased 30% to $18.6
million in the First Quarter 1999 as compared to $14.3 million for the First
Quarter 1998. EBITDA increased 23% to $32.8 million (24.2% of revenues) from
$26.7 million (21.1% of revenues) in the First Quarter 1998.
PRO FORMA YEAR ENDED DECEMBER 31, 1998 COMPARED TO THE PRO FORMA YEAR ENDED
DECEMBER 31, 1997
Our pro forma revenues increased 4.2% to $568.0 million in 1998 from $545.0
million in 1997. Our average daily rate and occupancy were $73.17 and 60.3%,
respectively, in 1998 compared to $69.46 and 61.2%, respectively, for 1997,
resulting in a 3.8% increase in RevPAR. Room revenue increased by 5.2% in 1998,
while food and beverage revenue increased by 1.9%. We would have had 54 hotels
that were under renovation during 1998, 37 of which had been completed by the
end of the year. During the renovation process, revenues are negatively affected
due to the unavailability of certain rooms, restaurants and meeting space.
40
<PAGE>
The following table summarizes certain operating data for our hotels for the
years ended December 31, 1997 and 1998.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ADR OCCUPANCY REVPAR
-------------------- -------------------- --------------------
<CAPTION>
CLASSIFICATION AT JANUARY 1, 1998 HOTELS(1) 1997 1998 1997 1998 1997 1998
- ------------------------------------------------ ------------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Stabilized...................................... 73 $ 70.04 $ 73.45 63.6% 61.7% $ 44.54 $ 45.31
Stabilizing..................................... 13 $ 74.25 $ 77.94 64.7% 66.9% $ 48.04 $ 52.14
Being Repositioned.............................. 42 $ 66.30 $ 71.16 55.2% 55.3% $ 36.57 $ 39.36
</TABLE>
- ------------------------
(1) Excludes hotels we managed for third parties and hotels in which we had a
minority interest.
Our pro forma direct operating expenses were $220.9 million (40.9% of direct
revenues) for 1998 and $210.7 (40.7% of direct revenues) for 1997. The slight
increase in 1998 of operating expense as a percentage of direct revenue was
primarily due to the adverse effect on revenues from the large number of
renovations during 1998.
HISTORICAL RESULTS OF OPERATIONS--LODGIAN
Our operating results have been materially impacted by the significant
number of acquisitions and extensive renovation activity during 1997 and 1998.
In June 1998, Servico acquired AMI, an entity that owned and operated 14 hotels,
three of which were subsequently sold. In December 1998, Servico merged with
Impac, an entity that owned or managed 53 hotels, three of which are under
construction. Because these transactions were accounted for using the purchase
accounting method, the results of AMI and Impac are included in our consolidated
results of operations from the time they were acquired. This makes comparisons
of our historical operating results with prior periods less meaningful. Servico
had historically classified its hotels as Stabilized Hotels and Reposition
Hotels. The Stabilized Hotels were hotels that had achieved normalized
operations after completion of renovation and repositioning. The Reposition
Hotels were those hotels that were undergoing or had completed significant
renovation and repositioning but had not yet achieved normalized operations.
THREE MONTHS ENDED MARCH 31, 1999 ("FIRST QUARTER 1999") COMPARED TO MARCH
31, 1998 ("FIRST QUARTER 1998")
Our revenues were $135.8 million for the First Quarter 1999, a 63.8%
increase over revenues of $82.9 million for the First Quarter 1998. Of this
$52.9 million increase, $49.0 million was attributable to the acquisition of AMI
and the Merger.
Our direct operating expenses were $50.4 million (39.1% of direct revenues)
for the First Quarter 1999 and $33.2 million (42.5% of direct revenue) for the
First Quarter 1998. Of the $17.2 million increase, $16.1 million was
attributable to the acquisition of AMI and the Merger.
Our general and administrative expenses were $5.2 million in First Quarter
1999 and $2.4 million in First Quarter 1998. Of the $2.8 million increase,
approximately $2.3 million was attributable to the acquisition of AMI and the
Merger. Additionally, $.5 million represents non-recurring expenses, principally
severance.
Our depreciation and amortization were $13.8 million in First Quarter 1999
and $7.2 million in First Quarter 1998. The $6.6 million increase was
attributable to the acquisition of AMI, the Merger and the completion of
renovation projects.
Our other hotel operating expenses were $47.8 million in First Quarter 1999
and $27.6 million in First Quarter 1998. Of the $20.2 million increase, $18.4
million was attributable to the acquisition of AMI and the Merger. In addition,
$1.0 million was attributable to our share of loss from an unconsolidated
partnership, including $.5 million of depreciation.
41
<PAGE>
As a result of the above, our income from operations was $18.6 million in
First Quarter 1999 as compared to $12.5 million in First Quarter 1998.
Interest expense was $19.1 million in First Quarter 1999 and $7.8 million in
First Quarter 1998. This increase is primarily a result of an increase in the
level of debt associated with the acquisition of AMI and the Merger.
Minority interest expense was $3.9 million in First Quarter 1999 and $.1
million in First Quarter 1998. Of the $3.8 million increase, $3.2 million
represents interest on our CRESTS that were issued in June 1998.
After a tax benefit of $1.6 million in First Quarter 1999 and a provision
for income taxes of $2.0 million in First Quarter 1998, we had a net loss of
$2.4 million (($.09) per share) in First Quarter 1999 compared with net income
of $3.0 million ($.14 per share) in First Quarter 1998.
YEAR ENDED DECEMBER 31, 1998 AS COMPARED TO THE YEAR ENDED DECEMBER 31, 1997
At December 31, 1998, we owned 141 hotels, managed two hotels for third
party owners and had a minority investment in one hotel compared with 68 hotels
owned, two managed for third party owners and a minority investment in one hotel
at December 31, 1997.
Our revenues were $395.2 million for 1998, a 42.8% increase over revenues of
$276.7 million for 1997. Of this $118.5 million increase in revenues, the 1997
acquisitions, which were not operated for the full year of 1997, contributed
approximately $49.5 million to the increase in revenues. The 1998 acquisitions
contributed approximately $33.6 million to the increase in revenues. The 21 days
of revenues from the Impac Hotels contributed approximately $7.3 million to the
increase in revenues. The remaining increase in revenues of approximately $28.1
is attributed to the balance of the portfolio.
Our direct operating expenses were $156.9 million for 1998 and $110.5
million for 1997. Of the $46.4 million increase, $20.4 million is directly
attributable to the Reposition Hotels with approximately $13.2 million relating
to acquisitions in 1998. The direct operating expenses decreased as a percentage
of direct revenue from 42.5% in 1997 as compared to 41.8% in 1998. The decrease
in operating expenses as a percentage of revenues was a result of the combined
effect of strong revenue growth and continued emphasis on cost controls. Other
operating expenses were $130.0 million for 1998 and $88.0 million for 1997. This
increase of $42.0 million represents the expenses incurred with respect to the
1998 acquisitions and by the Reposition Hotels. Our depreciation and
amortization expense was $31.1 million for 1998 and $23.0 million for 1997.
Included in this $8.1 million increase was $3.0 million associated with the
Reposition Hotels and the remaining increase was related to the 1998
acquisitions, and to equipment purchases and improvements made at the Stabilized
Hotels.
As a result of the above, income from operations was $67.1 million for 1998
as compared to $46.1 million for 1997.
We incurred $21.2 million (net of a tax benefit of $14.1 million) in
non-recurring charges during 1998. During August 1998, we entered into treasury
rate lock transactions with notional amounts of $175.0 million and $200.0
million with a lender for the purpose of hedging our interest rate exposure on
two anticipated financing transactions. During September 1998, we determined
that it was not probable that we could consummate the anticipated transactions
and recognized a loss of $18.9 million (net of tax benefit of $12.6 million). In
addition, we incurred approximately $3.4 million of severance and other expenses
in connection with the Merger which have been substantially paid at December 31,
1998. These expenses consisted primarily of costs associated with the closing
and relocation of Servico's West Palm Beach, Florida corporate headquarters to
our headquarters in Atlanta, Georgia and termination or relocation of certain
employees.
42
<PAGE>
Interest expense, net of interest income, was $29.1 million for 1998, a $4.9
million increase from the $24.2 million for 1997. The increase was primarily a
result of an increase in the level of debt associated with the 1998
acquisitions.
Minority interests in net income of consolidated partnerships were
approximately $1.4 million for 1998 and $1.0 million for 1997.
During 1998 we repaid, prior to maturity, approximately $247.0 million in
debt, and as a result recorded an extraordinary loss on early extinguishment of
debt of approximately $2.1 million (net of income tax benefit of $1.4 million)
relating to the write-off of unamortized loan costs associated with the debt. We
recognized an extraordinary loss on early extinguishment of debt of $3.8
million, after taxes, in 1997 which related to the refinancing of certain
hotels.
After a benefit for income taxes of $2.1 million in 1998 and a provision for
income taxes of $8.4 million in 1997, we had a net loss of $5.2 million ($(.26)
per share) for 1998 and net income of $8.8 million ($.56 per share) for 1997.
Excluding the non-recurring items discussed above, we had recurring income of
$18.0 million for 1998 ($.89 per share) and $12.6 million for 1997 ($.80 per
share) in 1998 and 1997, respectively.
YEAR ENDED DECEMBER 31, 1997 AS COMPARED TO THE YEAR ENDED DECEMBER 31, 1996
At December 31, 1997, we owned 68 hotels, managed two hotels for third party
owners and had a minority investment in one hotel compared with 56 hotels owned,
four managed for third party owners and a minority investment in one hotel at
December 31, 1996.
Our revenues were $276.7 million for 1997, a 15.5% increase over revenues of
$239.5 million for 1996. Of this $37.2 million increase in revenues,
approximately $9.2 million was attributable to the Stabilized Hotels primarily
as a result of a 6.4% increase in RevPAR. The Reposition Hotels contributed
approximately $28 million to the increase in revenues, of which approximately
$14.6 million related to the Reposition Hotels acquired in 1996 which were not
operated for the full year of 1996 but were operated for the full year of 1997.
Reposition Hotels acquired in 1997 contributed the remaining balance of
approximately $13.4 million.
Our direct operating expenses were $110.5 million for 1997 and $96.4 million
for 1996. The decrease in operating expenses as a percentage of revenues was a
result of the combined effect of strong revenue growth and continued emphasis on
cost controls. Our other operating expenses were $88.0 million for 1997 and
$77.2 million for 1996. Our depreciation and amortization expense was $23.0
million for 1997 and $18.7 million for 1996. Included in this $4.3 million
increase was $2.7 million associated with the Reposition Hotels and the
remaining increase was related to equipment purchases and improvements made at
the Stabilized Hotels.
As a result of the above, income from operations was $46.1 million for 1997
as compared to $37.9 million for 1996. Included in 1996 was a non-recurring
charge of $.8 million relating to a severance payment.
Interest expense, net of interest income, was $24.2 million for 1997, a $3.5
million decrease from the $27.7 million for 1996. The decrease was offset in
part by a $1.2 million increase relating to acquisitions in 1997. The decrease
was primarily a result of a reduction in the level of debt and effective
interest rate in connection with certain debt which was repaid with the proceeds
of a common stock offering.
Included in other income for 1996 was a non-recurring $3.6 million gain on
litigation settlement (net of expenses) in connection with a lawsuit brought on
our behalf against a bank group and law firm based on alleged breaches of their
duties to us.
43
<PAGE>
Minority interests in net income of consolidated partnerships were
approximately $1.0 million for 1997 and $2.1 million for 1996. Of this $1.1
million decrease, $.9 million related to three hotels in which we increased its
ownership from 51% to 100% during 1997.
During 1997 we repaid, prior to maturity, approximately $128.0 million in
debt, and as a result recorded an extraordinary loss on early extinguishment of
debt of approximately $3.8 million (net of income tax benefit of $2.5 million)
relating to the write-off of unamortized loan costs associated with the debt. We
recognized an extraordinary loss on early extinguishment of debt of $.3 million,
after taxes in 1996 which related to the refinancing of certain hotels.
After a provision for income taxes of $8.4 million for 1997 and $3.2 million
for 1996, we had net income of $8.8 million ($.56 per share) for 1997 and $8.2
million ($.84 per share) for 1996. Without consideration of the non-recurring
items discussed above, we had recurring income of $12.6 million for 1997 ($.80
per share) and $5.4 million for 1996 ($.55 per share).
HISTORICAL RESULTS OF OPERATIONS--IMPAC
Impac owned or managed primarily upscale or mid-market full service hotels,
including 52 wholly owned hotels, one partially owned hotel and two managed
hotels. Prior to March 12, 1997, Impac consisted of 22 partnerships and four
corporations, each of which owned between one and six hotels (the "Initial
Hotels"), and two operating corporations, Impac Hotel Management, Inc. ("Impac,
Inc.") and Impac Development & Construction, Inc, ("IDC"). The principals of
Impac, Inc. and their affiliates owned an aggregate of approximately 23% of the
Initial Hotels, while various other investors owned the remaining interests. On
February 26, 1997, Impac was formed for the purpose of acquiring, either
directly or indirectly, the outstanding ownership interests in the Initial
Hotels. On March 12, 1997, Impac acquired all of the Initial Hotels through the
issuance of units in exchange for all of the limited partnership interests or
shares, as applicable, of the limited partnerships and corporations that owned
the Initial Hotels. In addition, Impac acquired, in exchange for units, all of
the assets of Impac, Inc. and IDC. See Note 1 to Impac's financial statements.
Beginning in late 1996, Impac began to invest significantly in additional
professional staff and corporate infrastructure and systems and incurred
significant costs in order to position itself to both acquire and develop hotel
properties. From January 1996 through June 1998, Impac acquired 26 hotels and
developed nine hotels. In addition, Impac had five hotels under construction at
June 30, 1998. The acquired hotels underwent significant renovations and
therefore revenue trends are not comparable to revenues which would be realized
had these properties been stabilized. In addition, during the fiscal years ended
December 31, 1996 and December 31, 1995, Impac sold seven and three hotels,
respectively. The historical financial statements of the years ended December
31, 1997, 1996 and 1995 and for the six months ended June 30, 1998 and 1997
reflect differing numbers of owned hotels throughout the periods. Due to the
timing and magnitude of the acquisitions made during these periods, it is
difficult to compare results of the periods to each other.
44
<PAGE>
SIX MONTHS ENDED JUNE 30, 1998 (THE "1998 PERIOD") AS COMPARED TO THE SIX
MONTHS ENDED JUNE 30, 1997 (THE "1997 PERIOD")
As of June 30, 1998, Impac owned and operated 52 hotels (including five
under construction) and managed two hotels for third-party owners. One hotel was
partially owned. This compared to 42 hotels (including three under construction)
owned and operated and two hotels managed for third parties at June 30, 1997.
Impac acquired or opened two hotels during the 1998 Period compared to 12 hotels
during the 1997 Period. Sixteen hotels were under significant renovation during
the 1998 Period compared to 20 in the 1997 Period.
Revenues for the 1998 Period were $75.9 million as compared to $52.8 million
for the 1997 Period. The revenue increase primarily is attributable to the
inclusion of a full six months of revenue in the 1998 Period for 12 hotels that
were opened or purchased during the 1997 Period. During the 1997 Period, 20
properties returned to full operating capacity. However, revenue growth in both
the 1998 Period and 1997 Period was adversely affected by the 16 and 20 hotels,
respectively, that were under renovation.
Total operating expenses before depreciation and amortization increased to
$60.1 million for the 1998 Period from $43.7 million for the 1997 Period. As a
percentage of revenue, operating expenses before depreciation and amortization
were 79% for the 1998 Period compared to 83% for the 1997 Period. The decrease
as a percentage of revenue is attributable to properties coming out of
renovation in late 1997 and early 1998 which had been under renovation or
recently purchased in the 1997 Period. Operating efficiencies also contributed
to the decrease.
Depreciation and amortization costs increased by 51% to $7.4 million for the
1998 Period from $4.9 million for the 1997 Period.
Interest expense rose to $14.2 million in the 1998 Period as compared to
$8.9 million in the 1997 Period. The increase was attributable to increased debt
levels associated with the addition of the hotels described above.
In connection with the Merger, Impac incurred costs of $3.1 million through
June 30, 1998. These costs were expensed in the 1998 Period.
Extraordinary losses related to costs incurred in the early extinguishment
of indebtedness of $13.3 million were incurred during the 1997 Period. Impac
completed a reorganization of its partnerships and corporations into one entity
during March 1997. See Note 1 to Impac's financial statements. Individual
partnership debt from numerous lenders was replaced with a facility from one
lender. Accordingly, the debt previously existing was retired at a cost of $8.6
million. Approximately $4.7 million in deferred financing costs were written
off.
A net loss of $8.7 million was recorded (after provision for merger costs of
$3.1 million) for the 1998 Period as compared to a net loss of $17.9 million for
the 1997 Period. EBITDA increased by 72% to $15.8 million for the 1998 Period
compared to $9.2 million for the 1997 Period.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO THE YEAR ENDED DECEMBER 31, 1996.
As of December 31, 1997, Impac owned 45 hotels and managed two hotels for
third-party owners. One hotel was partially owned. This compares with 26 hotels
and two managed for third parties at December 31, 1996. Additionally, six hotels
were under construction at December 31, 1997. Impac developed three hotels
during 1997 and acquired 16 others. Impac significantly renovated 25 hotels
during 1997 and early 1998. Nine of these properties were purchased in 1996 and
significant renovations were completed during 1997.
Revenues for 1997 were $119.9 million as compared to $67.8 million for 1996.
The revenue increase was a result of the acquisition and development of 19
hotels as well as the inclusion of a full year of
45
<PAGE>
revenues in 1997 for the 14 properties added in 1996. Revenue growth is
adversely affected by the renovation of properties which were newly acquired.
The renovation process adversely affects net income and EBITDA as a consequence
of decreased revenue.
Total operating expenses before depreciation and amortization were $102.8
million in 1997. This compares to $55.8 million in 1996. As a percentage of
revenues, operating expenses before depreciation and amortization were 86% for
1997 and 82% for 1996. This percentage increase is the result of significant
renovations. Revenue levels during renovation are lower than would normally be
expected during a period of stabilization. However, fixed operating costs for
properties under renovation typically remain constant. Expenses also increased
as a result of the addition of the new properties described above and the
inclusion of expenses for a full year for properties acquired in 1996. Finally,
Impac invested significant amounts in staffing and corporate infrastructure
beginning in 1996 for Impac's in-house construction department, the Impac
revenue center (a centralized reservations center), and for accounting, hotel
operations and information technology functions. Accordingly, overhead costs
increased during a time period when numerous rooms were taken out of service for
renovation.
Depreciation and amortization costs increased by 92% to $11.1 million as
compared to $5.8 million for 1996. The increase is attributable to increased
investment in hotel properties and to the step-up of the asset basis resulting
from the reorganization completed in 1997. See Note 2 to Impac's financial
statements.
As a result of the factors described above, income from operations decreased
to $5.9 million as compared to $6.2 million for 1996.
Interest expense rose to $21.3 million for 1997 from $11.8 million in 1996.
The increase was attributable to increased debt levels associated with
additional investments in hotel properties.
Other income for 1997 decreased to $300,000 as compared to $19.7 million in
1996. Seven properties were sold in 1996, resulting in the substantial gain. No
properties were sold in 1997.
Extraordinary losses related to costs incurred in the early extinguishment
of indebtedness of $13.3 million were incurred during 1997. As described in Note
1 to Impac's financial statements, Impac completed a reorganization of its
partnerships and corporations into one entity during March 1997. Individual
partnership-level debt from numerous lenders was replaced with a facility from
one lender. Accordingly, the debt previously existing was retired early at a
cost of $8.6 million. Approximately $4.7 million in deferred financing costs
were written off.
Impac recorded a net loss of $29.4 million for 1997 as compared to income of
$14.1 million for 1996. EBITDA increased to $17.1 million as compared to $12.0
million for 1996.
INCOME TAXES
As of December 31, 1998, Lodgian had net operating loss carryforwards of
approximately $50.0 million for federal income tax purposes, which expire in
2005 through 2018. Our ability to use these net operating loss carryforwards to
offset our future income is subject to certain limitations, and may be subject
to additional limitations in the future. Due to these limitations, a portion or
all of these net operating loss carryforwards could expire unused.
LIQUIDITY AND CAPITAL RESOURCES
Our principal sources of liquidity consist of existing cash balances, cash
flow from operations and debt financing. We had EBITDA for 1998 of $98.2
million, a 41% increase over the $69.6 million from 1997. For the three months
ended March 31, 1999 we had EBITDA of $32.9 million, a 65.7% increase over the
$19.8 million for the 1998 period. EBITDA is a widely regarded industry measure
of lodging performance used in the assessment of hotel property values although
EBITDA is not indicative of and should not be
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used as an alternative to net income or net cash provided by operations as
specified by generally accepted accounting principles. Net cash provided by
operating activities for 1998 was $29.3 million as compared to $42.0 million for
1997 and $31.0 million for 1996. Net cash provided by operating activities for
the three months ended March 31, 1999 was $10.0 million as compared to $9.6
million for the 1998 period.
Cash flows used in investing activities were $12.0 million in the three
months ended March 31, 1999, $182.5 million for 1998, $220.7 million for 1997
and $97.6 million for 1996. The 1998 amount includes the $75.0 million
acquisition of the 14 AMI hotels and a $70.4 million increase in the level of
capital expenditures, primarily in connection with the repositioning of hotels.
The $123.1 million increase in 1997 over the 1996 amount includes the purchase
of 12 hotels for $140.3 million in 1997 compared to the purchase of 11 hotels
for $60.7 million in 1996 and a $22.0 million increase in the level of
maintenance and repositioning capital expenditures.
Cash flows provided by financing activities were $1.2 million in the three
months ended March 31, 1999, $157.2 million for 1998, $174.4 million for 1997
and $74.7 million for 1996. The 1998 amount includes the net proceeds from the
issuance and repayment of long-term obligations of $190.1 million (including
$168.5 million of net proceeds from the issuance of CRESTS) and the $34.1
million repurchase of common stock. The $99.7 million increase in 1997 over the
1996 amount includes $156.6 million proceeds from the issuance of common stock
and a $48.3 million lower level of net proceeds from the issuance and repayment
of long-term debt.
The Merger was a non-cash investing and financing transaction, except for
$15.0 million paid to Impac unitholders.
At March 31, 1999 and December 31, 1998, we had working capital deficits of
$62.3 million and $65.1 million, respectively, as compared to a working capital
deficit of $1.3 million at December 31, 1997. Current maturities of long-term
obligations of $36.1 million at March 31, 1999 and December 31, 1998 include an
increase of $30.4 million from December 31, 1997, primarily due to the financing
incurred at the time of the Merger, which is described below.
At March 31, 1999 and December 31, 1998, our long-term obligations were
$818.6 million and $816.6 million, respectively, not including $175.0 million of
CRESTS. Our long-term obligations were $323.3 million at December 31, 1997. The
increase from 1997 consists primarily of financing incurred and debt assumed at
the time of the Merger.
In connection with the Merger, on December 11, 1998, we obtained from Lehman
Brothers Holding, Inc. ("Lehman") $265.0 million of mortgage notes (the "Lehman
Loan"). The net proceeds were used to repay existing debt and $31.5 million due
to Lehman as a result of a loss on two treasury rate lock transactions. This
floating rate loan bears interest at LIBOR plus 3.25% and matures in December
2000. The Lehman Loan contains various covenants, with which we were in
compliance at March 31, 1999. In March 1999, Lehman released $15.0 million of
$23.0 million of funds being held in escrow for future capital improvements
required by the Lehman Loan. In May 1999, the Lehman Loan was increased to
$280.0 million (before amortization) on the same terms and conditions, and the
$15.0 million increase replenished the escrow account. Proceeds from the sale of
the Old Notes and the new credit facility were used to retire the Lehman Loan.
In December 1998, in connection with the Merger, we received a $72.0 million
loan from Banc One Capital Funding Corporation. The loan bears interest at 9%
and matures in November 2000.
In June 1998, Servico issued $175.0 million liquidation preference of
CRESTS. The CRESTS bear interest at 7% and are convertible into shares of our
common stock at an initial conversion price of $21.42 per share. The sale of the
CRESTS generated $168.5 million in net proceeds, substantially all of which were
used to repay existing debt.
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Certain of our hotels are operated under license agreements that require us
to make capital improvements in accordance with a specified time schedule.
Additionally, in connection with the refinancing of hotels, we have agreed to
make certain capital improvements and, as of March 31, 1999, had approximately
$16.0 million escrowed for such improvements. We estimate our remaining
obligations for all of such commitments to be approximately $62.0 million, of
which approximately $27.0 million is expected to be spent during 1999 and the
first quarter 2000, with the balance to be spent thereafter. During 1999 and
2000, we expect to spend $27.1 million to complete the construction of three new
hotels. Substantially all of the funds necessary to complete construction of
these hotels are expected to be provided by the continuing NACC loan facilities.
Concurrent with the sale of the Old Notes, we entered into a new $315
million secured loan credit facility. The facility consists of a $25 million
delayed draw tranche A term loan, a $240 million tranche B term loan and a $50
million revolving credit facility. The tranche A loan will be used for hotel
development and repositioning projects. The tranche B loan was used, along with
the net proceeds from the sale of the Old Notes, to repay the balance
outstanding under the Lehman Loan and, in September 1999, will be used to repay
a $132.5 million loan (one of three facilities) from Nomura Asset Capital
Corporation ("NACC"). This floating rate loan bears interest at LIBOR plus 2.25%
until September 11, 1999 at which time the interest rate would be fixed and the
maturity date extended to 2019. The revolving credit facility will be available
for hotel development and repositioning projects as well as general corporate
purposes. The new credit facility bears interest at floating rates based on the
LIBOR plus a margin based on the credit ratings we receive from Moody's
Investors Service, Inc. and Standard & Poor's Ratings Services, a division of
the McGraw-Hill Companies. The tranche A and B term loans mature in 2006, and
the revolving credit facility matures in 2004, unless the Banc One loan is not
extended or refinanced in which case all loans will mature in November 2000. See
"Description of Certain Indebtedness and Preferred Stock--Nomura Asset Capital
Corporation Loans" and "--The New Senior Credit Facility."
Management believes that cash flow from operations, in addition to
availability under our new credit facility and available funds under the NAAC
loans, will be sufficient to provide for our liquidity needs for the foreseeable
future.
INFLATION
The rate of inflation has not had a material effect on our revenues or costs
and expenses in the three most recent fiscal years, and it is not anticipated
that inflation will have a material effect on us in the near term.
YEAR 2000 MATTERS
The Year 2000 issue is the result of certain computer programs being written
using two digits rather than four to define the applicable year. Certain of our
computer programs may recognize a date using "00" as the year 1900 rather than
the year 2000. This could result in miscalculations causing disruptions to our
corporate operations, including accounting and financial reporting, budgeting,
tax, accounts receivable and payable, word processing, spreadsheet applications
and to hotel operations, including the temporary inability to process
transactions, including processing reservations, collection of payment,
purchasing, distributing, sending invoices, or engaging in similar normal
business activities.
The systems that we have identified as being critical include but may not be
limited to the following: Unix operating system, property management systems,
point of sale systems, Oracle general ledger system and credit card processing,
as well as our banking relationships and telecommunications vendors. We have
also identified non-critical issues including, but not limited to, stand alone
personal computers, other third party vendors and possible security issues.
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THE COMPANY'S STATE OF READINESS
Based on our recent assessment, we determined that we will have to modify or
replace portions of our existing software so that our computer systems will
properly utilize dates beyond December 31, 1999. Remediation plans have been
established for all major systems we have identified that may be potentially
affected by the Year 2000 issue. The current status of the plans for information
technology-based systems are summarized as follows:
1. IDENTIFICATION OF ALL APPLICATIONS AND HARDWARE WITH POTENTIAL YEAR 2000
ISSUES. To the best of our knowledge, this has been completed.
2. FOR EACH ITEM IDENTIFIED, PERFORMANCE OF AN ASSESSMENT TO DETERMINE AN
APPROPRIATE ACTION PLAN AND TIMETABLE FOR REMEDIATION OF EACH ITEM. The
plan consists of replacement, upgrade or elimination of the application.
This phase has been completed.
3. IMPLEMENTATION OF THE SPECIFIC ACTION PLAN. Action plans have been
completed for all known mission critical systems, including property
management systems and corporate systems.
4. TESTING EACH APPLICATION UPON COMPLETION. We will use both internal and
external resources to reprogram, or replace, and test the software for
Year 2000 modifications. All internally developed systems have been
tested and found to be compliant. Vendor-supplied software has been
upgraded to Year 2000 compliant versions for our software vendors and we
have received certification of compliance from them. The remaining
vendors have informed us that testing is expected to be completed at the
latest by the third quarter of 1999.
5. PLACEMENT OF THE NEW PROCESS INTO PRODUCTION. All applications and
systems are expected to be updated by August 31, 1999.
We have initiated formal communications with our significant suppliers and
vendors for corporate and hotel operations to determine our vulnerability to
those third parties' failure to remediate their own Year 2000 Issue.
Identification of areas of potential third party risk is nearly complete and,
for those areas identified to date, remediation plans are being developed.
Identification and assessment should be completed by the end of the second
quarter of 1999 and implemented by the end of the third quarter of 1999. We
cannot guarantee that the systems of our suppliers will be timely converted and
would not disrupt operations and have an adverse effect on us.
We are in the process of identifying all non-information technology based
systems which include equipment and services containing embedded microprocessors
such as alarm systems and voice mail systems. We are in the process of
identifying, developing, implementing and testing appropriate remediation plans.
We expect to fully implement such plans by the end of the third quarter of 1999.
THE COSTS INVOLVED
Our total cost of achieving Year 2000 compliance is not expected to exceed
$2.0 million and will consist of the utilization of both internal and external
resources. Spending to date totals approximately $250,000. Expenditures either
have been appropriately allocated for through the 1999 capital improvements
budget by property or are expected to be expensed as appropriate. All costs
related to achieving Year 2000 compliance are based on management's best
estimates. We cannot guarantee that these results will be achieved, and actual
results may differ materially from those anticipated.
RISKS AND CONTINGENCY PLAN
We are in the process of determining the risks we would face in the event
certain aspects of our Year 2000 remediation plan failed. We are also developing
contingency plans for all critical processes including replacement of certain
vendors, increases in staffing to process transactions and alternate hosting of
critical systems. Under a "worst case" scenario, our corporate operations would
be disrupted due to
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internal system failures including the ability to properly and timely process
corporate records and transactions and accounting functions. Our hotel
operations could be disrupted based on the inability of vendors and suppliers to
deliver products for our food, beverage and lodging operations. In addition our
hotel's reservation and payment collection processes would be disrupted. While
these systems can be replaced with manual systems on a temporary basis, it could
cause substantial delays and inefficiencies in hotel operations. The failure of
national and worldwide banking information systems or the loss of essential
utilities services due to the Year 2000 issue could result in the inability of
many businesses, including ours, to conduct business. Risk assessment has been
completed, and contingency plans should be completed in the third quarter of
1999.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The table below provides information about our financial instruments which
are sensitive to changes in interest rates, including CRESTS and debt
obligations. For debt obligations, the table presents principal cash flows and
related weighted average interest rates by expected maturity dates. Weighted
average variable rates are based on implied forward rates in the yield curve at
the reporting date. As of December 31, 1998, the change in current yields
between one-year and five-year U.S. Treasury bonds is three basis points, thus,
minimal fluctuations in the average interest rates are anticipated over the
maturity periods.
<TABLE>
<CAPTION>
EXPECTED MATURITY DATE
----------------------------------------------------- FAIR
1999 2000 2001 2002 2003 THEREAFTER TOTAL VALUE
--------- --------- --------- --------- --------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS)
Liabilities
Long-term Debt:
Mortgage notes payable with interest
at variable rate of LIBOR plus
3.25%.............................. $ 18,000 $ 247,000 $ -- $ -- $ -- $ -- $ 265,000 $ 265,000
Credit facilities totaling $396
million with interest at variable
rate of LIBOR plus 2.25% to 2.75%
maturing through 2011. Each loan
converts to term loans with a fixed
rate of interest and a 20-year
amortization period................ 722 3,842 6,816 7,940 8,580 295,844 323,744 323,744
Mortgage notes payable with an
interest rate of 9%................ 10,000 62,000 -- -- -- -- 72,000 72,000
Mortgage notes payable with fixed
rates ranging from 8.6% to 10.7%
payable through 2010............... 3,715 4,174 4,584 5,024 38,655 107,957 164,109 164,109
Other................................ 3,697 8,033 5,197 279 307 10,412 27,925 27,925
--------- --------- --------- --------- --------- ----------- --------- ---------
Total.................................. $ 36,134 $ 325,049 $ 16,597 $ 13,243 $ 47,542 $ 414,213 $ 852,778 $ 852,778
--------- --------- --------- --------- --------- ----------- --------- ---------
--------- --------- --------- --------- --------- ----------- --------- ---------
Average interest rate.................. 11.2% 11.9% 8.6% 8.6% 8.6% 8.5% 10.0%
Other:
Convertible preferred securities..... $ -- $ -- $ -- $ -- $ -- $ 175,000 $ 175,000 $ 78,750
Interest rate protection agreement:
Notional amount...................... $ -- $ 54,000 $ -- $ -- $ -- $ -- $ 54,000 $ 5,000
Weighted average rate................ -- 10.5% -- -- -- -- 10.5% --
</TABLE>
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THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER
GENERAL
In connection with the sale of our 12 1/4% Senior Subordinated Notes due
2009, Series A (the "Old Notes") to Morgan Stanley & Co. Incorporated, Lehman
Brothers Inc. and Bear, Stearns & Co. Inc. (the "Placement Agents") pursuant to
the Placement Agreement, dated July 20, 1999, among Lodgian Financing Corp.
("Lodgian Financing," and together with its subsidiaries, the "Company") and
Lodgian, Inc. and the guarantors named therein (collectively, the "Guarantors")
and the Placement Agents, the holders of the Old Notes became entitled to the
benefits of the Registration Rights Agreement, dated as of July 20, 1999 (the
"Registration Rights Agreement"), among Lodgian Financing, the Guarantors and
the Placement Agents.
Under the Registration Rights Agreement, Lodgian became obligated to cause
the notes to be generally freely transferable under the Securities Act no later
than six months after the closing of the offering of the Old Notes. The Exchange
Offer being made hereby, if consummated within the required time periods, will
satisfy Lodgian Financing's obligations under the Registration Rights Agreement.
Lodgian Financing understands that there are approximately beneficial
owners of such Old Notes. This Prospectus, together with the Letter of
Transmittal, is being sent to all such beneficial holders known to Lodgian
Financing.
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal, Lodgian Financing will accept all
Old Notes properly tendered and not withdrawn prior to 5:00 p.m., New York City
time, on the Expiration Date (as defined). Lodgian Financing will issue $1,000
principal amount of exchange notes in exchange for each $1,000 principal amount
of outstanding Old Notes accepted in the Exchange Offer. Holders may tender some
or all of their Old Notes pursuant to the Exchange Offer.
Based on an interpretation by the staff of the Securities and Exchange
Commission (the "Commission") set forth in Morgan Stanley & Co. Incorporated,
SEC No-Action Letter (available June 5, 1991) (the "Morgan Stanley Letter"),
Exxon Capital Holdings Corporation, SEC No-Action Letter (available May 13,
1988) (the "Exxon Capital Letter") and similar letters, Lodgian believes that
the 12 1/4% Senior Subordinated Notes due 2009, Series B (the "Exchange Notes")
issued pursuant to the Exchange Offer in exchange for Old Notes may be offered
for resale, resold and otherwise transferred by any person who received such
Exchange Notes, whether or not such person is the holder (other than any such
holder or other person which is (i) a broker-dealer that receives Exchange Notes
for its own account in exchange for Old Notes, where such Old Notes were
acquired by such broker-dealer as a result of market-making or other trading
activities, or (ii) an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, PROVIDED that such
Exchange Notes are acquired in the ordinary course of such holder's or other
person's business, neither such holder nor such other person is engaged in or
intends to engage in any distribution of the Exchange Notes and such holders or
other persons have no arrangement or understanding with any person to
participate in the distribution of such Exchange Notes.
If any person were to be participating in the Exchange Offer for the
purposes of participating in a distribution of the Exchange Notes in a manner
not permitted by the Commission's interpretation, such person (a) could not rely
upon the Morgan Stanley Letter, the Exxon Capital Letter or similar letters and
(b) must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with a secondary resale transaction.
Each broker-dealer that receives Exchange Notes for its own account in
exchange for Old Notes, where such Old Notes were acquired by such broker-dealer
as a result of market-making or other trading activities, must acknowledge that
it will deliver a prospectus in connection with any resale of such
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Exchange Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of Exchange Notes received in exchange
for Old Notes where such Old Notes were acquired by such broker-dealer as result
of market-making activities or other trading activities. Lodgian Financing has
agreed that, for a period of 180 days after consummation of the Exchange Offer,
it will make this Prospectus, as it may be amended or supplemented from time to
time, available to any broker-dealer for use in connection with any such resale.
See "Plan of Distribution."
Lodgian Financing will not receive any proceeds from the Exchange Offer. See
"Use of Proceeds." Lodgian Financing has agreed to bear the expenses of the
Exchange Offer pursuant to the Registration Rights Agreement. No underwriter is
being used in connection with the Exchange Offer.
Lodgian Financing shall be deemed to have accepted validly tendered Old
Notes when, as and if Lodgian Financing has given oral or written notice thereof
to Bankers Trust Company, as exchange agent (the "Exchange Agent"). The Exchange
Agent will act as agent for the tendering holders of Old Notes for the purposes
of receiving the Exchange Notes from Lodgian Financing and delivering Exchange
Notes to such holders.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender or the occurrence of certain conditions set forth herein under
"--Conditions" without waiver by Lodgian Financing, certificates for any such
unaccepted Old Notes will be returned, without expense, to the tendering holder
thereof as promptly as practicable after the Expiration Date.
Holders of Old Notes who tender in the Exchange Offer will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. Lodgian Financing will pay all charges and
expenses, other than certain applicable taxes in connection with the Exchange
Offer. See "--Fees and Expenses."
In the event the Exchange Offer is consummated, Lodgian Financing will not
be required to register the Old Notes. In such event, holders of Old Notes
seeking liquidity in their investment would have to rely on exemptions to
registration requirements under the securities laws, including the Securities
Act. See "Risk Factors--Consequences of Failure to Exchange."
EXPIRATION DATE; EXTENSIONS; AMENDMENT
The term "Expiration Date" shall mean the expiration date set forth on the
cover page of this Prospectus, unless Lodgian Financing, in its sole discretion,
extends the Exchange Offer, in which case the term "Expiration Date" shall mean
the latest date to which the Exchange Offer is extended.
In order to extend the Expiration Date, Lodgian Financing will notify the
Exchange Agent of any extension by oral or written notice and will issue a
public announcement thereof, each prior to 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date. Such
announcement may state that Lodgian Financing is extending the Exchange Offer
for a specified period of time.
Lodgian Financing reserves the right (a) to delay accepting any Old Notes,
to extend the Exchange Offer or to terminate the Exchange Offer and not accept
Old Notes not previously accepted if any of the conditions set forth herein
under "--Conditions" shall have occurred and shall not have been waived by
Lodgian Financing (if permitted to be waived by Lodgian Financing), by giving
oral or written notice of such delay, extension or termination to the Exchange
Agent, or (b) to amend the terms of the Exchange Offer in any manner deemed by
it to be advantageous to the holders of the Old Notes. Any such delay in
acceptance, extension, termination or amendment will be followed as promptly as
practicable by oral or written notice thereof. If the Exchange Offer is amended
in a manner determined by Lodgian Financing to
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constitute a material change, Lodgian Financing will promptly disclose such
amendment in a manner reasonably calculated to inform the holders of the Old
Notes of such amendment, and Lodgian Financing may extend the Exchange Offer for
a period of up to ten business days, depending upon the significance of the
amendment and the manner of disclosure to holders of the Old Notes, if the
Exchange Offer would otherwise expire during such extension period.
Without limiting the manner in which Lodgian Financing may choose to make
public announcement of any extension, amendment or termination of the Exchange
Offer, Lodgian Financing shall have no obligation to publish, advertise, or
otherwise communicate any such public announcement, other than by making a
timely release to the Dow Jones News Service.
INTEREST ON THE EXCHANGE NOTES
The Exchange Notes will bear interest from July 23, 1999, payable
semiannually on January 15 and July 15 of each year, commencing January 15,
2000, at the rate of 12 1/4% per annum. Holders of Old Notes whose Old Notes are
accepted for exchange will be deemed to have waived the right to receive any
payment in respect of interest on the Old Notes accrued and unpaid up until the
date of the issuance of the Exchange Notes.
PROCEDURES FOR TENDERING
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by instruction 3 of the Letter of Transmittal, and mail
or otherwise deliver such Letter of Transmittal or such facsimile, together with
the Old Notes and any other required documents. To be validly tendered, such
documents must reach the Exchange Agent on or before 5:00 p.m., New York City
time, on the Expiration Date.
The tender by a holder of Old Notes will constitute an agreement between
such holder and Lodgian Financing in accordance with the terms and subject to
the conditions set forth herein and in the Letter of Transmittal.
Delivery of all documents must be made to the Exchange Agent at its address
set forth below. Holders may also request their respective brokers, dealers,
commercial banks, trust companies or other nominees to effect such tender for
such holders.
The method of delivery of Old Notes and the Letter of Transmittal and all
other required documents to the Exchange Agent is at the election and risk of
the holders. Instead of delivery by mail, it is recommended that holders use an
overnight or hand delivery service. In all cases, sufficient time should be
allowed to assure timely delivery to the Exchange Agent on or before 5:00 p.m.
New York City time, on the Expiration Date. No Letter of Transmittal or Old
Notes should be sent to Lodgian Financing or the Guarantors.
Only a holder of Old Notes may tender such Old Notes in the Exchange Offer.
The term "holder" with respect to the Exchange Offer means any person in whose
name Old Notes are registered on the books of Lodgian Financing or any other
person who has obtained a properly completed bond power from the registered
holder.
Any beneficial holder whose Old Notes are registered in the name of his
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such registered holder promptly and instruct such
registered holder to tender on his behalf. If such beneficial holder wishes to
tender on his own behalf, such registered holder must, prior to completing and
executing the Letter of Transmittal and delivering his Old Notes, either make
appropriate arrangements to register ownership of the Old Notes in such holder's
name or obtain a properly completed bond power from the registered holder. The
transfer of record ownership may take considerable time.
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Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office or correspondent in the United
States (an "Eligible Institution") unless the Old Notes tendered pursuant
thereto are tendered (a) by a registered holder who has not completed the box
entitled "Special Issuance Instructions" or "Special Delivery Instructions" on
the Letter of Transmittal or (b) for the account of an Eligible Institution. In
the event that signatures on a Letter of Transmittal or a notice of withdrawal,
as the case may be, are required to be guaranteed, such guarantee must be by an
Eligible Institution.
If the Letter of Transmittal is signed by a person other than the registered
holder of any Old Notes listed therein, such Old Notes must be endorsed or
accompanied by appropriate bond powers and a proxy which authorizes such person
to tender the Old Notes on behalf of the registered holder, in each case signed
as the name of the registered holder or holders appears on the Old Notes.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by Lodgian Financing,
evidence satisfactory to Lodgian Financing of their authority so to act must be
submitted with the Letter of Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt), and withdrawal of the tendered Old Notes will be determined by Lodgian
Financing in its sole discretion, which determination will be final and binding.
Lodgian Financing reserves the absolute right to reject any and all Old Notes
not properly tendered or any Old Notes Lodgian Financing's acceptance of which
would, in the opinion of counsel for Lodgian Financing, be unlawful. Lodgian
Financing also reserves the right to waive any irregularities or conditions of
tender as to particular Old Notes. Lodgian Financing's interpretation of the
terms and conditions of the Exchange Offer (including the instructions in the
Letter of Transmittal) will be final and binding on all parties. Unless waived,
any defects or irregularities in connection with tenders of Old Notes must be
cured within such time as Lodgian Financing shall determine. None of Lodgian
Financing, the Guarantors, the Exchange Agent or any other person shall be under
any duty to give notification of defects or irregularities with respect to
tenders of Old Notes, nor shall any of them incur any liability for failure to
give such notification. Tenders of Old Notes will not be deemed to have been
made until such irregularities have been cured or waived. Any Old Notes received
by the Exchange Agent that are not properly tendered and as to which the defects
or irregularities have not been cured or waived will be returned without cost to
such holder by the Exchange Agent to the tendering holders of Old Notes, unless
otherwise provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.
In addition, Lodgian Financing reserves the right in its sole discretion to
(a) purchase or make offers for any Old Notes that remain outstanding subsequent
to the Expiration Date or, as set forth under "--Conditions," to terminate the
Exchange Offer in accordance with the terms of the Registration Rights Agreement
and (b) to the extent permitted by applicable law, purchase Old Notes in the
open market, in privately negotiated transactions or otherwise. The terms of any
such purchases or offers will differ from the terms of the Exchange Offer.
By tendering, each holder will represent to Lodgian Financing that, among
other things, (a) the Exchange Notes acquired pursuant to the Exchange Offer are
being obtained in the ordinary course of business of such holder or other
person, (b) neither such holder nor such other person is engaged in or intends
to engage in a distribution of the Exchange Notes (c) neither such holder or
other person has any arrangement or understanding with any person to participate
in the distribution of such Exchange Notes, and (d) such holder or other person
is not an "affiliate," as defined under Rule 405 of the Securities Act, of
Lodgian Financing or, if such holder or other person is such an affiliate, will
comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable.
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Each broker-dealer that receives Exchange Notes for its own account in
exchange for Old Notes, where such Old Notes were acquired by such broker-dealer
as a result of market-making or other trading activities, must acknowledge that
it will deliver a prospectus in connection with any resale of such Exchange
Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of Exchange Notes received in exchange
for Old Notes where such Old Notes were acquired by such broker-dealer as result
of market-making activities or other trading activities. Lodgian Financing has
agreed that, for a period of 180 days after consummation of the Exchange Offer,
it will make this Prospectus, as it may be amended or supplemented from time to
time, available to any broker-dealer for use in connection with any such resale.
See "Plan of Distribution."
Lodgian Financing will not receive any proceeds from the Exchange Offer. See
"Use of Proceeds." Lodgian Financing has agreed to bear the expenses of the
Exchange Offer pursuant to the Registration Rights Agreement. No underwriter is
being used in connection with the Exchange Offer.
The Old Notes were issued on July 23, 1999, and there is no public market
for them at present. To the extent Old Notes are tendered and accepted in the
Exchange Offer, the principal amount of outstanding Old Notes will decrease with
a resulting decrease in the liquidity in the market therefor. Following the
consummation of the Exchange Offer, holders of Old Notes will continue to be
subject to certain restrictions on transfer. Accordingly, the liquidity of the
market for the Old Notes could be adversely affected.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and (a) whose Old Notes are not
immediately available or (b) who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent prior to the
Expiration Date, may effect a tender if: (i) the tender is make through an
Eligible Institution; (ii) prior to the Expiration Date, the Exchange Agent
receives from such Eligible Institution a properly completed and duly executed
Notice of Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder of the Old Notes, the
certificate number or numbers of such Old Notes and the principal amount of Old
Notes tendered, stating that the tender is being made thereby, and guaranteeing
that, within three business days after the Expiration Date, the Letter of
Transmittal (or facsimile thereof) together with the certificate(s) representing
the Old Notes to be tendered in proper form for transfer and any other documents
required by the Letter of Transmittal will be deposited by the Eligible
Institution with the Exchange Agent; and (iii) such properly completed and
executed Letter of Transmittal (or facsimile thereof) together with the
certificate(s) representing all tendered Old Notes in proper form for transfer
and all other documents required by the Letter of Transmittal are received by
the Exchange Agent within three business days after the Expiration Date.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date,
unless previously accepted for exchange.
To withdraw a tender of Old Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m., New York City time, on
the Expiration Date. Any such notice of withdrawal must (a) specify the name of
the person having deposited the Old Notes to be withdrawn (the "Depositor"), (b)
identify the Old Notes to be withdrawn (including the certificate number or
numbers and principal amount of such Old Notes), (c) be signed by the Depositor
in the same manner as the original signature on the Letter of Transmittal by
which such Old Notes were tendered (including any required signature guarantees)
or be accompanied by
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<PAGE>
documents of transfer sufficient to have the Trustee with respect to the Old
Notes register the transfer of such Old Notes into the name of the Depositor
withdrawing the tender and (d) specify the name in which any such Old Notes are
to be registered, if different from that of the Depositor. All questions as to
the validity, form and eligibility (including time of receipt) of such
withdrawal notices will be determined by Lodgian Financing, whose determination
shall be final and binding on all parties. Any Old Notes so withdrawn will be
deemed not to have been validly tendered for purposes of the Exchange Offer and
no Exchange Notes will be issued with respect thereto unless the Old Notes so
withdrawn are validly retendered. Any Old Notes which have been tendered but
which are not accepted for exchange will be returned to the holder thereof
without cost to such holder as soon as practicable after withdrawal, rejection
of tender or termination of the Exchange Offer. Properly withdrawn Old Notes may
be retendered by following one of the procedures described above under
"--Procedures for Tendering" at any time prior to the Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, Lodgian Financing will
not be required to accept for exchange, or exchange notes for, any Old Notes not
theretofore accepted for exchange, and may terminate or amend the Exchange Offer
as provided herein before the acceptance of such Old Notes, if Lodgian Financing
or the holders of at least a majority in principal amount of Old Notes
reasonably determine in good faith that any of the following conditions exist:
(a) the Exchange Notes to be received by such holders of Old Notes in the
Exchange Offer, upon receipt, will not be tradable by each such holder (other
than a holder which is an affiliate of Lodgian Financing at any time on or prior
to the consummation of the Exchange Offer) without restriction under the
Securities Act and the Exchange Act and without material restrictions under the
blue sky or securities laws of substantially all of the states of the United
States, (b) the interests of the holders of the Old Notes, taken as a whole,
would be materially adversely affected by the consummation of the Exchange Offer
or (c) after conferring with counsel, the Commission is unlikely to permit the
making of the Exchange Offer prior to January 23, 2000.
Pursuant to the Registration Rights Agreement, if an Exchange Offer shall
not be consummated prior to the Exchange Offer Termination Date, Lodgian
Financing will be obligated to cause to be filed with the Commission a shelf
registration statement with respect to the Old Notes (the "Shelf Registration
Statement") as promptly as practicable after the Exchange Offer Termination Date
and thereafter use its best efforts to have the Shelf Registration Statement
declared effective.
"Exchange Offer Termination Date" means the date on which the earliest of
any of the following events occurs: (a) applicable interpretations of the staff
of the Commission do not permit to effect the Exchange Offer, (b) any holder of
Notes notifies Lodgian Financing that either (i) such holder is not eligible to
participate in the Exchange Offer or (ii) such holder participates in the
Exchange Offer and does not receive freely transferable Exchange Notes in
exchange for tendered Old Notes or (c) the Exchange Offer is not consummated
within six months after the closing after the Issue Date.
If any of the conditions described above exist, Lodgian Financing will
refuse to accept any Old Notes and will return all tendered Old Notes to
exchanging holders of the Old Notes.
EXCHANGE AGENT
Bankers Trust Company has been appointed as Exchange Agent for the Exchange
Offer. Questions and requests for assistance and requests for additional copies
of this Prospectus or of the Letter of
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<PAGE>
Transmittal and deliveries of completed Letters of Transmittal with tendered Old
Notes should be directed to the Exchange Agent addressed as follows:
<TABLE>
<S> <C>
BY MAIL: BY OVERNIGHT MAIL OR COURIER:
BT Services Tennessee, Inc. BT Services Tennessee, Inc.
Reorganization Unit Corporate Trust & Agency Group
P.O. Box 292737 Reorganization Unit
Nashville, Tennessee 37229-2737 648 Grassmere Park Road
Fax: (615) 835-3701 Nashville, Tennessee 37211
Confirm by Telephone
(615) 835-3572
</TABLE>
BY HAND:
Bankers Trust Company
Corporate Trust and Agency Group
Attn: Reorganization Department
Receipt & Delivery Window
123 Washington Street, 1st Floor
New York, New York 10006
Information (800) 735-7777
Lodgian Financing will indemnify the Exchange Agent and its agents for any
loss, liability or expense incurred by them, including reasonable costs and
expenses of their defense, except for any such loss, liability or expense caused
by negligence or bad faith.
FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by Lodgian Financing. The principal solicitation for tenders pursuant to
the Exchange Offer is being made by mail. Additional solicitations may be made
by officers and regular employees of Lodgian Financing and its affiliates in
person, by telephone or facsimile.
Lodgian Financing will not make any payments to brokers, dealers, or other
persons soliciting acceptances of the Exchange Offer. Lodgian Financing,
however, will pay the Exchange Agent reasonable and customary fees for its
services and will reimburse the Exchange Agent for its reasonable out-of-pocket
expenses in connection therewith. Lodgian Financing may also pay brokerage
houses and other custodians, nominees and fiduciaries the reasonable
out-of-pocket expenses incurred by them in forwarding copies of this Prospectus,
Letters of Transmittal and related documents to the beneficial owners of the Old
Notes, and in handling or forwarding tenders for exchange.
The expenses to be incurred in connection with the Exchange Offer, including
fees and expenses of the Exchange Agent and Trustee and accounting and legal
fees and expenses, will be paid by Lodgian Financing, and are estimated in the
aggregate to be approximately $500,000.
Lodgian Financing will pay all transfer taxes, if any, applicable to the
exchange of Old Notes pursuant to the Exchange Offer. If, however, certificates
representing Exchange Notes (or Old Notes for principal amounts not tendered or
accepted for exchange) are to be delivered to, or are to be registered or issued
in the name of, any person other than the registered holder of the Old Notes
tendered, or if tendered Old Notes are registered in the name of any person
other than the person signing the Letter of Transmittal, or if a transfer tax is
imposed for any reason other than the exchange of Old Notes pursuant to the
Exchange Offer, then the amount of any such transfer taxes (whether imposed on
the registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or
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<PAGE>
exemption therefrom is not submitted with the Letter of Transmittal, the amount
of such transfer taxes will be billed directly to such tendering holder.
ACCOUNTING TREATMENT
Lodgian Financing will not recognize any gain or loss for accounting
purposes upon the consummation of the Exchange Offer. The expense of the
Exchange Offer will be amortized by Lodgian Financing over the term of the
Exchange Notes under U.S. GAAP.
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BUSINESS
GENERAL
We are one of the largest owners and operators of full-service hotels in the
United States, with 134 hotels containing approximately 25,375 rooms located in
35 states and Canada. Our hotels include 121 wholly-owned hotels (including
three under construction), 11 hotels in which we have a 50% or greater equity
interest, one hotel in which we have a minority equity interest and one hotel
managed for a third party. Our hotels are primarily full-service properties
which offer food and beverage services, meeting space and banquet facilities and
compete in the mid-price and upscale segments of the lodging industry. We
believe that these segments have more consistent demand generators than other
segments of the lodging industry and that they have recently experienced less
development of new properties than other lodging segments, such as the limited
service, economy and budget segments. Substantially all of our hotels are
affiliated with nationally recognized hospitality franchises. We own and operate
hotels under franchise agreements with Marriott International, Bass Hotels and
Resorts, the franchisor for the Holiday Inn and Crowne Plaza brands, and the
franchisors of the Doubletree, Hilton, Omni, Radisson and Sheraton brands, among
others. We are one of the largest Holiday Inn franchisees and one of the largest
Marriott franchisees nationally.
Our success in managing, developing, renovating and repositioning our hotels
has resulted in strong relationships with our franchisors. We pride ourselves on
the recognition and awards we have received from our franchisors. These awards
include, among others:
- Seven Modernization Awards during the last four consecutive years from
Bass Hotels and Resorts;
- Torchbearer Award for quality for several hotels from Bass Hotels and
Resorts;
- President's Award for quality for three hotels in 1998 from Marriott
International;
- Best New Hotel Opening in 1997 for the Courtyard by Marriott, Tulsa and in
1998 for the Denver Airport Marriott, in each case from Marriott
International;
- Hotel of the Year for the Club Hotel by Doubletree in Philadelphia from
Promus Hotels; and
- "Best New Franchisee" in 1995 from Marriott International.
Lodgian was formed by Servico's merger with Impac in December 1998. We
believe that the Merger enhances our growth potential and provides significant
opportunities for operating synergies, due to the complementary nature of the
two companies' property portfolios, strategies and core competencies. Both
companies had portfolios consisting of full-service properties in the mid-price
and upscale segments with leading franchise brands, such as Holiday Inn,
Sheraton, Hilton and Doubletree. Both companies pursued a strategy of renovating
and repositioning their hotel properties to achieve growth in revenue per
available room and profitability and strong returns on capital. Impac developed
significant in-house development and construction management capabilities and
expertise, while Servico generally relied on others, including Impac, for
renovation and redevelopment services. We believe that the addition of Impac's
in-house development capabilities and relationships with high quality
franchisors, such as Marriott, will enable us to take advantage of more
opportunities to reposition our existing hotels, as well as to selectively
acquire and develop new hotels. We also believe that we have opportunities to
improve the operating performance of Impac's hotels by applying Servico's
operating expertise and "best practices." In addition, we believe that we will
be able to generate greater value from our portfolio through operating synergies
(including opportunities for cost savings in overhead, purchasing, insurance and
related activities) achieved as a result of, among other things, national
purchasing contracts.
Servico was incorporated in 1956 under the laws of the State of Delaware.
From 1956 through 1990, the predecessor engaged in the ownership and operation
of hotels under a series of different ownerships. In September 1990, Servico
filed for protection under Chapter 11 of the United States Bankruptcy Code. The
predecessor emerged from reorganization proceedings in August 1992 as Servico,
Inc., a Florida corporation.
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GROWTH STRATEGY
We have developed a strategy designed to increase our revenues, cash flow
and profitability while focusing on return on investment as the primary
criterion for growth. Our growth strategy consists primarily of (1) realizing
the built-in growth of our existing portfolio, (2) acquiring existing
full-service, mid-price and upscale hotels that are in need of substantial
renovation and repositioning and (3) developing new full-service, mid-price and
upscale hotels, primarily franchised under Marriott brands.
REALIZE BUILT-IN GROWTH. We intend to capitalize on the substantial
investments we have made in the development and renovation of the hotels in our
portfolio. From January 1, 1996 to March 31, 1999, Servico grew from 46 owned
hotels with approximately 9,031 rooms to 141 owned hotels (including Impac's
hotels, three of which were under construction) with approximately 26,729 rooms,
largely through acquisitions. From January 1, 1996 to the Merger, Impac grew
from 19 hotels with approximately 3,502 rooms to 53 hotels with 8,895 rooms.
From January 1, 1996 to March 31, 1999, Servico acquired 41 hotels (excluding
six European hotels) with 8,458 rooms at an average purchase price of $36,800
per room. In that time, Servico spent approximately $8,300 per room in
renovations and other capital assets. During this same period, Impac acquired 24
hotels with 4,185 rooms at an average purchase price of $40,000 per room and
spent an average of an additional $16,700 on renovations and other capital
assets. In addition, from January 1, 1996 to March 31, 1999, Impac completed the
development of 11 hotels and initiated development of three hotels. From January
1, 1997 to March 31, 1999, Servico completed renovations on 27 hotels, Impac
completed renovations on 31 hotels, and we completed renovations on two hotels
since the Merger, including renovations on hotels acquired since January 1,
1996. We plan to spend an additional $35.4 million for planned renovations to
these acquired properties and expect our total cost per room for the properties
acquired by Servico and Impac to be $51,800.
Through the implementation of our operating strategies, we expect to be
well-positioned to realize the built-in growth of our recently renovated and
developed properties. We expect to realize significant EBITDA contribution from
four newly developed hotels which were completed in 1998, including the Marriott
at the Denver Airport in Denver, Colorado, the Residence Inn Little Rock in
Little Rock, Arkansas, the Hilton Garden Rio Rancho in Rio Rancho, New Mexico
and the Residence Inn Dedham in Boston, Massachusetts. Furthermore, we expect
substantial EBITDA contribution from recently renovated hotels, including the
Doubletree Club Hollywood in Hollywood, California, the Holiday Inn Anchorage in
Anchorage, Alaska, the Mayfair House Coconut Grove in Miami, Florida and the
Sheraton West Palm Beach in West Palm Beach, Florida. We cannot assure you that
we will realize these expected EBITDA contributions.
ACQUIRE AND IMPROVE UNDERPERFORMING HOTELS. We seek to capitalize on our
management, renovation and development expertise by continuing to acquire
underperforming hotels and implementing operational initiatives and
repositioning programs to achieve revenue growth and margin improvements. We
have generally invested significant capital to renovate and reposition newly
acquired hotels. In certain instances, we re-brand hotels to highlight property
improvements to the marketplace and to improve average daily rates and market
share. We believe that our total cost to acquire and renovate hotels has been
significantly less than the cost to construct new hotels with similar
facilities. We expect that our relationships throughout the industry and our
in-house development capabilities will continue to provide us with a competitive
advantage in identifying, evaluating, acquiring, redeveloping and managing
hotels that meet our criteria.
We believe that a number of lodging industry trends will enable us to
continue to successfully execute our acquisition, renovation and repositioning
strategy, including the following: (1) there has generally been less competition
to purchase underperforming hotels than other properties because of the level of
expertise required to purchase and efficiently reposition such hotels, and (2) a
number of major franchisors, such as Bass Hotels and Resorts, have launched
quality improvement initiatives under which owners are required to invest
substantial amounts of capital to upgrade older properties or risk having the
franchise agreement terminated. We believe that these initiatives will provide
us with new acquisition
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opportunities, as individual or small-portfolio owners are unable or unwilling
to invest the capital required to raise quality standards to the level required
by franchisors.
SELECTIVELY DEVELOP NEW HOTELS. We plan to continue to selectively develop
new full-service, mid-price and upscale hotels. We intend to develop these
properties primarily under the Marriott and Courtyard by Marriott brands due to
the high quality image, strong reservations and marketing networks and overall
quality management of these brands. We have focused our development in suburbs
of metropolitan areas that are experiencing significant demand growth where
there have not historically been suitable acquisition targets. We believe that
the expertise required to develop such assets generally limits access to the
marketplace, and that our in-house development capabilities enable us to develop
hotels more efficiently than our competitors.
Our historical objective has been to develop each property as cost
efficiently as possible while meeting quality standards and return on investment
objectives. We have developed 12 hotels with 1,389 rooms since 1995. In
addition, we have three upscale hotels with 552 rooms under construction,
including the Marriott in downtown Portland, Oregon and the Courtyard by
Marriott in Livermore, California, which are both scheduled to open in the third
quarter of 1999, and the Hilton Garden Inn in Lake Oswego, Oregon, which is
scheduled to open in the first quarter of 2000. In addition, at March 31, 1999,
we owned four land parcels and held options to purchase two additional land
parcels that together would permit the development of six new hotels with a
total capacity of approximately 1,270 rooms.
OPERATING STRATEGY
We have developed a highly focused operating strategy designed to maximize
the financial performance of our hotels while providing our guests with high
quality service and value. Key elements of our operating strategy include:
ENHANCE HOTEL PERFORMANCE THROUGH DISCIPLINED CAPITAL INVESTMENT. We seek
to reposition and renovate our hotels based on strategic plans designed to
address the opportunities presented by each hotel and the hotel's particular
market. Renovations include enhancing lobbies, restaurants and public areas,
upgrading guest rooms and converting unprofitable lounge areas to meeting rooms
to accommodate the needs of business travelers. Renovations often include a
substantial exterior renovation to improve the property's overall appearance and
appeal. We believe that these renovations enable us to increase both occupancy
and room rates and generate attractive returns on our investment.
SELECTIVE USE OF PREMIUM BRANDS. We believe that the selection of an
appropriate franchise brand is essential in positioning a hotel optimally within
its local market. Because we are not bound by a single franchise brand, we can
choose a franchise relationship that will maximize a hotel's performance in a
particular market and complement our management strategies and those of the
individual hotel. Since January 1, 1996, we have rebranded 14 hotels to better
position them in their competitive markets. We select brands based on factors
such as revenue contribution, product quality standards, local presence of the
franchisor, brand recognition, target demographics and purchasing efficiencies
offered by franchisors.
INDIVIDUAL HOTEL MANAGEMENT. We seek to maximize the performance of our
hotels by developing marketing and business plans specifically tailored for each
individual hotel. We develop and implement marketing plans that properly
position each hotel within its local market and facilitate targeted sales and
marketing efforts. These plans focus on maximizing revenues and improving market
share, guest satisfaction and cost controls. We believe that experienced and
hands-on management of hotel operations is the most critical element in
maximizing revenue and cash flow of hotels, especially in full service hotels.
In order to maintain strong performance of the individual hotels, we stress
management accountability and entrepreneurship and provide performance-based
compensation at the individual hotel and regional levels that we believe is
among the most attractive in the industry.
EFFECTIVE CENTRALIZED CONTROLS AND SUPPORT. We have implemented centralized
controls and support that seek to provide corporate and group support services
while promoting flexibility and encouraging associates to develop innovative
solutions. Our hotels are organized into six regions, each headed by a
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regional vice president who reports to the chief operating officer. This
structure enables us to provide close oversight of property managers at the
regional and local levels while ensuring that information, standards and goals
are communicated effectively across our entire portfolio. We have established
certain uniform productivity standards and skill requirements for hotel
associates that we believe increase operating efficiencies by enhancing our
ability to measure performance and to allocate associates efficiently within our
hotel system.
LEADING EDGE TECHNOLOGY. We have invested substantial capital in advanced
information systems that allow for increased timely and accurate reporting of
operational and financial data, among many other capabilities. We are also in
the process of implementing Oracle web-based technology, which will permit (1)
more accurate and efficient revenue and expense reporting and forecasting by
providing real-time access to financial information, (2) improved labor and cash
management and (3) the ability to monitor from any location daily revenue
results, labor costs and expenses of every one of our hotels. Through our
intranet, we also can provide real-time reporting, distribute corporate
communications and disseminate critical information to our associates
company-wide.
CENTRALIZED RESERVATIONS AND SALES SUPPORT. We currently operate a revenue
center in Baton Rouge, Louisiana that maintains the reservation system for 51
Holiday Inn hotels, with 31 hotels expected to be added by the end of August
1999. We believe that the revenue center is the first of its kind in the hotel
industry, and we expect it to be able to cover multiple hotel brands in the near
future. The revenue center improves the efficiency of our hotel reservation
process by freeing up hotel associates to service guests and allowing dedicated
reservation agents to focus on taking reservations. We believe that dedicated
reservation agents convert a higher number of inquiries into actual reservations
than hotel associates with multiple responsibilities. Specialists at the revenue
center have complete access to the property management systems and price each
room according to market demand, inventory supply and competitor strategies. The
revenue center also has a group sales center which enables hotel salespeople to
focus on direct sales and marketing efforts and building and maintaining client
relationships.
OUR HOTELS
We owned or operated 143 hotels containing approximately 27,057 rooms
located in 35 states, Canada and Europe at March 31, 1999. On June 24, 1999, we
sold our joint venture interest in our European hotel portfolio, which consisted
of six hotels. During July 1999, we sold two wholly-owned hotels in the United
States, and effective August 1, 1999, we ceased managing one hotel for a third
party.
GROWTH THROUGH ACQUISITIONS
In 1997 and 1998, Servico and Impac each significantly expanded its
respective property portfolio. Our portfolio is shown in the following table:
COMBINED HOTELS OWNED AT FISCAL YEAR END
<TABLE>
<CAPTION>
HOTELS ROOMS
--------------------------------------- --------------------
DECEMBER 31, SERVICO IMPAC PRO FORMA SERVICO IMPAC
- -------------------------------------------------------------- ----------- ----------- ------------- --------- ---------
<S> <C> <C> <C> <C> <C>
1996.......................................................... 57 26 83 11,059 4,496
1997.......................................................... 69 45 113 14,061 7,713
1998(1)....................................................... 89 53 142 17,994 8,895
Net Acquisitions since December 31, 1996...................... 32 27 59 6,935 4,399
<CAPTION>
DECEMBER 31, PRO FORMA
- -------------------------------------------------------------- -----------
<S> <C>
1996.......................................................... 15,555
1997.......................................................... 21,774
1998(1)....................................................... 26,889
Net Acquisitions since December 31, 1996...................... 11,334
</TABLE>
- ------------------------
(1) Includes three hotels currently under construction and 18 hotels that are
partially owned.
In connection with the Merger, we acquired 53 hotels with 8,895 rooms. Using
the purchase accounting method, the average purchase price of these hotels is
$70,500 per room. We expect to spend approximately $3,050 per room in
renovations and completion of construction for a total cost per room of $73,550.
In June 1998, Servico completed the acquisition of the 14 hotel properties from
AMI, for an
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aggregate acquisition value of $75.0 million, or an average purchase price of
$32,600 per room. Three of the AMI properties were subsequently sold. We intend
to invest approximately $19,200 per room to renovate and reposition ten of the
AMI properties. In addition, during 1997 and 1998, we purchased 16 hotels (4,132
rooms) for an average purchase price of approximately $42,500 per room. We have
spent approximately $8,400 per room in renovations and capital assets and expect
to spend an additional $13.8 million, for a total cost per room of approximately
$54,300. We believe these costs per room to acquire and renovate these hotels
are significantly less than the costs to replace these hotels.
PROPERTY CLASSIFICATION
To better illustrate and demonstrate the execution of our repositioning
strategy, we classify our hotels as either "Stabilized Hotels," "Stabilizing
Hotels" or "Being Repositioned Hotels."
- Stabilized Hotels are properties (1) which have experienced little or no
disruption to their operations over the past 24 to 36 months as the result
of redevelopment or repositioning efforts, or (2) newly-constructed hotels
which have been in service for 24 months or more.
- Stabilizing Hotels are (1) properties that have undergone renovation or
repositioning investment within the last 36 months, which work is now
completed, or (2) newly developed properties placed into service within
the past 24 months. Management believes that these properties should
experience higher rates of growth in RevPAR and operating margin than the
Stabilized Hotels. On average, our hotels which have undergone renovation
have generally reached stabilization in approximately 12 to 18 months
after their completion date, and our newly developed hotels have reached
stabilization in approximately 24 months after their completion date.
- Being Repositioned Hotels are hotels experiencing disruption to their
operations due to renovation and repositioning. During this period
(generally 12 to 18 months) hotels will usually experience lower operating
results, such as RevPAR, and operating margins. We expect significant
improvements in the operating performance of those hotels that have
undergone a repositioning once the renovation is completed. After the
repositioning work is completed, these properties will be reclassified as
Stabilizing Hotels.
STABILIZED HOTELS. As of January 1, 1999, we had 77 Stabilized Hotels
(representing 14,084 rooms) which, based on management's determination, have
achieved normalized operations. The following table sets forth the number of our
Stabilized Hotels on which we completed renovation or construction in the
periods presented.
<TABLE>
<CAPTION>
STABILIZED HOTELS
YEAR OF LAST RENOVATION OR CONSTRUCTION
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PRIOR TO 1995 1995 1996 1997 1998
--------------- --------- --------- --------- ---------
Hotels....................................................... 11 13 21 22 10
Rooms........................................................ 1,886 2,442 4,328 3,692 1,736
<CAPTION>
<S> <C>
TOTAL(1)
-----------
Hotels....................................................... 77
Rooms........................................................ 14,084
</TABLE>
- ------------------------
(1) Excludes two managed hotels and one hotel in which we have a minority
interest.
STABILIZING HOTELS. As of January 1, 1999, we had 33 Stabilizing Hotels
(representing 6,056 rooms). Set forth below is the date of completion of
renovation or new construction of our Stabilizing Hotels in the periods
presented.
<TABLE>
<CAPTION>
STABILIZING HOTELS
PERIOD OF LAST RENOVATION OR CONSTRUCTION
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
JAN 97-JUN 97 JUL 97-DEC 97(1) JAN 98-JUN 98(2) JUL 98-DEC 98(3) TOTAL
----------------- ------------------- ----------------- ----------------- ---------
Hotels............................... 1 4 14 14 33
Rooms................................ 106 635 2,847 2,468 6,056
</TABLE>
- ------------------------
(1) Includes one newly constructed hotel (90 rooms).
(2) Includes one newly constructed hotel (81 rooms).
(3) Includes three newly constructed hotels (463 rooms).
63
<PAGE>
On January 1, 1999, 31 hotels became stabilized. Of these hotels, we
completed renovations on 18 in 1997 and 13 in 1998. As shown below, RevPAR
increased from $43.72 in 1996 to $49.27 in 1998 for the hotels we completed
renovating in 1997 and from $45.64 in 1996 to $51.87 in 1998 for the hotels we
completed renovating in 1998. The following table sets forth additional
operating data for the 1997 and 1998 renovations which became stabilized on
January 1, 1999.
<TABLE>
<CAPTION>
HOTELS THAT BECAME STABILIZED ON
JANUARY 1, 1999
-------------------------------------
<S> <C> <C> <C>
1996 1997 1998
----------- ----------- -----------
1997 RENOVATIONS:
Average Daily Rate.................................................................. $ 65.91 $ 75.29 $ 77.50
Occupancy........................................................................... 66.3% 59.9% 63.6%
RevPAR.............................................................................. $ 43.72 $ 45.07 $ 49.27
EBITDA Margin....................................................................... 21.8% 20.2% 24.9%
1998 RENOVATIONS:
Average Daily Rate.................................................................. $ 71.50 $ 74.86 $ 77.70
Occupancy........................................................................... 63.8% 64.2% 66.8%
RevPAR.............................................................................. $ 45.64 $ 48.04 $ 51.87
EBITDA Margin....................................................................... 27.4% 26.8% 29.0%
</TABLE>
BEING REPOSITIONED HOTELS. As of March 31, 1999, we had 21 Being
Repositioned Hotels in the U.S. (representing 4,593 rooms). We are in the
process of repositioning and renovating the Being Repositioned Hotels based on
strategic plans designed to address the opportunities presented by each hotel
and the hotel's particular market. Renovations are chosen based on meeting
return on investment criteria and brand standards. These renovations include
improving exteriors, enhancing lobbies, restaurants and public areas, upgrading
guest rooms and converting unprofitable lounge areas to meeting rooms to
accommodate the needs of business travelers. In certain instances, hotel
properties are rebranded to improve market share and further identify the
improved property to the community. We believe that these renovations enable us
to increase both occupancy and room rates. The following table sets forth the
periods in which we expect to complete renovation of our Being Repositioned
Hotels.
<TABLE>
<CAPTION>
BEING REPOSITIONED HOTELS
EXPECTED DATE OF COMPLETION OF RENOVATION
--------------------------------------------
2Q'99 3Q'99 4Q'99 1Q'00 TOTAL(1)
----------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
Hotels................................................................. 2 4 4 11 21
Rooms.................................................................. 540 1,050 690 2,313 4,593
</TABLE>
- ------------------------
(1) Excludes six European hotels which we sold.
The timing of the renovation for the Being Repositioned hotels may vary and
will depend upon a number of factors, including costs of renovation exceeding
budgeted or contracted amounts, the availability of capital, delays in
completion of construction, work stoppages and relationships with contractors.
See "Risk Factors--Risks Related to the Development of New Projects,
Acquisitions and Renovations--We Cannot Guarantee the Success of Any Future
Projects."
64
<PAGE>
NEW DEVELOPMENT PROPERTIES
Our objective is to develop properties as cost efficiently as possible while
meeting quality standards. We have developed 12 hotels with 1,389 rooms since
1995, including the Marriott in Denver, Colorado which opened in November 1998
and the Hilton Garden Inn in Rio Rancho, New Mexico which opened in December
1998. We have an additional three hotels with 552 rooms under construction: the
Marriott in downtown Portland, Oregon and the Courtyard by Marriott in
Livermore, California, both of which are scheduled to open in the third quarter
of 1999, and the Hilton Garden Inn in Lake Oswego, Oregon, which is scheduled to
open in the first quarter of 2000. In addition, at March 31, 1999, we owned four
land parcels or held options to purchase two additional land parcels that
together would permit the development of six new hotels with a total capacity of
approximately 1,270 rooms.
The timing of the development of new properties may vary and will depend
upon a number of factors, including costs of development exceeding budgeted or
contracted amounts, delays in completion of construction, the failure to obtain
necessary construction permits, availability of financing, work stoppages,
relationships with contractors and changes in general economic and business
conditions. See "Risk Factors--Risks Related to the Development of New Projects,
Acquisitions and Renovations--We Cannot Guarantee the Success of Any Future
Projects."
PORTFOLIO
Our hotel portfolio (with classifications as of January 1, 1999) is set
forth below.
LODGIAN HOTEL PORTFOLIO
<TABLE>
<CAPTION>
YEAR OF LAST
RENOVATION OR
HOTEL NAME NO. OF ROOMS LOCATION CONSTRUCTION
- ------------------------------------------------------ ------------- ---------------------------- ---------------
<S> <C> <C> <C>
STABILIZED
- ------------------------------------------------------
Best Western Central Omaha............................ 213 Omaha, NE 1997
Best Western Council Bluffs........................... 89 Council Bluffs, IA 1997
Best Western Northwoods Atrium Inn.................... 197 Charleston, SC 1994
Clarion Royce Hotel................................... 193 Pittsburgh, PA 1995
Comfort Inn Roseville................................. 118 Roseville, MN 1993
Comfort Inn San Antonio............................... 203 San Antonio, TX 1997
Comfort Suites Greenville............................. 85 Greenville, SC 1996
Courtyard by Marriott Abilene(1)...................... 99 Abilene, TX 1996
Courtyard by Marriott Bentonville(1).................. 90 Bentonville, AR 1996
Courtyard by Marriott Buckhead(1)..................... 181 Atlanta, GA 1996
Courtyard by Marriott Florence(1)..................... 78 Florence, KY 1995
Courtyard by Marriott Paducah(1)...................... 100 Paducah, KY 1997
Courtyard by Marriott Tifton(1)(2).................... 90 Tifton, GA 1996
Courtyard by Marriott Tulsa(1)........................ 122 Tulsa, OK 1997
Crowne Plaza Saginaw(3)............................... 177 Saginaw, MI 1996
Crowne Plaza Worcester(3)............................. 243 Worcester, MA 1996
Doubletree Club Louisville............................ 399 Louisville, KY 1996
Doubletree Club Philadelphia.......................... 188 Philadelphia, PA 1997
Fairfield Inn Valdosta................................ 108 Valdosta, GA 1997
Four Points Hilton Head............................... 139 Hilton Head, SC 1997
French Quarter Suites Memphis......................... 105 Memphis, TN 1997
Hampton Inn Dothan.................................... 113 Dothan, AL 1996
Hampton Inn Pensacola................................. 124 Pensacola, FL 1995
</TABLE>
65
<PAGE>
<TABLE>
<CAPTION>
YEAR OF LAST
RENOVATION OR
HOTEL NAME NO. OF ROOMS LOCATION CONSTRUCTION
- ------------------------------------------------------ ------------- ---------------------------- ---------------
<S> <C> <C> <C>
Hilton Fort Wayne..................................... 245 Fort Wayne, IN 1996
Hilton Inn Columbia................................... 152 Columbia, MD 1998
Hilton Inn Northfield................................. 186 Northfield, MI 1997
Hilton Inn Sioux City(3).............................. 193 Sioux City, IA 1994
Holiday Inn Arden Hills............................... 156 St. Paul, MN 1995
Holiday Inn Austin (South)............................ 210 Austin, TX 1994
Holiday Inn Birmingham................................ 166 Birmingham, AL 1996
Holiday Inn Bloomington............................... 187 Bloomington, IN 1992
Holiday Inn Brunswick (I-95).......................... 126 Brunswick, GA 1998
Holiday Inn City Center(4)............................ 240 Columbus, OH 1996
Holiday Inn Clarksburg................................ 160 Clarksburg, WV 1997
Holiday Inn Dothan.................................... 102 Dothan, AL 1996
Holiday Inn Express Fort Pierce....................... 100 Fort Pierce, FL 1998
Holiday Inn Express Gadsden........................... 141 Gadsden, AL 1997
Holiday Inn Express Palm Desert....................... 129 Palm Desert, CA 1992
Holiday Inn Express Pensacola......................... 214 Pensacola, FL 1996
Holiday Inn Fairmont.................................. 106 Fairmont, WV 1997
Holiday Inn Fayetteville.............................. 198 Fayetteville, NC 1997
Holiday Inn Fort Wayne(3)............................. 208 Fort Wayne, IN 1995
Holiday Inn Greentree................................. 200 Pittsburgh, PA 1998
Holiday Inn Hamburg................................... 129 Buffalo, NY 1998
Holiday Inn Hilton Head............................... 201 Hilton Head, SC 1995
Holiday Inn Lawrence.................................. 192 Lawrence, KS 1996
Holiday Inn Manhattan................................. 197 Manhattan, KS 1996
Holiday Inn Marietta.................................. 196 Atlanta, GA 1996
Holiday Inn McKnight Rd.(3)........................... 147 Pittsburgh, PA 1995
Holiday Inn Meadow Lands.............................. 138 Pittsburgh, PA 1996
Holiday Inn Melbourne(3).............................. 293 Melbourne, FL 1996
Holiday Inn Monroeville............................... 189 Pittsburgh, PA 1998
Holiday Inn Morgantown................................ 147 Morgantown, WV 1997
Holiday Inn Myrtle Beach.............................. 133 Myrtle Beach, SC 1998
Holiday Inn Parkway East.............................. 180 Pittsburgh, PA 1996
Holiday Inn Phoenix West.............................. 144 Phoenix, AZ 1995
Holiday Inn Raleigh Downtown.......................... 202 Raleigh, NC 1994
Holiday Inn Santa Fe.................................. 130 Santa Fe, NM 1992
Holiday Inn Select Airport Phoenix.................... 298 Phoenix, AZ 1995
Holiday Inn Select DFW................................ 282 Dallas, TX 1997
Holiday Inn Select Strongsville....................... 304 Cleveland, OH 1996
Holiday Inn Select Windsor, Ontario................... 214 Windsor, Ontario 1998
Holiday Inn Sheffield................................. 201 Sheffield, AL 1994
Holiday Inn St. Louis North........................... 391 St. Louis, MO 1996
Holiday Inn St. Louis West............................ 249 St. Louis, MO 1998
Holiday Inn Syracuse.................................. 153 Syracuse, NY 1997
Holiday Inn University Mall........................... 152 Pensacola, FL 1997
Holiday Inn Valdosta.................................. 173 Valdosta, GA 1997
Omni Albany NY........................................ 386 Albany, NY 1995
Omni West Palm Beach(3)............................... 219 West Palm Beach, FL 1994
Quality Hotel & Conference Ctr........................ 204 New Orleans, LA 1995
</TABLE>
66
<PAGE>
<TABLE>
<CAPTION>
YEAR OF LAST
RENOVATION OR
HOTEL NAME NO. OF ROOMS LOCATION CONSTRUCTION
- ------------------------------------------------------ ------------- ---------------------------- ---------------
<S> <C> <C> <C>
Radisson New Orleans(3)............................... 244 New Orleans, LA 1998
Radisson Phoenix Hotel................................ 163 Phoenix, AZ 1995
Sheraton Hotel Concord................................ 323 Concord, CA 1996
Super 8 Hazard........................................ 52 Hazard, KY 1997
Super 8 Prestonburg................................... 80 Prestonburg, KY 1997
Westin William Penn Pittsburgh........................ 595 Pittsburgh, PA 1997
------
SUBTOTAL.......................................... 14,174
------
STABILIZING
- ------------------------------------------------------
Courtyard by Marriott Lafayette (1)................... 90 Lafayette, LA 1997
Crowne Plaza Cedar Rapids............................. 275 Cedar Rapids, IA 1998
Crowne Plaza Macon(3)................................. 298 Macon, GA 1998
Doubletree Club Hollywood............................. 160 Hollywood, CA 1998
Fairfield Inn Augusta................................. 117 Augusta, GA 1998
Fairfield Inn Colchester.............................. 117 Burlington, VT 1998
Fairfield Inn Jackson................................. 105 Jackson, TN 1998
Fairfield Inn Merrimack............................... 116 Merrimack, NH 1998
Four Points Omaha..................................... 168 Omaha, NE 1997
Four Points West Des Moines........................... 161 Des Moines, IA 1997
Hilton Garden Rio Rancho(1)........................... 129 Rio Rancho, NM 1998
Holiday Inn Anchorage................................. 251 Anchorage, AK 1998
Holiday Inn Augusta(3)................................ 239 Augusta, GA 1998
Holiday Inn Boise..................................... 265 Boise, ID 1998
Holiday Inn Cincinnati................................ 244 Cincinnati, OH 1998
Holiday Inn Florence.................................. 106 Florence, KY 1997
Holiday Inn Fort Mitchell............................. 214 Fort Mitchell, KY 1998
Holiday Inn Frisco.................................... 216 Frisco, CO 1997
Holiday Inn Jamestown................................. 150 Jamestown, NY 1998
Holiday Inn Lansing West.............................. 239 Lansing, MI 1998
Holiday Inn Market Center Dallas...................... 246 Dallas, TX 1998
Holiday Inn Memphis................................... 175 Memphis, TN 1998
Holiday Inn North Miami............................... 98 Miami, FL 1998
Holiday Inn Richfield(3).............................. 219 Richfield, OH 1998
Holiday Inn Select Riverside.......................... 286 Riverside, CA 1998
Holiday Inn Select Wilsonville........................ 169 Portland, OR 1998
Holiday Inn Silver Spring............................. 232 Silver Spring, MD 1998
Holiday Inn Wichita Airport........................... 152 Wichita, KS 1998
Holiday Inn Winter Haven.............................. 225 Winter Haven, FL 1998
Marriott Denver(1).................................... 238 Denver, CO 1998
Mayfair House Coconut Grove........................... 179 Miami, FL 1998
Residence Inn Dedham(1)............................... 96 Boston, MA 1998
Residence Inn Little Rock(1).......................... 81 Little Rock, AR 1998
------
SUBTOTAL.......................................... 6,056
------
</TABLE>
67
<PAGE>
<TABLE>
<CAPTION>
EXPECTED
HOTEL NAME NO. OF ROOMS LOCATION COMPLETION DATE
- ---------------------------------------------------- ------------- ---------------------------- -----------------
<S> <C> <C> <C>
BEING REPOSITIONED
- ----------------------------------------------------
Courtyard by Marriott Revere........................ 120 Boston, MA 3Q99
Crowne Plaza Houston................................ 298 Houston, TX 3Q99
Four Points by Sheraton, Niagara Inn................ 190 Niagara Falls, NY 2Q99
Holiday Inn Belmont................................. 135 Belmont, MD 4Q99
Holiday Inn BWI Airport............................. 259 Baltimore, MD 4Q99
Holiday Inn Cromwell Bridge......................... 139 Cromwell Bridge, MD 4Q99
Holiday Inn East Hartford........................... 130 East Hartford, CT 1Q00
Holiday Inn Express Nashville....................... 210 Nashville, TN 3Q99
Holiday Inn Frederick............................... 157 Frederick, MD 4Q99
Holiday Inn Glen Burnie North....................... 128 Glen Burnie, MD 1Q00
Holiday Inn Grand Island............................ 265 Grand Island, NY 1Q00
Holiday Inn Inner Harbor............................ 373 Baltimore, MD 1Q00
Holiday Inn Jekyll Island........................... 199 Jekyll Island, GA 1Q00
Holiday Inn Lancaster (East)........................ 189 Lancaster, PA 1Q00
Holiday Inn New Haven............................... 160 New Haven, CT 1Q00
Holiday Inn Rolling Meadows......................... 422 Rolling Meadows, IL 3Q99
Holiday Inn Select Niagara Falls.................... 395 Niagara Falls, NY 1Q00
Holiday Inn York (Arsenal Rd.)...................... 100 York, PA 1Q00
Holiday Inn York (Market St.)(5).................... 120 York, PA N/A
Sheraton West Palm Beach............................ 350 West Palm Beach, FL 2Q99
Town Center Hotel Silver Spring..................... 254 Silver Spring, MD 1Q00
------
SUBTOTAL........................................ 4,593
------
UNDER CONSTRUCTION
- ----------------------------------------------------
Courtyard by Marriott Livermore..................... 122 San Francisco, CA 3Q99
Hilton Garden Inn Lake Oswego....................... 181 Lake Oswego, OR 1Q00
Marriott City Center Portland....................... 249 Portland, OR 3Q99
------
SUBTOTAL........................................ 552
------
TOTAL........................................... 25,375
------
------
</TABLE>
- ------------------------
(1) These hotels were newly constructed.
(2) This hotel is owned by third parties and is currently being renovated.
(3) These hotels are partially owned and consolidated.
(4) This hotel is partially owned and not consolidated.
(5) We are in the process of selling this hotel.
Sixteen of our hotels are located on land subject to long-term leases.
Generally, the leases are for terms in excess of the depreciable lives of the
improvements or contain a purchase option and provide for fixed rents. In
certain instances, additional rents, based on a percentage of revenue or cash
flow, may be payable. The leases generally require us to pay the cost of
repairs, insurance and real estate taxes.
FRANCHISE AFFILIATIONS
We believe that our strong brand affiliations bring many benefits in terms
of guest loyalty and market share premiums. With 73% of our portfolio composed
of Holiday Inn and Marriott hotels, we believe that we are well-positioned to
take advantage of superior brand equity, quality standards and reservation
contribution. As a result of our renovations and improvements, as well as
improvements made by other
68
<PAGE>
franchisees under the "Holiday Inn Worldwide Core Modernization" program, we
believe that the Holiday Inn image will be greatly enhanced. In addition, we
believe that Marriott continues to be a very strong name among travelers and in
the industry, providing consistently high quality products and service. Our
hotels also benefit from both franchisors' toll free reservation numbers, which
contribute approximately 30% of our total reservations for these brands.
At July 31, 1999, substantially all of our owned hotels were affiliated with
national franchisors, as set forth in the following table:
<TABLE>
<CAPTION>
TOTAL
------------------------------
<S> <C> <C>
NO. OF HOTELS NO. OF ROOMS
--------------- -------------
Bass Hotels and Resorts(1)....................................... 81 16,266
Marriott International(2)........................................ 18 2,229
Starwood(3)...................................................... 6 1,736
Hilton........................................................... 6 1,086
Promus(4)........................................................ 5 984
Choice Hotel(5).................................................. 5 803
Omni............................................................. 2 605
Best Western..................................................... 3 499
Radisson......................................................... 2 407
Cendant.......................................................... 2 132
Other............................................................ 3 538
--- ------
Total owned.............................................. 133 25,285
--- ------
--- ------
</TABLE>
- ------------------------
(1) Holiday Inn, Holiday Inn Select and Crowne Plaza brands.
(2) Marriott, Courtyard by Marriott and Fairfield Inn brands.
(3) Westin, Four Points and Sheraton brands.
(4) Doubletree brands.
(5) Comfort Inn and Suites and Clarion brands.
Franchisors provide a number of services to hotel operators which can
positively contribute to the improved financial performance of their properties,
including national reservation systems, marketing and advertising programs and
direct sales programs. We believe that noted franchisors with larger numbers of
hotels enjoy greater brand awareness among potential hotel guests than those
with fewer numbers of hotels. Hotels typically operate with high fixed costs,
and increases in revenues generated by affiliation with a national franchisor
can, at times, contribute positively to a hotel's financial performance.
Our license agreements with the national hotel franchisors typically
authorize the operation of a hotel under the licensed name, at a specific
location or within a specific area, and require that the hotel be operated in
accordance with standards specified by the licensor. Generally, the license
agreements require us to pay a royalty fee, an advertising/marketing fee, a fee
for the use of the licensor's nationwide reservation system and certain
ancillary charges. Royalty fees under our various license agreements generally
range from 3% to 6.5% of gross room revenues, while advertising/marketing fees
provided for in the agreements generally range from 1% to 2% of gross room
revenues and reservation system fees generally range from 1% to 2.5% of gross
room revenues. In the aggregate, royalty fees, advertising/ marketing fees and
reservation system fees range from 6% to 9% of gross revenues. The license
agreements are subject to cancellation in the event of a default, including the
failure to operate the hotel in accordance with the quality standards and
specifications of the licensor. The license agreements generally have an
original ten-year term, although certain license agreements provide for original
15 and 20-year terms. The majority of our license agreements have five to ten
years remaining on the term. The licensor may require us to upgrade our
facilities at any time to comply with the licensor's then current standards. The
licensee may apply for a license renewal as existing licenses expire. In
connection with license
69
<PAGE>
renewals, the licensor may require payment of a renewal fee, increased royalty
and other recurring fees and substantial renovation of the facility or the
licensor may elect not to renew the license. It is our policy to review
individual property franchise affiliations at the time of property acquisition
and, thereafter, on a regular basis. These reviews may result in changes in such
affiliations.
JOINT VENTURES; MANAGEMENT AGREEMENTS
In addition to operating the 123 hotels which we wholly owned at March 31,
1999, we operated 17 hotels owned in partnerships in which we have a 50% or
greater equity interest and one hotel owned in partnership in which we have a
minority equity interest. We sold six European hotels in which we had a 50%
interest on June 24, 1999. In each case in which a hotel is owned in
partnership, to varying extents we share decision making authority with our
joint venture partners and may not have sole discretion with respect to a
hotel's disposition.
We are currently negotiating the terms of a development joint venture, under
which we would contribute three development parcels for a 15% interest in the
venture, sell two existing hotels to the venture for fair market value and be
retained by the venture as manager of the venture's properties. If the venture
is completed, we would expect to receive management fees equal to 2% of gross
revenues with an incentive fee for exceeding certain negotiated amounts.
In addition to the hotels we own or in which we have an ownership interest,
at March 31, 1999, we managed two hotels for third parties: the Courtyard by
Marriott in Tifton, Georgia and the Radisson in Chattanooga, Tennessee. These
hotels are managed in accordance with written management agreements. Our
management agreements provide that we be paid a base fee calculated as a
percentage of gross revenues and generally provide for an accounting services
fee and an incentive management fee. The incentive fees are generally a
percentage of gross operating profits exceeding negotiated amounts. All
operating and other expenses are paid by the owner. The existing management
agreements have remaining terms of one and five years and pay us management fees
of 3% and 4% of gross sales, respectively.
One of our hotels, the Westin William Penn Hotel located in Pittsburgh,
Pennsylvania, is managed by Starwood Hotels & Resorts, an unaffiliated third
party. The terms of this management agreement, which expires in December 31,
2010, provide for the manager to receive the greater of a base fee of 3% of
gross revenues or an incentive fee based on profits available for debt service.
The agreement also provides that we are responsible to make funds available for
capital improvements.
COMPETITION AND SEASONALITY
The hotel business is highly competitive. We compete with other facilities
on various bases, including room prices, quality, service, location and
amenities customarily offered to the traveling public. The demand for
accommodations and the resulting cash flow vary seasonally. The off-season tends
to be the winter months for properties located in colder weather climates and
the summer months for properties located in warmer weather climates. Levels of
demand are dependent upon many factors including general and local economic
conditions and changes in levels of tourism and business-related travel. Our
hotels depend upon both commercial and tourist travelers for revenues.
Generally, our hotels operate in areas that contain numerous other competitive
lodging facilities, including hotels associated with franchisors which may have
more extensive reservation networks than those which may be available to us.
We also compete with other hotel owners and operators with respect to (1)
licensing upscale and mid-priced franchises in targeted markets, (2) acquiring
hotel properties to renovate and reposition, and (3) acquiring development sites
for new hotel properties. Our competition is highly fragmented and is composed
of relatively small, private owners and operators of hotel properties, public
REITs and private equity funds.
70
<PAGE>
EMPLOYEES
At March 31, 1999, we had approximately 8,000 full-time and 4,000 part-time
associates. We had 150 full time associates engaged in administrative and
executive activities. The balance of our associates manage, operate and maintain
our properties. At March 31, 1999, approximately 1,500 of our full- and
part-time associates located at 11 hotels were covered by collective bargaining
agreements which expire between July 1999 and December 2001. We consider
relations with our associates to be good.
INSURANCE
We maintain insurance covering liabilities for personal injuries and
property damage. We also maintain, among other types of insurance coverage, real
and personal property insurance, directors and officers liability insurance,
liquor liability insurance, workers' compensation insurance, travel accident
insurance for certain of our employees, fiduciary liability insurance and
business automobile insurance. We believe we maintain sufficient insurance
coverage for the operation of our business.
REGULATION
Our hotels are subject to certain federal, state and local regulations and
we must obtain and maintain various licenses and permits. All such licenses and
permits must be periodically renewed and may be revoked or suspended for cause
at any time. Certain of these licenses and permits are material to our business
and the loss of such licenses could have a material adverse effect on our
financial condition and results of operations. We are not aware of any reason
why we should not be in a position to maintain our licenses.
We are subject to certain federal and state labor laws and regulations such
as minimum wage requirements, regulations relating to working conditions, laws
restricting the employment of illegal aliens and the Americans with Disabilities
Act. As a provider of restaurant services, we are also subject to certain
federal, state and local health laws and regulations. We believe we comply with
such laws and regulations in all material respects. We are also subject in
certain states to dramshop statutes, which may give an injured person the right
to recover damages from any establishment which wrongfully served alcoholic
beverages to the person who, while intoxicated, caused the injury. We believe
that our insurance coverage with respect to any such liquor liability is
adequate.
To date, federal and state environmental regulations have not had a material
effect on our operations. However, such laws potentially impose cleanup costs
for hazardous waste contamination on property owners. If any material hazardous
waste contamination problems do exist on any of our properties, we may be
exposed to liability for the costs associated with the cleanup of such sites.
LEGAL PROCEEDINGS
On June 1, 1999, a contractor hired by Servico to perform work on six
properties in New York, Illinois and Texas filed a summons with notice against
us in the Supreme Court of the State of New York, claiming breach of contract
and quantum meruit, among other things. The contractor is seeking damages in the
aggregate amount of $45 million. The contractor is required to file a formal
complaint. We have filed an appearance to the summons and will vigorously defend
our position. We believe we have valid defenses and counterclaims and that the
outcome will not have a material adverse effect on our financial position or
results of operations.
We are a party to other legal proceedings arising in the ordinary course of
our business, the impact of which would not, either individually or in the
aggregate, in management's opinion, have a material adverse effect on our
financial condition or results of operations.
71
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth the names, ages and positions of our
directors, nominee for director and executive officers.
<TABLE>
<CAPTION>
NAME AGE POSITION
- -------------------------------------------------- --- --------------------------------------------------
<S> <C> <C>
Robert S. Cole.................................... 37 Chief Executive Officer, President and Director
Karyn Marasco..................................... 41 Chief Operating Officer and Executive Vice
President
Kenneth R. Posner................................. 51 Chief Financial Officer and Executive Vice
President
Joseph C. Calabro................................. 48 Chairman of the Office of the Chairman of the
Board of Directors and Director
Peter R. Tyson.................................... 52 Director
John Lang......................................... 44 Director
Michael A. Leven.................................. 62 Director
Richard H. Weiner................................. 49 Director
</TABLE>
ROBERT S. COLE has been the Chief Executive Officer and President of Lodgian
since the Merger. From 1990 until the Merger, Mr. Cole was the President of
Impac and its predecessors and affiliates. Prior to that time, he held a variety
of general manager positions in hotels throughout the United States.
KARYN MARASCO has been the Chief Operating Officer and Executive Vice
President of Lodgian since the Merger. From 1997 until the Merger, Ms. Marasco
was the Chief Operating Officer and Executive Vice President of Servico. Prior
to such time, Ms. Marasco was affiliated with Westin Hotels & Resorts for 18
years. Most recently, Ms. Marasco served as Westin's Area Managing Director,
based in Chicago.
KENNETH R. POSNER was appointed Chief Financial Officer and Executive Vice
President of Lodgian, effective April 1999. From 1981 until he joined Lodgian,
Mr. Posner served as Chief Financial Officer of the Hyatt Group of Companies.
JOSEPH C. CALABRO has been a director of Lodgian since the Merger and was a
director of Servico from August 1992 until the Merger. Mr. Calabro has been a
principal of Joseph C. Calabro, C.P.A., a Devon, Pennsylvania accounting firm,
since 1982. Mr. Calabro has also been an officer and director of Bibsy
Corporation, which previously owned and operated a Holiday Inn hotel in
Bensalem, Pennsylvania, since 1971.
JOHN M. LANG has been a director of Lodgian since the Merger. Mr. Lang is
the President of Lang Capital Partners, LLC, a private real estate venture firm
based in Atlanta, Georgia. From June 1996 until May 1998, Mr. Lang served as
Chief Executive Officer of ProTrust Capital, Inc. ("ProTrust"), a private
investment firm based in Atlanta, Georgia. Prior to joining ProTrust in June
1996, Mr. Lang, an attorney, was the managing partner of Reece & Lang, P.S.C., a
London, Kentucky law firm with offices in Atlanta.
MICHAEL A. LEVEN has been a director of Lodgian since the Merger and was a
director of Servico from August 1997 until the Merger. Since October 1995, Mr.
Leven has been President and Chief Executive Officer of US Franchise Systems,
Inc., which sells franchises for Hawthorne Suites, Best Inns and Microtel
72
<PAGE>
Inns hotel brands. From October 1990 until September 1995, Mr. Leven was
President and Chief Operating Officer of Holiday Inn Worldwide.
PETER R. TYSON has been a director of Lodgian since the Merger and was a
director of Servico from August 1992 until the Merger. From December 1990 to the
present, Mr. Tyson has been President of Peter R. Tyson & Associates, Inc., a
firm offering consulting services to clients in the hospitality industry. Prior
to forming Peter R. Tyson & Associates, Inc., Mr. Tyson was the
partner-in-charge of the hospitality industry consulting practice in the
Philadelphia office of the accounting and consulting firm of Laventhol &
Horwath, with which he was associated for 20 years.
RICHARD H. WEINER has been a director of Lodgian since the Merger and was a
director of Servico from August 1992 until the Merger. Mr. Weiner is a senior
partner in the Albany, New York law firm of Cooper, Erving, Savage, Nolan &
Heller, where he has practiced law since 1975.
EXECUTIVE COMPENSATION
The following table sets forth certain summary information concerning
compensation paid or accrued by us, to or on behalf of the Chief Executive
Officer and to each of our three most highly compensated executive officers
other than the Chief Executive Officer during the year ended December 31, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------ AWARDS
OTHER SECURITIES ALL OTHER
ANNUAL UNDERLYING COMPEN-
COMPEN- OPTIONS/SARS SATION
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS SATION (7) (8)
- ------------------------------------------- --------- ---------- ---------- ------------ --------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Robert S. Cole............................. 1998 $ 17,308 $ -- $ -- 185,000 $ --
Chief Executive Officer and President(1)
David Buddemeyer........................... 1998 $ 358,269 $ -- $ 1,282,500(5) -- $ --
Chairman of the Board, Chief Executive 1997 385,000 120,000 -- 400,000 2,948
Officer and President(2) 1996 350,000 96,745 -- 13,500 4,726
Karyn Marasco.............................. 1998 $ 235,000 $ 100,000 $ -- -- $ 20,106
Chief Operating Officer and Executive 1997 137,269 60,000 -- 125,000 --
Vice President(3)
Warren M. Knight........................... 1998 $ 215,000 $ 60,000 $ -- -- $ 2,500
Chief Financial Officer and Vice 1997 188,000 60,000 -- 75,000 3,556
President--Finance 1996 170,000 46,990 -- 13,500 4,844
Peter J. Walz.............................. 1998 $ 157,500 $ -- $ 249,909(6) -- $ 2,500
Vice President--Acquisitions(4) 1997 150,000 -- 174,700(6) 100,000 3,793
1996 122,596 139,438(6) 15,000 2,375
</TABLE>
- ------------------------
(1) Mr. Cole has served as President and Chief Executive Officer of Lodgian
since December 11, 1998.
(2) Mr. Buddemeyer served as Chairman of the Board, President and Chief
Executive Officer of Servico until his resignation on November 10, 1998.
(3) Ms. Marasco's employment with Servico began in May 1997.
(4) Mr. Walz's employment with Servico began in January 1996.
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(5) Represents severance payments made to Mr. Buddemeyer in connection with his
separation from Servico.
(6) Represents commission payments made to Mr. Walz.
(7) Represents the number of shares of common stock underlying the options/SARs.
(8) Each item included in this column represents a contribution made by Servico
under its 401(k) Plan on behalf of the named executive based on such
executive's annual elective pre-tax deferred contribution (included under
Salary) to such plan, except for Ms. Marasco, whose figure also includes a
relocation allowance of $19,687.
STOCK OPTION PLAN
Our Stock Option Plan provides for the issuance of incentive stock options
within the meaning of Section 422A of the Internal Revenue Code of 1986 (the
"Internal Revenue Code") and non-qualified stock options not intended to meet
the requirements of Section 422A of the Internal Revenue Code. The plan is
administered by a committee of the Board of Directors which, subject to the
terms of the plan, determines to whom grants are made and the vesting, timing
and amounts of such grants.
The following table sets forth information concerning stock option grants
made during 1998 to the executive officers named in the "Summary Compensation
Table," including the potential realizable value of each grant assuming that the
market value of the Common Stock appreciates from the date of grant to the
expiration of the option at annualized rates of 5% and 10%, in each case
compounded annually over the term of the option. These assumed rates of
appreciation have been specified by the Securities and Exchange Commission for
illustration purposes only and are not intended to predict future prices of the
Common Stock. The actual future value of the options will depend on the market
value of the Common Stock.
STOCK OPTION GRANTS IN FISCAL YEAR 1998
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
NUMBER OF PERCENT OF
SECURITIES TOTAL RATES OF STOCK PRICE
UNDERLYING OPTIONS/SARS EXERCISE APPRECIATION FOR OPTION
OPTIONS/SARS GRANTED TO PRICE EXPIRATION ------------------------
NAME GRANTED EMPLOYEES ($/SH) DATE 5% 10%
- -------------------------------------------- ------------- --------------- ----------- ----------- ---------- ------------
Robert S. Cole (1).......................... 185,000 24.5% $ 6.125 12/11/08 $ 712,616 $ 1,805,909
David Buddemeyer (2)........................ -- -- -- -- -- --
Karyn Marasco............................... -- -- -- -- -- --
Warren M. Knight............................ -- -- -- -- -- --
Peter J. Walz............................... -- -- -- -- -- --
</TABLE>
- ------------------------
(1) Mr. Cole has served as President and Chief Executive Officer of Lodgian
since December 11, 1998; Mr. Cole's options were initially issued with an
exercise price of $17.75, but were repriced on December 18, 1998 to $6.125.
(2) Mr. Buddemeyer served as Chairman of the Board, President and Chief
Executive Officer of Servico until his resignation on November 10, 1998.
The following table sets forth certain summary information concerning
exercised and unexercised options to purchase Servico's Common Stock as of
December 31, 1998, under Servico's Stock Option Plan held by the executive
officers named in the "Summary Compensation Table."
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<PAGE>
STOCK OPTION EXERCISES IN FISCAL YEAR
1998 AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS/SARS HELD AT FISCAL OPTIONS/SARS AT
VALUE YEAR-END (#) FISCAL YEAR-END ($) (3)
NAME AND POSITION DURING ACQUIRED ON REALIZED --------------------------- --------------------------
1998 FISCAL YEAR EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------------- ------------- ----------- ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert S. Cole........................... -- -- -- 185,000 -- --
Chief Executive Officer and
President(1)
David Buddemeyer......................... -- -- 270,700 252,800 78,750 --
Chairman of the Board, President and
Chief Executive Officer(2)
Karyn Marasco............................ -- -- 50,000 75,000 -- --
Chief Operating Officer and Executive
Vice President
Warren M. Knight......................... -- -- 130,900 55,100 69,375 --
Chief Financial Officer and
Vice President--Finance
Peter J. Walz............................ -- -- 46,000 69,000 -- --
Vice President--Acquisitions
</TABLE>
- ------------------------
(1) Mr. Cole has served as President and Chief Executive Officer of Lodgian
since December 11, 1998.
(2) Mr. Buddemeyer served as Chairman of the Board, President and Chief
Executive Officer of Servico until his resignation on November 10, 1998.
(3) The value of unexercised in-the-money options/SARs represents the number of
options/SARs held at year-end 1998 multiplied by the difference between the
exercise price and $4.75, the closing price of Lodgian's Common Stock at
year-end 1998.
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT
EMPLOYMENT AGREEMENTS
ROBERT COLE entered into an employment agreement with Lodgian relating to
his employment as President and Chief Executive Officer, as of December 11,
1998. The employment agreement provided for a base salary subject to increases
and bonuses, including a bonus of up to 100% of his base salary, in each case,
at the discretion of the Board of Directors. The base salary paid to Mr. Cole
during 1998 was $17,308 (base salary of $300,000 for the period of December 11,
1998 through year end). Mr. Cole also receives paid health insurance, paid
disability insurance and is entitled to participate, to the extent eligible,
under any benefit plans provided to other executives of Lodgian. Mr. Cole is
entitled to a minimum of four weeks paid vacation annually. Mr. Cole's
employment agreement contains provisions for payments to Mr. Cole in the event
of a change in control, as described more fully under "--Arrangements Regarding
Termination of Employment and Changes of Control."
DAVID BUDDEMEYER entered into an employment agreement with Servico relating
to his employment as President and Chief Operating Officer, as of May 14, 1993.
Effective December 21, 1995, Mr. Buddemeyer was elected Chief Executive Officer
of Servico and continued in that position until his resignation on November 10,
1998. The employment agreement provided for a base salary subject to increases
and bonuses, in each case, at the discretion of the Board of Directors. The base
salary paid to Mr. Buddemeyer during 1998 was $348,411 (base salary of $405,000
for the period of January 1, 1998 through November 10, 1998). Mr. Buddemeyer
also received paid health insurance, paid disability insurance and was entitled
to
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participate, to the extent eligible, under any benefit plans provided to other
executives of Servico. Mr. Buddemeyer was entitled to a minimum of four weeks
paid vacation annually.
KENNETH POSNER entered into a two-year automatically extendable employment
agreement with Lodgian relating to his employment as Chief Financial Officer, as
of April 9, 1999. The employment agreement provides for a base salary of
$250,000 subject to increases and bonuses, in each case at the discretion of the
Board of Directors. Mr. Posner also receives paid health insurance, paid
disability insurance and is entitled to participate, to the extent possible,
under any benefit plans provided to other executives of Lodgian. Mr. Posner is
entitled to a minimum of four weeks paid vacation annually. Posner is also
entitled to receive the benefits offered other executive officers, including a
bonus of up to 100% of salary, payable at the discretion of the Board. Pursuant
to the terms of his employment agreement, Mr. Posner was granted options to
acquire 400,000 shares of Lodgian Common Stock, 20% of which will vest per year
beginning April 9, 2000. The employment agreement is terminable upon 30 days
notice but in the event Mr. Posner is terminated other than "for Cause," as
defined in the agreement, he will be entitled to his base salary and benefits
under the agreement for the greater of the unexpired term or one year.
KARYN MARASCO entered into a three-year employment agreement with Servico
relating to her employment as Executive Vice President and Chief Operating
Officer of Servico on May 2, 1997. On November 24, 1998, the agreement was
extended for a period of one year. This agreement was assumed by Lodgian and is
still in effect. The employment agreement provides for a base salary of $235,000
subject to increases and bonuses in the discretion of the Board. Ms. Marasco is
also entitled to receive the benefits offered other executive officers. Pursuant
to the terms of her employment agreement, in 1997 Ms. Marasco was granted
options to acquire 50,000 shares of Lodgian Common Stock with options with
respect to 10,000 of such shares vesting immediately and 10,000 vesting
annually. The employment agreement is terminable upon 30 days notice but in the
event Ms. Marasco is terminated other than "for Cause," as defined in the
agreement, she will be entitled to her base salary and benefits under the
agreement for the greater of the unexpired term or one year.
ARRANGEMENTS REGARDING TERMINATION OF EMPLOYMENT AND CHANGES OF CONTROL
On November 10, 1998, David Buddemeyer, Servico's Chairman and Chief
Executive Officer, resigned from Servico. Servico and Lodgian paid to Mr.
Buddemeyer an aggregate severance pay equal to $1,282,500. Lodgian will continue
insurance coverage for Mr. Buddemeyer, on the same terms and conditions as would
be applicable if Mr. Buddemeyer were an active employee, under Lodgian's life
insurance, group disability benefits and similar welfare benefit plans for a
period of one year. Mr. Buddemeyer holds currently exercisable stock options to
purchase 423,500 shares of Lodgian's Common Stock which were originally granted
to him pursuant to Servico's Stock Option Plan and 100,000 stock appreciation
rights. The stock options or stock appreciation rights will continue to vest at
the same time they would have vested had Mr. Buddemeyer remained an employee of
Lodgian.
In addition, on February 28, 1999, Warren Knight, Lodgian's then Chief
Financial Officer, resigned and was replaced on an interim basis by Lawrence
Carballo. Lodgian paid to Mr. Knight an aggregate severance pay equal to
$350,000 and a bonus in compensation for services rendered during 1998 equal to
$60,000. Lodgian will continue insurance coverage for Mr. Knight, on the same
terms and conditions as would be applicable if Mr. Knight were an active
employee, under the Company's life insurance, group disability benefits and
similar welfare benefit plans for a period of one year. Mr. Knight holds
currently exercisable stock options to purchase 173,500 shares of Lodgian's
Common Stock which were originally granted to him pursuant to Servico's Stock
Option Plan and 12,500 stock appreciation rights. The stock options or stock
appreciation rights will continue to vest at the same time they would have
vested had Mr. Knight remained an employee of Lodgian.
The employment agreement between Lodgian and Mr. Cole provides for payments
to Mr. Cole in an amount equal to two and one-half times his annual base
compensation, less any other cash severance
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payments contractually owed to him by Lodgian, in the event that there is either
a change in the majority of the Board of Directors or the acquisition by any
individual or group of in excess of 50% of Lodgian's outstanding Common Stock,
and the duties or responsibilities of Mr. Cole are materially diminished within
24 months thereafter.
DIRECTOR COMPENSATION
During 1998, Servico paid non-employee directors a total annual retainer of
$18,000, as well as a fee per board meeting or board committee meeting of
$1,000. Mr. David Buddemeyer, who served as Chairman of the Board of Servico
until his resignation from that Board in November 1998, received no compensation
for serving as Servico's Chairman from January to November 1998.
In December 1998, Lodgian adopted a fee schedule for board members to
provide for a $24,000 total annual retainer, as well as fees of $1,500 per board
meeting, $1,000 per board committee meeting, and $500 per telephonic board or
board committee meeting. In addition, Mr. Joseph C. Calabro, in lieu of the
normal annual retainer and per meeting fees, is receiving annual director
compensation of $100,000 for services rendered to Lodgian in his capacity as
Chairman of the Office of the Chairman of the Board. Mr. Robert Cole, who served
on Lodgian's Board of Directors from December 11 until December 31, 1998,
received no compensation for serving as a member of Lodgian's Board.
Servico and Lodgian also reimbursed directors for expenses associated with
attending Board and committee meetings of the respective companies.
Under Lodgian's Stock Option Plan, each non-employee director is
automatically granted, on the date such director's term of office commences and
each year thereafter on the day following any annual meeting of stockholders (as
long as such director's term as a director is continuing for the ensuing year),
an option to acquire 5,000 shares of Common Stock at an exercise price equal to
the fair market value of the Common Stock on the date of grant. All options
granted to non-employee directors become exercisable upon grant.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1998, through the time of the Merger, the following directors served
on the Compensation Committee of the Board of Directors: Joseph C. Calabro,
Peter R. Tyson and Richard H. Weiner. Following the Merger, the following
directors served on the Compensation Committee: John M. Lang, Michael A. Leven,
Peter R. Tyson and Richard H. Weiner. None of such persons is or has been an
executive officer of Lodgian, and no interlocking relationships exist between
any such person and the directors or executive officers of Lodgian.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding ownership of
Common Stock as of June 25, 1999, by (1) each person known to Lodgian to be the
beneficial owner of more than 5% of the issued and outstanding Common Stock as
of June 25, 1999, (2) each of the members of Lodgian's Board of Directors, (3)
each of Lodgian's executive officers named in the "Summary Compensation Table"
under "Executive Compensation" below, and (4) all directors and executive
officers of Lodgian as a group. All shares were owned directly with sole voting
and investment power unless otherwise indicated.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK PERCENT OF COMMON STOCK
BENEFICIALLY BENEFICIALLY
NAME OF BENEFICIAL OWNER AND ADDRESS OF 5% BENEFICIAL OWNER OWNED (1) OWNED (2)
- --------------------------------------------------------------- ----------------------- ---------------------------
<S> <C> <C>
BENEFICIAL OWNERS OF 5% OR MORE OF OUTSTANDING
COMMON STOCK:
Heitman/PRA Securities Advisors, Inc. ......................... 2,205,100(3) 8.1%
180 North LaSalle Street, Suite 3600
Chicago, IL 60601
Prudential Insurance Company of America ....................... 2,113,000(4) 7.8%
751 Broad Street
Newark, NJ 07102-3777
Eagle Asset Management, Inc. .................................. 1,788,310(5) 6.6%
880 Carillon Parkway
St. Petersburg, FL 33716
Dimensional Fund Advisors ..................................... 1,538,000(6) 5.7%
1299 Ocean Avenue, 11(th) Floor
Santa Monica, CA 90401
DIRECTORS:
Robert S. Cole................................................. 622,843 2.3%
Joseph C. Calabro.............................................. 261,100(7) *
John M. Lang................................................... 326,116(8) 1.2%
Michael A. Leven............................................... 30,700(9) *
Peter R. Tyson................................................. 55,500(10) *
Richard H. Weiner.............................................. 55,100(10) *
NON-DIRECTOR EXECUTIVE OFFICERS:
David Buddemeyer............................................... 304,219(11) 1.1%
Karyn Marasco.................................................. 77,700(10) *
Warren M. Knight............................................... 138,311(12) *
Peter J. Walz.................................................. 49,000(13) *
Lawrence Carballo.............................................. 17,400(14) *
All directors and executive officers as a group (11 persons)... 1,937,989(15) 6.9%
</TABLE>
- ------------------------
* Represents less than 1%.
(1) This number does not include those shares of Lodgian to be distributed upon
conversion of Servico shares and Impac units pursuant to the Merger which
have as yet not been converted.
(2) Ownership percentages are based on 27,218,161 shares of Common Stock
(including 15,689 shares to be issued pursuant to Lodgian's Stock Option
Plan) outstanding as of June 25, 1999 and any Common Stock that such named
individual or group has the right to acquire within 60 days.
(3) Heitman/PRA Securities Advisors, Inc. filed a Schedule 13G dated October 15,
1998 with the SEC reporting ownership of 2,205,100 shares of Common Stock of
Lodgian's predecessor, Servico, with
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sole voting power with respect to 2,147,400 shares, sole dispositive power
with respect to 2,172,500 shares, and shared dispositive power with respect
to 32,600 shares.
(4) Prudential Insurance Company of America filed a Schedule 13G dated January
8, 1999 with the SEC reporting ownership of 2,113,000 shares of Common Stock
with sole voting and dispositive power with respect to 1,204,100 shares and
with shared voting and dispositive power with respect to 908,900 shares.
(5) Eagle Asset Management, Inc. filed a Schedule 13G dated January 29, 1999
with the SEC reporting ownership of 1,788,310 shares of Common Stock with
sole voting and dispositive power with respect to such shares.
(6) Dimensional Fund Advisors filed a Schedule 13G dated February 12, 1999 with
the SEC reporting ownership of 1,538,000 shares of Common Stock with sole
voting and dispositive power with respect to such shares.
(7) Includes currently exercisable options to purchase 55,000 shares. Mr.
Calabro has sole voting and dispositive power with respect to 203,100 of
such shares and shares voting and dispositive power with respect to 3,000
shares with his spouse.
(8) The shares in the table above do not include shares beneficially owned by
Hotel Capital II, LLC, a limited liability company whose manager, with sole
voting and dispositive power, is Robert H. Woods (a partner in Lang Capital
Partners, LLC). Mr. Lang is not a member or manager of Hotel Capital II, LLC
and does not have voting or dispositive power with respect to shares owned
by Hotel Capital II, LLC; therefore, such shares are not included in Mr.
Lang's beneficial ownership.
(9) Includes currently exercisable options to purchase 25,000 shares of Common
Stock and 5,700 shares owned by Mr. Leven's spouse.
(10) Includes currently exercisable options to purchase 55,000 shares of Common
Stock.
(11) Includes currently exercisable options to purchase 274,400 shares of Common
Stock.
(12) Includes currently exercisable options to purchase 134,600 shares of Common
Stock.
(13) Includes currently exercisable options to purchase 49,000 shares of Common
Stock.
(14) Includes currently exercisable options to purchase 17,400 shares of Common
Stock.
(15) Includes currently exercisable options to purchase 720,400 shares of Common
Stock.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following parties had a direct or indirect material interest in
transactions with the Company since the beginning of its most recently completed
fiscal year and such transactions are described below.
Mr. Cole is a minority shareholder of Impac Hotel Development ("IHD"), which
provided acquisition and property development services to Impac for a
development fee of 4% of the total project cost of each property acquired or
developed. Impac agreed to terminate this agreement prior to the consummation of
the Merger so that Impac and its subsidiaries will have no further obligations
under the agreement after the Merger other than the payment of up to a 4%
development fee (not to exceed $2.5 million in the aggregate) in the event
Lodgian acquires or develops any of the hotels or properties identified in the
merger agreement as Impac's acquisition and development pipeline.
IHD had contracted with Elegant Interiors, LLC ("Elegant"), an entity wholly
owned by Sheila Lang (the spouse of John M. Lang) to provide interior design
consulting services. In the event IHD, or its assignee, receives payment of the
above-referenced development fees, IHD, or its assignee, will pay Elegant
accrued consulting fees (not to exceed $250,000) with respect to any of the
hotels or properties identified in the merger agreement as being in Impac's
acquisition pipeline.
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DESCRIPTION OF CERTAIN INDEBTEDNESS AND PREFERRED STOCK
The following description of our indebtedness does not purport to be
complete and is subject to, and qualified in its entirety by reference to, all
of the provisions of the agreements related to the indebtedness. The following
description of the indebtedness sets forth the terms of certain material credit
agreements currently in place and anticipated to survive the consummation of the
offering.
GMAC COMMERCIAL MORTGAGE CORPORATION LOANS
GENERAL
The GMAC loans are composed of, and evidenced by, among other things, three
separate loan agreements (the "GMAC Loan Agreements"), among several of our
operating subsidiaries (the "GMAC Loan Subsidiaries") and GMAC Commercial
Mortgage Corporation ("GMAC") and three separate mortgage notes (the "GMAC
Mortgage Notes"). The three loan agreements are referred to as "Seldin" (which
includes five hotels in Iowa, Kansas and Nebraska), "Heartland Hotels" (which
includes three hotels in Georgia, Iowa and Ohio) and Lansing (which pertains to
a hotel in Michigan). The aggregate outstanding principal amount under the GMAC
Loans was approximately $34.2 million at March 31, 1999.
INTEREST
The Seldin and Lansing mortgage notes bear interest at 9.875% and the
Heartland Hotels mortgage bears interest at 8.625%.
SECURITY
The indebtedness of the GMAC Mortgage Notes is secured by a limited recourse
mortgage on, and an assignment of the leases and rents from, the nine hotels
referred to above.
TERM AND PREPAYMENT
The notes are repayable in equal monthly installments of principal and
interest based on a seven-year amortization schedule. All amounts outstanding
under the GMAC Mortgage Notes are due and payable February 1, 2003 (Heartland
Hotels), June 1, 2003 (Lansing) and August 1, 2003 (Seldin). The principal
balance of each of the GMAC Loans may be prepaid upon notice, payment of accrued
interest, payment of all other sums due under the GMAC Loan documents and
payment of a prepayment fee.
CERTAIN COVENANTS
In addition to customary covenants, the GMAC Mortgage Notes require, among
other things, that the GMAC Loan Subsidiaries: (a) not transfer or encumber the
mortgaged property; (b) not incur any indebtedness other than the GMAC Mortgage
Notes and certain other limited indebtedness; (c) not permit any lien to exist
on any of its property, assets or revenues, except the limited liens in favor of
GMAC, existing liens and certain other liens; (d) not make any loans to any
third party; and (e) not incur any guarantee obligations, except the guarantee
obligations related to the GMAC Mortgage Notes and certain other guarantee
obligations.
EVENTS OF DEFAULT
Events of default, under the GMAC Mortgage Notes, include, without
limitation, the following: (i) any failure by any of the GMAC Loan Subsidiaries
to pay principal, interest or other obligations under the GMAC Mortgage Notes
when due, (ii) any representation or warranty made by any of the GMAC Loan
Subsidiaries in the GMAC Loan Agreements and related documents proves to have
been untrue in any material respect when made, (iii) any default by GMAC Loan
Subsidiaries in the observance or performance of covenants or other agreements
contained in any of the GMAC Loan Agreements or
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related agreements, (iv) certain events of bankruptcy or insolvency of the GMAC
Loan Subsidiaries or any guarantor, and (v) the occurrence of an event of
default under any other GMAC Loan document.
COLUMN FINANCIAL, INC. LOANS ("COLUMN FINANCIAL LOANS")
GENERAL
The Column Financial Loans are evidenced by, among other things, three loan
agreements (the "Column Financial Loan Agreements"), among several of our
operating subsidiaries (the "Column Financial Loan Subsidiaries"), and Column
Financial, Inc. ("Column Financial"), an affiliate of Donaldson, Lufkin &
Jenrette. The aggregate outstanding principal balance of the Column Financial
Loans was approximately $69.8 million at March 31, 1999.
INTEREST
The Column Financial Loans bear interest at rates of 9.45%, 10.59% and
10.74% on principal balances of $10.2 million, $56.0 million and $3.6 million,
respectively.
SECURITY
The Column Financial Loans are secured by mortgages and assignments of
leases and rents on all of the Column Financial Loan Subsidiaries' 12 hotels.
TERM
The Column Financial Loans mature in March 2005 (for the $3.6 million loan),
in March 2010 (for the $56.0 million loan) and July 2010 (for the $10.2 million
loan).
CERTAIN COVENANTS
In addition to customary covenants, the Column Financial Loans require,
among other things, that the Column Financial Loan Subsidiaries: (a) not incur,
create or assume any outstanding debt other than the Column Financial Loans and
certain other limited indebtedness; (b) not make any advances or loans to any
third party; (c) not enter into or be a party to any transaction with an
affiliate of a Column Financial Loan Subsidiary, with certain limited
exceptions; (d) not permit any lien to exist on any of their properties, assets
or revenues, except the liens in favor of Column Financial, existing liens and
certain other liens; and (e) not amend or modify, terminate or extend, or
consent to assignment of any franchise agreement between any Column Financial
Loan Subsidiary and any franchisor.
EVENTS OF DEFAULT
The Column Financial Loan Agreements contain certain events of default,
including, without limitation, the following: (i) any failure by any of the
Column Financial Loan Subsidiaries to pay principal, interest or other
obligations under the Column Financial Loans when due, (ii) any representation
or warranty made by any of the Column Financial Loan Subsidiaries in the Column
Financial Loan Agreements or related agreements proves to have been untrue in
any material respect when made, (iii) any default by any Column Financial Loan
Subsidiaries in the observance or performance of covenants or other agreements
contained in any Credit Agreement or related agreements, (iv) certain events of
bankruptcy or insolvency of the Column Financial Loan Subsidiaries, and (v) the
occurrence of an event of default under any other Column Financial Loan
documents.
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NOMURA ASSET CAPITAL CORPORATION LOANS ("NOMURA LOANS")
THREE SEPARATE LOAN FACILITIES
Nomura Asset Capital Corporation ("NACC") entered into three separate loan
facilities with certain subsidiaries of Impac in an aggregate principal loan
amount of $330.1 million as of March 31, 1999. The three facilities are
hereinafter referred to as "Nomura I," "Nomura II" and "Nomura III."
NOMURA I
GENERAL
In March 1997, NACC made a $132.5 million term loan (the "Nomura I Loan") to
Impac Hotels I, L.L.C. ("Impac I"), a subsidiary of Impac, to refinance existing
debt on 22 hotel properties acquired by Impac I (the "Nomura I Properties").
NACC has assigned the Nomura I Loan to LaSalle National Bank, as Trustee for
Nomura Depositor Trust ST I, Commercial Mortgage Pass-Through Certificates,
Series 1998-ST I (together with its successors and assigns, the "Nomura I
Lender"). The Nomura I Loan is evidenced by, among other things, a loan
agreement between Impac I and NACC dated as of March 12, 1997 (the "Nomura I
Loan Agreement").
INTEREST
Prior to the Nomura I Adjustment Date (September 11, 1999), the Nomura I
Loan bears interest at a floating interest rate that fluctuates monthly, equal
to 30-day LIBOR plus 2.25%. From and after the Nomura I Adjustment Date,
interest converts to a fixed rate equal to the sum of (a) the implied yield on a
10-year U.S. Treasury note determined as of the earlier of (i) the date on which
the benchmark Treasury rate is locked pursuant to an interest rate management
agreement among Impac, Impac I and NACC (the "Nomura I Interest Rate
Agreement"), and (ii) the third business day prior to the Nomura I Adjustment
Date (the "Nomura I Benchmark Treasury Rate"), plus (b) a spread based on the
debt service coverage ratio ("DSCR") of the Nomura I Properties (which spread
ranges from a low of 1.925% to a high of 3.025%), plus (c), until the Nomura I
Optional Prepayment Date (as defined below), the Additional Nomura I Spread (as
defined below), plus (d) from and after the Nomura I Optional Prepayment Date,
the Additional Nomura I Hyperamortization Spread (as defined below). The
"Additional Nomura I Hyperamortization Spread" is 2.00% for the first monthly
debt service period after the Nomura I Optional Prepayment Date, and 5.00%
thereafter.
INTEREST RATE PROTECTION
Impac I may, from time to time, lock the Nomura I Benchmark Treasury Rate to
be used in calculating the base rate on all or a portion of the Nomura I Loan.
In addition, if prior to the Nomura I Adjustment Date the implied yield of the
10-year Treasury note two years forward exceeds certain pre-determined levels,
Impac I must elect either to lock the Nomura I Benchmark Treasury Rate on a
portion of the Nomura I Loan or prepay a portion of the Nomura I Loan. NACC can
also lock the Nomura I Benchmark Treasury Rate if it exceeds 7.80% or at any
time following the occurrence and during the continuation of an "event of
default" under the Nomura I Loan. If NACC determines prior to the Nomura I
Adjustment Date that it will incur or has incurred losses on its interest rate
hedge positions relating to the rate-locked portion of the Nomura I Loan in
excess of 25% of the net equity of Impac I in the Nomura I Properties, Impac I
or Impac are required to pay to NACC an amount of cash collateral sufficient to
reduce NACC's losses to no more than 20% of the net equity of Impac I in the
Nomura I Properties. Such collateral is returned to Impac I (1) if it converts
the rate-locked portion of the Nomura I Loan to a fixed rate loan, or (2) in the
event such collateral exceeds actual hedging losses, under which circumstances
Impac I is required to pay a monthly maintenance fee equal to eight basis points
on the principal amount of the Nomura I Loan on which the Nomura I Benchmark
Treasury Rate is locked. Of that fee, two basis points are due and payable on a
current basis, and the remainder (together with accrued interest thereon)
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will be recovered by NACC by adding an additional spread (the "Additional Nomura
I Spread") to the base rate from and after the Nomura I Adjustment Date and
prior to the Nomura I Optional Prepayment Date. In addition to the other
collateral described herein, the obligations of Impac and Impac I under the
Nomura I Interest Rate Agreement are secured by a pledge of Impac's 99%
membership interest in Impac I.
REPAYMENT OF PRINCIPAL
Interest-only payments on the Nomura I Loan are due and payable monthly,
prior to the Nomura I Adjustment Date. After the Nomura I Adjustment Date, the
Nomura I Loan is repayable in equal, monthly installments of principal and
interest based on a 20-year amortization schedule. If the Nomura I Loan or any
Split Nomura I Loan has not been prepaid in full by the tenth anniversary of the
applicable Nomura I Adjustment Date (the "Nomura I Optional Prepayment Date"),
excess cash flow from the Nomura I Properties financed by the Nomura I Loan or
the applicable Split Nomura I Loan will be applied monthly to reduce outstanding
principal, in addition to the scheduled installments of principal and interest.
The final maturity date of the Nomura I Loan is March 11, 2019.
PREPAYMENT
The Nomura I Loan may be prepaid in whole or in part without penalty or
premium on or after the Nomura I Optional Prepayment Date. Prior to the Nomura I
Adjustment Date, up to 40% of the Nomura I Loan may be prepaid from the proceeds
of the issuance of additional equity by Impac or from the proceeds of sale of
one or more Nomura I Properties, subject to a scale of increasing premiums
ranging from 0% to 3% of the principal so prepaid. Upon the reacquisition of the
Nomura I Loan from the current Nomura I Lender by Capital Company of America LLC
("CCA") or its designee on the Nomura I Adjustment Date, the Impac I Loan
Agreement will be amended to permit the Nomura I Loan to be prepaid in full, at
the option of Impac I, on the Nomura I Loan reacquisition date, at a prepayment
price equal to (a) 101% of the outstanding principal amount of the Nomura I Loan
or (b) if the Nomura III Loan shall have been prepaid in full (see "Nomura
III--Prepayment" below), 100.5% of the outstanding principal amount of the Impac
I Loan. If the DSCR of the remaining Nomura I Properties as of the Nomura I
Adjustment Date is less than 1.40, the Nomura I Loan must be prepaid in the
amount necessary to bring the DSCR up to 1.40. No prepayment of the Nomura I
Loan or any Split Nomura I Loans is permitted after the Nomura I Adjustment Date
and prior to the Optional Nomura I Prepayment Date; however; Impac I may obtain
the release of one or more Nomura I Properties from the applicable mortgage(s)
securing the Nomura I Loan or the applicable Split Nomura I Loan by defeasing
the portion of such loan allocated to each such Nomura I Property. Defeasance is
achieved by using equity proceeds or proceeds from the sale of each such Nomura
I Property to acquire U.S. Treasury securities in an amount equal to 125% of the
allocated loan amount (or, upon the release of the last Nomura I Property, 100%
of the allocated loan amount), which securities are delivered to the servicer of
the Nomura I Loan or such Split Nomura I Loan as replacement collateral for the
released Nomura I Properties.
Pursuant to an agreement with NACC, we expect to repay this loan on or about
September 11, 1999 with proceeds from our new credit facility.
SPLIT LOANS
The term "Split Nomura I Loans" refers to any refinancing loan made by NACC
pursuant to the Nomura I Loan Agreement to a bankruptcy-remote affiliate of
Impac to which Impac I has transferred a segregated pool of Nomura I Properties
for the purposes of effectively fixing the interest rate on a portion of the
Nomura I Loan and facilitating the securitization thereof by NACC.
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COLLATERAL
The Nomura I Loan is secured by mortgages on each of the 22 Nomura I
Properties (the "Nomura I Mortgages") and by a general security interest in all
personal property and fixtures of Impac I. The Nomura I Mortgages are
cross-collateralized and cross-defaulted with each other.
CERTAIN COVENANTS
In addition to customary covenants, the Nomura Loans require, among other
things, that the Nomura Loan Subsidiaries: (a) not purchase or lease real
property or hold assets other than assets related to the properties subject to
the Nomura Loans; (b) not incur any indebtedness other than the Nomura Loans and
certain other indebtedness; (c) not dissolve, liquidate or merge; and (d) not
engage in any transactions with an affiliate. In addition, Lodgian is required
to maintain a minimum net worth of $133.0 million.
EVENTS OF DEFAULT
The Nomura Loan Agreements contain certain events of default, including,
without limitation, the following: (i) any failure by any of the Nomura Loan
Subsidiaries to pay principal, interest or other obligations under the Nomura
Loans when due, (ii) any representation or warranty made by any of the Nomura
Loan Subsidiaries in the Nomura Loan agreements or related agreements proves to
have been untrue in any material respect when made, (iii) any default by the
Nomura Loan Subsidiaries in the observance or performance of covenants or other
agreements contained in any Nomura Loan documents, (iv) certain events of
bankruptcy or insolvency of any of the Nomura Loan Subsidiaries or any managing
member thereof, and (v) the entering of a judgment or decree against any Nomura
Loan Subsidiary involving an aggregate liability of $1.0 million or more.
NOMURA II
GENERAL
NACC entered into a loan facility (the "Nomura II Loan") with a subsidiary
of Impac, Impac Hotels II, L.L.C. ("Impac II") with an original maximum loan
amount of $150 million. As of March 31, 1999, $157.6 million was outstanding.
The loan amount was later increased to $163.5 million. The loan was made
pursuant to a loan agreement dated as of March 12, 1997 (as amended, the "Nomura
II Loan Agreement") between Impac II and NACC to finance a portion of the cost
of acquiring, constructing and rehabilitating 18 additional hotel properties
(the "Nomura II Properties"). NACC has transferred the Nomura II Loan to CCA
(together with its successors and assigns, the "Nomura II Lender"). The entire
Nomura II Loan has been committed to identified Impac II Properties. All
advances under the Nomura II Loan Agreement must be made and all construction
and rehabilitation of the Nomura II Properties completed by October 18, 1999.
INTEREST
Prior to the Nomura II Adjustment Date (as defined below) the Nomura II Loan
bears interest at a floating interest rate that fluctuates monthly, equal to
30-day LIBOR plus 2.75%. From and after the Nomura II Adjustment Date, interest
converts to a fixed rate as described above in "Nomura I--Interest", except that
(i) the date on which the benchmark Treasury rate is locked is pursuant to a
separate interest rate management agreement among Impac, Impac II, and the
Nomura II Lender (the "Nomura II Interest Rate Lock Agreement"), and (ii) the
spread based on the DSCR of the Nomura II Properties ranges from a low of 1.925%
to a high of 3.250%.
The Nomura II Adjustment Date will be the earlier of (y) October 18, 2000,
and (z) with respect to any portion of the Nomura II Loan that becomes a Split
Nomura II Loan (as defined below), the date on which such portion of the Nomura
II Loan becomes a Split Nomura II Loan. It is anticipated that Nomura
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II Lender will securitize the Nomura II Loan and any Split Nomura II Loan after
the applicable Nomura II Adjustment Date.
INTEREST RATE PROTECTION
The Nomura II Interest Rate Lock Agreement contains substantially similar
terms as those set forth under "Nomura I--Interest Rate Protection" above except
that the Nomura II Benchmark Treasury Rate is based on a four-year forward rate
rather than a two-year forward rate, and the prepayment amounts differ in the
event the Nomura II Benchmark Treasury Rate exceeds the pre-determined
thresholds. Pursuant to the terms of the Nomura II Interest Rate Agreement,
Impac II locked the Nomura II Benchmark Treasury Rate on $54 million of the
Nomura II Loan at 7.235% during April, 1997. In the event that Lodgian
determines that it is in its best interest to "break" that interest rate lock,
it would be required to pay a significant fee to the Nomura II Lender.
REPAYMENT OF PRINCIPAL
Principal and interest payments are to be made on the same terms as are
described above under "Nomura I--Repayment of Principal," except that the
schedule refers to the Nomura II Adjustment Date and the Nomura II Optional
Prepayment Date (which is the tenth anniversary of the Nomura II Adjustment
Date). The final maturity date of the Nomura II Loan is October 31, 2020.
PREPAYMENT
The Nomura II Loan may be prepaid on the same terms and under the same
conditions as are described under "Nomura I--Prepayment" above, except that all
references to Nomura I refer instead to Nomura II and except that Impac II does
not have the right to prepay the Nomura II Loan in full on the Nomura II
Adjustment Date.
SPLIT LOANS
Prior to the scheduled Nomura II Adjustment Date, the Nomura II Loan can be
split at the option of Impac II to effectively fix the interest rate thereon,
similar to the concept of Split Nomura I Loans discussed under the heading
"Nomura I--Split Loans" above (each portion so split, a "Split Nomura II Loan").
COLLATERAL
The Nomura II Loan is secured by first-priority mortgages on each Nomura II
Property (the "Nomura II Mortgages") and by a general security interest in all
personal property and fixtures of Impac II. The Nomura II Mortgages are
cross-collateralized and cross-defaulted with each other.
GUARANTEES
Impac has guaranteed the repayment of the portion of the Nomura II Loan
funding rehabilitation and construction costs (but not the acquisition costs) of
the Nomura II Properties. These guarantees expire upon completion of
rehabilitation or construction (as applicable). Currently, only $24.3 million of
such guarantees remain outstanding related to the Marriott Hotel being
constructed in Portland, Oregon which is expected to be completed no later than
the fall of 1999. In addition, where Impac II elected to increase the Nomura II
Loan for any particular Nomura II Property above 65% of the approved project
costs (but not higher than 80%), Impac has guaranteed repayment of such excess
(the "Guaranteed Differential") until the Nomura II Properties in question have
achieved a trailing 12-month DSCR of not less than 1.20. Three hotels have
passed the DSCR test, resulting in the expiration of Impac's guaranty of the
Guaranteed Differential with respect to such hotels. The aggregate amount of the
Guaranteed Differential still guaranteed by Impac is approximately $23.5
million.
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In December, 1998, as a condition to obtaining the consent of the Nomura II
Lender to the Merger transaction, Lodgian executed a joinder agreement pursuant
to which it became jointly and severally liable with Impac under the foregoing
payment guarantees pertaining to the Nomura II Loan.
CERTAIN COVENANTS AND EVENTS OF DEFAULT
The covenants and events of default provisions of the Nomura II Loan are in
all material respects essentially the same as those for the Nomura I Loan.
NOMURA III
GENERAL
NACC has extended a loan (the "Nomura III Loan") to a subsidiary of Impac,
Impac Hotels III, LLC. ("Impac III") in a maximum amount of $100 million, of
which approximately $40.0 million was funded at March 31, 1999. The loan was
made pursuant to a loan agreement between Impac III and NACC dated as of October
29, 1997 (as amended, the "Nomura III Loan Agreement") to finance a portion of
the cost of acquiring, constructing and rehabilitating nine hotel properties
(the "Nomura III Properties"). NACC has transferred the Nomura III Loan to CCA
(together with its successors and assigns, the "Nomura III Lender").
TERMS AND CONDITIONS
The terms and conditions of the Nomura III Loan are in all material respects
essentially the same as those for the Nomura II Loan, except as follows: (a) the
outside Nomura III Adjustment Date is October 11, 2001, (b) all advances under
the Nomura III Loan for the acquisition of a Nomura III Property must have been
made by October 31, 1998, (c) the rehabilitation and construction of the Nomura
III Properties must be completed by October 31, 2000, (d) the Nomura III Loan
has a final maturity date of November 11, 2021, (e) the maximum loan amount of
the Nomura III Loan relating to any particular Nomura III Property is 70% of
NACC-approved project costs, approved by the Nomura III Lender, (f) there are no
Impac and Lodgian payment guaranties, (g) the entire Nomura III Loan is subject
to optional prepayment in whole or in part from certain sources (e.g.,
additional equity, sale proceeds and short-term bridge financing) prior to the
Nomura III Adjustment Date at premiums increasing from 0% to 4% of the principal
prepaid, and (h) the Nomura III Loan is secured by mortgages and security
interests on the Nomura III Properties. Under an agreement with NACC, the Nomura
III Loan may be prepaid in full, at the option of Impac III, contemporaneously
with the consummation of this offering and the new credit facility at 105% of
face value.
BANC ONE CAPITAL FUNDING CORPORATION LOANS ("BANC ONE LOANS")
GENERAL
The Banc One Loans are evidenced by, among other things, loan agreements
dated as of December 8, 1998 among several of our operating subsidiaries (the
"Banc One Loan Subsidiaries") and Banc One Capital Funding Corporation ("Banc
One"). In addition, each loan is evidenced by two separate promissory notes, one
for an aggregate of $62.0 million (the "Primary Notes") and one for an aggregate
of $10.0 million (the "Additional Notes.") The aggregate principal balance of
the Banc One Loans was $71.5 million at March 31, 1999.
PAYMENT OF INTEREST AND PRINCIPAL
The interest rate payable on the Banc One Loans is 9% and after November 30,
2000, it may be increased up to the maximum rate allowable by applicable law
(as, and to the extent that, the interest rate on United States Treasury Issues
with maturity dates as closely as possible to November 30, 2001 exceeds 5.5%).
The principal balance of the Additional Notes must be repaid by July 1999.
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SECURITY
The Banc One Loan Subsidiaries have granted to Banc One a first priority
mortgage on substantially all of their real property, encompassing six
properties. Lodgian and certain affiliates have entered into guaranty and
indemnity agreements with Banc One in favor of the Banc One Operating
Subsidiaries, guaranteeing the prompt and complete payment and performance of
principal, interest and other monetary obligations of the Banc One Operating
Subsidiaries under the Primary and Additional Notes. Lodgian's payment guarantee
is limited in time and terminates upon completion of the renovation work
contemplated by the Banc One loan agreements.
TERM AND PREPAYMENT
The Primary Notes of the Banc One Loans mature on November 30, 2000, but may
be extended until November 30, 2001 provided that the extension fee (in the
amount specified in the Banc One Primary Notes) is paid on or before November
30, 2000. The Additional Notes have a maturity date of July 1999. The principal
balance of the Primary Notes may be prepaid in full after December 1, 1999 upon
payment of a prepayment fee. In addition, certain prepayments of the outstanding
principal balance may be required, if necessary to attain a certain debt
coverage ratio.
CERTAIN COVENANTS
In addition to customary covenants, the Banc One Loans require, among other
things, that the Banc One Loan Subsidiaries (a) maintain a debt service coverage
ratio of at least 1.25:1 or, subsequent to January 20, 2000, 1.40:1, (b) not
incur any indebtedness other than permitted indebtedness, (c) not permit any
lien to exist on any of their property, assets or revenues, except permitted
liens and (d) not incur any guarantee obligations, except the guarantee
obligations related to the Banc One Loans and certain other guarantee
obligations.
EVENTS OF DEFAULT
The Banc One loan agreements contain certain events of default, including,
without limitation, the following: (1) any failure by any of the Banc One Loan
Subsidiaries to pay principal, interest or other obligations under the Banc One
Loans when due, (2) any representation or warranty made by any of the Banc One
Loan Subsidiaries in any of the Banc One loan agreements or related agreements
proves to have been untrue in any material respect when made, (3) any default by
any of the Banc One Loan Subsidiaries in the observance or performance of
covenants or other agreements contained in any of the Banc One Loan agreements
or related agreements, (4) certain events of bankruptcy or insolvency of any of
the Banc One Loan Subsidiaries, (5) the entering of a judgment or decree against
any Banc One Loan Subsidiary involving an aggregate liability of $50,000 or
more, and (6) the occurrence of an event of default under any franchise
agreement between a franchisor and any Banc One Loan Subsidiary.
SINGLE ASSET MORTGAGES
We also have 18 loans totaling $86.2 million at March 31, 1999 with various
other lenders secured by single properties. The interest rates on such loans
range from 6% to 14% with maturities ranging from 2001 to 2016. The agreements
contain customary covenants and events of default.
CRESTS
In June 1998, Lodgian Capital Trust I, a statutory business trust formed
under the laws of the State of Delaware (the "Trust"), issued $175 million of
CRESTS. The CRESTS bear interest at 7% and are convertible into shares of our
common stock. The sole assets of the Trust are $175 million principal amount of
Lodgian's Convertible Debentures.
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TERMS OF THE CRESTS
The holders of the CRESTS receive distributions on the CRESTS at a fixed
annual rate of $3.50 per each $50 of CRESTS, subject to increase if certain
events occur. Payments may be deferred if interest on the Convertible Debentures
is deferred as described below.
The CRESTS are convertible, at the option of the holders, into shares of
Common Stock of Lodgian at a price equal to $21.42 per share of Common Stock (or
2.3343 shares of Common Stock per CRESTS). The CRESTS will be redeemed upon
repayment of the Convertible Debentures on June 30, 2010 or their earlier
redemption, in a liquidation amount equal to the principal amount of the related
Convertible Debentures maturing or being redeemed and at a redemption price
equal to the redemption price of the Convertible Debentures plus accumulated and
unpaid distributions to the date of redemption.
TERMS OF THE CONVERTIBLE DEBENTURES
The Convertible Debentures will mature on June 30, 2010, unless previously
redeemed. The convertible debentures are subordinate and junior in right of
payment to all indebtedness of Lodgian.
Lodgian has the option to redeem all or a part of the Convertible Debentures
for cash with the sale proceeds of its equity securities beginning July 3, 2002
at a price through July 27, 2003 equal to 104.2% of the aggregate principal
amount of the Convertible Debentures to be redeemed, declining annually to 100%
on June 30, 2008 (together with accrued and unpaid interest to the redemption
date).
Lodgian also has the option to redeem all or part of the Convertible
Debentures for cash beginning on July 3, 2002 at a price equal to 100% of the
aggregate principal amount of the Convertible Debentures to be redeemed (plus
accrued and unpaid interest to the redemption date). Lodgian may however,
exercise this option only if (1) for any 20 trading days within any 30
consecutive trading days, the closing price of its Common Stock on the New York
Stock Exchange exceeds $25.71 per share (subject to adjustments in certain
circumstances) and (2) on or prior to the notice of redemption, Lodgian has
entered into an agreement with a nationally recognized investment banking firm
to buy and sell at least the same number of shares of Lodgian Common Stock as
would be issuable upon conversion of the unconverted Convertible Debentures.
Lodgian may defer payments of interest on the Convertible Debentures by
extending the interest payment period on the Convertible Debentures. However,
the total extension period (together with all extensions) may not exceed 20
consecutive quarterly periods or extend beyond June 30, 2010. During any
extension period, interest on the Convertible Debentures will continue to accrue
at the applicable annual rate, compounded quarterly. As a result of such an
extension, distributions on the CRESTS would also be deferred by the Trust
during the extension period; however such distributions would continue to
accumulate at the applicable rate, compounded quarterly. If Lodgian defers its
interest payments, then, subject to limited exceptions, Lodgian may not, and
will not permit its subsidiaries to, (1) declare or pay any dividend on, make
any distribution with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock, or (2) pay any
principal, interest or premium on, or repay, repurchase or redeem any of its
debt securities or make any guarantee payment on any debt securities of its
subsidiaries that are similarly ranked with or junior in interest to the
Convertible Debentures.
EVENTS OF DEFAULT
Events of Default with respect to the Convertible Debentures include: (a)
default in paying interest for 30 days after notice is given (provided that
Lodgian has not exercised its option to extend interest); (b) default in paying
(i) liquidated damages for having failed to register the CRESTS under the
registration rights agreement or (ii) principal on the Convertible Debentures;
(c) breach of any other covenant under the Indenture for 90 days after notice is
given; (d) failure to deliver Lodgian's common stock upon conversion of the
CRESTS; (e) cross-default under any debt in excess of $10 million for 30 days
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after notice is given; (f) certain events of bankruptcy; and (g) dissolution of
the Trust (except where the holders of the CRESTS get a distribution of the
Convertible Debentures, the CRESTS are redeemed or the Trust is merged or
amalgamated as provided in the Trust declaration).
If an event of default occurs, the Trustee has the right to accelerate the
Convertible Debentures. If the Trustee fails to enforce its rights under the
Convertible Debentures, the holders of the CRESTS may institute legal
proceedings against Lodgian to enforce the Trustee's rights under the
Convertible Debentures. In addition, if any event of default relates to the
CRESTS and is attributable to a failure of Lodgian to pay interest or principal
on the Convertible Debentures on the date that interest and principal is
otherwise payable, then the holders of the CRESTS may directly institute a
proceeding for enforcement of payment to the holder of the principal of or
interest on the Convertible Debentures having a principal amount equal to the
aggregate liquidation amount of the CRESTS of the holder on or after the
respective due date specified in the Convertible Debentures.
GUARANTEE BY LODGIAN
As a result of the Merger, Lodgian has guaranteed, to the extent the Trust
has available funds, payments of distributions on the CRESTS and payments on
liquidation of the Trust or the redemption of the CRESTS. Lodgian's obligations
under the guarantee are subordinate to all of its liabilities and rank equally
with the most senior preferred stock which it may issue and with any guarantee
which it may issue in respect of any preferred stock of any of its affiliates.
LIQUIDATION RIGHTS
If the Trust liquidates, after satisfying any claims of the Trust's
creditors, the holders of the CRESTS will receive a liquidation amount of $50
per CRESTS (plus accumulated and unpaid distributions to the date of payment),
which may be in the form of a distribution of such amount in Convertible
Debentures.
SPECIAL EVENT DISTRIBUTION OF THE CONVERTIBLE DEBENTURES
Upon the occurrence of a special event such as a change in laws or
regulations or a change in the interpretation or application of laws or
regulations relating to the Trust's tax status or status under the Investment
Company Act of 1940, the Trust may be dissolved and the Convertible Debentures
distributed to the holders of the CRESTS.
THE NEW SENIOR CREDIT FACILITY
GENERAL
Concurrently with the closing of the offering of the Old Notes, Lodgian
Financing entered into a credit agreement establishing $315.0 million in a
secured credit facility (the "Credit Facility"). The Credit Facility is composed
of a $25.0 million delayed draw term loan facility ("Tranche A"), a $240.0
million term loan facility ("Tranche B") and a $50.0 million revolving credit
facility (the "Revolver"). At the closing of the offering, approximately $107.5
million of Tranche B was drawn. We will draw $132.5 million of Tranche B on
September 13, 1999 to repay the Nomura Impac I mortgage notes. The Tranche A
facility is available to be drawn during a 15-month period following the closing
date and can be utilized only to finance, in part, hotel development and
repositioning projects and to pay fees and expenses incurred in connection with
the Credit Facility. The Revolver is available to meet working capital
requirements, for hotel development and repositioning projects and for general
corporate purposes.
INTEREST
The Credit Facility bears interest and an applicable margin in excess of
base or LIBOR rates. The applicable margin is based on our senior secured debt
rating and range from 3.5% to 4.25% for Tranche A
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and Tranche B LIBOR-based loans, 2.25% to 3.0% for Tranche A and Tranche B base
rate loans, 3.25% to 4.00% for Revolver LIBOR-based loans or 2.0% to 2.75% for
Revolver base rate loans.
SECURITY AND GUARANTEES
The Credit Facility is secured by mortgages on the hotels owned through
Lodgian Financing, and a pledge of the capital stock of Lodgian Financing and
its subsidiaries, and limited guarantees from certain subsidiaries of Lodgian
other than Lodgian Financing. In addition, Lodgian will guarantee the Credit
Facility upon expiration of Lodgian's guarantees under the Nomura II Loan
described under "Description of Certain Indebtedness and Preferred Stock--Nomura
Asset Capital Corporation Loans--Nomura II-- Guarantees."
TERM
The final maturity of the Tranche A and Tranche B loans is the earlier of
(i) seven years after the closing date or (ii) the final maturity of the Banc
One Loans as extended whether through amendment or refinancing. The final
maturity of the Revolver is April 15, 2004.
CERTAIN COVENANTS
The Credit Facility limits the amount of our senior debt and provide for
minimum fixed charge coverage and interest coverage ratios. In addition, the
Credit Facility restricts
- liens (other than liens securing the Credit Facilities);
- debt (other than the issuance of up to $100 million of subordinated debt
(in addition to the Notes) on terms and conditions reasonably satisfactory
to the lenders), guarantees or other contingent obligations (including,
without limitation, the subordination of all intercompany indebtedness on
terms satisfactory to the lenders);
- lease obligations;
- mergers and consolidations;
- sales, transfers and other dispositions of assets (other than sales of
inventory in the ordinary course of business);
- loans, acquisitions, joint ventures and other investments;
- dividends and other distributions to stockholders (including, without
limitation, the Convertible Debentures);
- creating new subsidiaries;
- becoming a general partner in any partnership;
- repurchasing shares of capital stock;
- prepaying, redeeming or repurchasing debt;
- capital expenditures;
- granting negative pledges;
- changing the nature of our business;
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- amending organizational documents, or amending or otherwise modifying any
debt, any related document or any other material agreement; and
- changing accounting policies or reporting practices, in each case, with
such exceptions as may be agreed upon in the loan documentation.
EVENTS OF DEFAULT
Events of default under the Credit Facility include:
- failure to pay principal when due or to pay interest or other amounts
within three business days after the same becomes due;
- any representation or warranty proving to have been materially incorrect
when made or confirmed;
- failure to perform or observe convenants set forth in the Credit Facility
within a specified period of time, where customary and appropriate, after
notice or knowledge of such failure;
- cross-defaults to other indebtedness in an amount to be agreed in the
Credit Facility;
- bankruptcy and insolvency defaults (with grace period for involuntary
proceedings);
- monetary judgment defaults and nonmonetary judgment defaults that could
reasonably be expected to have a material adverse effect as defined in the
Credit Facility.
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DESCRIPTION OF THE NOTES
Lodgian Financing Corp. issued the Old Notes, and will issue the Exchange
Notes (together with the Old Notes, the "Notes") under an Indenture, dated as of
July 23, 1999, among Lodgian Financing Corp., as issuer, Lodgian, Inc. and the
Initial Subsidiary Guarantors, as guarantors, and Bankers Trust Company (the
"Trustee"). The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939.
The following is a summary of the material provisions of the Indenture but
does not restate the Indenture in its entirety. You can find the definitions of
certain capitalized terms used in the following summary under the subheading
"--Definitions." We urge you to read the Indenture because it, and not this
description, defines your rights as holders of the Notes. A copy of the
Indenture is available upon request from Lodgian Financing Corp. For purposes of
this "Description of the Notes," the term "Lodgian" means Lodgian, Inc. and its
successors under the Indenture and the term "Lodgian Financing Corp." means
Lodgian Financing Corp. and its successors under the Indenture, in each case
excluding its subsidiaries.
GENERAL
The Notes are unsecured senior subordinated obligations of Lodgian Financing
Corp., initially limited to $200.0 million aggregate principal amount. The Notes
will mature on July 15, 2009. Subject to the covenants described below under
"--Covenants" and applicable law, Lodgian Financing Corp. may issue additional
Notes ("Additional Notes") under the Indenture. The Notes offered hereby and any
Additional Notes subsequently issued would be treated as a single class for all
purposes under the Indenture.
Each Note will initially bear interest at 12 1/4% per annum from the Closing
Date or from the most recent Interest Payment Date to which interest has been
paid. Interest on the Notes will be payable semiannually on January 15 and July
15 of each year, commencing January 15, 2000. Interest will be paid to Holders
of record at the close of business on the January 1 or July 1 immediately
preceding the Interest Payment Date. Interest is computed on the basis of a
360-day year of twelve 30-day months on a U.S. corporate bond basis.
If by the date that is six months after the Closing Date, Lodgian Financing
Corp. has not consummated a registered exchange offer for the Notes or caused a
shelf registration statement with respect to resales of the Notes to be declared
effective, the annual interest rate on the Notes will increase by .5%, and if an
exchange offer is not consummated or a shelf registration statement is not
declared effective on the date that is nine months after the Closing Date, the
annual interest rate on the Notes will increase by an additional .5%, until the
consummation of a registered exchange offer or the effectiveness of a shelf
registration statement. See "--Registration Rights."
The Notes may be exchanged or transferred at the office or agency of Lodgian
Financing Corp. in the Borough of Manhattan, the City of New York. Initially,
the corporate trust office of the Trustee at 4 Albany Street, 4th Floor, New
York, NY 10004 will serve as such office. If you give Lodgian Financing Corp.
wire transfer instructions, Lodgian Financing Corp. will pay all principal,
premium and interest on your Notes in accordance with your instructions. If you
do not give Lodgian Financing Corp. wire transfer instructions, payments of
principal, premium and interest will be made at the office or agency of the
paying agent which will initially be the Trustee, unless Lodgian Financing Corp.
elects to make interest payments by check mailed to the Holders.
The Notes will be issued only in fully registered form, without coupons, in
denominations of $1,000 of principal amount and multiples of $1,000. See
"--Book-Entry; Delivery and Form." No service charge will be made for any
registration of transfer or exchange of Notes, but Lodgian Financing Corp. may
require payment of a sum sufficient to cover any transfer tax or other similar
governmental charge payable in connection therewith.
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OPTIONAL REDEMPTION
Lodgian Financing Corp. may redeem the Notes at any time on or after July
15, 2004. The Redemption Price for the Notes (expressed in percentages of
principal amount), plus accrued interest to the Redemption Date, if redeemed
during the 12-month period commencing July 15, of the years set forth below will
be as follows:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- ---------------------------------------------------------------------------- ----------------
<S> <C>
2004........................................................................ 106.125%
2005........................................................................ 104.083%
2006........................................................................ 102.042%
2007 and thereafter......................................................... 100.000%
</TABLE>
In addition, at any time prior to July 15, 2002, Lodgian Financing Corp. may
redeem up to 35% of the principal amount of the Notes with the Net Cash Proceeds
of one or more sales of Capital Stock (other than Disqualified Stock) of Lodgian
or Lodgian Financing Corp. at a Redemption Price (expressed as a percentage of
principal amount) of 112.250%, plus accrued interest to the Redemption Date;
PROVIDED that at least 65% of the aggregate principal amount of Notes originally
issued on the Closing Date remains outstanding after each such redemption and
notice of any such redemption is mailed within 60 days of each such sale of
Capital Stock.
Lodgian Financing Corp. will give not less than 30 days' nor more than 60
days' notice of any redemption. If less than all of the Notes are to be
redeemed, selection of the Notes for redemption will be made by the Trustee:
- in compliance with the requirements of the principal national securities
exchange, if any, on which the Notes are listed, or
- if the Notes are not listed on a national securities exchange, by lot or
by such other method as the Trustee in its sole discretion shall deem to
be fair and appropriate.
However, no Note of $1,000 in principal amount or less shall be redeemed in
part. If any Note is to be redeemed in part only, the notice of redemption
relating to such Note will state the portion of the principal amount to be
redeemed. A new Note in principal amount equal to the unredeemed portion will be
issued upon cancellation of the original Note.
RANKING
SUMMARY
The Notes are senior subordinated Indebtedness of Lodgian Financing Corp.
This means that the payment of the principal, premium and interest on the Notes
is subordinated to the prior payment in full of all existing and future Senior
Indebtedness of Lodgian Financing Corp. See "Risk Factors--Subordination of the
Notes and Notes Guarantees; Asset Encumbrances--Existence of Senior Debt Could
Limit the Ability of Lodgian Financing and the Guarantors to Fulfill Their
Obligations Under the Notes and the Note Guarantees." However, payment from the
money or the proceeds of U.S. Government Obligations held in any defeasance
trust described under "--Defeasance" below, will not be subordinated to any
Senior Indebtedness or subject to the restrictions described below.
The Note Guarantees are senior subordinated Indebtedness of Lodgian and the
Initial Subsidiary Guarantors. The Indebtedness evidenced by the Note Guarantees
is subordinated on the same basis to Senior Indebtedness of Lodgian and the
Initial Subsidiary Guarantors as the Notes are subordinated to Senior
Indebtedness of Lodgian Financing Corp. However, until Lodgian repays the Impac
I Debt in September 1999, the Note Guarantee of Lodgian, Inc. will be junior
solely to the guarantees under the Impac loans and the Credit Agreement.
Assuming the offering of the Notes, the borrowings under the new credit
facility and the application of the proceeds as described in "Use of Proceeds"
had occurred on March 31, 1999, Lodgian and Lodgian
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Financing Corp. and the Initial Subsidiary Guarantors would have had $887.0
million of consolidated Indebtedness, of which $376.0 million would have been
Senior Indebtedness (which includes $136.0 million of Guarantees of Indebtedness
of subsidiaries that are not guaranteeing the Notes) and Lodgian's subsidiaries
other than the Initial Subsidiary Guarantors would have had $447.0 million of
Indebtedness which would have been effectively senior to the Notes.
By reason of the subordination provisions described below, in the event of
liquidation or insolvency, creditors of Lodgian Financing Corp. who are not
holders of Senior Indebtedness may recover less, ratably, than holders of Senior
Indebtedness and may recover more, ratably, than Holders of the Notes.
TERMS OF SUBORDINATION
Except with respect to the money, securities or proceeds held under any
defeasance trust established in accordance with the Indenture, upon any payment
or distribution of assets or securities of Lodgian Financing Corp. of any kind
or character, whether in cash, property or securities, upon any dissolution or
winding up or total or partial liquidation or reorganization of Lodgian
Financing Corp., whether voluntary or involuntary, or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due or to become due upon all
Senior Indebtedness shall first be paid in full, in cash or cash equivalents,
before the Holders of the Notes or the Trustee on behalf of the Holders of the
Notes shall be entitled to receive (1) any payment by, or on behalf of, Lodgian
Financing Corp. on account of Senior Subordinated Obligations or (2) any payment
to acquire any of the Notes for cash, property or securities, or (3) any
distribution with respect to the Notes of any cash, property or securities.
Before any payment may be made by, or on behalf of, Lodgian Financing Corp.
on any Senior Subordinated Obligations (other than with the money, securities or
proceeds held under any defeasance trust established in accordance with the
Indenture), upon any such dissolution, winding up, liquidation or
reorganization, any payment or distribution of assets or securities of Lodgian
Financing Corp. of any kind or character, whether in cash, property or
securities, to which the Holders of the Notes or the Trustee on behalf of the
Holders of the Notes would be entitled, but for the subordination provisions of
the Indenture, shall be made by Lodgian Financing Corp. or by any receiver,
trustee in bankruptcy, liquidating trustee, agent or other similar Person making
such payment or distribution or by the Holders of the Notes or the Trustee if
received by them or it, directly to the holders of the Senior Indebtedness
(proportionately to such holders on the basis of the respective amounts of
Senior Indebtedness held by such holders) or their representatives or to any
trustee or trustees under any indenture pursuant to which any such Senior
Indebtedness may have been issued, as their respective interests appear, to the
extent necessary to pay all such Senior Indebtedness in full, in cash or cash
equivalents, after giving effect to any concurrent payment, distribution or
provision therefor to or for the holders of such Senior Indebtedness.
The words "cash, property or securities" do not include securities of
Lodgian Financing Corp. or any other corporation provided for by a plan of
reorganization or readjustment that are subordinated, at least to the extent
that the Notes are subordinated, to the payment of all Senior Indebtedness then
outstanding; PROVIDED that:
(1) this does not to cause the Notes to be treated in any case or
proceeding or similar event described above as part of the same class of
claims as the Senior Indebtedness or any class of claims PARI PASSU with, or
senior to, the Senior Indebtedness for any payment or distribution,
(2) if a new corporation results from such reorganization or
readjustment, such corporation assumes the Senior Indebtedness and
(3) the rights of the holders of the Senior Indebtedness are not,
without the consent of such holders, altered by such reorganization or
readjustment.
No direct or indirect payment by or on behalf of Lodgian Financing Corp. of
Senior Subordinated Obligations (other than with the money, securities or
proceeds held under any defeasance trust established in accordance with the
Indenture), whether pursuant to the terms of the Notes or upon acceleration or
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otherwise shall be made if, at the time of such payment, there exists a default
in the payment of all or any portion of the obligations on any Senior
Indebtedness of Lodgian Financing Corp. and such default shall not have been
cured or waived or the benefits of this sentence waived by or on behalf of the
holders of such Senior Indebtedness. In addition, during the continuance of any
other event of default with respect to any Designated Senior Indebtedness
pursuant to which the maturity thereof may be accelerated, upon receipt by the
Trustee of written notice from the trustee or other representative for the
holders of such Designated Senior Indebtedness (or the holders of at least a
majority in principal amount of such Designated Senior Indebtedness then
outstanding), no payment of Senior Subordinated Obligations (other than with the
money, securities or proceeds held under any defeasance trust established in
accordance with the Indenture) may be made by or on behalf of Lodgian Financing
Corp. upon or in respect of the Notes for a period (a "Payment Blockage Period")
commencing on the date of receipt of such notice and ending 179 days thereafter
(unless, in each case, such Payment Blockage Period shall be terminated by
written notice to the Trustee from such trustee of, or other representatives
for, such holders or by payment in full, in cash or cash equivalents, of such
Designated Senior Indebtedness or such event of default has been cured or
waived). Not more than one Payment Blockage Period may be commenced with respect
to the Notes during any period of 360 consecutive days. Notwithstanding anything
in the Indenture to the contrary, there must be 180 consecutive days in any
360-day period in which no Payment Blockage Period is in effect. No event of
default (other than an event of default pursuant to the financial maintenance
covenants under the Credit Agreement) that existed or was continuing (it being
acknowledged that any subsequent action that would give rise to an event of
default pursuant to any provision under which an event of default previously
existed or was continuing shall constitute a new event of default for this
purpose) on the date of the commencement of any Payment Blockage Period with
respect to the Designated Senior Indebtedness initiating such Payment Blockage
Period shall be, or shall be made, the basis for the commencement of a second
Payment Blockage Period by the representative for, or the holders of, such
Designated Senior Indebtedness, whether or not within a period of 360
consecutive days, unless such event of default shall have been cured or waived
for a period of not less than 90 consecutive days.
To the extent any payment of Senior Indebtedness (whether by or on behalf of
Lodgian Financing Corp., as proceeds of security or enforcement of any right of
setoff or otherwise) is declared to be fraudulent or preferential, set aside or
required to be paid to any receiver, trustee in bankruptcy, liquidating trustee,
agent or other similar Person under any bankruptcy, insolvency, receivership,
fraudulent conveyance or similar law, then if such payment is recovered by, or
paid over to, such receiver, trustee in bankruptcy, liquidating trustee, agent
or other similar Person, the Senior Indebtedness or part thereof originally
intended to be satisfied shall be deemed to be reinstated and outstanding as if
such payment had not occurred. To the extent the obligation to repay any Senior
Indebtedness is declared to be fraudulent, invalid, or otherwise set aside under
any bankruptcy, insolvency, receivership, fraudulent conveyance or similar law,
then the obligation so declared fraudulent, invalid or otherwise set aside (and
all other amounts that would come due with respect thereto had such obligation
not been so affected) shall be deemed to be reinstated and outstanding as Senior
Indebtedness for all purposes hereof as if such declaration, invalidity or
setting aside had not occurred.
GUARANTEES
Payment of the principal of, premium, if any, and interest on the Notes is
Guaranteed, jointly and severally, on an unsecured senior subordinated basis by
Lodgian and the Initial Subsidiary Guarantors. However, until Lodgian repays the
Impac I Debt in September 1999, the Note Guarantee of Lodgian, Inc. will be
junior solely to the guantees under the Impac loans and the Credit Agreement. In
addition, if any Restricted Subsidiary that is not a Subsidiary Guarantor
Guarantees any Indebtedness of Lodgian or any Restricted Subsidiary (other than
a Foreign Subsidiary), Lodgian will cause such Restricted Subsidiary to
Guarantee Lodgian Financing Corp.'s obligations under the Notes; provided that
the Restricted Subsidiaries of Lodgian Financing Corp. existing on the Closing
Date may guarantee Lodgian Financing
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Corp.'s obligations under the Credit Agreement. See "--Covenants--Limitation on
Issuances of Guarantees by Restricted Subsidiaries."
Payments under any Note Guarantee will be subordinated in right of payment
to all existing and future Senior Indebtedness of the Guarantor to the same
extent as the Notes are subordinated to Senior Indebtedness of Lodgian Financing
Corp.
The obligations of each Guarantor under its Note Guarantee will be limited
so as not to constitute a fraudulent conveyance under applicable Federal or
state laws. Each Guarantor that makes a payment or distribution under its Note
Guarantee will be entitled to contribution from any other Guarantor.
The Note Guarantee issued by any Subsidiary Guarantor will be automatically
and unconditionally released and discharged upon (1) any sale, exchange or
transfer to any Person (other than an Affiliate of the Company) of all of the
Capital Stock of such Subsidiary Guarantor or (2) the designation of such
Subsidiary Guarantor as an Unrestricted Subsidiary, in each case in compliance
with the terms of the Indenture.
SINKING FUND
There will be no sinking fund payments for the Notes.
REGISTRATION RIGHTS
The following is a summary of the material provisions of the Registration
Rights Agreement. You should read the proposed form of the Registration Rights
Agreement. A copy of the proposed form of Registration Rights Agreement is
available from Lodgian Financing Corp. upon request.
Lodgian Financing Corp. and each Guarantor have agreed with the placement
agents, for the benefit of the Holders, that they will use their best efforts,
at their cost, to file and cause to become effective a registration statement
with respect to a registered offer (the "Exchange Offer") to exchange the Notes
for an issue of senior subordinated notes of Lodgian Financing Corp. (the
"Exchange Notes"), guaranteed by the Guarantors, with terms identical to the
Notes (except that the Exchange Notes will not bear legends restricting
transfer).
The Exchange Offer will remain open for not less than 20 business days from
when we mail notice of the Exchange Offer to Holders. For each Note surrendered
to Lodgian Financing Corp. under the Exchange Offer, the Holder will receive an
Exchange Note of equal principal amount. Interest on each Exchange Note shall
accrue from the last Interest Payment Date on which interest was paid on the
Notes so surrendered or, if no interest has been paid on such Notes, from the
Closing Date. If Lodgian Financing Corp. effects the Exchange Offer, Lodgian
Financing Corp. will be entitled to close the Exchange Offer 20 business days
after the commencement thereof, PROVIDED that it has accepted all Notes validly
surrendered in accordance with the terms of the Exchange Offer. Notes not
tendered in the Exchange Offer will bear interest at the rate set forth on the
cover page of this memorandum and be subject to all of the terms and conditions
specified in the Indenture and to the transfer restrictions described in
"Transfer Restrictions."
In the event that applicable interpretations of the staff of the Securities
and Exchange Commission do not permit us to effect the Exchange Offer, or under
other specified circumstances, we will, at our cost, use our best efforts to
cause to become effective a shelf registration statement (the "Shelf
Registration Statement") with respect to resales of the Notes. Lodgian Financing
Corp. and the Guarantors will use their best efforts to keep such Shelf
Registration Statement effective until the expiration of the time period
referred to in Rule 144(k) under the Securities Act after the Closing Date, or
such shorter period that will terminate when all Notes covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement. Lodgian Financing Corp. and the Guarantors will, in the event of such
a shelf registration, provide to each Holder copies of the prospectus, notify
each Holder when the Shelf Registration Statement for the Notes has become
effective and take certain other actions as are required to permit resales of
the Notes. A Holder that sells its Notes pursuant to the Shelf Registration
Statement generally (1) will be required to be named as a selling security
holder in the related prospectus and to
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deliver a prospectus to purchasers, (2) will be subject to certain of the civil
liability provisions under the Securities Act in connection with such sales and
(3) will be bound by the provisions of the Registration Rights Agreement that
are applicable to such a Holder (including certain indemnification obligations).
In the event that the Exchange Offer is not consummated and a Shelf
Registration Statement is not declared effective on or prior to the date that is
six months after the Closing Date, the annual interest rate borne by the Notes
will be increased by .5% over the rate shown on the cover page of the memorandum
and if the Exchange Offer is not consummated or the Shelf Registration Statement
is not declared effective on or prior to the date that is nine months after the
Closing Date, the annual interest rate borne by the Notes shall be increased by
an additional .5%. Once the Exchange Offer is consummated or a Shelf
Registration Statement is declared effective, the annual interest rate borne by
the Notes shall be changed to again be the rate shown on the cover page of this
memorandum.
COVENANTS
OVERVIEW
In the Indenture, Lodgian has agreed to certain covenants that limit its and
its Restricted Subsidiaries' ability, among other things, to:
- incur additional debt;
- pay dividends, pay interest on the Convertible Debentures, acquire shares
of capital stock, make payments on subordinated debt or make investments;
- place limitations on distributions from Restricted Subsidiaries;
- issue or sell capital stock of Restricted Subsidiaries;
- issue guarantees;
- sell or exchange assets;
- enter into transactions with shareholders and affiliates;
- create liens; and
- effect mergers.
In addition, if a Change of Control occurs, each Holder of Notes will have
the right to require Lodgian Financing Corp. to repurchase all or a part of the
Holder's Notes at a price equal to 101% of their principal amount, plus any
accrued interest to the date of repurchase.
LIMITATION ON INDEBTEDNESS
(a) Lodgian will not, and will not permit any of its Restricted
Subsidiaries to, Incur any Indebtedness (other than the Notes, the Note
Guarantees and other Indebtedness existing on the Closing Date); PROVIDED that
Lodgian, Lodgian Financing Corp. or any Subsidiary Guarantor may Incur
Indebtedness if, after giving effect to the Incurrence of such Indebtedness and
the receipt and application of the proceeds therefrom, the Fixed Charge Coverage
Ratio would be greater than (x) 1.85:1, for Indebtedness Incurred based on any
four fiscal quarters ended no later than September 30, 1999 and (y) for
Indebtedness Incurred based on any four fiscal quarters ended after September
30, 1999, (I) 2.0:1, for Indebtedness Incurred on or before June 30, 2001, (II)
2.25:1 for Indebtedness Incurred after June 30, 2001 and on or before December
31, 2002 and (III) 2.5:1 for Indebtedness Incurred after December 31, 2002.
Notwithstanding the foregoing, Lodgian and Lodgian Financing Corp. and, as
specified below, any other Restricted Subsidiary may Incur each and all of the
following:
(1) Indebtedness outstanding under the Credit Agreement in an aggregate
principal amount (together with refinancings thereof) at any time not to
exceed $300 million minus the amount of Impac I Debt then outstanding and
the amount of such Indebtedness permanently repaid as provided under the
"Limitation on Asset Sales" covenant;
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(2) Indebtedness owed (A) to Lodgian, Lodgian Financing Corp. or any
Subsidiary Guarantor evidenced by a promissory note or (B) to any other
Restricted Subsidiary; PROVIDED that any event which results in any such
Restricted Subsidiary ceasing to be a Restricted Subsidiary or any
subsequent transfer of such Indebtedness (other than to Lodgian or another
Restricted Subsidiary) shall be deemed, in each case, to constitute an
Incurrence of such Indebtedness not permitted by this clause (2);
(3) Indebtedness issued in exchange for, or the net proceeds of which
are used to refinance or refund, then outstanding Indebtedness (other than
Indebtedness outstanding under clause (2) or (9) or the Convertible
Debentures and CRESTS) and any refinancings thereof in an amount not to
exceed the amount so refinanced or refunded (plus premiums, accrued
interest, fees and expenses); PROVIDED that
(a) Indebtedness the proceeds of which are used to refinance or
refund the Notes or Indebtedness that is PARI PASSU with, or subordinated
in right of payment to, the Notes or a Note Guarantee shall only be
permitted under this clause (3) if (x) in case the Notes are refinanced
in part or the Indebtedness to be refinanced is PARI PASSU with the Notes
or a Note Guarantee, such new Indebtedness, by its terms or by the terms
of any agreement or instrument pursuant to which such new Indebtedness is
outstanding, is expressly made PARI PASSU with, or subordinate in right
of payment to, the remaining Notes or the Note Guarantee, or (y) in case
the Indebtedness to be refinanced is subordinated in right of payment to
the Notes or a Note Guarantee, such new Indebtedness, by its terms or by
the terms of any agreement or instrument pursuant to which such new
Indebtedness is issued or remains outstanding, is expressly made
subordinate in right of payment to the Notes or the Note Guarantee at
least to the extent that the Indebtedness to be refinanced is
subordinated to the Notes or the Note Guarantee,
(b) such new Indebtedness, determined as of the date of Incurrence of
such new Indebtedness, does not mature prior to the Stated Maturity of
the Indebtedness to be refinanced or refunded, and the Average Life of
such new Indebtedness is at least equal to the remaining Average Life of
the Indebtedness to be refinanced or refunded, and
(c) such new Indebtedness is Incurred by Lodgian Financing Corp. or a
Guarantor or by the Restricted Subsidiary who is the obligor on the
Indebtedness to be refinanced or refunded;
(4) Indebtedness of Lodgian or Lodgian Financing Corp., to the extent
the net proceeds thereof are promptly (a) used to purchase Notes tendered in
an Offer to Purchase made as a result of a Change in Control or (b)
deposited to defease the Notes as described under "Defeasance";
(5) Guarantees of the Notes and Guarantees of Indebtedness of Lodgian,
Lodgian Financing Corp. or any Subsidiary Guarantor by any Restricted
Subsidiary provided the Guarantee of such Indebtedness is permitted by and
made in accordance with the "Limitation on Issuance of Guarantees by
Restricted Subsidiaries" covenant;
(6) Indebtedness of any Restricted Subsidiary in an aggregate principal
amount outstanding at any time (together with refinancings thereof) not to
exceed $18 million, less any amount of such Indebtedness permanently repaid
as provided under the "Limitation on Asset Sales" covenant;
(7) Purchase Money Indebtedness of Lodgian, Lodgian Financing Corp. or
any Subsidiary Guarantor in an aggregate amount outstanding at any time
(together with refinancings thereof) not to exceed $10 million;
(8) Indebtedness of Lodgian or Lodgian Financing Corp. issued in
exchange for, or the net proceeds of which are used to repurchase the
Convertible Debentures and CRESTS; provided that either
(a) after giving effect to the Incurrence of such Indebtedness and
the receipt and application of the proceeds therefrom, (x) the Fixed
Charge Coverage Ratio would be greater than 2.0:1 and (y) Lodgian or
Lodgian Financing Corp. could Incur at least $1.00 of Indebtedness under
the first
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paragraph of this "Limitation on Indebtedness" covenant; PROVIDED,
HOWEVER, that such Indebtedness (1) is expressly made subordinate in
right of payment to the Notes or Lodgian's Note Guarantee, as the case
may be, at least to the extent that the Convertible Debentures are
subordinated to Lodgian's Note Guarantee on the Closing Date and (2) does
not mature prior to the Stated Maturity of the Convertible Debentures,
and the Average Life of such new Indebtedness is at least equal to the
remaining Average Life of the Convertible Debentures, determined as of
the date of Incurrence of such Indebtedness; or
(b) such Indebtedness (w) is expressly made subordinate in right of
payment to the Notes or Lodgian's Note Guarantee, as the case may be, at
least to the extent that the Convertible Debentures are subordinated to
Lodgian's Note Guarantee on the Closing Date, (x) does not mature prior
to the Stated Maturity of the Convertible Debentures and the Average Life
of such new Indebtedness is at least equal to the remaining Average Life
of the Convertible Debentures, determined as of the date of the
Incurrence of such Indebtedness, (y) permits interest on such
Indebtedness to be deferred on terms at least as favorable to the Holders
as the Convertible Debentures and (z) on a pro forma basis does not cause
the Fixed Charge Coverage Ratio to be less than the Fixed Charge Coverage
Ratio prior to the exchange or repurchase, assuming that the interest on
the Convertible Debentures constituted Consolidated Interest Expense;
(9) performance or completion guarantees arising in the ordinary course
of business in an aggregate amount outstanding at any time not to exceed 5%
of Adjusted Consolidated Net Tangible Assets (determined as of the last day
of the last fiscal quarter preceding the date of such guarantee for which
reports have been filed with the SEC or provided to the Trustee); and
(10) Indebtedness of Lodgian, Lodgian Financing Corp. or any Subsidiary
Guarantor (in addition to Indebtedness permitted under clauses (1) through
(9) above) in an aggregate principal amount outstanding at any time
(together with refinancings thereof) not to exceed $10 million, less any
amount of such Indebtedness permanently repaid as provided under the
"Limitation on Asset Sales" covenant.
(b) Notwithstanding any other provision of this "Limitation on
Indebtedness" covenant, the maximum amount of Indebtedness that may be Incurred
pursuant to this "Limitation on Indebtedness" covenant will not be deemed to be
exceeded, with respect to any outstanding Indebtedness due solely to the result
of fluctuations in the exchange rates of currencies.
(c) For purposes of determining any particular amount of Indebtedness under
this "Limitation on Indebtedness" covenant, (x) Indebtedness Incurred under the
Credit Agreement on or prior to the Closing Date shall be treated as Incurred
pursuant to clause (1) of the second paragraph of clause (a) of this "Limitation
on Indebtedness" covenant, (y) Guarantees, Liens or obligations with respect to
letters of credit supporting Indebtedness otherwise included in the
determination of such particular amount shall not be included and (z) any Liens
granted pursuant to the equal and ratable provisions referred to in the
"Limitation on Liens" covenant shall not be treated as Indebtedness. For
purposes of determining compliance with this "Limitation on Indebtedness"
covenant, in the event that an item of Indebtedness meets the criteria of more
than one of the types of Indebtedness described above (other than Indebtedness
referred to in clause (x) of the preceding sentence), including under the first
paragraph of part (a), Lodgian, in its sole discretion, shall classify, and from
time to time may reclassify, such item of Indebtedness.
(d) Notwithstanding the foregoing, neither Lodgian nor any Restricted
Subsidiary will issue any Indebtedness in exchange for, or the net proceeds of
which will be used to, refinance or refund the Convertible Debentures or the
CRESTS unless (x) such Indebtedness is expressly made subordinate in right of
payment to Lodgian's Note Guarantees or the Note Guarantee at least to the
extent as the Convertible Debentures are subordinated to Lodgian's Note
Guarantee and (y) such new Indebtedness, determined as of the date of Incurrence
of such Indebtedness, does not mature prior to the Stated
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Maturity of the Convertible Debentures, and the Average Life of such new
Indebtedness is at least equal to the remaining Average Life of the Convertible
Debentures.
LIMITATION ON SENIOR SUBORDINATED INDEBTEDNESS
Lodgian will not, and will not permit Lodgian Financing Corp. or any
Subsidiary Guarantor to, Incur any Indebtedness that is subordinate in right of
payment to any Senior Indebtedness unless such Indebtedness is PARI PASSU with,
or subordinated in right of payment to, the Notes or any Note Guarantee;
PROVIDED that the foregoing limitation shall not apply to distinctions between
categories of Senior Indebtedness that exist by reason of any Liens or
Guarantees arising or created in respect of some but not all such Senior
Indebtedness.
LIMITATION ON RESTRICTED PAYMENTS
Lodgian will not, and will not permit any Restricted Subsidiary to, directly
or indirectly, (1) declare or pay any dividend or make any distribution on or
with respect to its Capital Stock (other than dividends or distributions payable
solely in shares of its Capital Stock (other than Disqualified Stock) or in
options, warrants or other rights to acquire shares of such Capital Stock) held
by Persons other than Lodgian or any of its Restricted Subsidiaries or make any
payment on the Convertible Debentures or the CRESTS (including payments pursuant
to the Lodgian Capital Trust Guarantee), (2) purchase, call for redemption or
redeem, retire or otherwise acquire for value any shares of Capital Stock of (A)
Lodgian, Lodgian Financing Corp., Lodgian Capital Trust or any Subsidiary
Guarantor (including options, warrants or other rights to acquire such shares of
Capital Stock) held by any Person or (B) a Restricted Subsidiary other than
Lodgian Financing Corp. or a Subsidiary Guarantor (including options, warrants
or other rights to acquire such shares of Capital Stock) held by any Affiliate
of Lodgian (other than a Wholly Owned Restricted Subsidiary) or any holder (or
any Affiliate of such holder) of 5% or more of the Capital Stock of Lodgian, (3)
make any voluntary or optional principal payment, or voluntary or optional
redemption, repurchase, defeasance, or other acquisition or retirement for
value, of Indebtedness of Lodgian Financing Corp. that is subordinated in right
of payment to the Notes or any Indebtedness of Lodgian or a Subsidiary Guarantor
that is subordinated in right of payment to a Note Guarantee or (4) make any
Investment, other than a Permitted Investment, in any Person (such payments or
any other actions described in clauses (1) through (4) above being collectively
"Restricted Payments") if, at the time of, and after giving effect to, the
proposed Restricted Payment:
(A) a Default or Event of Default shall have occurred and be
continuing,
(B) Lodgian could not Incur at least $1.00 of Indebtedness under the
first paragraph of part (a) of the "Limitation on Indebtedness" covenant or
(C) the aggregate amount of all Restricted Payments (the amount, if
other than in cash, to be determined in good faith by the Board of
Directors, whose determination shall be conclusive and evidenced by a Board
Resolution) made after April 1, 1999 shall exceed the sum of:
(1) the excess of (x) 100% of the aggregate amount of Consolidated
EBITDA accrued on a cumulative basis during the period (taken as one
accounting period) beginning on April 1, 1999 and ending on the last day
of the last fiscal quarter preceding the Transaction Date for which
reports have been filed with the SEC or provided to the Trustee over (y)
2.0 times the aggregate amount of Consolidated Interest Expense accrued
on a cumulative basis during the period (taken as one accounting period)
beginning on April 1, 1999 and ending on the last day of the last fiscal
quarter preceding the Transaction Date for which reports have been filed
with the SEC or provided to the Trustee PLUS
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(2) the aggregate Net Cash Proceeds received by Lodgian after the
Closing Date from the issuance and sale permitted by the Indenture of its
Capital Stock (other than Disqualified Stock) to a Person who is not a
Subsidiary of Lodgian, including an issuance or sale permitted by the
Indenture of Indebtedness of Lodgian or any Restricted Subsidiary for
cash subsequent to the Closing Date upon the conversion of such
Indebtedness into Capital Stock (other than Disqualified Stock) of
Lodgian, or from the issuance to a Person who is not a Subsidiary of
Lodgian of any options, warrants or other rights to acquire Capital Stock
of Lodgian (in each case, exclusive of any Disqualified Stock or any
options, warrants or other rights that are redeemable at the option of
the holder, or are required to be redeemed, prior to the Stated Maturity
of the Notes) PLUS
(3) an amount equal to the net reduction in Investments (other than
reductions in Permitted Investments) in any Person resulting from
payments of interest on Indebtedness, dividends, repayments of loans or
advances, or other transfers of assets, in each case to Lodgian or any
Restricted Subsidiary or from the Net Cash Proceeds from the sale of any
such Investment (except, in each case, to the extent any such payment or
proceeds are included in the calculation of Adjusted Consolidated Net
Income), from the release of any Guarantee or from redesignations of
Unrestricted Subsidiaries as Restricted Subsidiaries (valued in each case
as provided in the definition of "Investments"), not to exceed, in each
case, the amount of Investments previously made by Lodgian or any
Restricted Subsidiary in such Person or Unrestricted Subsidiary.
The foregoing provision shall not be violated by reason of:
(1) the payment of any dividend or redemption of any Capital Stock
within 60 days after the related date of declaration or call for redemption
if, at said date of declaration or call for redemption, such payment or
redemption would comply with the preceding paragraph;
(2) the redemption, repurchase, defeasance or other acquisition or
retirement for value of Indebtedness that is subordinated in right of
payment to the Notes or any Note Guarantee including premium, if any, and
accrued interest, with the proceeds of, or in exchange for, Indebtedness
Incurred under clause (3) of the second paragraph of part (a) of the
"Limitation on Indebtedness" covenant;
(3) the repurchase, redemption or other acquisition of Capital Stock of
Lodgian, Lodgian Financing Corp., Lodgian Capital Trust or a Subsidiary
Guarantor (or options, warrants or other rights to acquire such Capital
Stock) in exchange for, or out of the proceeds of a substantially concurrent
offering of, shares of Capital Stock (other than Disqualified Stock) of
Lodgian or Lodgian Financing Corp. (or options, warrants or other rights to
acquire such Capital Stock; PROVIDED that such options, warrants or other
rights are not redeemable prior to the Stated Maturity of the Notes);
(4) the making of any principal payment or the repurchase, redemption,
retirement, defeasance or other acquisition for value of Indebtedness which
is subordinated in right of payment to the Notes or any Note Guarantee in
exchange for, or out of the proceeds of, a substantially concurrent offering
of, shares of the Capital Stock (other than Disqualified Stock) of Lodgian
or Lodgian Financing Corp. (or options, warrants or other rights to acquire
such Capital Stock; PROVIDED that such options, warrants or other rights are
not redeemable prior to the Stated Maturity of the Notes);
(5) payments or distributions, to dissenting stockholders pursuant to
applicable law, pursuant to or in connection with a consolidation, merger or
transfer of assets that complies with the provisions of the Indenture
applicable to mergers, consolidations and transfers of all or substantially
all of the property and assets of Lodgian;
(6) Investments acquired in exchange for, or out of the proceeds of a
substantially concurrent offering of, Capital Stock (other than Disqualified
Stock) of Lodgian;
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(7) the declaration or payment of dividends on Capital Stock (other
than Disqualified Stock) of Lodgian in an aggregate annual amount not to
exceed 6% of the Net Cash Proceeds received by Lodgian after the Closing
Date from the sale of such Capital Stock;
(8) the payment of interest or liquidated damages on the Convertible
Debentures or the declaration or payment of dividends or liquidated damages
on the CRESTS; PROVIDED that the time of any such payment, Lodgian could not
defer any such payment;
(9) any purchase of any fractional shares of Common Stock in connection
with the conversion of the Convertible Debentures or CRESTS;
(10) Investments in any Person the primary business of which is
related, ancillary or complementary to the business of Lodgian and its
Restricted Subsidiaries on the date of such Investment; PROVIDED that the
aggregate amount of such Investments under this clause (10) does not exceed
(a) 10% of Adjusted Consolidated Net Tangible Assets (determined as of the
last day of the last fiscal quarter preceding the date of such Investment
for which reports have been filed with the SEC or provided to the Trustee),
plus (b) the net reduction in Investments made pursuant to this clause (10)
resulting from distributions on or repayments of such Investments, including
payments of interest on Indebtedness, dividends, repayments of loans or
advances, or other distributions or other transfers of assets, in each case
to Lodgian or any Restricted Subsidiary, or from the Net Cash Proceeds from
the sale or other disposition of any such Investment (except, in each case,
to the extent of any gain on such sale or disposition that would be included
in the calculation of Adjusted Consolidated Net Income), from the release of
any Guarantee or from redesignations of Unrestricted Subsidiaries as
Restricted Subsidiaries (valued in each case as provided in the definition
of "Investments"); PROVIDED that the net reduction in any such Investments
shall not exceed the amount of such Investments in such Person;
(11) the repurchase or other acquisition of Convertible Debentures and
CRESTS with the proceeds of, or in exchange for, Indebtedness Incurred under
clause (8) of the "Limitation on Indebtedness" covenant or Preferred Stock
of a Restricted Subsidiary issued under clause (5) of the "Limitation on the
Issuance and Sale of Capital Stock of Restricted Subsidiaries" covenant; or
(12) other Restricted Payments in an aggregate amount not to exceed $10
million;
PROVIDED that, except in the case of clauses (1) and (3), no Default or Event of
Default shall have occurred and be continuing or occur as a consequence of the
actions or payments set forth therein.
Each Restricted Payment permitted pursuant to the preceding paragraph (other
than the Restricted Payment referred to in clause (2) thereof, an exchange of
Capital Stock for Capital Stock or Indebtedness referred to in clause (3) or (4)
thereof, an Investment acquired in exchange for Capital Stock referred to in
clause (6) thereof and the repurchase or other acquisition of Convertible
Debentures and CRESTS referred to clause (11) thereof), and the Net Cash
Proceeds from any issuance of Capital Stock referred to in clauses (3), (4) and
(6), shall be included in calculating whether the conditions of clause (C) of
the first paragraph of this "Limitation on Restricted Payments" covenant have
been met with respect to any subsequent Restricted Payments. In the event the
proceeds of an issuance of Capital Stock of Lodgian are used for the redemption,
repurchase or other acquisition of the Notes, or Indebtedness that is PARI PASSU
with the Notes or any Note Guarantee, then the Net Cash Proceeds of such
issuance shall be included in clause (C) of the first paragraph of this
"Limitation on Restricted Payments" covenant only to the extent such proceeds
are not used for such redemption, repurchase or other acquisition of
Indebtedness. For purposes of determining compliance with this "Limitation on
Restricted Payments" covenant, in the event that a Restricted Payment meets the
criteria of more than one of the types of Restricted Payments described in the
above clauses, including the first paragraph of this "Limitation on Restricted
Payments" covenant, Lodgian, in its sole discretion, may order and classify, and
from time to time may reclassify, such
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Restricted Payment if it would have been permitted at the time such Restricted
Payment was made and at the time of such reclassification.
LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES
Lodgian will not, and will not permit any Restricted Subsidiary to, create
or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any Restricted
Subsidiary to (1) pay dividends or make any other distributions permitted by
applicable law on any Capital Stock of such Restricted Subsidiary owned by
Lodgian or any other Restricted Subsidiary, (2) pay any Indebtedness owed to
Lodgian or any other Restricted Subsidiary, (3) make loans or advances to
Lodgian or any other Restricted Subsidiary or (4) transfer any of its property
or assets to Lodgian or any other Restricted Subsidiary.
The foregoing provisions shall not restrict any encumbrances or
restrictions:
(1) existing on the Closing Date in the Credit Agreement, the Indenture
or any other agreements in effect on the Closing Date, and any extensions,
refinancings, renewals or replacements of such agreements; PROVIDED that the
encumbrances and restrictions in any such extensions, refinancings, renewals
or replacements taken as a whole are no less favorable in any material
respect to the Holders than those encumbrances or restrictions that are then
in effect and that are being extended, refinanced, renewed or replaced;
(2) existing under or by reason of applicable law;
(3) with respect to any Person or the property or assets of such Person
acquired by Lodgian or any Restricted Subsidiary, existing at the time of
such acquisition and not incurred in contemplation thereof, which
encumbrances or restrictions are not applicable to any Person or the
property or assets of any Person other than such Person or the property or
assets of such Person so acquired;
(4) in the case of clause (4) of the first paragraph of this
"Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries" covenant, (A) that restrict in a customary manner the
subletting, assignment or transfer of any property or asset that is a lease,
license, conveyance or contract or similar property or asset, (B) existing
by virtue of any transfer of, agreement to transfer, option or right with
respect to, or Lien on, any property or assets of Lodgian or any Restricted
Subsidiary not otherwise prohibited by the Indenture or (C) arising or
agreed to in the ordinary course of business, not relating to any
Indebtedness, and that do not, individually or in the aggregate, detract
from the value of property or assets of Lodgian or any Restricted Subsidiary
in any manner material to Lodgian or any Restricted Subsidiary;
(5) with respect to a Restricted Subsidiary and imposed pursuant to an
agreement that has been entered into for the sale or disposition of all or
substantially all of the Capital Stock of, or property and assets of, such
Restricted Subsidiary;
(6) contained in the terms of any Indebtedness or any agreement
pursuant to which such Indebtedness was issued if:
(A) the encumbrance or restriction applies only in the event of a
payment default or a default with respect to a financial covenant
contained in such Indebtedness or agreement,
(B) the encumbrance or restriction is not materially more
disadvantageous to the Holders of the Notes than is customary in
comparable financings (as determined by Lodgian in good faith) and
(C) Lodgian determines that any such encumbrance or restriction will
not materially affect Lodgian Financing Corp.'s ability to make principal
or interest payments on the Notes; or
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(7) relating to a Subsidiary Guarantor and contained in the terms of
any Indebtedness or any agreement pursuant to which such Indebtedness was
issued if:
(A) the encumbrance or restriction is not materially more
disadvantageous to the Holders of the Notes than is customary in
comparable financings (as determined by Lodgian in good faith) and
(B) Lodgian determines that any such encumbrance or restriction will
not materially affect Lodgian Financing Corp.'s ability to make principal
or interest payments on the Notes.
Nothing contained in this "Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries" covenant shall prevent Lodgian or any
Restricted Subsidiary from (1) creating, incurring, assuming or suffering to
exist any Liens otherwise permitted in the "Limitation on Liens" covenant or (2)
restricting the sale or other disposition of property or assets of Lodgian or
any of its Restricted Subsidiaries that secure Indebtedness of Lodgian or any of
its Restricted Subsidiaries.
LIMITATION ON THE ISSUANCE AND SALE OF CAPITAL STOCK OF RESTRICTED
SUBSIDIARIES
Lodgian will not sell, and will not permit any Restricted Subsidiary,
directly or indirectly, to issue or sell, any shares of Capital Stock of a
Restricted Subsidiary (including options, warrants or other rights to purchase
shares of such Capital Stock) except:
(1) to Lodgian or a Wholly Owned Restricted Subsidiary;
(2) issuances of director's qualifying shares or sales to foreign
nationals of shares of Capital Stock of foreign Restricted Subsidiaries, to
the extent required by applicable law;
(3) if, immediately after giving effect to such issuance or sale, such
Restricted Subsidiary would no longer constitute a Restricted Subsidiary and
any Investment in such Person remaining after giving effect to such issuance
or sale would have been permitted to be made under the "Limitation on
Restricted Payments" covenant if made on the date of such issuance or sale;
(4) sales of Common Stock (including options, warrants or other rights
to purchase shares of such Common Stock) of a Restricted Subsidiary by
Lodgian or a Restricted Subsidiary, PROVIDED that Lodgian or such Restricted
Subsidiary applies the Net Cash Proceeds of any such sale in accordance with
clause (A) or (B) of the "Limitation on Asset Sales" covenant described
below; or
(5) sales of Preferred Stock of a Restricted Subsidiary whose sole
assets consist of Indebtedness of Lodgian or Lodgian Financing Corp., in
exchange for or the proceeds of which are used to repurchase the Convertible
Debentures and CRESTS, PROVIDED such Indebtedness (a) is expressly made
subordinate in right of payment to the Notes or Lodgian's Note Guarantee, as
the case may be, at least to the extent that the Convertible Debentures are
subordinated to Lodgian's Note Guarantee on the Closing Date, (b) does not
mature prior to the Stated Maturity of the Convertible Debentures and the
Average Life of such new Indebtedness is at least equal to the remaining
Average Life of the Convertible Debentures, (c) on a pro forma basis does
not cause the Fixed Charge Coverage Ratio to be less than the Fixed Charge
Coverage Ratio prior to such sale, assuming the interest on such
Indebtedness and the Convertible Debentures constituted Consolidated
Interest Expense and (d) permits interest on such Indebtedness to be
deferred on terms at least as favorable to the Holders as the Convertible
Debentures.
LIMITATION ON ISSUANCES OF GUARANTEES BY RESTRICTED SUBSIDIARIES
Lodgian will not permit any Restricted Subsidiary which is not a Subsidiary
Guarantor, directly or indirectly, to Guarantee any Indebtedness of Lodgian,
Lodgian Financing Corp. or any other Restricted Subsidiary (other than a Foreign
Subsidiary), unless (1) such Restricted Subsidiary simultaneously executes and
delivers a supplemental indenture to the Indenture providing for a Guarantee (a
"Subsidiary
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Guarantee") of payment of the Notes by such Restricted Subsidiary and (2) such
Restricted Subsidiary waives and will not in any manner whatsoever claim or take
the benefit or advantage of, any rights of reimbursement, indemnity or
subrogation or any other rights against Lodgian or any other Restricted
Subsidiary as a result of any payment by such Restricted Subsidiary under its
Subsidiary Guarantee; PROVIDED that this covenant shall not apply to any
Guarantee existing on the Closing Date of Lodgian Finance Corp.'s obligations
under the Credit Agreement by a Restricted Subsidiary. The Subsidiary Guarantee
may be subordinated to the Senior Indebtedness of the Subsidiary Guarantor to
the same extent as the Notes are subordinated to the Senior Indebtedness of
Lodgian Financing Corp.
Notwithstanding the foregoing, any Subsidiary Guarantee by a Restricted
Subsidiary may provide by its terms that it shall be automatically and
unconditionally released and discharged upon (x) any sale, exchange or transfer,
to any Person not an Affiliate of Lodgian, of all of Lodgian's and each
Restricted Subsidiary's Capital Stock in, or all or substantially all the assets
of, such Restricted Subsidiary (which sale, exchange or transfer is not
prohibited by the Indenture) or (y) the release or discharge of the Guarantee
which resulted in the creation of such Subsidiary Guarantee, except a discharge
or release by or as a result of payment under such Guarantee.
LIMITATION ON TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES
Lodgian will not, and will not permit any Restricted Subsidiary to, directly
or indirectly, enter into, renew or extend any transaction (including, without
limitation, the purchase, sale, lease or exchange of property or assets, or the
rendering of any service) with any holder (or any Affiliate of such holder) of
5% or more of any class of Capital Stock of Lodgian or with any Affiliate of
Lodgian or any Restricted Subsidiary, except upon fair and reasonable terms no
less favorable to Lodgian or such Restricted Subsidiary than could be obtained,
at the time of such transaction or, if such transaction is pursuant to a written
agreement, at the time of the execution of the agreement providing therefor, in
a comparable arm's-length transaction with a Person that is not such a holder or
an Affiliate.
The foregoing limitation does not limit, and shall not apply to:
(1) transactions (A) approved by a majority of the disinterested
members of the Board of Directors or (B) for which Lodgian or a Restricted
Subsidiary delivers to the Trustee a written opinion of a nationally
recognized investment banking, accounting, valuation or appraisal firm
stating that the transaction is fair to Lodgian or such Restricted
Subsidiary from a financial point of view;
(2) any transaction solely between Lodgian and any of its Wholly Owned
Restricted Subsidiaries or solely among Wholly Owned Restricted
Subsidiaries;
(3) the payment of reasonable and customary regular fees to directors
of Lodgian who are not employees of Lodgian and indemnification arrangements
entered into by Lodgian in the ordinary course of business and consistent
with past practices of Lodgian;
(4) any payments or other transactions pursuant to any tax-sharing
agreement between Lodgian and any other Person with which Lodgian files a
consolidated tax return or with which Lodgian is part of a consolidated
group for tax purposes;
(5) any sale of shares of Capital Stock (other than Disqualified Stock)
of Lodgian or Lodgian Financing Corp.;
(6) development, management and administrative services and performance
and completion guarantees provided in the ordinary course of business by
Lodgian or any Restricted Subsidiary to any Person in which Lodgian or any
Restricted Subsidiary has an Investment; or
(7) any Permitted Investments or any Restricted Payments not prohibited
by the "Limitation on Restricted Payments" covenant.
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Notwithstanding the foregoing, any transaction or series of related transactions
covered by the first paragraph of this "Limitation on Transactions with
Shareholders and Affiliates" covenant and not covered by clauses (2) through (7)
of this paragraph, (a) the aggregate amount of which exceeds $1 million in
value, must be approved or determined to be fair in the manner provided for in
clause (1)(A) or (B) above and (b) the aggregate amount of which exceeds $5
million in value, must be determined to be fair in the manner provided for in
clause (1)(B) above.
LIMITATION ON LIENS
Lodgian will not, and will not permit Lodgian Financing Corp. or any
Subsidiary Guarantor to, Incur any Indebtedness secured by a Lien ("Secured
Indebtedness") which is not Senior Indebtedness unless contemporaneously
therewith effective provision is made to secure the Notes or the Note Guarantee
equally and ratably with (or, if the Secured Indebtedness is subordinated in
right of payment to the Notes or the Note Guarantees, prior to) such Secured
Indebtedness for so long as such Secured Indebtedness is secured by a Lien.
The foregoing limitation does not apply to:
(1) Liens (including extensions and renewals thereof) upon real or
personal property acquired after the Closing Date; PROVIDED that such Lien
is created solely for the purpose of securing Indebtedness Incurred, in
accordance with the "Limitation on Indebtedness" covenant, to finance the
cost (including the cost of improvement or construction) of the item of
property or assets subject thereto and such Lien is created prior to, at the
time of or within six months after the later of the acquisition, the
completion of construction or the commencement of full operation of such
property;
(2) any interest or title of a lessor in the property subject to any
Capitalized Lease;
(3) Liens on shares of Capital Stock of any Unrestricted Subsidiary to
secure Indebtedness of such Unrestricted Subsidiary; and
(4) Liens on cash set aside at the time of the Incurrence of any
Indebtedness, or government securities purchased with such cash, in either
case to the extent that such cash or government securities prefund the
payment of interest on such Indebtedness and are held in an escrow account
or similar arrangements to be applied for such purpose.
LIMITATION ON ASSET SALES
Lodgian will not, and will not permit any Restricted Subsidiary to,
consummate any Asset Sale, unless (1) the consideration received by Lodgian or
such Restricted Subsidiary is at least equal to the fair market value of the
assets sold or disposed of and (2) at least 75% of the consideration received
consists of (a) cash or Temporary Cash Investments, (b) the assumption of
Indebtedness of Lodgian or any Restricted Subsidiary (other than Indebtedness to
Lodgian or any Restricted Subsidiary), PROVIDED that Lodgian or such Restricted
Subsidiary is irrevocably and unconditionally released from all liability under
such Indebtedness or (c) Replacement Assets.
In the event and to the extent that the Net Cash Proceeds received by
Lodgian or any of its Restricted Subsidiaries from one or more Asset Sales
occurring on or after the Closing Date in any period of 12 consecutive months
exceed 10% of Adjusted Consolidated Net Tangible Assets (determined as of the
date closest to the commencement of such 12-month period for which a
consolidated balance sheet of Lodgian and its Subsidiaries has been filed with
the SEC or provided to the Trustee), then Lodgian shall or shall cause the
relevant Restricted Subsidiary to:
(1) within twelve months after the date Net Cash Proceeds so received
exceed 10% of Adjusted Consolidated Net Tangible Assets,
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(A) apply an amount equal to such excess Net Cash Proceeds to
permanently repay Senior Indebtedness of Lodgian, Lodgian Financing Corp.
or of any Subsidiary Guarantor or Indebtedness of any other Restricted
Subsidiary, in each case owing to a Person other than Lodgian or any of
its Restricted Subsidiaries, or
(B) invest an equal amount, or the amount not so applied pursuant to
clause (A) (or enter into a definitive agreement committing to so invest
within 12 months after the date of such agreement), in Replacement
Assets, and
(2) apply (no later than the end of the 12-month period referred to in
clause (1)) such excess Net Cash Proceeds (to the extent not applied
pursuant to clause (1)) as provided in the following paragraph of this
"Limitation on Asset Sales" covenant.
The amount of such excess Net Cash Proceeds required to be applied (or to be
committed to be applied) during such 12-month period as set forth in clause (1)
of the preceding sentence and not applied as so required by the end of such
period shall constitute "Excess Proceeds."
If, as of the first day of any calendar month, the aggregate amount of
Excess Proceeds not theretofore subject to an Offer to Purchase pursuant to this
"Limitation on Asset Sales" covenant totals at least $5 million, Lodgian
Financing Corp. must commence, not later than the fifteenth Business Day of such
month, and consummate an Offer to Purchase from the Holders (and if required by
the terms of any Indebtedness that is PARI PASSU with the Notes ("Pari Passu
Indebtedness"), from the holders of such Pari Passu Indebtedness) on a pro rata
basis an aggregate principal amount of Notes (and Pari Passu Indebtedness) equal
to the Excess Proceeds on such date, at a purchase price equal to 100% of the
principal amount thereof, plus, in each case, accrued interest (if any) to the
Payment Date.
REPURCHASE OF NOTES UPON A CHANGE OF CONTROL
Lodgian Financing Corp. must commence, within 30 days of the occurrence of a
Change of Control, and consummate an Offer to Purchase for all Notes then
outstanding, at a purchase price equal to 101% of the principal amount thereof,
plus accrued interest (if any) to the Payment Date.
There can be no assurance that Lodgian Financing Corp. will have sufficient
funds available at the time of any Change of Control to make any debt payment
(including repurchases of Notes) required by the foregoing covenant (as well as
may be contained in other securities of Lodgian Financing Corp. which might be
outstanding at the time).
Lodgian Financing Corp.'s ability to repurchase Notes upon a Change of
Control may be limited by the terms of its then existing contractual
obligations. In particular, the repurchase of the Notes upon a Change of Control
may constitute a default under the Credit Agreement. Any future credit
agreements or other agreements relating to Senior Indebtedness may contain
similar restrictive provisions.
The above covenant requiring Lodgian Financing Corp. to repurchase the Notes
will, unless consents are obtained, require Lodgian Financing Corp. to repay all
indebtedness then outstanding which by its terms would prohibit such Note
repurchase, either prior to or concurrently with such Note repurchase.
SEC REPORTS AND REPORTS TO HOLDERS
Whether or not Lodgian is then required to file reports with the SEC,
Lodgian shall file with the SEC all such reports and other information as it
would be required to file with the SEC by Section 13(a) or 15(d) under the
Securities Exchange Act of 1934 if it were subject thereto. Lodgian shall supply
to the Trustee and to each Holder or shall supply to the Trustee for forwarding
to each such Holder, without cost to such Holder, copies of such reports and
other information.
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EVENTS OF DEFAULT
The following events will be defined as "Events of Default" in the
Indenture:
(a) default in the payment of principal of (or premium, if any, on) any
Note when the same becomes due and payable at maturity, upon acceleration,
redemption or otherwise, whether or not such payment is prohibited by the
provisions described under "--Ranking--Terms of Subordination";
(b) default in the payment of interest on any Note when the same
becomes due and payable, and such default continues for a period of 30 days,
whether or not such payment is prohibited by the provisions described under
"--Ranking--Terms of Subordination";
(c) default in the performance or breach of the provisions of the
Indenture applicable to mergers, consolidations and transfers of all or
substantially all of the assets of Lodgian or Lodgian Financing Corp. or the
failure by Lodgian Financing Corp. to make or consummate an Offer to
Purchase in accordance with the "Limitation on Asset Sales" or "Repurchase
of Notes upon a Change of Control" covenant;
(d) Lodgian, Lodgian Financing Corp. or any Subsidiary Guarantor
defaults in the performance of or breaches any other covenant or agreement
in the Indenture or under the Notes (other than a default specified in
clause (a), (b) or (c) above) and such default or breach continues for a
period of 30 consecutive days after written notice by the Trustee or the
Holders of 25% or more in aggregate principal amount of the Notes;
(e) there occurs with respect to any issue or issues of Indebtedness of
Lodgian, Lodgian Financing Corp., any Subsidiary Guarantor or any
Significant Subsidiary having an outstanding principal amount of $5 million
or more in the aggregate for all such issues of all such Persons, whether
such Indebtedness now exists or shall hereafter be created, (I) an event of
default that has caused the holder thereof to declare such Indebtedness to
be due and payable prior to its Stated Maturity and such Indebtedness has
not been discharged in full or such acceleration has not been rescinded or
annulled within 30 days of such acceleration and/or (II) the failure to make
a principal payment at the final (but not any interim) fixed maturity and
such defaulted payment shall not have been made, waived or extended within
30 days of such payment default;
(f) any final judgment or order (not covered by insurance) for the
payment of money in excess of $5 million in the aggregate for all such final
judgments or orders against all such Persons (treating any deductibles,
self-insurance or retention as not so covered) shall be rendered against
Lodgian, Lodgian Financing Corp., any Subsidiary Guarantor or any
Significant Subsidiary and shall not be paid or discharged, and there shall
be any period of 30 consecutive days following entry of the final judgment
or order that causes the aggregate amount for all such final judgments or
orders outstanding and not paid or discharged against all such Persons to
exceed $5 million during which a stay of enforcement of such final judgment
or order, by reason of a pending appeal or otherwise, shall not be in
effect;
(g) a court having jurisdiction in the premises enters a decree or
order for (A) relief in respect of Lodgian, Lodgian Financing Corp., any
Subsidiary Guarantor or any Significant Subsidiary in an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, (B) appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of Lodgian, Lodgian
Financing Corp., any Subsidiary Guarantor or any Significant Subsidiary or
for all or substantially all of the property and assets of Lodgian, Lodgian
Financing Corp., any Subsidiary Guarantor or any Significant Subsidiary or
(C) the winding up or liquidation of the affairs of Lodgian, Lodgian
Financing Corp., any Subsidiary Guarantor or any Significant Subsidiary and,
in each case, such decree or order shall remain unstayed and in effect for a
period of 30 consecutive days;
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(h) Lodgian, Lodgian Financing Corp., any Subsidiary Guarantor or any
Significant Subsidiary (A) commences a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
consents to the entry of an order for relief in an involuntary case under
any such law, (B) consents to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official of Lodgian, Lodgian Financing Corp., any Subsidiary Guarantor or
any Significant Subsidiary or for all or substantially all of the property
and assets of Lodgian, Lodgian Financing Corp., any Subsidiary Guarantor or
any Significant Subsidiary or (C) effects any general assignment for the
benefit of creditors; or
(i) Lodgian or any Subsidiary Guarantor repudiates its obligations
under its Note Guarantee or, except as permitted by the Indenture, any Note
Guarantee is determined to be unenforceable or invalid or shall for any
reason cease to be in full force and effect.
If an Event of Default (other than an Event of Default specified in clause
(g) or (h) above that occurs with respect to Lodgian, Lodgian Financing Corp.,
or any Subsidiary Guarantor) occurs and is continuing under the Indenture, the
Trustee or the Holders of at least 25% in aggregate principal amount of the
Notes, then outstanding, by written notice to Lodgian Financing Corp. (and to
the Trustee if such notice is given by the Holders), may, and the Trustee at the
request of such Holders shall, declare the principal of, premium, if any, and
accrued interest on the Notes to be immediately due and payable. Upon a
declaration of acceleration, such principal of, premium, if any, and accrued
interest shall be immediately due and payable; PROVIDED that any such
declaration of acceleration shall not become effective until the earlier of (x)
five Business Days after receipt of the acceleration notice by the Bank Agent
and Lodgian Financing Corp. or (y) acceleration of the Indebtedness under the
Credit Agreement; PROVIDED FURTHER that such acceleration shall automatically be
rescinded and annulled without any further action required on the part of the
Holders in the event that any and all Events of Default specified in the
acceleration notice under the Indenture shall have been cured, waived or
otherwise remedied as provided in the Indenture prior to the expiration of the
period referred to in the preceding clauses (x) and (y). In the event of a
declaration of acceleration because an Event of Default set forth in clause (e)
above has occurred and is continuing, such declaration of acceleration shall be
automatically rescinded and annulled if the event of default triggering such
Event of Default pursuant to clause (e) shall be remedied or cured by Lodgian,
Lodgian Financing Corp. or the relevant Significant Subsidiary or waived by the
holders of the relevant Indebtedness within 60 days after the declaration of
acceleration with respect thereto. If an Event of Default specified in clause
(g) or (h) above occurs with respect to Lodgian, Lodgian Financing Corp. or any
Subsidiary Guarantor, the principal of, premium, if any, and accrued interest on
the Notes then outstanding shall automatically become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder. The Holders of at least a majority in principal amount of the
outstanding Notes by written notice to Lodgian Financing Corp. and to the
Trustee, may waive all past defaults and rescind and annul a declaration of
acceleration and its consequences if (x) all existing Events of Default, other
than the nonpayment of the principal of, premium, if any, and interest on the
Notes that have become due solely by such declaration of acceleration, have been
cured or waived and (y) the rescission would not conflict with any judgment or
decree of a court of competent jurisdiction. For information as to the waiver of
defaults, see "--Modification and Waiver."
The Holders of at least a majority in aggregate principal amount of the
outstanding Notes may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee. However, the Trustee may refuse to follow any
direction that conflicts with law or the Indenture, that may involve the Trustee
in personal liability, or that the Trustee determines in good faith may be
unduly prejudicial to the rights of Holders of Notes not joining in the giving
of such direction and may take any other action it deems proper that is not
inconsistent with any such direction received from Holders of Notes. A Holder
may not pursue any remedy with respect to the Indenture or the Notes unless:
(1) the Holder gives the Trustee written notice of a continuing Event
of Default;
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(2) the Holders of at least 25% in aggregate principal amount of
outstanding Notes make a written request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer the Trustee indemnity satisfactory to
the Trustee against any costs, liability or expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity; and
(5) during such 60-day period, the Holders of a majority in aggregate
principal amount of the outstanding Notes do not give the Trustee a
direction that is inconsistent with the request.
However, such limitations do not apply to the right of any Holder of a Note to
receive payment of the principal of, premium, if any, or interest on, such Note
or to bring suit for the enforcement of any such payment, on or after the due
date expressed in the Notes, which right shall not be impaired or affected
without the consent of the Holder.
Officers of Lodgian must certify, on or before a date not more than 90 days
after the end of each fiscal year, that a review has been conducted of the
activities of Lodgian and its Restricted Subsidiaries and Lodgian's and its
Restricted Subsidiaries' performance under the Indenture and that Lodgian has
fulfilled all obligations thereunder, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default and the nature
and status thereof. Lodgian will also be obligated to notify the Trustee of any
default or defaults in the performance of any covenants or agreements under the
Indenture.
CONSOLIDATION, MERGER AND SALE OF ASSETS
Neither Lodgian nor Lodgian Financing Corp. will consolidate with, merge
with or into, or sell, convey, transfer, lease or otherwise dispose of all or
substantially all of its property and assets (as an entirety or substantially an
entirety in one transaction or a series of related transactions) to, any Person
or permit any Person to merge with or into it, unless:
(1) it shall be the continuing Person, or the Person (if other than it)
formed by such consolidation or into which it is merged or that acquired or
leased such property and assets (the "Surviving Person") shall be a
corporation organized and validly existing under the laws of the United
States of America or any jurisdiction thereof and shall expressly assume, by
a supplemental indenture, executed and delivered to the Trustee, all of its
obligations under the Indenture and the Notes;
(2) immediately after giving effect to such transaction, no Default or
Event of Default shall have occurred and be continuing;
(3) immediately after giving effect to such transaction on a pro forma
basis, Lodgian or Lodgian Financing Corp. or the Surviving Person, as the
case may be, shall have a Consolidated Net Worth equal to or greater than
the Consolidated Net Worth of Lodgian or Lodgian Financing Corp., as the
case may be, immediately prior to such transaction;
(4) immediately after giving effect to such transaction on a PRO FORMA
basis, Lodgian or Lodgian Financing Corp. or the Surviving Person, as the
case may be, could Incur at least $1.00 of Indebtedness under the first
paragraph of the "Limitation on Indebtedness" covenant; PROVIDED that this
clause (4) shall not apply to a consolidation, merger or sale of all (but
not less than all) of the assets of Lodgian or Lodgian Financing Corp., as
the case may be, if all Liens and Indebtedness of Lodgian or Lodgian
Financing Corp. or the Surviving Person, as the case may be, and its
Restricted Subsidiaries outstanding immediately after such transaction would
have been permitted (and all such Liens and Indebtedness, other than Liens
and Indebtedness of Lodgian and its Restricted Subsidiaries outstanding
immediately prior to the transaction, shall be deemed to have been Incurred)
for all purposes of the Indenture;
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(5) it delivers to the Trustee an Officers' Certificate (attaching the
arithmetic computations to demonstrate compliance with clauses (3) and (4))
and Opinion of Counsel, in each case stating that such consolidation, merger
or transfer and such supplemental indenture complies with this provision and
that all conditions precedent provided for herein relating to such
transaction have been complied with; and
(6) each Guarantor, unless such Guarantor is the Person with which
Lodgian or Lodgian Financing Corp. has entered into a transaction under this
"Consolidation, Merger and Sale of Assets" section, shall have by amendment
to its Note Guarantee confirmed that its Note Guarantee shall apply to the
obligations of Lodgian Financing Corp. or the Surviving Person in accordance
with the Notes and the Indenture;
PROVIDED, HOWEVER, that clauses (3) and (4) above do not apply if, in the good
faith determination of the Board of Directors of Lodgian, whose determination
shall be evidenced by a Board Resolution, the principal purpose of such
transaction is to change the state of incorporation of Lodgian or Lodgian
Financing Corp. and any such transaction shall not have as one of its purposes
the evasion of the foregoing limitations.
DEFEASANCE
DEFEASANCE AND DISCHARGE. The Indenture will provide that Lodgian Financing
Corp. will be deemed to have paid and will be discharged from any and all
obligations in respect of the Notes on the 123rd day after the deposit referred
to below, and the provisions of the Indenture will no longer be in effect with
respect to the Notes (except for, among other matters, certain obligations to
register the transfer or exchange of the Notes, to replace stolen, lost or
mutilated Notes, to maintain paying agencies and to hold monies for payment in
trust) if, among other things:
(A) Lodgian Financing Corp. has deposited with the Trustee, in trust,
money and/or U.S. Government Obligations that through the payment of
interest and principal in respect thereof in accordance with their terms
will provide money in an amount sufficient to pay the principal of, premium,
if any, and accrued interest on the Notes on the Stated Maturity of such
payments in accordance with the terms of the Indenture and the Notes,
(B) Lodgian Financing Corp. has delivered to the Trustee (1) either (x)
an Opinion of Counsel to the effect that Holders will not recognize income,
gain or loss for federal income tax purposes as a result of Lodgian
Financing Corp.'s exercise of its option under this "Defeasance" provision
and will be subject to federal income tax on the same amount and in the same
manner and at the same times as would have been the case if such deposit,
defeasance and discharge had not occurred, which Opinion of Counsel must be
based upon (and accompanied by a copy of) a ruling of the Internal Revenue
Service to the same effect unless there has been a change in applicable
federal income tax law after the Closing Date such that a ruling is no
longer required or (y) a ruling directed to the Trustee received from the
Internal Revenue Service to the same effect as the aforementioned Opinion of
Counsel and (2) an Opinion of Counsel to the effect that the creation of the
defeasance trust does not violate the Investment Company Act of 1940 and
after the passage of 123 days following the deposit, the trust fund will not
be subject to the effect of Section 547 of the United States Bankruptcy Code
or Section 15 of the New York Debtor and Creditor Law,
(C) immediately after giving effect to such deposit on a PRO FORMA
basis, no Event of Default, or event that after the giving of notice or
lapse of time or both would become an Event of Default, shall have occurred
and be continuing on the date of such deposit or during the period ending on
the 123rd day after the date of such deposit, and such deposit shall not
result in a breach or violation of, or constitute a default under, any other
agreement or instrument to which Lodgian or any of its Subsidiaries is a
party or by which Lodgian or any of its Subsidiaries is bound,
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(D) Lodgian Financing Corp. is not prohibited from making payments in
respect of the Notes by the provisions described under "--Ranking--Terms of
Subordination," and
(E) if at such time the Notes are listed on a national securities
exchange, Lodgian Financing Corp. has delivered to the Trustee an Opinion of
Counsel to the effect that the Notes will not be delisted as a result of
such deposit, defeasance and discharge.
DEFEASANCE OF CERTAIN COVENANTS AND CERTAIN EVENTS OF DEFAULT. The
Indenture further will provide that the provisions of the Indenture will no
longer be in effect with respect to clauses (3) and (4) under "Consolidation,
Merger and Sale of Assets" and all the covenants described herein under
"Covenants," clause (c) under "Events of Default" with respect to such clauses
(3) and (4) under "Consolidation, Merger and Sale of Assets," clause (d) under
"Events of Default" with respect to such other covenants and clauses (e) and (f)
under "Events of Default" shall be deemed not to be Events of Default upon,
among other things, the deposit with the Trustee, in trust, of money and/or U.S.
Government Obligations that through the payment of interest and principal in
respect thereof in accordance with their terms will provide money in an amount
sufficient to pay the principal of, premium, if any, and accrued interest on the
Notes on the Stated Maturity of such payments in accordance with the terms of
the Indenture and the Notes, the satisfaction of the provisions described in
clauses (B)(2), (C), (D) and (E) of the preceding paragraph and the delivery by
Lodgian Financing Corp. to the Trustee of an Opinion of Counsel to the effect
that, among other things, the Holders will not recognize income, gain or loss
for federal income tax purposes as a result of such deposit and defeasance of
certain covenants and Events of Default and will be subject to federal income
tax on the same amount and in the same manner and at the same times as would
have been the case if such deposit and defeasance had not occurred.
DEFEASANCE AND CERTAIN OTHER EVENTS OF DEFAULT. In the event Lodgian
Financing Corp. exercises its option to omit compliance with certain covenants
and provisions of the Indenture with respect to the Notes as described in the
immediately preceding paragraph and the Notes are declared due and payable
because of the occurrence of an Event of Default that remains applicable, the
amount of money and/or U.S. Government Obligations on deposit with the Trustee
will be sufficient to pay amounts due on the Notes at the time of their Stated
Maturity but may not be sufficient to pay amounts due on the Notes at the time
of the acceleration resulting from such Event of Default. However, Lodgian
Financing Corp. will remain liable for such payments and Lodgian's and any
Subsidiary Guarantor's Note Guarantee with respect to such payments will remain
in effect.
MODIFICATION AND WAIVER
The Indenture may be amended, without the consent of any Holder, to:
(1) cure any ambiguity, defect or inconsistency in the Indenture;
(2) comply with the provisions described under "Consolidation, Merger
and Sale of Assets";
(3) comply with any requirements of the SEC in connection with the
qualification of the Indenture under the Trust Indenture Act;
(4) evidence and provide for the acceptance of appointment by a
successor Trustee; or
(5) make any change that, in the good faith opinion of the Board of
Directors, does not materially and adversely affect the rights of any
Holder.
Modifications and amendments of the Indenture may be made by Lodgian
Financing Corp. and the Trustee with the consent of the Holders of not less than
a majority in aggregate principal amount of the outstanding Notes; PROVIDED,
HOWEVER, that no such modification or amendment may, without the consent of each
Holder affected thereby:
(1) change the Stated Maturity of the principal of, or any installment
of interest on, any Note,
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(2) change the optional redemption dates or optional redemption prices
of the Notes from that stated under the caption "Optional Redemption",
(3) reduce the principal amount of, or premium, if any, or interest on,
any Note,
(4) change the place or currency of payment of principal of, or
premium, if any, or interest on, any Note,
(5) impair the right to institute suit for the enforcement of any
payment on or after the Stated Maturity (or, in the case of a redemption, on
or after the Redemption Date) of any Note,
(6) waive a default in the payment of principal of, premium, if any, or
interest on the Notes,
(7) release any Guarantor from its Note Guarantee, except as provided
in the Indenture,
(8) modify the subordination provisions in a manner adverse to the
Holders, or
(9) reduce the percentage or aggregate principal amount of outstanding
Notes the consent of whose Holders is necessary for waiver of compliance
with certain provisions of the Indenture or for waiver of certain defaults.
NO PERSONAL LIABILITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS, DIRECTORS OR
EMPLOYEES
No recourse for the payment of the principal of, premium, if any, or
interest on any of the Notes or for any claim based thereon or otherwise in
respect thereof, and no recourse under or upon any obligation, covenant or
agreement of Lodgian in the Indenture, or in any of the Notes or because of the
creation of any Indebtedness represented thereby, shall be had against any
incorporator, stockholder, officer, director, employee or controlling person of
Lodgian or of any successor Person thereof. Each Holder, by accepting the Notes,
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes. Such waiver may not be effective to
waive liabilities under the federal securities laws.
CONCERNING THE TRUSTEE
The Indenture provides that, except during the continuance of a Default, the
Trustee will not be liable, except for the performance of such duties as are
specifically set forth in the Indenture. If an Event of Default has occurred and
is continuing, the Trustee will use the same degree of care and skill in its
exercise of the rights and powers vested in it under the Indenture as a prudent
person would exercise under the circumstances in the conduct of such person's
own affairs.
The Indenture and provisions of the Trust Indenture Act of 1939, as amended,
incorporated by reference therein contain limitations on the rights of the
Trustee, should it become a creditor of Lodgian Financing Corp., to obtain
payment of claims in certain cases or to realize on certain property received by
it in respect of any such claims, as security or otherwise. The Trustee is
permitted to engage in other transactions; PROVIDED, HOWEVER, that if it
acquires any conflicting interest, it must eliminate such conflict or resign.
BOOK-ENTRY; DELIVERY AND FORM
The certificates representing the Notes will be issued in fully registered
form without interest coupons. Notes sold in offshore transactions in reliance
on Regulation S under the Securities Act will initially be represented by one or
more permanent global Notes in definitive, fully registered form without
interest coupons (each a "Regulation S Global Note") and will be deposited with
the Trustee as custodian for, and registered in the name of a nominee of, The
Depository Trust Company ("DTC") for the accounts of Euroclear and Cedelbank.
Prior to the 40th day after the Closing Date, beneficial interests in the
Regulation S Global Notes may only be held through Euroclear or Cedelbank, and
any resale or transfer of
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such interests to U.S. persons shall not be permitted during such period unless
such resale or transfer is made pursuant to Rule 144A or Regulation S.
Notes sold in reliance on Rule 144A will be represented by one or more
permanent global Notes in definitive, fully registered form without interest
coupons (each a "Restricted Global Note"; and together with the Regulation S
Global Notes, the "Global Notes") and will be deposited with the Trustee as
custodian for, and registered in the name of a nominee of, DTC.
Each Global Note (and any Notes issued for exchange therefor) will be
subject to certain restrictions on transfer set forth therein as described under
"Transfer Restrictions."
Notes transferred to institutional "accredited investors" (as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act (an "Institutional
Accredited Investor") who are not qualified institutional buyers ("Non-Global
Purchasers") will be in registered form without interest coupons ("Certificated
Notes"). Upon the transfer of Certificated Notes initially issued to a
Non-Global Purchaser to a qualified institutional buyer or in accordance with
Regulation S, such Certificated Notes will, unless the relevant Global Note has
previously been exchanged in whole for Certificated Notes, be exchanged for an
interest in a Global Note. For a description of the restrictions on the transfer
of Certificated Notes, see "Transfer Restrictions."
Ownership of beneficial interests in a Global Note will be limited to
persons who have accounts with DTC ("participants") or persons who hold
interests through participants. Ownership of beneficial interests in a Global
Note will be shown on, and the transfer of that ownership will be effected only
through, records maintained by DTC or its nominee (with respect to interests of
participants) and the records of participants (with respect to interests of
persons other than participants). Qualified institutional buyers may hold their
interests in a Restricted Global Note directly through DTC if they are
participants in such system, or indirectly through organizations which are
participants in such system.
Investors may hold their interests in a Regulation S Global Note directly
through Cedelbank or Euroclear, if they are participants in such systems, or
indirectly through organizations that are participants in such system. On or
after the 40th day following the Closing Date, investors may also hold such
interests through organizations other than Cedelbank or Euroclear that are
participants in the DTC system. Cedelbank and Euroclear will hold interests in
the Regulation S Global Notes on behalf of their participants through DTC.
So long as DTC, or its nominee, is the registered owner or holder of a
Global Note, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the Notes represented by such Global Note for all
purposes under the Indenture and the Notes. No beneficial owner of an interest
in a Global Note will be able to transfer that interest except in accordance
with DTC's applicable procedures, in addition to those provided for under the
Indenture and, if applicable, those of Euroclear and Cedelbank.
Payments of the principal of, and interest on, a Global Note will be made to
DTC or its nominee, as the case may be, as the registered owner thereof. Neither
Lodgian Financing Corp., the Trustee nor any Paying Agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a Global Note or
for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
Lodgian Financing Corp. expects that DTC or its nominee, upon receipt of any
payment of principal or interest in respect of a Global Note, will credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global Note as
shown on the records of DTC or its nominee. Lodgian Financing Corp. also expects
that payments by participants to owners of beneficial interests in such Global
Note held through such participants will be governed by standing instructions
and customary practices, as is now the case with securities held for the
accounts of
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customers registered in the names of nominees for such customers. Such payments
will be the responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules and will be settled in same-day funds. Transfers
between participants in Euroclear and Cedelbank will be effected in the ordinary
way in accordance with their respective rules and operating procedures.
Lodgian Financing Corp. expects that DTC will take any action permitted to
be taken by a holder of Notes (including the presentation of Notes for exchange
as described below) only at the direction of one or more participants to whose
account the DTC interests in a Global Note is credited and only in respect of
such portion of the aggregate principal amount of Notes as to which such
participant or participants has or have given such direction. However, if there
is an Event of Default under the Notes, DTC will exchange the applicable Global
Note for Certificated Notes, which it will distribute to its participants and
which may be legended as set forth under the heading "Transfer Restrictions."
Lodgian Financing Corp. understands that: DTC is a limited purpose trust
company organized under the laws of the State of New York, a "banking
organization" within the meaning of New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "Clearing Agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participants and facilitate the clearance and settlement of
securities transactions between participants through electronic book-entry
changes in accounts of its participants, thereby eliminating the need for
physical movement of certificates. Indirect access to the DTC system is
available to others such as banks, brokers, dealers and trust companies and
certain other organizations that clear through or maintain a custodial
relationship with a participant, either directly or indirectly ("indirect
participants").
Although DTC, Euroclear and Cedelbank are expected to follow the foregoing
procedures in order to facilitate transfers of interests in a Global Note among
participants of DTC, Euroclear and Cedelbank, they are under no obligation to
perform or continue to perform such procedures, and such procedures may be
discontinued at any time. Neither Lodgian Financing Corp. nor the Trustee will
have any responsibility for the performance by DTC, Euroclear or Cedelbank or
their respective participants or indirect participants of their respective
obligations under the rules and procedures governing their operations.
If DTC is at any time unwilling or unable to continue as a depositary for
the Global Notes and a successor depositary is not appointed by Lodgian
Financing Corp. within 90 days, Lodgian Financing Corp. will issue Certificated
Notes, which may bear the legend referred to under "Transfer Restrictions," in
exchange for the Global Notes. Holders of an interest in a Global Note may
receive Certificated Notes, which may bear the legend referred to under
"Transfer Restrictions," in accordance with the DTC's rules and procedures in
addition to those provided for under the Indenture.
DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
covenants and other provisions of the Indenture. Reference is made to the
Indenture for the full definition of all terms as well as any other capitalized
term used in this "Description of the Notes" for which no definition is
provided.
"Acquired Indebtedness" means Indebtedness of a Person existing at the time
such Person becomes a Restricted Subsidiary or assumed in connection with an
Asset Acquisition by a Restricted Subsidiary; PROVIDED that Indebtedness of such
Person which is redeemed, defeased, retired or otherwise repaid at the time of
or immediately upon consummation of the transactions by which such Person
becomes a Restricted Subsidiary or such Asset Acquisition shall not be Acquired
Indebtedness.
"Adjusted Consolidated Net Income" means, for any period, the aggregate net
income (or loss) of Lodgian and its Restricted Subsidiaries for such period
determined in conformity with GAAP; PROVIDED
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that the following items shall be excluded in computing Adjusted Consolidated
Net Income (without duplication):
(1) the net income (or loss) of any Person that is not a Restricted
Subsidiary;
(2) the net income (or loss) of any Person accrued prior to the date it
becomes a Restricted Subsidiary or is merged into or consolidated with
Lodgian or any of its Restricted Subsidiaries or all or substantially all of
the property and assets of such Person are acquired by Lodgian or any of its
Restricted Subsidiaries;
(3) the net income of any Restricted Subsidiary to the extent that the
declaration or payment of dividends or similar distributions by such
Restricted Subsidiary of such net income is not at the time permitted by the
operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable
to such Restricted Subsidiary;
(4) any gains or losses (on an after-tax basis) attributable to sales
of assets outside the ordinary course of business of Lodgian and its
Restricted Subsidiaries;
(5) solely for purposes of calculating the amount of Restricted
Payments that may be made pursuant to clause (C) of the first paragraph of
the "Limitation on Restricted Payments" covenant, (a) any amount paid or
accrued as dividends on Preferred Stock of Lodgian owned by Persons other
than Lodgian and any of its Restricted Subsidiaries and (b) any amount paid
as interest on the Convertible Debentures or dividends on the CRESTS; and
(6) all extraordinary gains and, for purposes of calculating the Fixed
Charge Coverage Ratio only, extraordinary losses.
"Adjusted Consolidated Net Tangible Assets" means the total amount of assets
of Lodgian and its Restricted Subsidiaries (less applicable depreciation,
amortization and other valuation reserves), except to the extent resulting from
write-ups of capital assets (excluding write-ups in connection with accounting
for acquisitions in conformity with GAAP), after deducting therefrom (1) all
current liabilities of Lodgian and its Restricted Subsidiaries (excluding
intercompany items) and (2) all goodwill, trade names, trademarks, patents,
unamortized debt discount and expense and other like intangibles, all as set
forth on the most recent quarterly or annual consolidated balance sheet of
Lodgian and its Restricted Subsidiaries, prepared in conformity with GAAP and
filed with the SEC or provided to the Trustee.
"Affiliate" means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Asset Acquisition" means (1) an investment by Lodgian or any of its
Restricted Subsidiaries in any other Person pursuant to which such Person shall
become a Restricted Subsidiary or shall be merged into or consolidated with
Lodgian or any of its Restricted Subsidiaries; PROVIDED that such Person's
primary business is related, ancillary or complementary to the businesses of
Lodgian and its Restricted Subsidiaries on the date of such investment or (2) an
acquisition by Lodgian or any of its Restricted Subsidiaries of the property and
assets of any Person other than Lodgian or any of its Restricted Subsidiaries
that constitute substantially all of a division or line of business of such
Person; PROVIDED that the property and assets acquired are related, ancillary or
complementary to the businesses of Lodgian and its Restricted Subsidiaries on
the date of such acquisition.
"Asset Disposition" means the sale or other disposition by Lodgian or any of
its Restricted Subsidiaries (other than to Lodgian or another Restricted
Subsidiary) of (1) all or substantially all of the Capital Stock of any
Restricted Subsidiary or (2) all or substantially all of the assets that
constitute a division or line of business of Lodgian or any of its Restricted
Subsidiaries.
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"Asset Sale" means any sale, transfer or other disposition (including by way
of merger, consolidation or sale-leaseback transaction) in one transaction or a
series of related transactions by Lodgian or any of its Restricted Subsidiaries
to any Person other than Lodgian or any of its Restricted Subsidiaries of (1)
all or any of the Capital Stock of any Restricted Subsidiary, (2) all or
substantially all of the property and assets of an operating unit or business of
Lodgian or any of its Restricted Subsidiaries or (3) any other property and
assets (other than the Capital Stock or other Investment in an Unrestricted
Subsidiary) of Lodgian or any of its Restricted Subsidiaries outside the
ordinary course of business of Lodgian or such Restricted Subsidiary and, in
each case, that is not governed by the provisions of the Indenture applicable to
mergers, consolidations and sales of assets of Lodgian; PROVIDED that "Asset
Sale" shall not include (a) sales or other dispositions of inventory,
receivables and other current assets or (b) sales, transfers or other
dispositions of assets with a fair market value not in excess of $1.0 million in
any transaction or series of related transactions, (c) sales, transfers or other
dispositions of assets constituting a Permitted Investment or a Restricted
Payment permitted to be made under the "Limitation on Restricted Payments"
covenant, or (d) any sale, transfer, assignment or other disposition of any
property or equipment that has become damaged, worn out, obsolete or otherwise
unsuitable for use in connection with the business of Lodgian or its Restricted
Subsidiaries.
"Average Life" means, at any date of determination with respect to any debt
security, the quotient obtained by dividing (1) the sum of the products of (a)
the number of years from such date of determination to the dates of each
successive scheduled principal payment of such debt security and (b) the amount
of such principal payment by (2) the sum of all such principal payments.
"Bank Agent" means the agent for the lenders under the Credit Agreement or
its successors as agent for the lenders under the Credit Agreement.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) in equity of such Person, whether outstanding on the
Closing Date or issued thereafter, including, without limitation, all Common
Stock and Preferred Stock.
"Capitalized Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) of which the discounted present value
of the rental obligations of such Person as lessee, in conformity with GAAP, is
required to be capitalized on the balance sheet of such Person.
"Capitalized Lease Obligations" means the discounted present value of the
rental obligations under a Capitalized Lease.
"Change of Control" means such time as (1) a "person" or "group" (within the
meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) becomes the ultimate
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of more
than 35% of the total voting power of the Voting Stock of Lodgian on a fully
diluted basis; or (2) individuals who on the Closing Date constitute the Board
of Directors (together with any new directors whose election by the Board of
Directors or whose nomination by the Board of Directors for election by
Lodgian's stockholders was approved by a vote of at least a majority of the
members of the Board of Directors then in office who either were members of the
Board of Directors on the Closing Date or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the members of the Board of Directors then in office.
"Closing Date" means the date on which the Notes are originally issued under
the Indenture.
"Consolidated EBITDA" means, for any period, Adjusted Consolidated Net
Income for such period plus, to the extent such amount was deducted in
calculating such Adjusted Consolidated Net Income:
(1) Consolidated Interest Expense and accrued but unpaid interest on
the Convertible Debentures or accrued but unpaid dividends on the CRESTS;
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(2) income taxes;
(3) depreciation expense;
(4) amortization expense; and
(5) all other non-cash items reducing Adjusted Consolidated Net Income
(other than items that will require cash payments and for which an accrual
or reserve is, or is required by GAAP to be, made), less all non-cash items
increasing Adjusted Consolidated Net Income, all as determined on a
consolidated basis for Lodgian and its Restricted Subsidiaries in conformity
with GAAP;
PROVIDED that, if any Restricted Subsidiary is not a Wholly Owned Restricted
Subsidiary, Consolidated EBITDA shall be reduced (to the extent not otherwise
reduced in accordance with GAAP) by an amount equal to (a) the amount of the
Adjusted Consolidated Net Income attributable to such Restricted Subsidiary
multiplied by (b) the percentage ownership interest in the income of such
Restricted Subsidiary not owned on the last day of such period by Lodgian or any
of its Restricted Subsidiaries.
"Consolidated Interest Expense" means, for any period, (1) the aggregate
amount of interest in respect of Indebtedness (including, without limitation,
amortization of original issue discount on any Indebtedness and the interest
portion of any deferred payment obligation, calculated in accordance with the
effective interest method of accounting; all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing; the net costs associated with Interest Rate Agreements; and
Indebtedness that is Guaranteed or secured by Lodgian or any of its Restricted
Subsidiaries) paid or accrued by Lodgian and its Restricted Subsidiaries during
such period, (2) all but the principal component of rentals in respect of
Capitalized Lease Obligations paid, accrued or scheduled to be paid or to be
accrued by Lodgian and its Restricted Subsidiaries during such period and (3)
solely for calculating the Fixed Charge Coverage Ratio, the aggregate amount of
interest on the Convertible Debentures or dividends on the CRESTS paid by
Lodgian and its Restricted Subsidiaries during such period for such period to
the extent paid under clause (8) of the "Limitation on Restricted Payments"
covenant; EXCLUDING, HOWEVER, (1) any amount of such interest of any Restricted
Subsidiary if the net income of such Restricted Subsidiary is excluded in the
calculation of Adjusted Consolidated Net Income pursuant to clause (3) of the
definition thereof (but only in the same proportion as the net income of such
Restricted Subsidiary is excluded from the calculation of Adjusted Consolidated
Net Income pursuant to clause (3) of the definition thereof) and (2) any
premiums, fees and expenses (and any amortization thereof) payable in connection
with the offering of the Notes, the establishment of the Credit Agreement and
any concurrent repayment of Indebtedness, all as determined on a consolidated
basis (without taking into account Unrestricted Subsidiaries) in conformity with
GAAP.
"Consolidated Net Worth" means, at any date of determination, stockholders'
equity plus, to the extent not included, any Preferred Stock of Lodgian as set
forth on the most recently available quarterly or annual consolidated balance
sheet of Lodgian and its Restricted Subsidiaries (which shall be as of a date
not more than 90 days prior to the date of such computation, and which shall not
take into account Unrestricted Subsidiaries), less any amounts attributable to
Disqualified Stock or any equity security convertible into or exchangeable for
Indebtedness, the cost of treasury stock and the principal amount of any
promissory notes receivable from the sale of the Capital Stock of Lodgian or any
of its Restricted Subsidiaries, each item to be determined in conformity with
GAAP (excluding the effects of foreign currency exchange adjustments under
Financial Accounting Standards Board Statement of Financial Accounting Standards
No. 52).
"Consolidated Operating Rental Expense" of any Person means, for any period,
the aggregate amount of rental expense with respect to any Operating Leases
deducted in computing net income of such Person during such period.
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"Convertible Debentures" means the 7% Convertible Debentures due 2010 issued
pursuant to the indenture dated June 17, 1998 among Servico, Inc., as issuer,
Lodgian, and Wilmington Trust Company, as trustee, as amended (including any
amendment and restatement thereof), supplemented, extended, renewed, replaced or
otherwise modified from time to time and including any agreement extending the
maturity of, refinancing or otherwise restructuring all or any portion of the
Indebtedness under such indenture or any successor agreement, as such agreement
may be amended, renewed, extended, substituted, replaced, restated or otherwise
modified from time to time.
"Credit Agreement" means the credit agreement to be dated as of the Closing
Date among Lodgian Financing Corp., the guarantors named therein and Morgan
Stanley Senior Funding, Inc. and any other lenders and parties thereto, together
with any agreements, instruments and documents executed or delivered pursuant to
or in connection with such credit agreement (including, without limitation, any
Guarantees and security documents), in each case as such credit agreement or
such agreements, instruments or documents may be amended (including any
amendment and restatement thereof), supplemented, extended, renewed, replaced or
otherwise modified from time to time and including any agreement extending the
maturity of, refinancing or otherwise restructuring (including, but not limited
to, the inclusion of additional borrowers thereunder that are Subsidiaries of
Lodgian) all or any portion of the Indebtedness under such agreement or any
successor agreement, as such agreement may be amended, renewed, extended,
substituted, replaced, restated or otherwise modified from time to time.
"CRESTS" means the 7% Convertible Redeemable Equity Structured Trust
Securities of Lodgian Capital Trust.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Designated Senior Indebtedness" means (1) any Indebtedness under the Credit
Agreement (except that any Indebtedness which represents a partial refinancing
of Indebtedness theretofore outstanding pursuant to the Credit Agreement, rather
than a complete refinancing thereof, shall only constitute Designated Senior
Indebtedness if such partial refinancing meets the requirements of clause (2)
below) and (2) any other Indebtedness constituting Senior Indebtedness that, at
the date of determination, has an aggregate principal amount outstanding of at
least $25 million and that is specifically designated, in the instrument
creating or evidencing such Senior Indebtedness as "Designated Senior
Indebtedness."
"Disqualified Stock" means any class or series of Capital Stock of any
Person that by its terms or otherwise is (1) required to be redeemed prior to
the Stated Maturity of the Notes, (2) redeemable at the option of the holder of
such class or series of Capital Stock at any time prior to the Stated Maturity
of the Notes or (3) convertible into or exchangeable for Capital Stock referred
to in clause (1) or (2) above or Indebtedness having a scheduled maturity prior
to the Stated Maturity of the Notes; PROVIDED that any Capital Stock that would
not constitute Disqualified Stock but for provisions thereof giving holders
thereof the right to require such Person to repurchase or redeem such Capital
Stock upon the occurrence of an "asset sale" or "change of control" occurring
prior to the Stated Maturity of the Notes shall not constitute Disqualified
Stock if the "asset sale" or "change of control" provisions applicable to such
Capital Stock are no more favorable to the holders of such Capital Stock than
the provisions contained in "Limitation on Asset Sales" and "Repurchase of Notes
upon a Change of Control" covenants and such Capital Stock specifically provides
that such Person will not repurchase or redeem any such stock pursuant to such
provision prior to Lodgian Financing Corp.'s repurchase of such Notes as are
required to be repurchased pursuant to the "Limitation on Asset Sales" and
"Repurchase of Notes upon a Change of Control" covenants.
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"fair market value" means the price that would be paid in an arm's-length
transaction between an informed and willing seller under no compulsion to sell
and an informed and willing buyer under no compulsion to buy, as determined in
good faith by the Board of Directors, whose determination shall be conclusive if
evidenced by a Board Resolution.
"Fixed Charge Coverage Ratio" means, on any Transaction Date, the ratio of
(1) the aggregate amount of Consolidated EBITDA and one-third of Consolidated
Operating Rental Expense for the then most recent four fiscal quarters prior to
such Transaction Date for which reports have been filed with the SEC or provided
to the Trustee (the "Four Quarter Period") to (2) the aggregate Consolidated
Interest Expense and one-third of Consolidated Operating Rental Expense during
such Four Quarter Period. In making the foregoing calculation, (A) PRO FORMA
effect shall be given to any Indebtedness Incurred or repaid during the period
(the "Reference Period") commencing on the first day of the Four Quarter Period
and ending on the Transaction Date (other than Indebtedness Incurred under a
revolving credit or similar arrangement to the extent of the commitment
thereunder (or under any predecessor revolving credit or similar arrangement) in
effect on the last day of such Four Quarter Period unless any portion of such
Indebtedness is projected, in the reasonable judgment of the senior management
of Lodgian, to remain outstanding for a period in excess of 12 months from the
date of the Incurrence thereof), in each case as if such Indebtedness had been
Incurred or repaid on the first day of the Reference Period; (B) PRO FORMA
effect shall be given to any Operating Leases entered into during such Reference
Period as if they had been entered into on the first day of such Reference
Period; (C) Consolidated Interest Expense attributable to interest on any
Indebtedness (whether existing or being Incurred) computed on a PRO FORMA basis
and bearing a floating interest rate shall be computed as if the rate in effect
on the Transaction Date (taking into account any Interest Rate Agreement
applicable to such Indebtedness if such Interest Rate Agreement has a remaining
term in excess of 12 months or, if shorter, at least equal to the remaining term
of such Indebtedness) had been the applicable rate for the entire period; (D)
PRO FORMA effect shall be given to Asset Dispositions and Asset Acquisitions
(including giving PRO FORMA effect to the application of proceeds of any Asset
Disposition) that occur during such Reference Period as if they had occurred and
such proceeds had been applied on the first day of such Reference Period; and
(E) PRO FORMA effect shall be given to asset dispositions and asset acquisitions
(including giving PRO FORMA effect to the application of proceeds of any asset
disposition) that have been made by any Person that has become a Restricted
Subsidiary or has been merged with or into Lodgian or any Restricted Subsidiary
during such Reference Period and that would have constituted Asset Dispositions
or Asset Acquisitions had such transactions occurred when such Person was a
Restricted Subsidiary as if such asset dispositions or asset acquisitions were
Asset Dispositions or Asset Acquisitions that occurred on the first day of such
Reference Period; PROVIDED that to the extent that clause (D) or (E) of this
sentence requires that PRO FORMA effect be given to an Asset Acquisition or
Asset Disposition, such PRO FORMA calculation shall be based upon the four full
fiscal quarters immediately preceding the Transaction Date of the Person, or
division or line of business of the Person, that is acquired or disposed for
which financial information is available.
"Foreign Subsidiary" means any Subsidiary of Lodgian that is an entity which
is a controlled foreign corporation under Section 957 of the Internal Revenue
Code.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Closing Date, including, without limitation,
those set forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations contained or referred to in
the Indenture shall be computed in conformity with GAAP applied on a consistent
basis, except that calculations made for purposes of determining compliance with
the terms of the covenants and with other provisions of the Indenture shall be
made without giving effect to (i) the amortization of any expenses incurred in
connection with the offering of the Notes, the establishment of the Credit
Agreement and any concurrent repayment of Indebtedness and (ii) except as
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otherwise provided, the amortization of any amounts required or permitted by
Accounting Principles Board Opinion Nos. 16 and 17.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (1) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness of
such other Person (whether arising by virtue of partnership arrangements, or by
agreements to keep-well, to purchase assets, goods, securities or services
(unless such purchase arrangements are on arm's-length terms and are entered
into in the ordinary course of business), to take-or-pay, or to maintain
financial statement conditions or otherwise) or (2) entered into for purposes of
assuring in any other manner the obligee of such Indebtedness of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); PROVIDED that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Guarantor" means Lodgian, an Initial Subsidiary Guarantor or any other
Restricted Subsidiary that provides a Guarantee of Lodgian Financing Corp.'s
obligations under the Indenture and the Notes.
"Impac I Debt" means the loan in the aggregate principal amount of $132.359
million extended by Nomura Asset Capital Corporation to Impac Hotel I, L.L.C. in
March 1997.
"Incur" means, with respect to any Indebtedness, to incur, create, issue,
assume, Guarantee or otherwise become liable for or with respect to, or become
responsible for, the payment of, contingently or otherwise, such Indebtedness,
including an "Incurrence" of Acquired Indebtedness; PROVIDED that neither the
accrual of interest nor the accretion of original issue discount shall be
considered an Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person at any date of
determination (without duplication):
(1) all indebtedness of such Person for borrowed money;
(2) all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments;
(3) all obligations of such Person in respect of letters of credit or
other similar instruments (including reimbursement obligations with respect
thereto, but excluding obligations with respect to letters of credit
(including trade letters of credit) securing obligations (other than
obligations described in (1) or (2) above or (5), (6) or (7) below) entered
into in the ordinary course of business of such Person to the extent such
letters of credit are not drawn upon or, if drawn upon, to the extent such
drawing is reimbursed no later than the third Business Day following receipt
by such Person of a demand for reimbursement);
(4) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services, which purchase price is due more
than six months after the date of placing such property in service or taking
delivery and title thereto or the completion of such services, except Trade
Payables;
(5) all Capitalized Lease Obligations;
(6) all Indebtedness of other Persons secured by a Lien on any asset of
such Person, whether or not such Indebtedness is assumed by such Person;
PROVIDED that the amount of such Indebtedness shall be the lesser of (A) the
fair market value of such asset at such date of determination and (B) the
amount of such Indebtedness;
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(7) all Indebtedness of other Persons Guaranteed by such Person to the
extent such Indebtedness is Guaranteed by such Person; and
(8) to the extent not otherwise included in this definition,
obligations under Currency Agreements and Interest Rate Agreements (other
than Currency Agreements and Interest Rate Agreements designed solely to
protect Lodgian or its Restricted Subsidiaries against fluctuations in
foreign currency exchange rates or interest rates and that do not increase
the Indebtedness of the obligor outstanding at any time other than as a
result of fluctuations in foreign currency exchange rates or interest rates
or by reason of fees, indemnities and compensation payable thereunder).
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and,
with respect to contingent obligations, the maximum liability upon the
occurrence of the contingency giving rise to the obligation, PROVIDED (A) that
the amount outstanding at any time of any Indebtedness issued with original
issue discount is the face amount of such Indebtedness less the remaining
unamortized portion of the original issue discount of such Indebtedness at such
time as determined in conformity with GAAP, (B) that money borrowed and set
aside at the time of the Incurrence of any Indebtedness in order to prefund the
payment of the interest on such Indebtedness shall not be deemed to be
"Indebtedness" and (C) that Indebtedness shall not include (x) any liability for
federal, state, local or other taxes, (y) performance, surety or appeal bonds
provided in the ordinary course of business or (z) agreements providing for
indemnification, adjustment of purchase price or similar obligations, or
Guarantees or letters of credit, surety bonds or performance bonds securing any
obligations of Lodgian or any of its Restricted Subsidiaries pursuant to such
agreements, in any case Incurred in connection with the disposition of any
business, assets or Restricted Subsidiary (other than Guarantees of Indebtedness
Incurred by any Person acquiring all or any portion of such business, assets or
Restricted Subsidiary for the purpose of financing such acquisition), so long as
the principal amount does not to exceed the gross proceeds actually received by
Lodgian or any Restricted Subsidiary in connection with such disposition.
"Initial Subsidiary Guarantors" means each wholly-owned subsidiary of
Lodgian Financing Corp.
"Interest Rate Agreement" means any interest rate protection agreement,
interest rate future agreement, interest rate option agreement, interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedge agreement, option or future contract or other similar
agreement or arrangement.
"Investment" in any Person means any direct or indirect advance, loan or
other extension of credit (including, without limitation, by way of Guarantee or
similar arrangement; but excluding advances to customers or suppliers in the
ordinary course of business that are, in conformity with GAAP, recorded as
accounts receivable, prepaid expenses or deposits on the balance sheet of
Lodgian or its Restricted Subsidiaries and endorsements for collection or
deposit arising in the ordinary course of business) or capital contribution to
(by means of any transfer of cash or other property to others or any payment for
property or services for the account or use of others), or any purchase or
acquisition of Capital Stock, bonds, notes, debentures or other similar
instruments issued by, such Person and shall include (1) the designation of a
Restricted Subsidiary as an Unrestricted Subsidiary and (2) the retention of the
Capital Stock (or any other Investment) by Lodgian or any of its Restricted
Subsidiaries, of (or in) any Person that has ceased to be a Restricted
Subsidiary, including, without limitation, by reason of any transaction
permitted by clause (3) of the "Limitation on the Issuance and Sale of Capital
Stock of Restricted Subsidiaries" covenant. For purposes of the definition of
"Unrestricted Subsidiary" and the "Limitation on Restricted Payments" covenant,
(a) the amount of or a reduction in an Investment shall be equal to the fair
market value thereof at the time such Investment is made or reduced and (b) in
the event Lodgian or a Restricted Subsidiary makes an Investment by transferring
assets to any Person and as part of such transaction receives Net Cash Proceeds,
the amount of such Investment shall be the fair market value of
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the assets less the amount of Net Cash Proceeds so received, provided that the
Net Cash Proceeds are applied in accordance with clause (A) or (B) of the
"Limitation on Asset Sales" covenant.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including, without limitation, any conditional sale or other
title retention agreement or lease in the nature thereof or any agreement to
give any security interest).
"Lodgian Capital Trust" means Lodgian Capital Trust I, a statutory business
trust formed under the laws of the State of Delaware.
"Lodgian Capital Trust Declaration" means the amended and restated
declaration of trust dated June 17, 1998 among Lodgian (as successor of Servico,
Inc.) as sponsor, David Buddemeyer, Phillip R. Hale and Charles M. Diaz as the
initial regular trustees, Wilmington Trust Company as the initial property
trustee and initial Delaware trustee, Lodgian and the holders, from time to
time, of undivided beneficial ownership interest in the trust, as in effect on
the Closing Date.
"Lodgian Capital Trust Guarantee" means the Guarantee by Lodgian (as
successor of the original guarantor Servico, Inc.) of Lodgian Capital Trust's
obligations under the CRESTS, as in effect on the Closing Date.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means:
(a) with respect to any Asset Sale, the proceeds of such Asset Sale in
the form of cash or cash equivalents, including payments in respect of
deferred payment obligations (to the extent corresponding to the principal,
but not interest, component thereof) when received in the form of cash or
cash equivalents and proceeds from the conversion of other property received
when converted to cash or cash equivalents, net of:
(1) brokerage commissions and other fees and expenses (including
fees and expenses of counsel and investment bankers) related to such
Asset Sale;
(2) provisions for all taxes (whether or not such taxes will
actually be paid or are payable) as a result of such Asset Sale without
regard to the consolidated results of operations of Lodgian and its
Restricted Subsidiaries, taken as a whole;
(3) payments made to repay Indebtedness or any other obligation
outstanding at the time of such Asset Sale that either (x) is secured by
a Lien on the property or assets sold or (y) is required to be paid as a
result of such sale; and
(4) appropriate amounts to be provided by Lodgian or any Restricted
Subsidiary as a reserve against any liabilities associated with such
Asset Sale, including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated
with such Asset Sale, all as determined in conformity with GAAP; and
(b) with respect to any issuance or sale of Capital Stock, the proceeds
of such issuance or sale in the form of cash or cash equivalents, including
payments in respect of deferred payment obligations (to the extent
corresponding to the principal, but not interest, component thereof) when
received in the form of cash or cash equivalents and proceeds from the
conversion of other property received when converted to cash or cash
equivalents, net of attorneys' fees, accountants' fees, underwriters' or
placement agents' fees, discounts or commissions and brokerage, consultant
and other fees incurred in connection with such issuance or sale and net of
taxes paid or payable as a result thereof.
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"Note Guarantee" means any Guarantee of the obligations of Lodgian Financing
Corp. under the Indenture and the Notes by any Guarantor.
"Offer to Purchase" means an offer to purchase Notes by Lodgian Financing
Corp. from the Holders commenced by mailing a notice to the Trustee and each
Holder stating:
(1) the covenant pursuant to which the offer is being made and that all
Notes validly tendered will be accepted for payment on a pro rata basis;
(2) the purchase price and the date of purchase (which shall be a
Business Day no earlier than 30 days nor later than 60 days from the date
such notice is mailed) (the "Payment Date");
(3) that any Note not tendered will continue to accrue interest
pursuant to its terms;
(4) that, unless Lodgian Financing Corp. defaults in the payment of the
purchase price, any Note accepted for payment pursuant to the Offer to
Purchase shall cease to accrue interest on and after the Payment Date;
(5) that Holders electing to have a Note purchased pursuant to the
Offer to Purchase will be required to surrender the Note, together with the
form entitled "Option of the Holder to Elect Purchase" on the reverse side
of the Note completed, to the Paying Agent at the address specified in the
notice prior to the close of business on the Business Day immediately
preceding the Payment Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the third
Business Day immediately preceding the Payment Date, a telegram, facsimile
transmission or letter setting forth the name of such Holder, the principal
amount of Notes delivered for purchase and a statement that such Holder is
withdrawing his election to have such Notes purchased; and
(7) that Holders whose Notes are being purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered; PROVIDED that each Note purchased and each new Note
issued shall be in a principal amount of $1,000 or integral multiples of
$1,000.
On the Payment Date, Lodgian Financing Corp. shall (a) accept for payment on a
pro rata basis Notes or portions thereof tendered pursuant to an Offer to
Purchase; (b) deposit with the Paying Agent money sufficient to pay the purchase
price of all Notes or portions thereof so accepted; and (c) deliver, or cause to
be delivered, to the Trustee all Notes or portions thereof so accepted together
with an Officers' Certificate specifying the Notes or portions thereof accepted
for payment by Lodgian Financing Corp. The Paying Agent shall promptly mail to
the Holders of Notes so accepted payment in an amount equal to the purchase
price, and the Trustee shall promptly authenticate and mail to such Holders a
new Note equal in principal amount to any unpurchased portion of the Note
surrendered; PROVIDED that each Note purchased and each new Note issued shall be
in a principal amount of $1,000 or integral multiples of $1,000. Lodgian
Financing Corp. will publicly announce the results of an Offer to Purchase as
soon as practicable after the Payment Date. The Trustee shall act as the Paying
Agent for an Offer to Purchase. Lodgian Financing Corp. will comply with Rule
14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable, in the event
that Lodgian Financing Corp. is required to repurchase Notes pursuant to an
Offer to Purchase.
"Operating Lease" means any lease of any property (whether real, personal or
mixed) other than a Capitalized Lease.
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"Permitted Investment" means:
(1) an Investment in Lodgian or a Restricted Subsidiary or a Person
which will, upon the making of such Investment, become a Restricted
Subsidiary or be merged or consolidated with or into or transfer or convey
all or substantially all its assets to, Lodgian or a Restricted Subsidiary;
PROVIDED that (a) such person's primary business is related, ancillary or
complementary to the businesses of Lodgian and its Restricted Subsidiaries
on the date of such Investment and (b) none of Lodgian Financing Corp.,
Lodgian or any Subsidiary Guarantor will transfer any hotel properties to a
Restricted Subsidiary other than a Subsidiary Guarantor and no Restricted
Subsidiary other than Lodgian Financing Corp. or a Subsidiary Guarantor will
acquire or otherwise develop any hotels other than hotels held by such
Subsidiary on the Closing Date;
(2) Temporary Cash Investments;
(3) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as expenses
in accordance with GAAP;
(4) stock, obligations or securities received in satisfaction of
judgments;
(5) an Investment in an Unrestricted Subsidiary consisting solely of an
Investment in another Unrestricted Subsidiary;
(6) Interest Rate Agreements and Currency Agreements designed solely to
protect Lodgian or its Restricted Subsidiaries against fluctuations in
interest rates or foreign currency exchange rates; and
(7) Investments in any Person the primary business of which is related,
ancillary or complementary to the business of Lodgian and its Restricted
Subsidiaries on the date of such Investment; PROVIDED that the aggregate
amount of such Investments under this clause (7) does not exceed (a) $20
million plus (b) the net reduction in Investments made pursuant to this
clause (7) resulting from distributions on or repayments of such
Investments, including payments of interest on Indebtedness, dividends,
repayments of loans or advances, or other distributions or other transfers
of assets, in each case to Lodgian or any Restricted Subsidiary, or from the
Net Cash Proceeds from the sale or other disposition of any such Investment
(except, in each case, to the extent of any gain on such sale or disposition
that would be included in the calculation of Adjusted Consolidated Net
Income), from the release of any Guarantee or from redesignations of
Unrestricted Subsidiaries as Restricted Subsidiaries (valued in each case as
provided in the definition of "Investments"); PROVIDED that the net
reduction in any such Investments shall not exceed the amount of such
Investments in such Person.
"Purchase Money Indebtedness" means any Indebtedness, including Capitalized
Leases, which is Incurred to finance the acquisition, construction, installation
or improvement of any Replacement Assets and which is Incurred concurrently
with, or within six months following, such acquisition, construction,
installation or improvement.
"Replacement Assets" means, on any date, property or assets (other than
current assets) of a nature or type or that are used in a business (or an
Investment in a company having property or assets of a nature or type, or
engaged in a business) similar or related to the nature or type of the property
and assets of, or the business of, Lodgian and its Restricted Subsidiaries
existing on such date.
"Restricted Subsidiary" means any Subsidiary of Lodgian other than an
Unrestricted Subsidiary.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and its successors.
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"Senior Indebtedness" means the following obligations of Lodgian, Lodgian
Financing Corp. or any Subsidiary Guarantor, whether outstanding on the Closing
Date or thereafter Incurred: (1) all Indebtedness and all other monetary
obligations (including, without limitation, expenses, fees, principal, interest,
reimbursement obligations under letters of credit and indemnities payable in
connection therewith) under (or in respect of) the Credit Agreement or any
Interest Rate Agreement or Currency Agreement relating to the Indebtedness under
the Credit Agreement and (2) all Indebtedness and all other monetary obligations
of Lodgian, Lodgian Financing Corp. or any Subsidiary Guarantor (other than the
Notes and any Note Guarantee and the Convertible Debentures), including
principal and interest on such Indebtedness, unless such Indebtedness, by its
terms or by the terms of any agreement or instrument pursuant to which such
Indebtedness is issued, is PARI PASSU with, or subordinated in right of payment
to, the Notes or any Note Guarantee; PROVIDED that the term "Senior
Indebtedness" shall not include (a) any Indebtedness of Lodgian, Lodgian
Financing Corp. or any Subsidiary Guarantor that, when Incurred, was without
recourse to Lodgian, Lodgian Financing Corp. or such Subsidiary Guarantor, (b)
any Indebtedness of Lodgian, Lodgian Financing Corp. or any Subsidiary Guarantor
to a Subsidiary of Lodgian, or to a joint venture in which Lodgian or any
Restricted Subsidiary has an interest, (c) any Indebtedness of Lodgian, Lodgian
Financing Corp. or any Subsidiary Guarantor, to the extent not permitted by the
"Limitation on Indebtedness" covenant or the "Limitation on Senior Subordinated
Indebtedness" covenant; provided that Indebtedness under the Credit Agreement
shall be deemed Senior Indebtedness if Lodgian, Lodgian Financing Corp. or any
Subsidiary Guarantor, as the case may be, believed in good faith at the time of
incurrence that it was permitted to incur such Indebtedness under the Indenture
and delivers an officers' certificate to the lenders under the Credit Agreement
to such effect, (d) any repurchase, redemption or other obligation in respect of
Disqualified Stock, (e) any Indebtedness to any employee of Lodgian or any of
its Subsidiaries, (f) any liability for taxes owed or owing by Lodgian, Lodgian
Financing Corp. or any Subsidiary Guarantor, or (g) any Trade Payables.
"Senior Subordinated Obligations" means any principal of, premium, if any,
or interest on the Notes payable pursuant to the terms of the Notes or any Note
Guarantee or upon acceleration, including any amounts received upon the exercise
of rights of rescission or other rights of action (including claims for damages)
or otherwise, to the extent relating to the purchase price of the Notes or
amounts corresponding to such principal, premium, if any, or interest on the
Notes.
"Significant Subsidiary" means, at any date of determination, any Restricted
Subsidiary that, together with its Subsidiaries, (i) for the most recent fiscal
year of Lodgian, accounted for more than 10% of the consolidated revenues of
Lodgian and its Restricted Subsidiaries or (ii) as of the end of such fiscal
year, was the owner of more than 10% of the consolidated assets of Lodgian and
its Restricted Subsidiaries, all as set forth on the most recently available
consolidated financial statements of Lodgian for such fiscal year.
"Stated Maturity" means (1) with respect to any debt security, the date
specified in such debt security as the fixed date on which the final installment
of principal of such debt security is due and payable and (2) with respect to
any scheduled installment of principal of or interest on any debt security, the
date specified in such debt security as the fixed date on which such installment
is due and payable.
"Subsidiary" means, with respect to any Person, any corporation, association
or other business entity of which more than 50% of the voting power of the
outstanding Voting Stock is owned, directly or indirectly, by such Person and
one or more other Subsidiaries of such Person.
"Subsidiary Guarantor" means any Initial Subsidiary Guarantor and any other
Restricted Subsidiary which provides a Guarantee of Lodgian Financing Corp.'s
obligations under the Indenture and the Notes pursuant to the "Limitation on
Issuances of Guarantees by Restricted Subsidiaries" covenant.
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"Temporary Cash Investment" means any of the following:
(1) direct obligations of the United States of America or any agency
thereof or obligations fully and unconditionally guaranteed by the United
States of America or any agency thereof, in each case maturing within one
year;
(2) time deposit accounts, certificates of deposit and money market
deposits maturing within 180 days of the date of acquisition thereof issued
by a bank or trust company which is organized under the laws of the United
States of America, any state thereof or any foreign country recognized by
the United States of America, and which bank or trust company has capital,
surplus and undivided profits aggregating in excess of $100 million (or the
foreign currency equivalent thereof) and has outstanding debt which is rated
"A" (or such similar equivalent rating) or higher by at least one nationally
recognized statistical rating organization (as defined in Rule 436 under the
Securities Act) or any money-market fund sponsored by a registered broker
dealer or mutual fund distributor;
(3) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (1) above entered
into with a bank or trust company meeting the qualifications described in
clause (2) above;
(4) commercial paper, maturing not more than one year after the date of
acquisition, issued by a corporation (other than an Affiliate of Lodgian
Financing Corp.) organized and in existence under the laws of the United
States of America, any state thereof or any foreign country recognized by
the United States of America with a rating at the time as of which any
investment therein is made of "P-1" (or higher) according to Moody's or
"A-1" (or higher) according to S&P;
(5) securities with maturities of six months or less from the date of
acquisition issued or fully and unconditionally guaranteed by any state,
commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least "A" by
S&P or Moody's; and
(6) any mutual fund that has at least 95% of its assets continuously
invested in investments of the types described in clauses (1) through (5)
above.
"Trade Payables" means, with respect to any Person, any accounts payable or
any other indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by such Person or any of its Subsidiaries arising in the
ordinary course of business in connection with the acquisition of goods or
services.
"Transaction Date" means, with respect to the Incurrence of any
Indebtedness, the date such Indebtedness is to be Incurred and, with respect to
any Restricted Payment, the date such Restricted Payment is to be made.
"Unrestricted Subsidiary" means (1) any Subsidiary of Lodgian other than
Lodgian Financing Corp. that at the time of determination shall be designated an
Unrestricted Subsidiary by the Board of Directors in the manner provided below;
and (2) any Subsidiary of an Unrestricted Subsidiary. The Board of Directors may
designate any Restricted Subsidiary (including any newly acquired or newly
formed Subsidiary of Lodgian) to be an Unrestricted Subsidiary unless such
Subsidiary owns any Capital Stock of, or owns or holds any Lien on any property
of, Lodgian or any Restricted Subsidiary; PROVIDED that (a) any Guarantee by
Lodgian or any Restricted Subsidiary of any Indebtedness of the Subsidiary being
so designated shall be deemed an "Incurrence" of such Indebtedness and an
"Investment" by Lodgian or such Restricted Subsidiary (or both, if applicable)
at the time of such designation; (b) either (x) the Subsidiary to be so
designated has total assets of $1,000 or less or (y) if such Subsidiary has
assets greater than $1,000, such designation would be permitted under the
"Limitation on Restricted Payments" covenant and (c) if applicable, the
Incurrence of Indebtedness and the Investment referred to in clause (a)
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of this proviso would be permitted under the "Limitation on Indebtedness" and
"Limitation on Restricted Payments" covenants. The Board of Directors may
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; PROVIDED
that (i) no Default or Event of Default shall have occurred and be continuing at
the time of or after giving effect to such designation and (ii) all Liens and
Indebtedness of such Unrestricted Subsidiary outstanding immediately after such
designation would, if Incurred at such time, have been permitted to be Incurred
(and shall be deemed to have been Incurred) for all purposes of the Indenture.
Any such designation by the Board of Directors shall be evidenced to the Trustee
by promptly filing with the Trustee a copy of the Board Resolution giving effect
to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing provisions.
"U.S. Government Obligations" means securities that are (1) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (2) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof at any time prior
to the Stated Maturity of the Notes, and shall also include a depository receipt
issued by a bank or trust company as custodian with respect to any such U.S.
Government Obligation or a specific payment of interest on or principal of any
such U.S. Government Obligation held by such custodian for the account of the
holder of a depository receipt; PROVIDED that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or the specific payment of interest on
or principal of the U.S. Government Obligation evidenced by such depository
receipt.
"Voting Stock" means with respect to any Person, Capital Stock of any class
or kind ordinarily having the power to vote for the election of directors,
managers or other voting members of the governing body of such Person.
"Wholly Owned" means, with respect to any Subsidiary of any Person, the
ownership of all of the outstanding Capital Stock of such Subsidiary (other than
any director's qualifying shares or Investments by foreign nationals mandated by
applicable law) by such Person or one or more Wholly Owned Subsidiaries of such
Person.
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CERTAIN U.S. FEDERAL TAX CONSIDERATIONS
The following discussion summarizes certain U.S. federal tax consequences of
the Exchange Offer, and of the purchase, beneficial ownership and disposition of
Exchange Notes. For purposes of this summary, a "U.S. Holder" means a beneficial
owner of an Old Note or an Exchange Note that is for U.S. federal income tax
purposes:
- an individual who is a citizen or resident of the United States;
- a corporation, partnership or other business entity created or organized
under the laws of the United States or any state or political subdivision
thereof (including the District of Columbia);
- an estate the income of which is subject to U.S. federal income taxation
regardless of its source; or
- a trust with respect to which a court within the United States is able to
exercise primary supervision over its administration, and one or more
United States persons have the authority to control all of its substantial
decisions.
An individual may, subject to certain exceptions, be deemed to be a resident
of the United States by virtue of being present in the United States for at
least 31 days in the calendar year and for an aggregate of at least 183 days
during a three-year period ending in the current calendar year (counting for
such purposes of all the days present in the current year, one-third of the days
present in the immediately preceding year, and one-sixth of the days present in
the second preceding year). A "Non-U.S. Holder" is a beneficial owner of an Old
Note or an Exchange Note that is not a U.S. Holder.
This summary is based on interpretations of the Internal Revenue Code of
1986, as amended (the "Code"), regulations issued thereunder, and rulings and
decisions currently in effect (or in some cases proposed), all of which are
subject to change. Any such change may be applied retroactively and may
adversely affect the federal tax consequences described herein. This summary
addresses only holders that own Old Notes or Exchange Notes as capital assets
and not as part of a "straddle" or a "conversion transaction" for U.S. federal
income tax purposes or as part of some other integrated investment. This summary
does not discuss all of the tax consequences that may be relevant to particular
investors or to investors subject to special treatment under the U.S. federal
income tax laws (such as life insurance companies, tax-exempt entities,
regulated investment companies, securities dealers, or investors whose
functional currency is not the U.S. dollar). Persons considering the exchange of
their Old Notes for Exchange Notes and persons considering the purchase of
Exchange Notes should consult their tax advisors concerning the application of
U.S. federal tax laws to their particular situations as well as any consequences
of the exchange of the Old Notes for Exchange Notes, and of the purchase,
beneficial ownership and disposition of Exchange Notes arising under the laws of
any state or other taxing jurisdiction.
U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER TO U.S. HOLDERS AND
NON-U.S. HOLDERS
The exchange of Old Notes for Exchange Notes pursuant to the Exchange Offer
will not be a taxable event for U.S. federal income tax purposes. U.S. Holders
and Non-U.S. Holders will not recognize any taxable gain or loss as a result of
such exchange and will have the same tax basis and holding period in the
Exchange Notes as they had in the Old Notes immediately before the exchange.
U.S. FEDERAL INCOME AND ESTATE TAX CONSEQUENCES TO NON-U.S. HOLDERS OF OWNERSHIP
OF EXCHANGE NOTES
For purposes of the following summary, interest and gain on the sale,
exchange or other disposition of an Exchange Note will be considered "U.S. trade
or business income" if such income or gain is:
- effectively connected with the conduct of a trade or business in the
United States; or
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- in the case of a treaty resident, attributable to a permanent
establishment (or, in the case of an individual, to a fixed base) in the
United States.
TREATMENT OF INTEREST. A Non-U.S. Holder that is not subject to U.S.
federal income tax as a result of any direct or indirect connection to the
United States other than its ownership of an Exchange Note will not be subject
to U.S. federal income or withholding tax in respect of interest income on the
Exchange Note if:
- the interest is not U.S. trade or business income;
- the Non-U.S. Holder provides an appropriate statement on Internal Revenue
Service ("IRS") Form W-8 or Form W-8BEN, together with all appropriate
attachments, signed under penalties of perjury, identifying the Non-U.S.
Holder and stating, among other things, that the Non-U.S. Holder is not a
United States person for U.S. federal income tax purposes; and
- the Non-U.S. Holder is not a "10-percent shareholder" or a "related
controlled foreign corporation" with respect to the Company as specially
defined for U.S. federal income tax purposes.
If an Exchange Note is held through a securities clearing organization or
certain other financial institutions, the organization or institution may
provide a signed statement to eliminate withholding tax. However, in such case,
the signed statement must be accompanied by a copy of the IRS Form W-8 or Form
W-8BEN or the substitute form provided by the beneficial owner to the
organization or institution. For interest paid with respect to an Exchange Note
after December 31, 2000, a Non-U.S. Holder that is treated as a partnership for
U.S. federal tax purposes generally will be required to provide an IRS Form
W-8IMY and to attach an appropriate certification by each beneficial owner of
the Non-U.S. Holder (including in certain cases, such beneficial owner's
beneficial owners). Prospective investors, including foreign partnerships and
their partners, should consult their tax advisors regarding these possible
additional reporting requirements.
To the extent these conditions are not met, a 30% withholding tax will apply
to interest income on the Exchange Note, unless an income tax treaty reduces or
eliminates such tax or unless the interest is effectively connected with the
conduct of a trade or business within the United States by such Non-U.S. Holder
and the Non-U.S. Holder provides an appropriate statement to that effect. In the
latter case, such Non-U.S. Holder generally will be subject to U.S. federal
income tax with respect to all income from the Exchange Notes at regular rates
applicable to U.S. taxpayers. Additionally, in such event, Non-U.S. Holders that
are corporations could be subject to a branch profits tax on such income.
TREATMENT OF DISPOSITIONS OF EXCHANGE NOTES. In general, a Non-U.S. Holder
will not be subject to U.S. federal income tax on any amount received (other
than amounts in respect of accrued but unpaid interest) upon retirement or
disposition of an Exchange Note unless such Non-U.S. Holder is an individual
present in the United States for 183 days or more in the taxable year of the
sale, exchange or other disposition and certain other requirements are met, or
unless the gain is U.S. trade or business income. In the latter event, Non-U.S.
Holders generally will be subject to U.S. federal income tax with respect to
such gain at regular rates applicable to U.S. taxpayers. Additionally, in such
event, Non-U.S. Holders that are corporations could be subject to a branch
profits tax on such gain.
TREATMENT OF EXCHANGE NOTES FOR U.S. FEDERAL ESTATE TAX PURPOSES. An
individual Non-U.S. Holder (who is not domiciled in the United States for U.S.
federal estate tax purposes at the time of death) will not be subject to U.S.
federal estate tax in respect of an Exchange Note, provided the Non-U.S. Holder
does not at the time of death actually or constructively own 10% or more of the
combined voting power of all classes of stock of the Company and payments of
interest on such Exchange Note would not have been considered U.S. trade or
business income at the time of such Non-U.S. Holder's death.
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U.S. INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING TAX FOR NON-U.S.
HOLDERS
Under certain circumstances, the Code requires "information reporting"
annually to the IRS and to each holder of Exchange Notes, and "backup
withholding" at a rate of 31% with respect to certain payments made on or with
respect to the Exchange Notes. Backup withholding generally does not apply with
respect to certain holders of Exchange Notes, including corporations, tax-exempt
organizations, qualified pension and profit sharing trusts and individual
retirement accounts.
A Non-U.S. Holder that provides an IRS Form W-8 or Form W-8BEN, together
with all appropriate attachments, signed under penalties of perjury, identifying
the Non-U.S. Holder and stating that the Non-U.S. Holder is not a United States
person will not be subject to IRS reporting requirements and U.S. backup
withholding. With respect to interest paid after December 31, 2000, IRS Forms
W-8BEN will be required from the beneficial owners of interests in a Non-U.S.
Holder that is treated as a partnership for U.S. federal income tax purposes.
The payment of the proceeds on the disposition of an Exchange Note to or
through the U.S. office of a broker generally will be subject to information
reporting and backup withholding at a rate of 31% unless the Non-U.S. Holder
either certifies its status as a Non-U.S. Holder under penalties of perjury on
IRS Form W-8 or Form W-8BEN (as described above) or otherwise establishes an
exemption. The payment of the proceeds on the disposition of an Exchange Note by
a Non-U.S. Holder to or through a non-U.S. office of a non-U.S. broker will not
be subject to backup withholding or information reporting unless the non-U.S.
broker is a "U.S. related person" (as defined below). The payment of proceeds on
the disposition of an Exchange Note by a Non-U.S. Holder to or through a
non-U.S. office of a U.S. broker or a U.S. related person generally will not be
subject to backup withholding but will be subject to information reporting
unless the Non-U.S. Holder certifies its status as a Non-U.S. Holder under
penalties of perjury or the broker has certain documentary evidence in its files
as to the Non-U.S. Holder's foreign status and the broker has no actual
knowledge to the contrary.
For this purpose, a "U.S. related person" is:
- a "controlled foreign corporation" for U.S. federal income tax purposes;
- a foreign person 50% or more of whose gross income from all sources for
the three-year period ending with the close of its taxable year preceding
the payment (or for such part of the period that the broker has been in
existence) is derived from activities that are effectively connected with
the conduct of a U.S. trade or business; or
- for payments made after December 31, 2000, a foreign partnership if at any
time during its tax year one or more of its partners are United States
persons who, in the aggregate, hold more than 50% of the income or capital
interest of the partnership or if, at any time during its taxable year,
the partnership is engaged in the conduct of a U.S. trade or business.
Backup withholding is not an additional tax and may be refunded (or credited
against the Non-U.S. Holder's U.S. federal income tax liability, if any),
provided that certain required information is furnished. The information
reporting requirements may apply regardless of whether withholding is required.
Copies of the information returns reporting such interest and withholding also
may be made available to the tax authorities in the country in which a Non-U.S.
Holder is a resident under the provisions of an applicable income tax treaty or
agreement.
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LEGAL MATTERS
Certain legal matters with respect to the issuance of the Exchange Notes
offered by this prospectus will be passed on for us by Cadwalader, Wickersham &
Taft, New York, New York.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements at December 31, 1998 and 1997, and for each of the three
years in the period ended December 31, 1998, as set forth in their report. We
have included our financial statements in the prospectus and elsewhere in the
registration statement in reliance on Ernst & Young LLP's report, given on their
authority as experts in accounting and auditing.
The consolidated financial statements of Impac Hotel Group, LLC as of
December 31, 1997 and 1996 and for each of the three-years in the period ended
December 31, 1997, included in this prospectus, have been audited by
PricewaterhouseCoopers LLP, independent accountants, as stated in their report
appearing herein.
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
LODGIAN, INC. AND SUBSIDIARIES
<TABLE>
<S> <C>
Report of Independent Auditors....................................................... F-2
Consolidated Balance Sheets as of March 31, 1999 (Unaudited) and December 31, 1998
and 1997........................................................................... F-3
Consolidated Statements of Operations for the Three Months Ended March 31, 1999 and
1998 (Unaudited) and the Years Ended December 31, 1998, 1997 and 1996.............. F-4
Consolidated Statements of Stockholders' Equity for the Three Months Ended March 31,
1999 (Unaudited) and the Years Ended December 31, 1998, 1997 and 1996.............. F-5
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1999 and
1998 (Unaudited) and the Years Ended December 31, 1998, 1997 and 1996.............. F-6
Notes to Consolidated Financial Statements........................................... F-7
IMPAC HOTEL GROUP, LLC AND SUBSIDIARIES
Report of Independent Accountants.................................................... F-35
Consolidated and Combined Balance Sheets as of June 30, 1998 (Unaudited) and December
31, 1997 and 1996.................................................................. F-36
Consolidated and Combined Statements of Operations for the Six Months Ended June 30,
1998 and 1997 (Unaudited) and the Years Ended December 31, 1997, 1996 and 1995..... F-37
Consolidated and Combined Statements of Equity for the Six Months Ended June 30, 1998
(Unaudited) and the Years Ended December 31, 1997, 1996 and 1995................... F-38
Consolidated and Combined Statements of Cash Flows for the Six Months Ended June 30,
1998 and 1997 (Unaudited) and the Years Ended December 31, 1997, 1996 and 1995..... F-39
Notes to Financial Statements........................................................ F-40
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Stockholders and Board of Directors
Lodgian, Inc.
We have audited the accompanying consolidated balance sheets of Lodgian,
Inc. (formerly known as Servico, Inc) and subsidiaries as of December 31, 1998
and 1997, and the related consolidated statements of operations, stockholders'
equity, and cash flows for each of the three years in the period ended December
31, 1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Lodgian, Inc.
(formerly known as Servico, Inc.) and subsidiaries at December 31, 1998 and
1997, and the consolidated results of their operations and their cash flows for
each of the three years in the period ended December 31, 1998, in conformity
with generally accepted accounting principles.
Ernst & Young LLP
Atlanta, Georgia
March 31, 1999, except for Note 15,
as to which the date is June 24, 1999
F-2
<PAGE>
LODGIAN, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
AS OF MARCH 31 ------------------------
1999 1998 1997
-------------- ------------ ----------
<S> <C> <C> <C>
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents............................................ $ 18,293 $ 19,185 $ 15,243
Cash, restricted..................................................... 6,127 6,302 --
Accounts receivable, net of allowances............................... 28,612 25,498 11,023
Inventories.......................................................... 9,072 9,263 4,485
Prepaid expenses..................................................... 11,505 8,697 7,469
Other current assets................................................. 6,101 9,996 3,684
-------------- ------------ ----------
Total current assets............................................... 79,710 78,941 41,904
Property and equipment, net............................................ 1,329,968 1,317,470 534,080
Deposits for capital expenditures...................................... 16,186 30,386 30,901
Other assets, net...................................................... 68,816 71,124 20,766
-------------- ------------ ----------
$ 1,494,680 $ 1,497,921 $ 627,651
-------------- ------------ ----------
-------------- ------------ ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable..................................................... $ 56,935 $ 57,253 $ 7,543
Accrued liabilities.................................................. 48,988 50,633 27,355
Current portion of long-term obligations............................. 36,122 36,134 5,728
-------------- ------------ ----------
Total current liabilities.......................................... 142,045 144,020 40,626
Long-term obligations, less current portion............................ 818,627 816,644 323,320
Deferred income taxes.................................................. 61,841 63,469 10,615
Commitments and contingencies.......................................... -- -- --
Minority interests:
Preferred redeemable securities...................................... 175,000 175,000 --
Other................................................................ 15,642 15,021 13,555
Stockholders' equity:
Common stock, $.01 par value-shares authorized; 27,981,501,
27,937,057 and 20,974,852 shares issued and outstanding at March
31, 1999, December 31, 1998 and 1997, respectively................. 278 278 210
Additional paid-in capital........................................... 262,176 261,976 211,577
Retained earnings.................................................... 20,664 23,106 28,327
Accumulated other comprehensive loss................................. (1,593) (1,593) (579)
-------------- ------------ ----------
Total stockholders' equity......................................... 281,525 283,767 239,535
-------------- ------------ ----------
Total liabilities and stockholders' equity......................... $ 1,494,680 $ 1,497,921 $ 627,651
-------------- ------------ ----------
-------------- ------------ ----------
</TABLE>
SEE ACCOMPANYING NOTES.
F-3
<PAGE>
LODGIAN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
-------------------- ----------------------------------
<S> <C> <C> <C> <C> <C>
1999 1998 1998 1997 1996
--------- --------- ---------- ---------- ----------
<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Rooms................................................ $ 96,784 $ 55,833 $ 267,862 $ 179,956 $ 156,564
Food and beverage.................................... 32,070 22,146 107,334 80,335 68,803
Other................................................ 6,950 4,902 20,018 16,366 14,159
--------- --------- ---------- ---------- ----------
135,804 82,881 395,214 276,657 239,526
Operating expenses:
Direct:
Rooms.............................................. 26,264 15,509 75,316 49,608 43,667
Food and beverage.................................. 24,108 17,647 81,643 60,919 52,761
General and administrative............................. 5,229 2,387 10,080 8,973 9,297
Depreciation and amortization.......................... 13,750 7,207 31,114 23,023 18,677
Other.................................................. 47,840 27,650 129,950 88,036 77,183
--------- --------- ---------- ---------- ----------
Total operating expenses............................... 117,191 70,400 328,103 230,559 201,585
--------- --------- ---------- ---------- ----------
Income from operations................................. 18,613 12,481 67,111 46,098 37,941
Other income (expenses):
Interest income and other............................ 348 454 1,260 1,720 1,723
Gain on litigation settlement........................ -- -- -- -- 3,612
Loss on asset disposition............................ -- -- (432) -- --
Interest expense..................................... (19,128) (7,846) (30,378) (25,909) (29,443)
Settlement on swap transactions...................... -- -- (31,492) -- --
Severance and other expenses......................... -- -- (3,400) -- --
Minority interests:
Preferred redeemable securities...................... (3,159) -- (6,475) -- --
Other................................................ (744) (94) (1,436) (960) (2,060)
--------- --------- ---------- ---------- ----------
(Loss) income before income taxes and extraordinary
item................................................. (4,070) 4,995 (5,242) 20,949 11,773
(Benefit) provision for income taxes................... (1,628) 1,999 (2,097) 8,379 3,225
--------- --------- ---------- ---------- ----------
(Loss) income before extraordinary item................ (2,442) 2,996 (3,145) 12,570 8,548
Extraordinary item:
Loss on extinguishment of indebtedness, net of income
tax benefit of $1,384, $2,500 and $232 in 1998,
1997 and 1996, respectively........................ -- -- (2,076) (3,751) (348)
--------- --------- ---------- ---------- ----------
Net (loss) income...................................... $ (2,442) $ 2,996 $ (5,221) $ 8,819 $ 8,200
--------- --------- ---------- ---------- ----------
--------- --------- ---------- ---------- ----------
Earnings (loss) per common share:
(Loss) income before extraordinary item.............. $ (0.09) $ 0.14 $ (.16) $ .83 $ .92
Extraordinary item................................... -- -- (.10) (.25) (.04)
--------- --------- ---------- ---------- ----------
Net (loss) income per common share................... $ (0.09) $ 0.14 $ (.26) $ .58 $ .88
--------- --------- ---------- ---------- ----------
--------- --------- ---------- ---------- ----------
Earnings (loss) per common share-assuming dilution:
(Loss) income before extraordinary item.............. $ (0.09) $ 0.14 $ (.16) $ .80 $ .88
Extraordinary item................................... -- -- (.10) (.24) (.04)
--------- --------- ---------- ---------- ----------
Net (loss) income per common share-assuming
dilution........................................... $ (0.09) $ 0.14 $ (.26) $ .56 $ .84
--------- --------- ---------- ---------- ----------
--------- --------- ---------- ---------- ----------
</TABLE>
SEE ACCOMPANYING NOTES.
F-4
<PAGE>
LODGIAN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
ACCUMULATED
ADDITIONAL OTHER TOTAL
COMMON STOCK PAID-IN RETAINED COMPREHENSIVE STOCKHOLDERS
SHARES AMOUNT CAPITAL EARNINGS LOSS EQUITY
------------- ----------- ---------- --------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995................ 8,846,269 $ 88 $ 51,424 $ 11,308 $ -- $ 62,820
401(k) Plan contribution.................. 25,536 1 465 -- -- 466
Exercise of stock options................. 497,800 5 2,008 -- -- 2,013
Tax benefit from exercise of stock
options................................. -- -- 1,239 -- -- 1,239
Net income................................ -- -- -- 8,200 -- 8,200
------------- ----- ---------- --------- ------- ------------
Balance at December 31, 1996................ 9,369,605 94 55,136 19,508 -- 74,738
Issuance of common stock.................. 11,500,000 115 156,085 -- -- 156,200
401(k) Plan contribution.................. 49,847 -- 282 -- -- 282
Exercise of stock options................. 86,600 1 437 -- -- 438
Tax benefit from exercise of stock
options................................. -- -- 175 -- -- 175
Purchase of common stock.................. (31,200) -- (538) -- -- (538)
Net income................................ -- -- -- 8,819 -- 8,819
Currency translation adjustments.......... -- -- -- -- (579) (579)
------------- ----- ---------- --------- ------- ------------
Comprehensive income...................... -- -- -- -- -- 8,240
------------- ----- ---------- --------- ------- ------------
Balance at December 31, 1997................ 20,974,852 210 211,577 28,327 (579) 239,535
Issuance of common stock in connection
with purchase of Impac.................. 9,400,000 94 82,626 -- -- 82,720
401(k) Plan contribution.................. 88,205 -- 430 -- -- 430
Exercise of stock options................. 134,900 1 1,143 -- -- 1,144
Tax benefit from exercise of stock
options................................. -- -- 245 -- -- 245
Purchase of common stock.................. (2,660,900) (27) (34,045) -- -- (34,072)
Net loss.................................. -- -- -- (5,221) -- (5,221)
Currency translation adjustments.......... -- -- -- -- (1,014) (1,014)
------------- ----- ---------- --------- ------- ------------
Comprehensive loss........................ -- -- -- -- -- (6,235)
------------- ----- ---------- --------- ------- ------------
Balance at December 31, 1998................ 27,937,057 278 261,976 23,106 (1,593) 283,767
401(k) Plan contribution (unaudited)...... 44,444 -- 200 -- -- 200
Net loss (unaudited)...................... -- -- -- (2,442) -- (2,442)
------------- ----- ---------- --------- ------- ------------
Balance at March 31, 1999 (unaudited)....... 27,981,501 $ 278 $ 262,176 $ 20,664 $ (1,593) $ 281,525
------------- ----- ---------- --------- ------- ------------
------------- ----- ---------- --------- ------- ------------
</TABLE>
SEE ACCOMPANYING NOTES.
F-5
<PAGE>
LODGIAN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
-------------------- -------------------------------
<S> <C> <C> <C> <C> <C>
1999 1998 1998 1997 1996
--------- --------- --------- --------- ---------
<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Operating activities:
Net (loss) income................................................... $ (2,442) $ 2,996 $ (5,221) $ 8,819 $ 8,200
Adjustments to reconcile net (loss) income to net cash provided by
operating activities:
Depreciation and amortization..................................... 13,750 7,207 31,114 23,023 18,677
Loss on extinguishment of indebtedness............................ 3,460 6,251 580
Deferred income taxes............................................. (1,828) 500 (726) 2,216 1,252
Minority interests--other......................................... 821 94 1,430 960 2,060
401(k) Plan contributions......................................... 200 138 430 282 548
Provision for (recoveries of) losses on receivables............... -- (39) 77 (69) 27
Equity in (profit) loss of unconsolidated entities................ -- (20) (782) (107) 63
Gain on litigation settlement..................................... -- -- -- -- (3,868)
Gain on recovery of investments................................... -- -- -- -- (134)
Changes in operating assets and liabilities, net of effect of
acquisitions:
Accounts receivable............................................. (3,114) (4,449) (6,563) (2,017) (824)
Inventories..................................................... (427) (1,883) (1,458) (761)
Other assets.................................................... 4,544 (5,315) (18,412) 425 1,875
Accounts payable................................................ (318) 3,097 14,913 1,174 200
Accrued liabilities............................................. (1,645) 5,786 11,464 2,522 3,075
--------- --------- --------- --------- ---------
Net cash provided by operating activities........................... 9,968 9,568 29,301 42,021 30,970
Investing activities:
Acquisitions of property and equipment............................ -- (35,411) (67,717) (143,406) (70,312)
Acquisition of Impac.............................................. -- -- -- --
Proceeds from sale of assets...................................... 3,600 -- -- -- --
Capital improvements, net......................................... (29,848) (14,258) (118,667) (48,252) (26,323)
Purchase of minority interests.................................... -- -- -- (11,748) --
Net deposits for capital expenditures............................. 14,200 (5,232) 3,860 (17,247) (7,074)
Deposit for asset purchase........................................ -- (8,558) -- -- --
Other............................................................. -- 692 -- -- --
Purchase of marketable securities................................. -- -- -- (500) --
Payments on notes receivable issued to related parties............ -- -- -- 470 1,200
Decrease in investment in unconsolidated entities................. -- -- -- 17 2,198
Notes receivable issued to related parties........................ -- -- -- -- (1,670)
Net proceeds from litigation settlement........................... -- -- -- -- 3,868
Net proceeds from recovery of investments......................... -- -- -- -- 556
--------- --------- --------- --------- ---------
Net cash used in investing activities............................. (12,048) (62,767) (182,524) (220,666) (97,557)
Financing activities:
Proceeds from issuance of long-term obligations................... 6,273 54,788 600,284 191,560 166,317
Proceeds from issuance of common stock............................ -- 515 1,144 156,638 2,013
Principal payments of long-term obligations....................... (4,302) (1,512) (390,026) (167,647) (92,216)
Payments of deferred loan costs................................... (660) (900) (20,165) (4,652) (6,533)
(Distributions to) contributions from minority interests.......... (123) 232 -- (946) 5,078
Payments for repurchase of common stock........................... -- -- (34,072) (538) --
--------- --------- --------- --------- ---------
Net cash provided by financing activities......................... 1,188 53,123 157,165 174,415 74,659
--------- --------- --------- --------- ---------
Net (decrease) increase in cash and cash equivalents................ (892) (76) 3,942 (4,230) 8,072
Cash and cash equivalents at beginning of period.................... 19,185 15,243 15,243 19,473 11,401
--------- --------- --------- --------- ---------
Cash and cash equivalents at end of period.......................... $ 18,293 $ 15,167 $ 19,185 $ 15,243 $ 19,473
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Supplemental cash flow information
Cash paid during the year for:
Interest, net of amount capitalized............................... $ 22,015 $ 6,636 $ 31,512 $ 22,109 $ 23,147
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Income taxes paid, net of refunds................................. $ -- $ 285 $ 5,210 $ 1,091 $ 2,531
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Supplemental disclosure of non cash investing and financing
activities:
Non cash acquisition and related financing of property and
equipment....................................................... $ -- $ -- $ 696,851 $ -- $ --
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Issuance of stock in connection with acquisition of Impac......... $ -- $ -- $ 82,700 $ -- $ --
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
SEE ACCOMPANYING NOTES.
F-6
<PAGE>
LODGIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
On December 11, 1998 Servico, Inc. (Servico) merged with Impac Hotel Group,
LLC (Impac), pursuant to which Servico and Impac formed a new company Lodgian,
Inc. ("Lodgian" or the "Company"). This transaction has been accounted for under
the purchase method of accounting, whereby Servico is considered the acquiring
company. For further discussion of the merger see Note 2.
As a result of the merger, Lodgian its wholly owned subsidiaries and
consolidated partnerships (collectively, the "Company"), own or manage hotels in
35 states, Canada and Europe. At December 31, 1998 and 1997, the Company owned,
either wholly or partially, or managed 144 and 71 hotels, respectively.
PRINCIPLES OF CONSOLIDATION
The financial statements consolidate the accounts of Lodgian, its wholly
owned subsidiaries and partnerships in which Lodgian exercises control over the
partnerships' assets and operations. Lodgian believes it has control of
partnerships when the Company manages and has control of the partnerships'
assets and operations, has the ability and authority to enter into financing
arrangements on behalf of the entity or to sell the assets of the entity within
reasonable business guidelines.
An unconsolidated entity (owning 1 hotel) and a joint venture which owns and
operates six hotels in Belgium and the Netherlands, in which the Company
exercises significant influence over operating and financial policies, are
accounted for on the equity method. The Company's investments in unconsolidated
entities was $10,091,000 December 31, 1998, and is included in other assets, net
in the accompanying consolidated balance sheets. All significant intercompany
accounts and transactions have been eliminated in consolidation.
QUARTERLY FINANCIAL STATEMENTS
The unaudited quarterly consolidated financial statements for March 31, 1999
and 1998 do not include all disclosures provided in the annual consolidated
financial statements. These quarterly statements should be read in conjunction
with the accompanying annual audited consolidated financial statement and the
footnotes thereto. Results for the quarterly period ended March 31, 1999 are not
necessarily indicative of the results to be expected for the year ending
December 31, 1999. However, the accompanying quarterly financial statements
reflect all adjustments which are in the opinion of management, of a normal and
recurring nature necessary for a fair presentation of the financial position and
results of operations of the Company. Unless otherwise stated, all information
subsequent to December 31, 1998 is unaudited.
INVENTORIES
Inventories consist primarily of food and beverage, linens, china, tableware
and glassware and are valued at the lower of cost (computed on the first-in,
first-out method) or market.
MINORITY INTERESTS--OTHER
Minority interests represent the minority interests' proportionate share of
equity or deficit of partnerships which are accounted for by the Company on a
consolidated basis. The Company generally allocates to minority interests their
share of any profits or losses in accordance with the provisions of the
F-7
<PAGE>
LODGIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
applicable agreements. However, if the loss applicable to a minority interest
exceeds its total investment and advances, such excess is charged to the
Company.
MINORITY INTERESTS--PREFERRED REDEEMABLE SECURITIES
Minority interests-preferred redeemable securities, represents Convertible
Redeemable Equity Structure Trust Securities ("CRESTS"). The CRESTS bear
interest at 7% and are convertible into shares of the Company's common stock.
For further discussion of the CRESTS, see Note 5.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets. Property
under capital leases is amortized using the straight line method over the
shorter of the estimated useful lives of the assets or the lease term.
The Company capitalizes interest costs incurred during the renovation and
construction of capital assets. During the years ended December 31, 1998, 1997
and 1996, the Company capitalized $3,499,000, $1,650,000 and $644,000 of
interest, respectively.
Management periodically evaluates the Company's property and equipment to
determine if there has been any impairment in the carrying value of the assets
in accordance with Financial Accounting SFAS 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed of". SFAS 121
requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount.
DEFERRED COSTS
Deferred franchise, financing, and other deferred costs of $41,336,000 and
$16,371,000 at December 31, 1998 and 1997, respectively, are included in other
assets, net of accumulated amortization of $3,061,000 and $2,509,000 at December
31, 1998 and 1997, respectively, which is computed using the straight-line
method, over the terms of the related franchise, loan or other agreements The
straight-line method of amortizing deferred financing costs approximates the
interest method.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents. Restricted cash, consists
of amounts reserved for capital improvements, debt service, taxes and insurance.
FAIR VALUES OF FINANCIAL INSTRUMENTS
The fair values of current assets and current liabilities are assumed to be
equal to their reported carrying amounts. The fair values of the Company's
long-term debt are estimated using discounted cash flow analysis, based on the
Company's current incremental borrowing rates for similar types of borrowing
arrangements. In the opinion of management, the carrying value of long-term debt
approximates market value as of December 31, 1998 and 1997. The fair market
value of the Company's CRESTS which is $78,750,000 at December 31, 1998, is
based on quoted market prices. Management has estimated the fair
F-8
<PAGE>
LODGIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
value of the Company's interest rate protection agreements to be approximately
$5,000,000 at December 31, 1998 based on dealer quotes.
CONCENTRATION OF CREDIT RISK
Concentration of credit risk associated with cash and cash equivalents is
considered low due to the credit quality of the issuers of the financial
instruments held by the Company and due to their short duration to maturity.
Accounts receivable are primarily from major credit card companies, airlines and
other travel related companies. The Company performs ongoing evaluations of its
significant customers and generally does not require collateral. The Company
maintains an allowance for doubtful accounts at a level which management
believes is sufficient to cover potential credit losses. At December 31, 1998
and 1997, these allowances were $979,000 and $300,000, respectively.
EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
The Company adopted SFAS 128 "Earnings Per Share" effective for the year
ended December 31, 1998. Basic earnings per share is calculated based on the
weighted average number of common shares outstanding during the periods and
include common stock contributed or to be contributed by the Company to its
employees 401(k) Plan (the "401(k)"). Dilutive earnings per common share include
the Company's outstanding stock options and shares convertible under the
Company's CRESTS, if dilutive.
STOCK BASED COMPENSATION
The Company grants stock options for a fixed number of shares to employees
with an exercise price equal to the fair value of the shares at the date of
grant. The Company accounts for stock option grants in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" (APB 25) and related interpretations. Under APB 25, because the
exercise price of the Company's employee stock options is equal to the market
price of the underlying stock on the date of grant, no compensation expense is
recognized. Under Financial SFAS 123, "Accounting for Stock-Based Compensation",
net income and earnings per share are not materially different from amounts
reported, therefore, no pro forma information has been presented.
The Financial Accounting Standards Board is expected to issue an
interpretation of APB 25 (the "Interpretation") in the third quarter of 1999.
Two of the key areas affected by the proposal are the accounting for stock
option repricings and options issued to non-employee directors. The
interpretation would be applied prospectively to transactions that occur after
December 15, 1998.
The Interpretation will require that once an option granted to an employee
is repriced, that option would be accounted for as if it were a variable plan,
giving rise to compensation expense for subsequent changes in stock price, from
the date the option is repriced to the date it is exercised. Under the proposal,
no compensation expense would be recorded on the date of the repricing. However,
compensation would be recorded quarterly through the date of exercise to the
extent that the fair market value of the common stock is in excess of the
exercise price of the options adjusted for the repricing. The interpretation
requires, in measuring compensation expense, the use of the higher of the
repriced exercise price of the options or the fair market value of the stock on
the date the interpretation is effective.
F-9
<PAGE>
LODGIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Additionally, under the proposed Interpretation, options granted to
non-employee directors subsequent to December 15, 1998, would no longer be
accounted for under APB 25's intrinsic value method. Instead, such options would
be accounted for under the fair value method.
The Company repriced options totaling 1,408,400 on December 18, 1998 that
will be subject to these requirements when the new Interpretation becomes
effective.
ADVERTISING EXPENSE
The cost of advertising is expensed as incurred. The Company incurred
$2,162,000, $1,867,000 and $1,613,000 in advertising costs during 1998, 1997 and
1996, respectively.
FOREIGN CURRENCY TRANSLATION
The financial statements of foreign subsidiaries have been translated into
U.S. dollars in accordance with SFAS 52, "Foreign Currency Translation." All
balance sheet accounts have been translated using the exchange rates in effect
at the balance sheet dates. Income statement amounts have been translated using
the average rate for the year. The gains and losses resulting from the changes
in exchange rates from year to year have been reported in other comprehensive
income. The effects on the statements of operations of transaction gains and
losses is insignificant for all years presented.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Effective January 1, 1998, the Company adopted the SFAS 131, "Disclosures
about Segments of an Enterprise and Related Information" (SFAS 131). SFAS 131
superseded SFAS 14, "Financial Reporting for Segments of a Business Enterprise."
SFAS 131 establishes standards for the way that public business enterprises
report information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports. SFAS 131 also establishes standards for
related disclosures about products and services, geographic areas, and major
customers. It is the belief of management that the Company operates under one
reporting segment-hotel ownership and management. Therefore, the adoption of
SFAS 131 did not have a material impact on the Company's financial statement
disclosures.
As of January 1, 1998, the Company adopted SFAS 130, "Reporting
Comprehensive Income." SFAS 130 establishes new rules for the reporting and
display of comprehensive income and its components; however, the adoption of
this Statement had no impact on the Company's results of operations or
shareholders' equity. SFAS 130 requires the Company's foreign currency
translation adjustments, which prior to adoption were reported separately in
shareholders' equity, to be included in other comprehensive income.
F-10
<PAGE>
LODGIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
2. MERGER, ACQUISITIONS AND RELATED ITEMS
On December 11, 1998, Servico merged with Impac in a transaction accounted
for under the purchase method of accounting, pursuant to APB 16, "Business
Combinations", whereby Servico is considered the acquiring company. The
operations of Impac are included in the consolidated statement of operations
from the date of acquisition. Under the terms of the Amended and Restated
Agreement and Plan of Merger (the "Merger Agreement"), Servico's existing
shareholders received one share of Lodgian common stock for each of Servico
stock held by them (approximately 18,440,000 million shares). The purchase price
of Impac approximated $104,367,000, consisting of $15 million in cash, the
issuance of 9.4 million shares of common stock of Lodgian at $8.80, of which 1.4
million shares are contingent upon the completion of construction of five
hotels, and acquisition related costs of approximately $6,647,000. The purchase
price has been allocated to the fair value of the net assets acquired as follows
(in thousands):
<TABLE>
<S> <C>
Cash............................................................................. $ 7,027
Inventory........................................................................ 2,685
Accounts receivable.............................................................. 12,239
Property and equipment........................................................... 616,000
Goodwill and other assets........................................................ 12,089
Accounts payable................................................................. (58,432)
Long term obligations............................................................ (429,466)
Deferred income taxes............................................................ (47,900)
Accrued liabilities.............................................................. (9,875)
---------
Total purchase price............................................................. $ 104,367
---------
---------
</TABLE>
In connection with the purchase, of Impac, the Company recorded goodwill of
approximately $11 million, included in other assets above, which is being
amortized over 20 years.
The allocation of the purchase price is tentative pending completion of
valuations of the property and equipment acquired. The allocation may change
upon the completion of these valuations.
In connection with the merger with Impac, Servico incurred approximately
$3,400,000 of expenses which consisted primarily of expenses associated with the
closing and relocation of Servico's West Palm Beach, Florida corporate
headquarters to the Company's headquarters in Atlanta, Georgia and termination
and relocation of certain Servico employees. These costs have been expensed as
incurred and are included in severance and other expenses in the 1998
consolidated statement of operations. Substantially all of these costs have been
paid by December 31, 1998.
On June 1, 1998, the Company acquired the issued and outstanding units of
AMI Operating Partners, L.P. (AMI), in a transaction accounted for under the
purchase method of accounting. The purchase price of AMI approximated $74
million which included cash of $16 million and the assumption of $58 million in
debt. The operations of AMI are included in the consolidated statement of
operations from the date of acquisition. The purchase price was principally
allocated to the 15 hotel properties acquired.
F-11
<PAGE>
LODGIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
2. MERGER, ACQUISITIONS AND RELATED ITEMS (CONTINUED)
The pro forma unaudited results of operations for the years ended December
31, 1998 and 1997, assuming the purchase of Impac had been consummated on
January 1, 1997, follows:
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
Revenues.................................................................................. $ 545,794 $ 396,516
Net (loss) income before extraordinary item............................................... (19,070) 2,917
Net loss.................................................................................. (21,146) (8,837)
Net loss per common share:
Basic and diluted....................................................................... (.75) (.38)
</TABLE>
During November 1998, the President and Chief Executive Officer of Servico
announced his resignation effective the date of the merger with Impac. In
connection with his resignation, Mr. Buddemeyer was provided a severance package
approximating $1.3 million. This amount was expensed during the fourth quarter
of 1998 and is included in severance and other expenses in the 1998 consolidated
statement of operations. Approximately $164,000 of this amount relates to
compensation expense associated with the extension of the terms of his stock
options, pursuant to APB 25.
F-12
<PAGE>
LODGIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
3. PROPERTY AND EQUIPMENT
At December 31, 1998 and 1997, property and equipment consisted of the
following:
<TABLE>
<CAPTION>
USEFUL LIVES
(YEARS) 1998 1997
------------- ------------ ----------
<S> <C> <C> <C>
(IN THOUSANDS)
Land...................................................................... -- $ 168,303 $ 48,798
Buildings and improvements................................................ 10-40 976,608 430,363
Furnishings and equipment................................................. 3-10 187,055 99,487
----- ------------ ----------
1,331,966 578,648
Less accumulated depreciation and amortization............................ (104,528) (75,976)
Construction in progress.................................................. 90,032 31,408
------------ ----------
$ 1,317,470 $ 534,080
------------ ----------
------------ ----------
</TABLE>
During the year ended December 31, 1997, the Company purchased 12 hotels for
an aggregate purchase price of $140,300,000 which were paid for by the delivery
of mortgage notes totaling $72,655,000 and cash for the balance. The 12 hotels
purchased, containing an aggregate of 3,002 guest rooms, are operated under
license agreements with nationally recognized franchisors and are managed by the
Company. In addition, Company increased its ownership interests in the
partnerships, owning three hotels, from 51% to 100% for approximately
$11,800,000.
4. ACCRUED LIABILITIES
At December 31, 1998 and 1997, accrued liabilities consisted of the
following:
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
(IN THOUSANDS)
Salaries and related costs.................................................................. $ 26,798 $ 10,775
Real estate taxes........................................................................... 9,095 4,118
Interest.................................................................................... 4,370 1,969
Advance deposits............................................................................ 3,799 1,666
Sales taxes................................................................................. 5,412 2,523
Other....................................................................................... 1,159 6,304
--------- ---------
$ 50,633 $ 27,355
--------- ---------
--------- ---------
</TABLE>
F-13
<PAGE>
LODGIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
5. LONG-TERM OBLIGATIONS AND PREFERRED REDEEMABLE SECURITIES
Long-term obligations consisted of the following at December 31:
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
(IN THOUSANDS)
Mortgage notes payable with interest at a variable rate of LIBOR (5% at December 31, 1998
plus 3.25%). The notes are payable through 2000......................................... $ 265,000 $ --
Credit facilities, of $396 million with interest LIBOR + 2.25% to 2.75% maturing through
2001. At maturity, each loan converts to term loans amortizing over a 20 year period.... 323,744 --
Mortgage notes with an interest rate of 9% payable through 2000........................... 72,000 --
Mortgage notes with fixed rates ranging from 8.6% to 10.7% payable through 2010........... 164,109 152,469
Mortgage notes with variable rates of interest............................................ -- 166,817
Other..................................................................................... 27,925 9,762
---------- ----------
852,778 329,048
Less current portion of long-term obligations............................................. (36,134) (5,728)
---------- ----------
$ 816,644 $ 323,320
---------- ----------
---------- ----------
</TABLE>
Substantially, all of the Company's property and equipment are pledged as
collateral for long-term obligations of which approximately $403,249,000 has
been guaranteed by Lodgian, Inc. Certain of the mortgage notes are subject to a
prepayment penalty if repaid prior to their maturity.
On December 11, 1998, the Company consummated financing agreements, which
resulted in net proceeds of approximately $337 million. The net proceeds were
primarily used to pay the costs of the merger with Impac, escrow funds for
renovations on certain properties and to repay, prior to maturity, approximately
$142,205,000 in debt secured by 27 of its hotels. As a result, the Company
recorded an extraordinary loss on early extinguishment of debt of approximately
$934,000 (net of income tax benefit of $622,000) relating to the write-off of
unamortized deferred financing costs. Approximately $31.5 million of the $337
million relates to the settlement on two swap transactions entered into by the
Company with its lender. For further discussion of swap transaction see Note 6.
In June 1998, the Company issued $175 million of Convertible Redeemable
Equity Structures Trust Securities ("CRESTS"). The CRESTS bear interest at 7%
and are convertible into shares of the Company's common stock at an initial
conversion price of $21.42 per share. The sale of the CRESTS generated $168.5
million in net proceeds, substantially, all of which were used to repay existing
debt prior to maturity. As a result, the Company recorded an extraordinary loss
on early extinguishment of debt of approximately $1,142,000 (net of income tax
benefit of $761,000) relating to the write off of unamortized financing costs.
The CRESTS are included in the accompany consolidated balance sheet as Minority
Interests-Preferred Redeemable Securities. The interest expense incurred on the
CRESTS have been included as "Minority Interests--Preferred Redeemable
Securities" in the Consolidated Statement of Operations.
During 1997 Lodgian completed a secondary offering of 11.5 million shares of
common stock at $14.50 per share, which resulted in net proceeds to Lodgian of
$156,000,000. The Company repaid, prior to maturity, approximately $128,000,000
in debt secured by 21 of its hotels and, as a result, recorded an extraordinary
loss on early extinguishment of debt of approximately $3,800,000 (net of income
tax benefit of $2,500,000) relating to the write-off of unamortized loan costs
associated with the debt. Seventeen of
F-14
<PAGE>
LODGIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
5. LONG-TERM OBLIGATIONS AND PREFERRED REDEEMABLE SECURITIES (CONTINUED)
these hotels have subsequently been used to secure approximately $81,200,000 in
new variable rate mortgage notes which generated approximately $78,300,000 of
net proceeds for use in the acquisition of new properties. The Company has also
refinanced eight other properties generating approximately $3,100,000 in net
proceeds.
The Company has entered into an interest rate protection agreement on $54
million related to one of the above credit facilities. Pursuant to the terms of
this agreement, when the loan matures in 2001 and converts to term loans, the
interest rate will be based on a benchmark treasury rate of 7.235%. In the event
the company determines that it is in its best interest to "break" that interest
rate lock, it may be required to pay a significant fee to the lender.
Maturities of long-term obligations for each of the five years after
December 31, 1998 and thereafter, are as follows (in thousands):
<TABLE>
<S> <C>
1999.............................................................. $ 36,134
2000.............................................................. 325,049
2001.............................................................. 16,597
2002.............................................................. 13,243
2003.............................................................. 47,542
Thereafter........................................................ 414,213
---------
$ 852,778
---------
---------
</TABLE>
6. SETTLEMENT ON SWAP TRANSACTIONS
During August 1998, the Company entered into treasury rate lock transactions
with notional amounts of $175 million and $200 million (collectively, the
"Swaps") with a lender for the purpose of hedging their interest rate exposure
on two anticipated financing transactions. During September 1998, the Company
determined that it was not probable that it would consummate the anticipated
transactions and recognized a loss in the consolidated statement of operations
of $31.5 million related to the settlement of the Swaps. The obligation related
to the settlement of the Swaps was included in the $337 million financing
transaction discussed in Note 5.
7. STOCKHOLDERS' EQUITY
During 1998, in accordance with previously announced share buyback programs,
the Company has repurchased in open market transactions and retired 2,660,900
shares of its common stock.
8. INCOME TAXES
Provision (benefit) for income taxes for the Company is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1998 1997 1996
------------------------------- ----------------------------------- ------------------------
<CAPTION>
CURRENT DEFERRED TOTAL CURRENT DEFERRED TOTAL CURRENT DEFERRED
--------- --------- --------- ----------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Federal............................ $ (1,140) $ (481) $ (1,621) $ 3,289 $ 3,186 $ 6,475 $ 1,322 $ 1,170
State and local.................... (423) (53) (476) 1,693 211 1,904 651 82
--------- --------- --------- ----------- ----------- --------- ----------- -----------
$ (1,563) $ (534) $ (2,097) $ 4,982 $ 3,397 $ 8,379 $ 1,973 $ 1,252
--------- --------- --------- ----------- ----------- --------- ----------- -----------
--------- --------- --------- ----------- ----------- --------- ----------- -----------
<CAPTION>
<S> <C>
TOTAL
---------
<S> <C>
Federal............................ $ 2,492
State and local.................... 733
---------
$ 3,225
---------
---------
</TABLE>
F-15
<PAGE>
LODGIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
8. INCOME TAXES (CONTINUED)
The components of the cumulative effect of temporary differences in the
deferred income tax liability and asset balances at December 31, 1998 and 1997,
are as follows:
<TABLE>
<CAPTION>
1998 1997
------------------------------- -------------------------------
<S> <C> <C> <C> <C> <C> <C>
NON-CURRENT NON-CURRENT
CURRENT -------------------- CURRENT --------------------
TOTAL ASSET LIABILITY TOTAL ASSET LIABILITY
--------- --------- --------- --------- --------- ---------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Property and equipment................................... $ 78,523 $ -- $ 78,523 $ 21,151 $ -- $ 21,151
Net operating loss carryforward.......................... (16,015) (605) (15,410) (7,905) (605) (7,300)
Alternative minimum tax credits.......................... (999) -- (999) (3,739) -- (3,739)
Self-insurance reserve................................... (1,360) (1,360) -- (878) (878) --
Vacation pay accrual..................................... (745) (745) -- (681) (681) --
Other.................................................... 1,240 (115) 1,355 413 (90) 503
--------- --------- --------- --------- --------- ---------
$ 60,644 $ (2,825) $ 63,469 $ 8,361 $ (2,254) $ 10,615
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
The difference between income taxes using the effective income tax rate and
the federal income tax statutory rate of 34% is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
<S> <C> <C> <C>
1998 1997 1996
--------- --------- ---------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C>
Federal income tax at statutory federal rate........................................ $ (1,782) $ 7,123 $ 4,003
State income taxes, net............................................................. (315) 1,256 483
Tax benefit with respect to legal settlement........................................ -- -- (1,261)
--------- --------- ---------
$ (2,097) $ 8,379 $ 3,225
--------- --------- ---------
--------- --------- ---------
</TABLE>
As of December 31, 1998, the Company had net operating loss carry forwards
of approximately $45,300,000 for federal income tax purposes which expire in
years 2005 through 2018. The full amount of the income tax benefit of this net
operating loss carryforward has been reflected in the Consolidated Financial
Statements of the Company in prior years.
9. RELATED PARTY TRANSACTIONS
The Company's President was a shareholder of Impac Hotel Development
("IHD"), which provided acquisition and property development services to Impac
for a development fee of four percent of the total project cost of each property
acquired or developed. Impac agreed to terminate this agreement prior to the
consummation of the Merger so that Impac and its subsidiaries will have no
further obligations under the agreement after the Merger other than the payment
of up to a four percent development fee (not to exceed $2.5 million in the
aggregate) in the event Lodgian acquires or develops any of the hotels or
properties identified in the Merger Agreement as Impac's acquisition pipeline.
F-16
<PAGE>
LODGIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
10. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings
per share (in thousands, except per share data):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
-------------------- -------------------------------
1999 1998 1998 1997 1996
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Numerator:
(Loss) income before extraordinary item................... $ (2,442) $ 2,996 $ (3,145) $ 12,570 $ 8,548
Extraordinary item........................................ -- -- (2,076) (3,751) (348)
--------- --------- --------- --------- ---------
Net (loss) income......................................... $ (2,442) $ 2,996 $ (5,221) $ 8,819 $ 8,200
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Denominator:
Denominator for basic earnings per share--
weighted-average shares................................. 27,056 20,989 20,245 15,183 9,295
Effect of dilutive securities:
Employee stock options.................................... -- 448 -- 457 456
--------- --------- --------- --------- ---------
Denominator for dilutive earnings per share-- adjusted
weighted-average shares................................. 27,056 21,437 20,245 15,640 9,751
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Basic earnings per share:
(Loss) income before extraordinary item................... $ (0.09) $ (0.14) $ (.16) $ .83 $ .92
Extraordinary item........................................ -- -- (.10) (.25) (.04)
--------- --------- --------- --------- ---------
Net (loss) income......................................... $ (0.09) $ 0.14 $ (.26) $ .58 $ .88
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Diluted earnings per share:
Income before extraordinary item.......................... $ (0.09) $ (0.14) $ (.16) $ .80 $ .88
Extraordinary item........................................ (.10) (.24) (.04)
--------- --------- --------- --------- ---------
Net (loss) income......................................... $ (0.09) $ 0.14 $ (.26) $ .56 $ .84
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
All prior-period earnings per share amounts have been restated to conform to
the SFAS 128 "Earnings per share".
The computation of diluted EPS did not include shares associated with the
assumed conversion of the CRESTS or stock options totaling 8,169,935 because
their inclusion would have been antidilutive.
11. COMMITMENTS AND CONTINGENCIES
Six of the Company's hotels are subject to long-term ground leases expiring
from 2014 through 2075 which provide for minimum payments as well as incentive
rent payments and most of the Company's hotels have noncancellable operating
leases, mainly for operating equipment. The land covered by one lease can be
purchased by the Company for approximately $2,600,000. For the years ended
December 31, 1998, 1997 and 1996, lease expense for the five noncancellable
ground leases was approximately $2,400,000, $1,624,000 and $1,381,000,
respectively.
F-17
<PAGE>
LODGIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
11. COMMITMENTS AND CONTINGENCIES (CONTINUED)
At December 31, 1998, the future minimum commitments for noncancellable
ground leases are as follows (in thousands):
<TABLE>
<S> <C>
1999............................................................... $ 3,438
2000............................................................... 3,444
2001............................................................... 3,427
2002............................................................... 3,434
2003............................................................... 2,405
Thereafter......................................................... 73,429
---------
$ 89,577
---------
---------
</TABLE>
The Company has entered into license agreements with various hotel chains
which require annual payments for license fees, reservation services and
advertising fees. The license agreements generally have an original ten year
term. The majority of the Company's license agreements have five to ten years
remaining on the term. The licensors may require the Company to upgrade its
facilities at any time to comply with the licensor's then current standards.
Upon the expiration of the term of a license, the Company may apply for a
license renewal. In connection with the renewal of a license, the licensor may
require payment of a renewal fee, increased license, reservation and advertising
fees, as well as substantial renovation of the facility. Payments made in
connection with these agreements totaled approximately $19,268,000, $14,498,000
and $12,401,000 for the years ended December 31, 1998, 1997 and 1996,
respectively.
The license agreements are subject to cancellation in the event of a
default, including the failure to operate the hotel in accordance with the
quality standards and specifications of the licensors. The Company believes that
the loss of a license for any individual hotel would not have a material adverse
effect on the Company's financial condition and results of operations. The
Company believes it will be able to renew its current licenses or obtain
replacements of a comparable quality.
Twenty-five hotels which the Company owns are operated under license
agreements that require the Company to make certain capital improvements in
accordance with a specified time schedule. Further, in connection with the
financing of the Company's hotels (see Note 4) and the acquisition of other
hotels (see Note 2), the Company has agreed to make certain capital improvements
and had approximately $30 million escrowed for such improvements which is
included in other assets on the accompanying balance sheet. The Company
estimates its remaining obligations for all the above commitments to be
approximately $85 million of which approximately $50 million is expected to be
spent in 1999 and the balance during 2000 and 2001.
The Company has maintenance agreements, primarily on a one to three year
basis, which resulted in expenses of approximately $3,557,000, $2,497,000 and
$2,106,000 for the years ended December 31, 1998, 1997 and 1996, respectively.
A wholly-owned subsidiary of Lodgian, Inc. has provided a guarantee of the
debt of a joint venture in which the Company accounts for under the equity
method of accounting. As of December 31, 1998, the balance of this obligation
approximated $80 million. Assets with a carrying value of approximately $100
million collateralize this obligation.
The Company is a party to legal proceedings arising in the ordinary course
of its business, the impact of which would not, either individually or in the
aggregate, in management's opinion, based upon the facts
F-18
<PAGE>
LODGIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
11. COMMITMENTS AND CONTINGENCIES (CONTINUED)
known by management and the advice of counsel, have a material adverse effect on
the Company's financial condition or results of operations.
12. EMPLOYEE BENEFITS PLANS AND STOCK OPTION PLAN
The Company makes contributions to several multi-employer pension plans for
employees of various subsidiaries covered by collective bargaining agreements.
These plans are not administered by the Company and contributions are determined
in accordance with provisions of negotiated labor contracts. Certain withdrawal
penalties may exist, the amount of which are not determinable at this time. The
cost of such contributions during the years ended December 31, 1998, 1997 and
1996, was approximately $500,000, $412,000 and $499,000, respectively.
The Company adopted, the 401(k) for the benefit of its non-union employees
under which participating employees may elect to contribute up to 10% of their
compensation. The Company may match an employee's elective contributions to the
401(k), subject to certain conditions, with shares of the Company's common stock
equal to up to 100% of the amount of such employee's elective contributions.
These employer contributions vest at a rate of 20% per year beginning in the
third year of employment. The cost of these contributions during the years ended
December 31, 1998, 1997 and 1996, was $430,000, $282,000 and $548,000,
respectively. The 401(k) does not require a contribution by the Company.
The Company has also adopted the Lodgian, Inc. Stock Option Plan, as
amended, (the "Option Plan"). In accordance with the Option Plan, options to
acquire up to 3,250,000 shares of common stock may be granted to employees,
directors, independent contractors and agents as determined by a committee
appointed by the Board of Directors. Options may be granted at an exercise price
not less than fair market value on the date of grant. These options will
generally vest over five years.
In addition, in August 1997 each non-employee director was awarded an option
to acquire 20,000 shares of common stock at an exercise price equal to the fair
market price on date of grant. Such options became exercisable upon date of
grant and were granted outside of the Lodgian Stock Option plan.
On December 18, 1998, the Company re-priced its options. See discussion of
impact of pending accounting pronouncement related to stock option repricings in
Note 1.
The following table indicates all options granted and their status:
<TABLE>
<CAPTION>
OPTION PRICE
-------------------------------------
<S> <C> <C>
NUMBER OF SHARES RANGE PER SHARE
----------------- ------------------
Balance December 31, 1995.................................................. 1,137,200 $ 4.00 -- $ 9.50
Granted.................................................................. 216,500 10.75 -- 16.13
Exercised................................................................ (497,800) 4.00 -- 9.50
Forfeited................................................................ (38,900) 8.63 -- 10.75
-----------------
Balance December 31, 1996.................................................. 817,000 4.00 -- 16.13
Granted.................................................................. 977,700 15.25 -- 16.81
Exercised................................................................ (86,600) 4.00 -- 10.75
Forfeited................................................................ (19,400) 8.63 -- 10.75
-----------------
Balance December 31, 1997.................................................. 1,688,700 4.00 -- 16.81
Granted.................................................................. 755,000 6.13 --
Exercised................................................................ (134,900) 4.00 -- 16.75
Forfeited................................................................ (27,900) 8.63 -- 16.75
-----------------
Balance December 31, 1998.................................................. 2,280,900 4.00 -- 6.15
-----------------
-----------------
</TABLE>
F-19
<PAGE>
LODGIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
12. EMPLOYEE BENEFITS PLANS AND STOCK OPTION PLAN (CONTINUED)
At December 31, 1998, there were 911,280 options exercisable. The income tax
benefit, if any, associated with the exercise of stock options is credited to
additional paid-in capital.
13. CERTAIN OTHER EVENTS
In January 1996, the Company entered into an agreement with its former Chief
Executive Officer in connection with his resignation from the Company and its
Board of Directors. This agreement provided for payments totaling approximately
$830,000 over a twenty-four month period, the cost of which is included in other
operating expenses for the year ended December 31, 1996.
In March 1996, the Company received approximately $3,900,000 in connection
with the settlement of a lawsuit brought on behalf of Servico, against a bank
group and law firm, based on alleged breaches prior to 1990 of their duties to
the Company. This amount, less approximately $300,000 of associated expenses, is
included in other income for the year ended December 31, 1996.
14. SUBSEQUENT EVENTS
In March 1999, a lender released $15 million of an original $23 million
escrow initiated at the time their $265 million loan was closed. This holdback
related to future capital improvements. Simultaneously, the lender issued the
Company a commitment for $15 million to replenish this escrow at a future date
subject to the same terms and conditions as the original loan.
On March 30, 1999, the board of directors adopted a Shareholder Rights Plan
and declared one Right on each outstanding share of the Company's common stock.
The dividend will be paid on April 19, 1999 to stockholders of record on April
14, 1999. Initially the Rights will trade with the common stock of the Company
and will not be exercisable. The Right will separate from the common stock and
become exercisable upon the occurrence of events typical of shareholder rights
plans. In general, such separation will occur when any person or group of
affiliated persons acquires or makes an offer to acquire 15% or more of the
Company's common stock. Thereafter, separate Right Certificates will be
distributed and each Right will entitle its holder to purchase one-hundredth of
a share of the Company's Participating Preferred Stock for an exercise price of
$25. Each one-hundredth of a share of Preferred Stock has economic and voting
terms equivalent to those of one share of the Company's common stock.
15. OTHER SUBSEQUENT EVENTS AND SUPPLEMENTAL GUARANTOR INFORMATION
On June 1, 1999, a contractor hired by Servico to perform work on six
properties in New York, Illinois and Texas filed a summons with notice against
us in the Supreme Court of the State of New York, claiming breach of contract
and quantum meruit, among other things. The contractor is seeking damages in the
aggregate amount of $45 million. The contractor is required to file a formal
complaint.
We have filed an appearance to the summons and will vigorously defend our
position. We believe we have valid defenses and counterclaims and that any
possible outcome will not have a material adverse effect on our financial
position or results of operations.
In connection with the Company's offer to sell $200 million principal amount
of Senior Subordinated Notes due 2009 (the "Notes"), certain of the Company's
subsidiaries (the "Subsidiary Guarantors") will fully and unconditionally
guarantee, on a joint and several basis, the Company's obligations to pay
principal and interest with respect to the Notes. Each Subsidiary Guarantor is
wholly owned and management has determined that separate financial statements
for the Subsidiary Guarantors are not
F-20
<PAGE>
LODGIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
15. OTHER SUBSEQUENT EVENTS AND SUPPLEMENTAL GUARANTOR INFORMATION (CONTINUED)
material to investors. The subsidiaries of the Company that are not Subsidiary
Guarantors are referred to in this note as the "Non-Guarantor Subsidiaries."
The following supplemental consolidating condensed financial statements
present balance sheets as of March 31, 1999 (Unaudited), December 31, 1998 and
1997 and statements of operations and of cash flows for the three months ended
March 31, 1999 (Unaudited) and 1998 (Unaudited) and for the years ended December
31, 1998, 1997 and 1996. In the consolidating condensed financial statements,
Lodgian, Inc. or Servico, Inc. (the "Parent") accounts for its investments in
wholly-owned subsidiaries using the equity method.
F-21
<PAGE>
LODGIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
LODGIAN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
MARCH 31, 1999
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
SUBSIDIARY NON-GUARANTOR TOTAL
ASSETS PARENT GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ----------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents............... $ 2,558 $ 7,378 $ 8,357 $ -- $ 18,293
Restricted cash......................... -- -- 6,127 -- 6,127
Accounts receivable, net of
allowances............................ -- 7,913 20,699 -- 28,612
Other current assets.................... 2,512 29,304 (5,138) -- 26,678
------------ ----------- ------------- ------------ ------------
Total current assets...................... 5,070 44,595 30,045 -- 79,710
Property and equipment, net............... -- 334,435 995,533 -- 1,329,968
Deposits for capital expenditures......... -- -- 16,186 -- 16,186
Investment in consolidated entities....... 138,037 -- -- (138,037) --
Due from to affiliates.................... 109,167 (132,789) 23,622 -- --
Other assets, net......................... 40,854 22,389 5,573 -- 68,816
------------ ----------- ------------- ------------ ------------
$ 293,128 $ 268,630 $ 1,070,959 $ (138,037) $1,494,680
------------ ----------- ------------- ------------ ------------
------------ ----------- ------------- ------------ ------------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable, trade................. $ 365 $ 10,709 $ 45,861 $ -- $ 56,935
Accrued liabilities..................... -- 20,104 28,884 -- 48,988
Current portion long-term obligations... -- 829 35,293 -- 36,122
------------ ----------- ------------- ------------ ------------
Total current liabilities................. 365 31,642 110,038 -- 142,045
Long-term obligations, less current
portion................................. 7,722 260,331 550,574 -- 818,627
Deferred income taxes..................... 1,923 (6,534) 66,452 -- 61,841
Minority interests:
Preferred redeemable securities......... -- -- 175,000 -- 175,000
Other................................... -- -- 15,642 -- 15,642
Stockholder's equity:
Common stock............................ 278 34 492 (526) 278
Additional paid-in capital.............. 262,176 10,184 718 (10,902) 262,176
Retained earnings (accumulated
deficit).............................. 20,664 (25,434) 143,870 (118,436) 20,664
Members' equity......................... -- -- 8,173 (8,173) --
Accumulated other comprehensive loss.... -- (1,593) -- -- (1,593)
------------ ----------- ------------- ------------ ------------
Total stockholders' equity................ 283,118 (16,809) 153,253 (138,037) 281,525
------------ ----------- ------------- ------------ ------------
Total liabilities and stockholders'
equity.................................. $ 293,128 $ 268,630 $ 1,070,959 $ (138,037) $1,494,680
------------ ----------- ------------- ------------ ------------
------------ ----------- ------------- ------------ ------------
</TABLE>
F-22
<PAGE>
LODGIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
LODGIAN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
SUBSIDIARY NON-GUARANTOR TOTAL
ASSETS PARENT GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
---------- ----------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents.................. $ 1,648 $ 5,864 $ 11,673 $ -- $ 19,185
Restricted cash............................ -- -- 6,302 -- 6,302
Accounts receivable, net of allowances..... -- 6,228 19,270 -- 25,498
Other current assets....................... 3,023 31,495 (6,562) -- 27,956
---------- ----------- ------------- ------------ ------------
Total current assets......................... 4,671 43,587 30,683 -- 78,941
Property and equipment, net.................. -- 336,556 980,914 -- 1,317,470
Deposits for capital expenditures............ -- -- 30,386 -- 30,386
Investment in consolidated entities.......... 74,056 -- -- (74,056) --
Due from (to) affiliates..................... 178,948 (145,507) (33,441) -- --
Other assets, net............................ 38,095 24,121 8,908 -- 71,124
---------- ----------- ------------- ------------ ------------
$ 295,770 $ 258,757 $ 1,017,450 $ (74,056) $1,497,921
---------- ----------- ------------- ------------ ------------
---------- ----------- ------------- ------------ ------------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable, trade.................... $ 132 $ 11,054 $ 46,067 $ -- $ 57,253
Accrued liabilities........................ -- 11.852 38,781 -- 50,633
Current portion long-term obligations...... -- 829 35,305 -- 36,134
---------- ----------- ------------- ------------ ------------
Total current liabilities.................... 132 23,735 120,153 -- 144,020
Long-term obligations, less current
portion.................................... 7,722 258,462 550,460 -- 816,644
Deferred income taxes........................ 2,556 (6,533) 67,446 -- 63,469
Minority interests:
Preferred redeemable securities............ -- -- 175,000 -- 175,000
Other...................................... -- -- 15,021 -- 15,021
Stockholder's equity:
Common stock............................... 278 34 492 (526) 278
Additional paid-in capital................. 261,976 9,687 718 (10,405) 261,976
Retained earnings (accumulated deficit).... 23,106 (25,035) 79,987 (54,952) 23,106
Members equity............................. -- -- 8,173 (8,173) --
Accumulated other comprehensive loss....... -- (1,593) -- -- (1,593)
---------- ----------- ------------- ------------ ------------
Total stockholders' equity................... 285,360 (16,907) 89,370 (74,056) 283,767
---------- ----------- ------------- ------------ ------------
Total liabilities and stockholders' equity... $ 295,770 $ 258,757 $ 1,017,450 $ (74,056) $1,497,921
---------- ----------- ------------- ------------ ------------
---------- ----------- ------------- ------------ ------------
</TABLE>
F-23
<PAGE>
LODGIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
LODGIAN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
SUBSIDIARY NON-GUARANTOR TOTAL
PARENT GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
----------- ----------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
<CAPTION>
ASSETS
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents................. $ 14,208 $ 1,811 $ (776) $ -- $ 15,243
Restricted cash........................... -- -- -- -- --
Accounts receivable, net of allowances.... -- 4,539 6,484 -- 11,023
Other current assets...................... 2,344 4,071 9.223 -- 15,638
----------- ----------- ------------- ------------ ------------
Total current assets........................ 16,552 10,421 14,931 -- 41,904
Property and equipment, net................. -- 245,083 288,997 -- 534,080
Deposits for capital expenditures........... -- 25,467 5,434 -- 30,901
Due from (to) affiliates.................... 212,806 (117,222) (95,584) -- --
Investment in consolidated entities......... 3,715 -- -- (3,715) --
Other assets, net........................... 11,779 8,951 36 -- 20,766
----------- ----------- ------------- ------------ ------------
$ 244,852 $ 172,700 $ 213,814 $ (3,715) $ 627,651
----------- ----------- ------------- ------------ ------------
----------- ----------- ------------- ------------ ------------
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY
<S> <C> <C> <C> <C> <C>
Current liabilities:
Accounts payable, trade................... $ 4 $ 2,925 $ 4,614 $ -- $ 7,543
Accrued liabilities....................... 989 10,390 15,976 -- 27,355
Current portion long-term obligations..... 79 930 4,719 -- 5,728
----------- ----------- ------------- ------------ ------------
Total current liabilities................... 1,072 14,245 25,309 -- 40,626
Long-term obligations, less current
portion................................... 986 162,937 159,397 -- 323,320
Deferred income taxes....................... 2,680 347 7,588 -- 10,615
Minority interests.......................... -- -- 13,555 -- 13,555
Stockholder's equity:
Common stock.............................. 210 32 488 (520) 210
Additional paid-in capital................ 211,577 9,685 538 (10,223) 211,577
Retained earnings (accumulated deficit)... 28,327 (13,967) 6,939 7,028 28,327
Accumulated other comprehensive loss...... -- (579) -- -- (579)
----------- ----------- ------------- ------------ ------------
Total stockholders' equity.................. 240,114 (4,829) 7,965 (3,715) 239,535
----------- ----------- ------------- ------------ ------------
Total liabilities and stockholders' equity.. $ 244,852 $ 172,700 $ 213,814 $ (3,715) $ 627,651
----------- ----------- ------------- ------------ ------------
----------- ----------- ------------- ------------ ------------
</TABLE>
F-24
<PAGE>
LODGIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
LODGIAN, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
SUBSIDIARY NON-GUARANTOR TOTAL
PARENT GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
--------- ----------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Revenues
Rooms....................................... $ -- $ 29,825 $ 66,959 $ -- $ 96,784
Food and beverage........................... -- 10,892 21,178 -- 32,070
Other....................................... -- 2,238 4,712 -- 6,950
--------- ----------- ------------- ------ ------------
Total revenues.......................... -- 42,955 92,849 -- 135,804
--------- ----------- ------------- ------ ------------
Operating expenses
Direct:
Rooms..................................... -- 8,047 18,217 -- 26,264
Food and beverage......................... -- 7,876 16,232 -- 24,108
General and administrative.................. -- -- 5,229 -- 5,229
Other....................................... -- 15,327 32,513 -- 47,840
Depreciation and amortization............... -- 6,265 7,485 -- 13,750
--------- ----------- ------------- ------ ------------
Total operating expenses................ -- 37,515 79,676 -- 117,191
--------- ----------- ------------- ------ ------------
Income from operations........................ -- 5,440 13,173 -- 18,613
Other income (expenses)
Other income................................ (66) (268) 682 -- 348
Interest expense............................ -- (5,230) (13,898) -- (19,128)
Equity in loss of consolidated
subsidiaries.............................. (4,004) -- -- 4,004 --
Minority interests:
Preferred redeemable securities............. -- -- (3,159) -- (3,159)
Other....................................... -- -- (744) -- (744)
--------- ----------- ------------- ------ ------------
Loss before income taxes...................... (4,070) (58) (3,946) 4,004 (4,070)
(Benefit) provision for income taxes.......... (1,628) (23) (1,579) 1,602 (1,628)
--------- ----------- ------------- ------ ------------
Net loss...................................... $ (2,442) $ (35) $ (2,367) $ 2,402 $ (2,442)
--------- ----------- ------------- ------ ------------
--------- ----------- ------------- ------ ------------
</TABLE>
F-25
<PAGE>
LODGIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
LODGIAN, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1999
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
SUBSIDIARY NON-GUARANTOR TOTAL
PARENT GUARANTORS SUBSIDIARIES CONSOLIDATED
--------- ----------- ------------- ------------
<S> <C> <C> <C> <C>
Net cash flows operating activities.......................... $ 710 $ 5,658 $ 3,600 $ 9,968
Investing activities:
Capital improvements, net................................ -- (4,144) (25,704) (29,848)
Other.................................................... -- -- 17,800 17,800
--------- ----------- ------------- ------------
Net cash flows from investing activities..................... -- (4,144) (7,904) (12,048)
Financing activities:
Proceeds from issuance of long-term obligations.......... -- -- 6,273 6,273
Principal payments of long-term obligations.............. -- -- (4,302) (4,302)
Other.................................................... 200 -- (983) (783)
--------- ----------- ------------- ------------
Net cash flows from financing activities..................... 200 -- 988 1,188
--------- ----------- ------------- ------------
Change in cash and cash equivalents.......................... 910 1,514 (3,316) (892)
Cash and cash equivalents at beginning of period............. 1,648 5,864 11,673 19,185
--------- ----------- ------------- ------------
Cash and cash equivalents at end of period................... $ 2,558 $ 7,378 $ 8,357 $ 18,293
--------- ----------- ------------- ------------
--------- ----------- ------------- ------------
</TABLE>
F-26
<PAGE>
LODGIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
LODGIAN, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
SUBSIDIARY NON-GUARANTOR TOTAL
PARENT GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
---------- ----------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Rooms...................................... $ -- $ 25,596 $ 30,237 $ -- $ 55,833
Food and beverage.......................... -- 9,443 12,703 -- 22,146
Other...................................... -- 2,269 2,633 -- 4,902
---------- ----------- ------------- ------------ ------------
Total revenues......................... -- 37,308 45,573 -- 82,881
---------- ----------- ------------- ------------ ------------
Operating expenses:
Direct:
Rooms.................................... -- 7,323 8,186 -- 15,509
Food and beverage........................ -- 7,414 10,233 -- 17,647
General and adminsitrative................. 141 -- 2,246 -- 2,387
Other...................................... 138 13,592 13,920 -- 27,650
Depreciation and amortization.............. -- 3,486 3,721 -- 7,207
---------- ----------- ------------- ------------ ------------
Total operating expenses............... 279 31,815 38,306 -- 70,400
---------- ----------- ------------- ------------ ------------
(Loss) income from operations................ (279) 5,493 7,267 -- 12,481
Other income (expenses):
Other income............................... 146 (211) 519 -- 454
Interest expense........................... (111) (3,325) (4,410) -- (7,846)
Equity in earnings of consolidated
subsidiaries............................. 5,239 -- -- (5,239) --
Minority interests........................... -- -- (94) -- (94)
---------- ----------- ------------- ------------ ------------
Income before income taxes................... 4,995 1,957 3,282 (5,239) 4,995
Provision for income taxes................... 1,999 783 1,313 (2,096) 1,999
---------- ----------- ------------- ------------ ------------
Net income................................... $ 2,996 $ 1,174 $ 1,969 $ (3,143) $ 2,996
---------- ----------- ------------- ------------ ------------
---------- ----------- ------------- ------------ ------------
</TABLE>
F-27
<PAGE>
LODGIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
LODGIAN, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1998
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
SUBSIDIARY NON-GUARANTOR TOTAL
PARENT GUARANTORS SUBSIDIARIES CONSOLIDATED
--------- ----------- ------------- ------------
<S> <C> <C> <C> <C>
Net cash flows from operating activities.................... ($ 1,958) $ 10,997 $ 529 $ 9,568
Investing activities:
Acquisitions of property and equipment.................. -- (35,400) (11) (35,411)
Capital improvements, net............................... -- (6,502) (7,756) (14,258)
Other................................................... -- (10,592) (2,506) (13,098)
--------- ----------- ------------- ------------
Net cash flows from investing activities.................... -- (52,494) (10,273) (62,767)
Financing activities:
Proceeds from issuance of long-term obligations......... 7,029 42,775 4,984 54,788
Principal payments of long-term obligations............. -- (140) (1,372) (1,512)
Other................................................... 513 (821) 155 (153)
--------- ----------- ------------- ------------
Net cash flows from financing activities.................... 7,542 41,814 3,767 53,123
--------- ----------- ------------- ------------
Change in cash and cash equivalents......................... 5,584 317 (5,977) (76)
Cash and cash equivalents at beginning of period............ 14,208 1,811 (776) 15,243
--------- ----------- ------------- ------------
Cash and cash equivalents at end of period.................. $ 19,792 $ 2,128 ($ 6,753) $ 15,167
--------- ----------- ------------- ------------
--------- ----------- ------------- ------------
</TABLE>
F-28
<PAGE>
LODGIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
LODGIAN, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
SUBSIDIARY NON-GUARANTOR TOTAL
PARENT GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
--------- ----------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Rooms....................................... $ -- $ 118,041 $ 149,821 $ -- $ 267,862
Food and beverage........................... -- 42,849 64,485 -- 107,334
Other....................................... -- 9,633 10,385 -- 20,018
--------- ----------- ------------- ------ ------------
Total revenues............................ -- 170,523 224,691 -- 395,214
--------- ----------- ------------- ------ ------------
Operating expenses:
Direct:
Rooms..................................... -- 34,001 41,315 -- 75,316
Food and beverage......................... -- 32,891 48,752 -- 81,643
General and administrative.................. 527 -- 9,553 -- 10,080
Other....................................... 435 63,174 66,341 -- 129,950
Depreciation and amortization............... -- 12,550 18,564 -- 31,114
--------- ----------- ------------- ------ ------------
Total operating expenses.................. 962 142,616 184,525 -- 328,103
--------- ----------- ------------- ------ ------------
(Loss) income from operations................. (962) 27,907 40,166 -- 67,111
Other income (expenses):
Other income................................ 2,864 -- (2,036) -- 828
Other expenses.............................. -- (29,033) (5,859) -- (34,892)
Interest expense............................ (1,557) (16,079) (12,742) -- (30,378)
Equity in loss of consolidated
subsidiaries.............................. (5,587) -- -- 5,587 --
Minority interests:
Preferred redeemable securities............. -- -- (6,475) -- (6,475)
Other....................................... -- -- (1,436) -- (1,436)
--------- ----------- ------------- ------ ------------
(Loss) income before income taxes and
extraordinary item.......................... (5,242) (17,205) 11,618 5,587 (5,242)
(Benefit) provision for income taxes.......... (2,097) (6,882) 4,647 2,235 (2,097)
--------- ----------- ------------- ------ ------------
(Loss) income before extraordinary items...... (3,145) (10,323) 6,971 3,352 (3,145)
--------- ----------- ------------- ------ ------------
Extraordinary items, net of taxes............. -- -- (2,076) -- (2,076)
--------- ----------- ------------- ------ ------------
Net (loss) income............................. $ (3,145) $ (10,323) $ 4,895 $ 3,352 $ (5,221)
--------- ----------- ------------- ------ ------------
--------- ----------- ------------- ------ ------------
</TABLE>
F-29
<PAGE>
LODGIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
LODGIAN, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
SUBSIDIARY NON-GUARANTOR TOTAL
PARENT GUARANTORS SUBSIDIARIES CONSOLIDATED
--------- ----------- ------------- ------------
<S> <C> <C> <C> <C>
Net cash flows from operating activities.................... $ 20,394 $ 9,529 ($ 622) 29,301
Investing activities:
Acquisitions of property and equipment.................. -- (56,589) (11,128) (67,717)
Capital improvements, net............................... -- (47,434) (71,233) (118,667)
Other................................................... -- 25,467 (21,607) 3,860
--------- ----------- ------------- ------------
Net cash flows from investing activities.................... -- (78,556) (103,968) (182,524)
Financing activities:
Proceeds from issuance of long-term obligations......... 6,736 251,662 341,886 600,284
Principal payments of long-term obligations............. -- (162,937) (227,089) (390,026)
Other................................................... (39,690) (15,645) 2,242 (53,093)
--------- ----------- ------------- ------------
Net cash flows from financing activities.................... (32,954) 73,080 117,039 157,165
--------- ----------- ------------- ------------
Change in cash and cash equivalents......................... (12,560) 4,053 12,449 3,942
Cash and cash equivalents at beginning of year.............. 14,208 1,811 (776) 15,243
--------- ----------- ------------- ------------
Cash and cash equivalents at end of year.................... $ 1,648 $ 5,864 $ 11,673 $ 19,185
--------- ----------- ------------- ------------
--------- ----------- ------------- ------------
</TABLE>
F-30
<PAGE>
LODGIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
LODGIAN, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
SUBSIDIARY NON-GUARANTOR TOTAL
PARENT GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
----------- ----------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Rooms.................................... $ -- $ 62,618 $ 117,338 $ -- $ 179,956
Food and beverage........................ -- 24,629 55,706 -- 80,335
Other.................................... -- 5,135 11,231 -- 16,366
----------- ----------- ------------- ------------ ------------
Total revenues......................... -- 92,382 184,275 -- 276,657
----------- ----------- ------------- ------------ ------------
Operating expenses:
Direct:
Rooms.................................. -- 17,338 32,270 -- 49,608
Food and beverage...................... -- 18,911 42,008 -- 60,919
General and administrative............... 424 -- 8,549 -- 8,973
Other.................................... 283 31,694 56,059 -- 88,036
Depreciation and amortization............ -- 8,022 15,001 -- 23,023
----------- ----------- ------------- ------------ ------------
Total operating expenses............... 707 75,965 153,887 -- 230,559
----------- ----------- ------------- ------------ ------------
(Loss) income from operations.............. (707) 16,417 30,388 -- 46,098
Other income (expenses):
Other income............................. 1,928 (6,850) 6,642 -- 1,720
Interest expense......................... (8) (9,972) (15,929) -- (25,909)
Equity in earnings of consolidated
subsidiaries........................... 19,736 -- -- (19,736) --
Minority interests......................... -- -- (960) -- (960)
----------- ----------- ------------- ------------ ------------
Income (loss) before income taxes and
extraordinary item....................... 20,949 (405) 20,141 (19,736) 20,949
Provision (benefit) for income taxes....... 8,380 (162) 8,056 (7,895) 8,379
----------- ----------- ------------- ------------ ------------
Income (loss) before extraordinary item.... 12,569 (243) 12,085 (11,841) 12,570
Extraordinary item, net of taxes........... -- -- (3,751) -- (3,751)
----------- ----------- ------------- ------------ ------------
Net income (loss).......................... $ 12,569 $ (243) $ 8,334 $ (11,841) $ 8,819
----------- ----------- ------------- ------------ ------------
----------- ----------- ------------- ------------ ------------
</TABLE>
F-31
<PAGE>
LODGIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
LODGIAN, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
SUBSIDIARY NON-GUARANTOR TOTAL
PARENT GUARANTORS SUBSIDIARIES CONSOLIDATED
----------- ----------- ------------- ------------
<S> <C> <C> <C> <C>
Net cash flows from operating activities.................. $ (152,267) $ 118,520 $ 75,768 $ 42,021
Investing activities:
Acquisitions of property and equipment................ -- (118,700) (24,706) (143,406)
Capital improvements, net............................. -- (11,007) (37,245) (48,252)
Other................................................. -- (23,420) (5,588) (29,008)
----------- ----------- ------------- ------------
Net cash flows from investing activities.................. -- (153,127) (67,539) (220,666)
Financing activities:
Proceeds from issuance of long-term obligations....... -- 64,989 126,571 191,560
Principal payments of long-term obligations........... (6,387) (26,644) (134,616) (167,647)
Proceeds from issuance of common stock................ 156,638 -- -- 156,638
Other................................................. (31) (2,749) (3,356) (6,136)
----------- ----------- ------------- ------------
Net cash flows from financing activities.................. 150,220 35,596 (11,401) 174,415
----------- ----------- ------------- ------------
Change in cash and cash equivalents....................... (2,047) 989 (3,172) (4,230)
Cash and cash equivalents at beginning of year............ 16,255 822 2,396 19,473
----------- ----------- ------------- ------------
Cash and cash equivalents at end of year.................. $ 14,208 $ 1,811 $ (776) $ 15,243
----------- ----------- ------------- ------------
----------- ----------- ------------- ------------
</TABLE>
F-32
<PAGE>
LODGIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
LODGIAN, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
SUBSIDIARY NON-GUARANTOR TOTAL
PARENT GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
--------- ----------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Rooms....................................... $ -- $ 53,642 $ 102,922 $ -- $ 156,564
Food and beverage........................... -- 20,916 47,887 -- 68,803
Other....................................... -- 3,987 10,172 -- 14,159
--------- ----------- ------------- ------------ ------------
Total revenues............................ -- 78,545 160,981 -- 239,526
--------- ----------- ------------- ------------ ------------
Operating expenses:
Direct:
Rooms..................................... -- 15,115 28,552 -- 43,667
Food and beverage......................... -- 16,016 36,745 -- 52,761
General and administrative.................. 546 -- 8,751 -- 9,297
Other....................................... 646 26,016 50,521 -- 77,183
Depreciation and amortization............... -- 6,551 12,126 -- 18,677
--------- ----------- ------------- ------------ ------------
Total operating expenses.................. 1,192 63,698 136,695 -- 201,585
--------- ----------- ------------- ------------ ------------
(Loss) income from operations................. (1,192) 14,847 24,286 -- 37,941
Other income (expenses):
Other income................................ 1,949 (2,005) 5,391 -- 5,335
Interest expense............................ (169) (13,196) (16,078) -- (29,443)
Equity in earnings of consolidated
subsidiaries.............................. 11,185 -- -- (11,185) --
Minority interests............................ -- -- (2,060) -- (2,060)
--------- ----------- ------------- ------------ ------------
Income (loss) before income taxes and
extraordinary item.......................... 11,773 (354) 11,539 (11,185) 11,773
Provision (benefit) for income taxes.......... 4,709 (141) 3,131 (4,474) 3,225
--------- ----------- ------------- ------------ ------------
Income (loss) before extraordinary item....... 7,064 (213) 8,408 (6,711) 8,548
Extraordinary item, net of tax................ -- -- (348) -- (348)
--------- ----------- ------------- ------------ ------------
Net income (loss)............................. $ 7,064 $ (213) $ 8,060 $ (6,711) $ 8,200
--------- ----------- ------------- ------------ ------------
--------- ----------- ------------- ------------ ------------
</TABLE>
F-33
<PAGE>
LODGIAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
LODGIAN, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
SUBSIDIARY NON-GUARANTOR TOTAL
PARENT GUARANTORS SUBSIDIARIES CONSOLIDATED
--------- ----------- ------------- ------------
<S> <C> <C> <C> <C>
Net cash flows from operating activities.................... $ 7,741 ($ 9,189) $ 32,418 $ 30,970
Investing activities:
Acquisitions of property and equipment.................. -- (7,100) (63,212) (70,312)
Capital Improvements, net............................... -- (7,741) (18,582) (26,323)
Other................................................... -- 726 (1,648) (922)
--------- ----------- ------------- ------------
Net cash flows from investing activities.................... -- (14,115) (83,442) (97,557)
Financing activities:
Proceeds from issuance of long-term obligations......... 343 56,868 109,106 166,317
Principal payments of long-term obligations............. -- (22,128) (70,088) (92,216)
Other................................................... 5,074 (11,400) 6,884 558
--------- ----------- ------------- ------------
Net cash flows from financing activities.................... 5,417 23,340 45,902 74,659
--------- ----------- ------------- ------------
Change in cash and cash equivalents......................... 13,158 36 (5,122) 8,072
Cash and cash equivalents at beginning of year.............. 3,097 786 7,518 11,401
--------- ----------- ------------- ------------
Cash and cash equivalents at end of year.................... $ 16,255 $ 822 $ 2,396 $ 19,473
--------- ----------- ------------- ------------
--------- ----------- ------------- ------------
</TABLE>
F-34
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Members of
Impac Hotel Group, L.L.C.
We have audited the accompanying consolidated and combined balance sheets of
Impac Hotel Group, L.L.C. and its Predecessors and Impac Hotel Development,
Inc., as defined in Note 1, as of December 31, 1997 and 1996, and the related
consolidated and combined statements of operations, equity and cash flows for
each of the three years in the period ended December 31, 1997. These
consolidated and combined financial statements are the responsibility of
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated and combined financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the consolidated
and combined financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated and combined financial statements referred
to above present fairly, in all material respects, the consolidated and combined
financial position of Impac Hotel Group L.L.C. and its Predecessors and Impac
Hotel Development, Inc. as of December 31, 1997 and 1996 and the consolidated
and combined results of their operations and their cash flows for each of the
three years in the period ended December 31, 1997 in conformity with generally
accepted accounting principles.
PRICEWATERHOUSECOOPERS LLP
Atlanta, Georgia
April 10, 1998, except
for Note 9 as to which
the date is December 11, 1998
F-35
<PAGE>
IMPAC HOTEL GROUP, L.L.C. AND PREDECESSORS
AND IMPAC HOTEL DEVELOPMENT, INC.
CONSOLIDATED AND COMBINED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, ----------------------
1998 1997 1996
----------- ---------- ----------
<S> <C> <C> <C>
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents................................................. $ 864 $ 10,877 $ 5,199
Cash, restricted.......................................................... 4,687 5,271 --
Accounts receivable, net.................................................. 8,078 5,886 2,583
Inventories............................................................... 607 585 335
Other current assets...................................................... 4,094 2,807 310
----------- ---------- ----------
Total current assets.................................................... 18,330 25,426 8,427
Property and equipment, net................................................. 426,637 378,204 175,910
Other assets, net........................................................... 18,152 14,150 7,329
----------- ---------- ----------
$ 463,119 $ 417,780 $ 191,666
----------- ---------- ----------
----------- ---------- ----------
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable.......................................................... $ 23,548 $ 15,156 $ 8,463
Accrued liabilities....................................................... 9,003 9,031 6,429
Accrued merger related costs.............................................. 2,900 1,200 --
Current portion of long-term obligations.................................. -- -- 1,163
----------- ---------- ----------
Total current liabilities............................................... 35,451 25,387 16,055
Long-term obligations, less current portion................................. 400,071 355,236 155,851
Commitments and contingencies............................................... -- -- --
Minority interests.......................................................... 248 187 --
Equity:
Impac Hotel Group, L.L.C. and Predecessors:
Partners' and stockholders' equity...................................... -- -- 18,798
Members' equity......................................................... 33,613 41,559 --
Impac Hotel Development, Inc.:
Stockholders' equity (deficit).......................................... (6,264) (4,589) 962
----------- ---------- ----------
Total equity.......................................................... 27,349 36,970 19,760
----------- ---------- ----------
$ 463,119 $ 417,780 $ 191,666
----------- ---------- ----------
----------- ---------- ----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED AND COMBINED
FINANCIAL STATEMENTS.
F-36
<PAGE>
IMPAC HOTEL GROUP, L.L.C. AND PREDECESSORS
AND IMPAC HOTEL DEVELOPMENT, INC.
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
--------------------- --------------------------------
<S> <C> <C> <C> <C> <C>
1998 1997 1997 1996 1995
--------- ---------- ---------- --------- ---------
<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue:
Rooms.................................................. $ 57,608 $ 39,873 $ 90,139 $ 52,043 $ 42,442
Food and beverage...................................... 14,072 10,498 23,429 11,813 9,800
Other.................................................. 4,204 2,459 6,291 3,957 3,334
--------- ---------- ---------- --------- ---------
Total revenue........................................ 75,884 52,830 119,859 67,813 55,576
--------- ---------- ---------- --------- ---------
Operating expenses:
Direct:
Rooms................................................ 14,054 10,419 28,303 16,840 12,965
Food and beverage.................................... 11,403 8,455 19,322 9,734 7,365
Other:
Administrative and general........................... 5,756 3,451 10,212 4,306 2,439
Property management.................................. 7,550 5,655 13,273 7,642 5,517
Advertising and promotion............................ 7,351 4,004 9,064 3,415 2,880
Utilities............................................ 4,007 3,172 7,143 4,140 3,286
Repairs and maintenance.............................. 3,981 3,023 6,573 3,455 3,289
Depreciation and amortization........................ 7,367 4,894 11,136 5,814 3,978
Property taxes and insurance......................... 3,407 2,431 4,779 2,957 2,214
Other................................................ 2,591 3,061 4,114 3,338 3,836
--------- ---------- ---------- --------- ---------
Total operating expenses........................... 67,467 48,565 113,919 61,641 47,769
--------- ---------- ---------- --------- ---------
Income from operations................................... 8,417 4,265 5,940 6,172 7,807
Other income (expenses):
Other income, primarily gain on sale of hotels......... 184 22 271 19,701 5,049
Minority interests..................................... (61) (6) 220 -- --
Interest expense....................................... (14,170) (8,870) (21,265) (11,809) (7,237)
Merger related costs................................... (3,084) -- (1,255) -- --
--------- ---------- ---------- --------- ---------
Total other income (expenses)...................... (17,131) (8,854) (22,029) 7,892 (2,188)
--------- ---------- ---------- --------- ---------
Income (loss) before extraordinary item.................. (8,714) (4,589) (16,089) 14,064 5,619
Extraordinary item--
Loss on extinguishment of indebtedness................. -- (13,332) (13,332) -- --
--------- ---------- ---------- --------- ---------
Net income (loss)........................................ $ (8,714) $ (17,921) $ (29,421) $ 14,064 $ 5,619
--------- ---------- ---------- --------- ---------
--------- ---------- ---------- --------- ---------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED AND COMBINED
FINANCIAL STATEMENTS.
F-37
<PAGE>
IMPAC HOTEL GROUP, L.L.C. AND PREDECESSORS
AND IMPAC HOTEL DEVELOPMENT, INC.
CONSOLIDATED AND COMBINED STATEMENTS OF EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
IMPAC HOTEL GROUP,
L.L.C. IMPAC HOTEL
AND PREDECESSORS DEVELOPMENT,
------------------------ INC.
PARTNERS' ----------------
AND STOCKHOLDERS'
STOCKHOLDERS' MEMBERS' EQUITY
EQUITY EQUITY (DEFICIT) TOTAL
------------ ---------- ---------------- ----------
<S> <C> <C> <C> <C>
Balance at December 31, 1994............................. $ 5,282 -- $ 95 $ 5,377
Net income (loss)...................................... 6,088 -- (469) 5,619
Contributions, net..................................... 12,724 -- 300 13,024
Distributions.......................................... (10,385) -- -- (10,385)
Loans to partners...................................... -- -- (227) (227)
------------ ---------- -------- ----------
Balance at December 31, 1995............................. 13,709 -- (301) 13,408
Net income (loss)...................................... 15,055 -- (991) 14,064
Contributions, net..................................... 19,464 -- 2,561 22,025
Distributions.......................................... (29,430) -- 666 (28,764)
Loans to partners...................................... -- -- (973) (973)
------------ ---------- -------- ----------
Balance at December 31, 1996............................. 18,798 -- 962 19,760
Transfer of equity into Impac Hotel Group, L.L.C....... (18,798) $ 18,798 -- --
Purchase of limited partners' interest................. -- 22,700 -- 22,700
Net loss............................................... -- (26,410) (3,011) (29,421)
Issuance of membership units, net...................... -- 37,810 -- 37,810
Distributions to members............................... -- (6,039) (1,580) (7,619)
Membership units retired............................... -- (5,300) -- (5,300)
Loans to members....................................... -- -- (960) (960)
------------ ---------- -------- ----------
Balance at December 31, 1997............................. -- 41,559 (4,589) 36,970
Net loss (unaudited)................................... -- (8,039) (675) (8,714)
Issuance of membership units, net (unaudited).......... -- 93 -- 93
Distributions to members (unaudited)................... -- -- (1,000) (1,000)
------------ ---------- -------- ----------
Balance at June 30, 1998 (unaudited)..................... $ -- $ 33,613 $ (6,264) $ 27,349
------------ ---------- -------- ----------
------------ ---------- -------- ----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED AND COMBINED
FINANCIAL STATEMENTS.
F-38
<PAGE>
IMPAC HOTEL GROUP, L.L.C. AND PREDECESSORS
AND IMPAC HOTEL DEVELOPMENT, INC.
CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------------------ -----------------------------------
1998 1997 1997 1996 1995
----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Operating activities:
Net income (loss)........................................ $ (8,714) $ (17,921) $ (29,421) $ 14,064 $ 5,619
Adjustments to reconcile net income (loss) to net cash
from operating activities:
Depreciation and amortization.......................... 7,367 4,894 11,136 5,814 3,978
Minority interest...................................... 61 6 (220) -- --
Gain on sales of hotel properties...................... -- -- -- (19,369) (5,354)
Loss on extinguishment of indebtedness................. -- 13,332 13,332 -- --
Changes in operating assets and liabilities, net of
effect of acquisitions:
Accounts receivable.................................. (2,192) (6,120) (3,303) (109) 713
Inventories.......................................... (22) (250) (250) (66) (45)
Other assets......................................... (1,287) (642) (1,853) (441) (2,543)
Accounts payable and accrued expenses................ 10,064 6,302 11,255 4,151 5,280
----------- ----------- ----------- ---------- ----------
Net cash provided by (used in) operating
activities....................................... 5,277 (399) 676 4,044 7,648
----------- ----------- ----------- ---------- ----------
Investing activities:
Acquisition and development of hotel properties.......... (16,692) (84,675) (148,094) (60,860) (29,708)
Capital improvements..................................... (38,734) (32,760) (41,949) (50,463) (27,610)
Deposit on hotel purchase................................ (4,165) -- -- -- --
Proceeds from sales of hotel properties.................. 55,494 18,972
Cash, restricted......................................... 584 (4,535) (5,271) -- --
Loans to members......................................... -- (585) (960) -- --
Loans to partners........................................ -- -- -- (973) (227)
----------- ----------- ----------- ---------- ----------
Net cash used in investing activities.............. (59,007) (122,555) (196,274) (56,802) (38,573)
----------- ----------- ----------- ---------- ----------
Financing activities:
Proceeds from issuance of long-term obligations.......... 44,835 294,970 354,957 83,151 45,084
Payments of deferred loan costs.......................... -- (8,624) (12,391) (2,366) (1,451)
Payments of franchise fees and other deferred costs...... (211) (307) (453) (688) (197)
Capital contributions, net............................... 93 11,752 37,810 22,025 13,024
Equity distributions..................................... (1,000) (3,368) (7,619) (28,764) (10,385)
Repayment of long-term obligations....................... -- (156,214) (156,695) (19,815) (13,245)
Retirement of membership units........................... -- (5,300) (5,300) -- --
Prepayment penalties..................................... -- (8,640) (8,640) -- --
Contribution by joint venture partner.................... -- 407 407 -- --
Loan from members........................................ -- -- -- -- --
Repayment of related party loans......................... -- (800) (800) -- --
Proceeds from issuance of related party notes............ -- -- -- 400 400
----------- ----------- ----------- ---------- ----------
Net cash provided by financing activities.......... 43,717 123,876 201,276 53,943 33,230
----------- ----------- ----------- ---------- ----------
Net change in cash and cash equivalents.................... (10,013) 922 5,678 1,185 2,305
Cash and cash equivalents at beginning of period........... 10,877 5,199 5,199 4,014 1,709
----------- ----------- ----------- ---------- ----------
Cash and cash equivalents at end of period................. $ 864 $ 6,121 $ 10,877 $ 5,199 $ 4,014
----------- ----------- ----------- ---------- ----------
----------- ----------- ----------- ---------- ----------
Supplemental disclosures of cash flow information--
Cash payments for interest............................... $ 15,708 $ 9,447 $ 21,370 $ 12,633 $ 6,938
----------- ----------- ----------- ---------- ----------
----------- ----------- ----------- ---------- ----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED AND COMBINED
FINANCIAL STATEMENTS.
F-39
<PAGE>
IMPAC HOTEL GROUP, L. L. C. AND PREDECESSORS
AND IMPAC HOTEL DEVELOPMENT, INC.
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
The principal activity of Impac Hotel Group, L.L.C. ("Impac") is to either
acquire and renovate or develop, and operate hotels. The predecessors of Impac,
prior to the formation of Impac Hotel Group, L.L.C., consisted of 22 limited
partnerships and four corporations which each owned between one and six hotels,
("Initial Hotels") and two operating corporations, Impac Hotel Management, Inc.
("Impac, Inc.") and Impac Development and Construction, Inc. ("IDC")
(collectively, the "Predecessors"). Impac and IDC are engaged in the hotel
management business and the hotel design and construction business,
respectively. Impac Inc., which managed all of the Initial Hotels, was owned by
Charles Cole, 25%; Robert Cole, 32.5%; Nancy Wolff (a member of the immediate
Cole family), 10%; and an employee, 32.5%. IDC, a construction company, was also
controlled by the Cole Family by virtue of its ownership of 50.4% of IDC's
outstanding stock. The four hotel companies were controlled by the Cole Family
by virtue of its ownership of between 52% and 65% of each hotel corporation's
outstanding stock. The Cole Family also controlled each of the 22 corporate
general partners of each of the 22 limited partnerships through the ownership of
in excess of 66% of the outstanding stock of each general partner. Under the
terms of each limited partnership agreement, the general partner of each
partnership had control over the decisions of the limited partnerships including
the operation, sale or financing of the partnerships' assets, and the general
partner could not be replaced by the limited partners. By virtue of such
ownership and management of the hotels, the Cole family controlled each of the
Predecessors. On February 26, 1997 Impac was formed by the Cole Family, with
Robert Cole as manager, as a limited liability company under the laws of the
state of Georgia. As Manager, Mr. Cole had and continues to have authority over
Impac's business and affairs. All of the Initial Hotels were acquired by Impac
through the issuance of membership units in Impac in exchange for either all of
the interests in limited partnerships or all of the assets of the corporations.
In addition, Impac acquired, in exchange for membership interests, all of the
assets of Impac, Inc. and IDC. This reorganization, which was accounted for as a
reorganization of entities under common control, was completed on March 12,
1997. The acquisition of the 22 partnerships was recorded as a purchase by the
Cole Family of the minority interests in the Predecessor entities. The
acquisition of the assets (subject to all of the liabilities) of the four
corporations which owned Initial Hotels, Impac, Inc. and IDC has been recorded
as a reorganization at historical cost.
In accordance with Impac's Operating Agreement, profits and losses, as
defined, are allocated among the members in proportion to their ownership
interests.
Impac and its Predecessors owned 45, 26 and 19 hotels as of December 31,
1997, 1996 and 1995, respectively. During the years ended December 31, 1996 and
1995 the Predecessors of Impac sold seven and three hotels, respectively.
The principal activity of Impac Hotel Development, Inc. ("IHD") is to
analyze prospective hotel acquisitions for Impac and Predecessors. The
principals of Impac, Inc. own a majority of the outstanding stock of IHD. IHD
was not acquired by Impac in the reorganization previously described.
BASIS OF PRESENTATION
The accompanying consolidated and combined financial statements of Impac and
its subsidiaries and IHD ("Companies") are prepared on the basis of generally
accepted accounting principles. The accounts and activities of Impac and IHD are
presented on a combined basis due to their common control and
F-40
<PAGE>
IMPAC HOTEL GROUP, L. L. C. AND PREDECESSORS
AND IMPAC HOTEL DEVELOPMENT, INC.
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
because the entities are subject to a merger as described in Note 9. All
material intercompany balances are eliminated in the consolidation and
combination.
The accompanying combined financial statements of the Predecessors and IHD
are presented on a combined basis due to the common control that existed during
those periods. The combined financial statements include the partnerships and
corporations that were acquired by Impac as well as the financial position and
results of operations of hotel properties that were sold prior to the
reorganization but were under the common control of Impac, Inc. during the
periods presented. All material intercompany balances are eliminated in the
combination.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Companies consider highly
liquid investments purchased with a maturity of three months or less to be cash
equivalents.
CASH, RESTRICTED
Cash, restricted consists of amounts reserved for capital improvements, debt
service, taxes, and insurance.
INVENTORIES
Inventories consist primarily of food and beverage, linens, china,
tableware, and glassware and are stated at the lower of cost (computed on the
first-in, first-out basis) or market.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets. Impac
capitalizes interest costs incurred during the construction of property and
during major renovations upon the acquisition of hotels. During the years ended
December 31, 1997, 1996 and 1995, Impac capitalized interest of approximately
$1,100,000, $1,200,000 and $300,000, respectively.
Management monitors the operating results of Impac's property and equipment
and periodically reviews the carrying value of each property to determine if
circumstances exist indicating an impairment other than temporary in the
carrying value of the assets or that depreciation periods should be modified. If
facts or circumstances indicate a potential impairment exists, Impac compares
projected cash flows (undiscounted, without interest charges) of the specific
hotel property to its carrying amount. Should a shortfall result, Impac would
adjust the carrying amount of the property to the present value of such
projected cash flows with a corresponding charge to earnings. Impac does not
believe there are any factors or circumstances indicating impairment of any of
its investments in property and equipment.
Maintenance and repairs are charged to operations as incurred; major
renewals and betterments are capitalized. Upon the sale or disposition of
property and equipment, the asset and related depreciation are removed from the
accounts and the gain or loss is included in operations.
F-41
<PAGE>
IMPAC HOTEL GROUP, L. L. C. AND PREDECESSORS
AND IMPAC HOTEL DEVELOPMENT, INC.
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DEFERRED COSTS
Deferred costs of $13.5 million and $6.4 million at December 31, 1997 and
1996, which are included in other assets, primarily consist of deferred loan
costs, franchise fees and other deferred costs, net of accumulated amortization
of approximately $660,000 and $290,000 at December 31, 1997 and 1996,
respectively. Amortization of deferred costs is computed using the straight-line
method over the terms of the related loan, franchise, or other agreement. The
straight line method of amortizing deferred financing costs approximates the
effective interest method. Impac wrote off approximately $4.7 million of
deferred loan costs in connection with the refinancing of its long-term
obligations, which is included in loss on extinguishment of indebtedness.
INCOME TAXES
Impac is a limited liability company and is not subject to income taxes. The
Predecessors were each either general or limited partnerships or S corporations
and IHD is an S corporation and similarly not subject to income taxes. The
results of these entities operations are included in the tax returns of the
members, partners or S corporation shareholders.
CONCENTRATION OF CREDIT RISK
Concentration of credit risk associated with cash and cash equivalents is
considered low due to the credit quality of the issuers of the financial
instruments held by Impac and due to their short duration to maturity. Accounts
receivable are primarily from major credit card companies, airlines and other
travel related companies. Impac performs ongoing evaluations of its significant
customers and generally does not require collateral. Impac maintains an
allowance for doubtful accounts at a level which management believes is
sufficient to cover potential credit losses. At December 31, 1997 and 1996,
these allowances were $548,000 and $405,000, respectively.
ADVERTISING EXPENSE
The cost of advertising is expensed as incurred.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
RECLASSIFICATIONS
Certain amounts from prior years have been reclassified to conform with the
June 30, 1998 presentation.
F-42
<PAGE>
IMPAC HOTEL GROUP, L. L. C. AND PREDECESSORS
AND IMPAC HOTEL DEVELOPMENT, INC.
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (CONTINUED)
2. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following (in thousands):
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
USEFUL LIVES ----------- ----------------------
(YEARS) 1998 1997 1996
------------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
(UNAUDITED)
Land...................................... $ 60,606 $ 60,012 $ 30,981
Buildings and improvements................ 35-39 265,436 231,710 112,079
Furnishings and equipment................. 5-15 58,753 55,709 28,490
----- ----------- ---------- ----------
384,795 347,431 171,550
Less accumulated depreciation............. (28,853) (21,860) (11,410)
----------- ---------- ----------
355,942 325,571 160,140
Construction in progress.................. 70,695 52,633 15,770
----------- ---------- ----------
$ 426,637 $ 378,204 $ 175,910
----------- ---------- ----------
----------- ---------- ----------
</TABLE>
At December 31, 1997, Impac had 6 hotels under development and 18 hotels
which had been recently acquired and were under renovation. Construction in
progress consists of amounts expended to develop and renovate these hotels.
Impac developed and opened or began development on a total of 9 hotels during
1997 for a cost of approximately $50 million.
During the year ended December 31, 1997, Impac acquired and opened 18 hotels
in various transactions and acquired one additional hotel through a joint
venture in which Impac acquired a 60% interest. The activities of the joint
venture were consolidated with Impac for the period commencing on the date the
joint venture interests were acquired through December 31, 1997. Such
acquisitions were each made for cash using newly contributed equity and debt.
The aggregate purchase price for these hotels and the partnership interest was
approximately $107 million.
In connection with the reorganization on March 12, 1997, Impac recorded a
step-up of land and building, reflecting an increase in their basis of
approximately $4.8 million and $17.9 million, respectively.
During the year ended December 31, 1996, the Predecessors acquired or
developed and opened 14 hotels in various transactions. Each of the acquisitions
were made for cash using newly contributed equity and debt. The aggregate
purchase price for these hotels was approximately $64 million.
Unaudited pro forma results of operations assuming the 1997 and 1996
acquisitions were completed on January 1, 1996 are as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
----------------------
1997 1996
---------- ----------
<S> <C> <C>
Revenues............................................................ $ 139,630 $ 114,096
Income (loss) before extraordinary item............................. (14,432) 12,088
Net income (loss)................................................... (27,764) 12,088
</TABLE>
F-43
<PAGE>
IMPAC HOTEL GROUP, L. L. C. AND PREDECESSORS
AND IMPAC HOTEL DEVELOPMENT, INC.
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (CONTINUED)
3. ACCRUED LIABILITIES
Accrued liabilities consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, --------------------
1998 1997 1996
----------- --------- ---------
<S> <C> <C> <C>
(UNAUDITED)
Salaries and related costs................................... 2,150 $ 2,750 $ 1,960
Real estate taxes............................................ 1,832 1,486 468
Interest..................................................... 2,021 2,042 1,090
Advanced deposits............................................ 444 263 246
Sales taxes.................................................. 1,454 1,813 1,751
Other........................................................ 1,102 677 914
----------- --------- ---------
$ 9,003 $ 9,031 $ 6,429
----------- --------- ---------
----------- --------- ---------
</TABLE>
4. LONG-TERM OBLIGATIONS
Long-term obligations consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, ----------------------
1998 1997 1996
----------- ---------- ----------
<S> <C> <C> <C>
(UNAUDITED)
Credit facility with a financial institution............ $ 298,075 $ 265,262 $ --
Subordinated promissory note payable to a bank.......... 78,500 71,018 --
Other mortgages and notes............................... 23,496 18,956 156,214
Loans to a related party................................ -- -- 800
----------- ---------- ----------
400,071 355,236 157,014
Less: current portion of long-term obligations.......... -- -- 1,163
----------- ---------- ----------
$ 400,071 $ 355,236 $ 155,851
----------- ---------- ----------
----------- ---------- ----------
</TABLE>
F-44
<PAGE>
IMPAC HOTEL GROUP, L. L. C. AND PREDECESSORS
AND IMPAC HOTEL DEVELOPMENT, INC.
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (CONTINUED)
4. LONG-TERM OBLIGATIONS (CONTINUED)
CREDIT FACILITY
At June 30, 1998 and December 31, 1997, Impac had a credit facility
("Facility") with a financial institution that consisted of the following loans
which are collateralized by substantially all of the Company's hotel properties
(in thousands):
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
----------- ------------
<S> <C> <C>
(UNAUDITED)
Loan, totaling $132.5 million, with interest at LIBOR
(6.00% at December 31, 1997) plus 2.25%, maturing in
1999, and requiring interest only payments to maturity.......... $ 132,459 $ 132,459
Loan, totaling $163.5 million, with interest at LIBOR
plus 2.75%, maturing in 2000, and requiring interest
only payments to maturity....................................... 137,245 107,727
Loan, totaling $100 million, with interest at LIBOR
plus 2.75%, maturing in 2001, and requiring interest
only payments to maturity....................................... 28,371 25,076
----------- ------------
$ 298,075 $ 265,262
----------- ------------
----------- ------------
</TABLE>
Loan advances, not to exceed the maximum loan amounts, are to be made to
Impac for approved construction projects and acquisitions. Impac is required to
pay a fee equal to 1% of funds advanced at the time of advance. Each of the
loans, upon maturity, converts to a term loan that requires payments of interest
and principal sufficient to amortize the loan over a 20 year period. These loans
will bear interest at a predetermined fixed rate and will be collateralized by
the hotel properties securing the respective loans. Upon conversion of the loans
to term loans, Impac is required to pay a securitization fee of 1% of the
balance of the loans. Impac is required to fund 2% of its gross revenues in
restricted cash balances to be used for capital improvements.
The Facility contains certain covenants, including maintenance of certain
financial ratios, certain reporting requirements and other customary
restrictions, the violation of which could cause the amounts of outstanding
principal, interest and fees to be immediately due and payable. In addition, the
Facility does not allow distributions to be made to the unitholders until after
the payment of debt service payments and the funding of certain reserve accounts
including tax, insurance and capital reserves. On December 31, 1997, management
believes that Impac was in compliance with all debt covenants.
The loans require payment of penalties and yield maintenance amounts when
certain payments of principal are made prior to specified dates.
SUBORDINATED PROMISSORY NOTE
Impac has a subordinated promissory note ("Note") with a bank totaling $78.5
million which is subordinated to the Facility agreement. Advances on the Note,
totaling $78.5 and $71 million at June 30, 1998 and December 31, 1997,
respectively, are used for the acquisition and development of hotel properties.
The Note is unsecured, matures in March 2000, and bears interest at a fixed
interest rate of 10%. Interest only payments are required to maturity. In
addition, variable interest payments are required
F-45
<PAGE>
IMPAC HOTEL GROUP, L. L. C. AND PREDECESSORS
AND IMPAC HOTEL DEVELOPMENT, INC.
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (CONTINUED)
4. LONG-TERM OBLIGATIONS (CONTINUED)
to be made upon the achievement of certain performance measures related to the
cash flow of substantially all of Impac's hotel properties, and upon the
occurrence of certain events (defined as "Participation Events" in the Note
agreement, including the sale or refinancing of properties, an equity offering
by Impac or the merger or reorganization of Impac).
Fixed and variable interest on the Note included in interest expense is $4.3
million for the year ended December 31, 1997. Impac prepaid approximately
$660,000 in participation interest which is included in other current assets.
Upon the occurrence of a Participation Event, if the fixed interest and the
variable interest are not sufficient to provide the holder of the Note with a
cumulative internal rate of return with respect to their investment in the Note
equal to 15% per annum, then additional payment of interest shall be paid with
respect to the Note in an amount sufficient to provide the holder with a
cumulative internal rate of return equal to 15%, provided that such additional
payment of interest shall not exceed 100% of net cash flow from the operations
of the Hotel properties, plus 100% of net proceeds from Participation Events.
The members are not required to make contributions in order for the holder to
obtain a 15% internal rate of return.
The Note contains certain covenants, including maintenance of certain
financial ratios, certain reporting requirements and other customary
restrictions. In addition, the Note does not allow distributions to unitholders
at any time that there is an event of default, as defined in the Note Agreement,
or if Impac fails to maintain a debt service coverage ratio of at least 1.20.
Any event of default under the terms of the Facility constitute an event of
default under the Note. On December 31, 1997, management believes that Impac was
in compliance with all debt covenants.
OTHER DEBT
Impac and Predecessors had mortgage loans totaling $19.1 million
(unaudited), $14.6 million and $156.2 million at June 30, 1998 and December 31,
1997 and 1996, respectively. The mortgage loans outstanding at December 31, 1997
require interest only payments and are due during 1998 and 1999. The mortgage
loans will convert to amortizing term loans which mature in 2020 through 2024.
All mortgage loans outstanding at December 31, 1996 were paid out with proceeds
from the Facility and the Note. Interest rates on Impac's mortgage loans vary
and are either fixed or variable. At December 31, 1997, mortgage loan interest
rates ranged from 2% to 8.5%.
Impac also has two promissory notes totaling $4.4 million at June 30, 1998
(unaudited) and December 31, 1997 that bear interest at 14%. These notes require
interest only payments and mature in 2001.
Impac refinanced its long-term obligations in March, 1997. Prior to the
refinancing with the Facility and the Note, the Predecessors generally financed
each hotel with separate mortgage debt. Such debt was collateralized by a single
hotel without recourse to other entities or the property owners. Interest rates
on mortgage notes varied by lender and were either fixed or variable. In
connection with the previously described refinancing, all separate mortgage debt
was satisfied. Prepayment penalties paid upon the retirement of the mortgages
and the write-off of remaining deferred loan costs associated with the satisfied
mortgage notes of approximately $13.3 million are included as an extraordinary
item in the accompanying statement of operations for the year ended December 31,
1997.
F-46
<PAGE>
IMPAC HOTEL GROUP, L. L. C. AND PREDECESSORS
AND IMPAC HOTEL DEVELOPMENT, INC.
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (CONTINUED)
5. EQUITY
Equity consisted of the following (in thousands except share amounts):
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, --------------------
1998 1997 1996
----------- --------- ---------
<S> <C> <C> <C>
(UNAUDITED)
Impac Hotel Group, L.L.C. and Predecessors:
Member units, 11,559,527 issued and outstanding.......... $ 33,613 $ 41,559 $ --
Partners' and Stockholders' equity....................... -- -- 18,798
----------- --------- ---------
33,613 41,559 18,798
----------- --------- ---------
Impac Hotel Development, Inc.:
Common stock, no par value; 2,000 shares authorized,
issued and outstanding................................. 299 299 299
Additional paid-in capital............................... 153 1,153 3,323
Retained deficit......................................... (5,146) (4,471) (1,460)
Loans to members......................................... (1,570) (1,570) --
Loans to partners........................................ -- -- (1,200)
----------- --------- ---------
(6,264) (4,589) 962
----------- --------- ---------
Total.................................................... $ 27,349 $ 36,970 $ 19,760
----------- --------- ---------
----------- --------- ---------
</TABLE>
6. COMMITMENTS AND CONTINGENCIES
Impac has franchise and license agreements with various hotel chains which
require monthly payments for license fees, reservation services and advertising
fees. Such agreements are generally for periods from 10 to 20 years. A licensor
may require Impac to upgrade its facilities at any time to comply with the
licensor's then current standards. Upon the expiration of the term of a license,
Impac may apply for a license renewal. In connection with a renewal of a
license, a licensor may require payment of a renewal fee, increased license,
reservation and advertising fees, as well as substantial renovation of the
hotel. Impac is required under its franchise agreements to remit varying
percentages of gross room revenue generally ranging from 6% to 7.5% to the
various franchisors for franchising, royalties, reservations, sales and
advertising services. Additional sales and advertising costs are incurred at the
local property level.
The license agreements are subject to cancellation in the event of a
default, including the failure to operate the hotel in accordance with the
quality standards and specifications of the licensor. Impac believes that the
loss of a license for any individual hotel would not have a material adverse
effect on the Impac's financial condition and results of operations. Impac
believes it will be able to renew its current licenses or obtain replacements of
a comparable quality.
Impac's hotels have noncancelable operating leases, mainly for operating
equipment, and Impac leases certain office space. Lease expense for the years
ended December 31, 1997, 1996 and 1995 was approximately $625,000, $350,000 and
$600,000.
The Companies are a party to legal proceedings, including employment related
claims, arising in the ordinary course of its business, the impact of which
would not, either individually or in the aggregate, in management's opinion,
based upon the facts known by management and the advice of counsel, have a
F-47
<PAGE>
IMPAC HOTEL GROUP, L. L. C. AND PREDECESSORS
AND IMPAC HOTEL DEVELOPMENT, INC.
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (CONTINUED)
6. COMMITMENTS AND CONTINGENCIES (CONTINUED)
material adverse effect on the Company's financial condition or results of
operations. The Companies, prior to December 10, 1997, did not have insurance
coverage, except for directors and officers' insurance, in connection with the
employment related claims.
7. FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of accounts receivable and payable and accrued expenses are
assumed to be equal to their reported carrying amounts due to their short
maturity. The carrying amount of long-term obligations approximates their fair
value based on the rate of interest charged and Impac's incremental borrowing
rate.
8. RELATED PARTY TRANSACTIONS
IHD loaned certain employees funds to purchase units in Impac. Such loans
are included as a component of stockholders' equity in the consolidated and
combined financial statements. Certain of these loans to members of
approximately $590,000 were satisfied through a charge to administrative and
general expenses during 1997.
IHD incurred fees of approximately $100,000, $580,000, $160,000 and $575,000
during six months ended June 30, 1998 and the years ended December 31, 1997,
1996 and 1995, respectively, to a related party for interior design consulting
services and for equity placement fees in connection with the acquisition of
hotels. All fees are recorded as operating expenses in the statement of
operations.
9. SUBSEQUENT EVENTS
On December 11, 1998, Servico merged with Impac and IHD in a transaction
accounted for under the purchase method of accounting, pursuant to APB 16,
"Business Combinations" whereby Servico is considered the acquiring company.
Under the terms of the Amended and Restated Agreement and Plan of Merger (the
"Merger Agreement"), Servico's existing shareholders received one share of
Lodgian common stock for each of Servico stock held by them (approximately
18,440,000 million shares). The purchase price of Impac and IHD approximated
$104,367,000, consisting of $15 million in cash, the issuance of 9.4 million
shares of common stock of Lodgian at $8.80, of which 1.4 million shares are
contingent upon the completion of construction of five hotels, and acquisition
related costs of approximately $6,647,000.
The Company has incurred legal, accounting, consulting and investment
bankers fees relating to the proposed merger totaling $3,084,000 (unaudited)
during the six months ended June 30, 1998 and $1,255,000 during the year ended
December 31, 1997. Approximately $2,900,000 (unaudited) and $1,200,000 of these
expenses are unpaid and included in accrued merger costs on the accompanying
balance sheet as of June 30, 1998 and December 31, 1997, respectively. In
addition, the Company, upon completion of the merger, owed investment bankers an
additional amount totaling $2,100,000. This amount has not been accrued in the
accompanying financial statements.
F-48
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION OR TO MAKE ANY
REPRESENTATION TO YOU THAT IS NOT CONTAINED IN THIS PROSPECTUS. THIS PROSPECTUS
IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO
BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT
PERMITTED. YOU SHOULD NOT UNDER ANY CIRCUMSTANCES ASSUME THAT THE INFORMATION IN
THIS PROSPECTUS IS CORRECT ON ANY DATE AFTER THE DATE OF THIS PROSPECTUS.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Summary........................................ 7
Risk Factors................................... 18
Use of Proceeds................................ 27
Capitalization................................. 28
Unaudited Pro Forma Consolidated Financial
Data......................................... 29
Selected Historical Financial Information of
Lodgian...................................... 32
Selected Historical Financial Information of
Impac........................................ 35
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 36
The Exchange Offer............................. 50
Business....................................... 58
Management..................................... 71
Security Ownership of Certain Beneficial Owners
and Management............................... 77
Certain Relationships and Related
Transactions................................. 79
Description of Certain Indebtedness and
Preferred Stock.............................. 80
Description of the Notes....................... 92
Certain U.S. Federal Tax Considerations........ 129
Plan of Distribution........................... 130
Legal Matters.................................. 133
Experts........................................ 133
Index to Consolidated Financial Statements..... F-1
</TABLE>
UNTIL (40 DAYS AFTER THE DATE OF THIS PROSPECTUS) ALL DEALERS
THAT EFFECT TRANSACTIONS IN THESE SECURITIES, WHETHER OR NOT PARTICIPATING IN
THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO
DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH
RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
LODGIAN FINANCING CORP.
EXCHANGE OFFER
FOR
12 1/4% SENIOR SUBORDINATED NOTES
DUE 2009
GUARANTEED BY:
LODGIAN, INC.
AND THE SUBSIDIARIES OF
LODGIAN FINANCING CORP.
---------------------
PROSPECTUS
---------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Subsection (a) of Section 145 of the General Corporation Law of Delaware
(the "DGCL") empowers a corporation to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or complete
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation and, with respect to any criminal action
or proceeding, had no cause to believe his conduct was unlawful.
Subsection (b) of Section 145 of the DGCL empowers a corporation to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and except that no indemnification may be made
in respect to any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine that despite the adjudication of liability such person is fairly and
reasonably entitled to indemnity for such expenses which the court shall deem
proper.
Section 145 of the DGCL further provides that to the extent a director,
officer, employee or agent of a corporation has been successful in the defense
of any action, suit or proceeding referred to in subsections (a) and (b) or in
the defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection therewith; that indemnification or advancement of expenses
provided for by Section 145 shall not be deemed exclusive of any other rights to
which the indemnified party may be entitled; and empowers the corporation to
purchase and maintain insurance on behalf of a director, officer, employee or
agent of the corporation against any liability asserted against him or incurred
by him in any such capacity or arising out of his status as such whether or not
the corporation would have the power to indemnify him against such liabilities
under Section 145.
The Certificates of Incorporation of Lodgian Financing Corp. ("Lodgian
Financing"), Lodgian, Inc. ("Lodgian"), Servico Ft. Pierce, Inc., Servico
Pensacola 7200, Inc., Servico Pensacola 7330, Inc., and Servico Pensacola, Inc.,
and AMIOP Acquisition Corp. (the general partner of the AMI Operating Partners,
L.P., a Delaware limited partnership), each a Delaware corporation
(collectively, the "Delaware Companies"), provide that a director shall not be
personally liable to the Delaware Companies or their stockholders for monetary
damages for breach of fiduciary duty as a director except for liability (i) for
any breach of the director's duty of loyalty to the Delaware Companies or their
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the DGCL or (iv) for any transaction from which the director derives an improper
personal benefit. The Certificates of Incorporation of the Delaware Companies
also provide that the Delaware Companies shall indemnify every director or
officer to the fullest extent permitted by law.
II-1
<PAGE>
The Bylaws of each of the Delaware Companies, other than AMIOP Acquisition
Corp., provide, in effect, that the Delaware Companies, other than AMIOP
Acquisition Corp., shall indemnify every person who was or is a party, or is or
was threatened to be made a party, to any action, suit, or proceeding, whether
civil, criminal, administrative, or investigative, by reason of the fact that he
or she is or was a director, officer, employee, or agent of any of the Delaware
Companies, other than AMIOP Acquisition Corp., or is or was serving at the
request of any of the Delaware Companies, other than AMIOP Acquisition Corp., as
a director, officer, employee, or agent of another corporation, partnership,
joint venture, trust, employee benefit plan, or other enterprise, against
expenses (including attorneys' fees), judgments, fines, and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit, or proceedings, to the fullest extent permitted by applicable law.
Such indemnifications may, in the discretion of the board of directors, include
advances of the person's expenses in advance of final disposition of such
action, suit, or proceeding, subject to the provisions of any applicable
statute. The Delaware Companies, other than AMIOP Acquisition Corp., are
empowered to purchase and maintain insurance on behalf of any person who is or
was a director, officer, employee, or agent of any of the Delaware Companies,
other than AMIOP Acquisition Corp., or is or was serving at the request of any
of the Delaware Companies, other than AMIOP Acquisition Corp., as a director,
officer, employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise, against any liability incurred by such person in
such capacity, or arising out of such person's capacity.
Sections 722 and 723 of the Business Corporation Law of New York (the
"NYBCL") empower Servico Jamestown, Inc., Servico Grand Island, Inc., Servico
New York, Inc., and Servico Niagara Falls, Inc., each a New York corporation
(collectively, the "New York Companies"), to indemnify, subject to the
limitations and standards set forth therein, any person made or threatened to be
made a party to an action or proceeding brought or threatened by reason of the
fact that such person is or was a director or officer of the New York Companies.
Section 726 of the NYBCL provides that the New York Companies may purchase
insurance on behalf of any such director or officer. The Certificates of
Incorporation of the New York Companies provide, in effect, for the
indemnification by the New York Companies of each director, officer, employee or
agent of the New York Companies to the full extent permitted by the NYBCL.
The Alabama Business Corporation Act (the "ABCA") gives Alabama corporations
broad powers to indemnify their present and former directors and officers
against expenses incurred in the defense of any lawsuit to which they are made
parties by reason of being or having been such directors or officers. Subject to
specific conditions and exclusions, the ABCA requires an Alabama corporation to
indemnify directors and officers who successfully defend actions, and it permits
a corporation to indemnify its directors and officers under other circumstances
as the corporation deems appropriate, if certain statutory standards are met.
The indemnification required and permitted under the ABCA is not exclusive of
any other rights to which those indemnified may be entitled under any statute,
provision of the articles of incorporation, by-law, agreement, vote of
shareholders or disinterested directors or otherwise. The ABCA also authorizes
Alabama corporations to buy directors' and officers' liability insurance
regardless of the corporation's authority to indemnify the director or officer
per applicable statutes.
Specifically, subsection 10-2B-8.51(a) of the ABCA empowers a corporation,
subject to a finding of authorization by the corporation pursuant to subsection
10-2B-8.55, to indemnify an individual who was, is, or is threatened to be made
a party to a threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, or investigative because he/she is or
was a director of the corporation (or, while a director of the corporation is or
was serving at the corporation's request as a director, officer, partner,
trustee, employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, employee benefit plan, or other enterprise)
against liability incurred in such proceeding (including reasonable expenses),
provided the individual (1) conducted himself/herself in good faith and (2)
reasonably believed that he/she was acting (in his/her official capacity) in the
best interests of the corporation (or, in other than his/her official capacity,
reasonably believed to be acting in a manner not opposed to the best interests
of the corporation), and (3) with respect to any criminal
II-2
<PAGE>
proceeding, the individual had no reasonable cause to believe his/her conduct
was unlawful. Subsection 10-2B-8.51(c) provides that the termination of a
proceeding by judgment, order, settlement, conviction, or upon a plea of NOLO
CONTENDERE (or its equivalent) is not, in itself, determinative that the
director did not meet the standard of conduct in subsection 10-2B-8.51(a).
Subsection 10-2B-8.56(b) permits a corporation to indemnify an officer who is
not a director of the corporation to the same extent as permissible for a
director.
Further, subsection 10-2B-8.51(d) of the ABCA prohibits a corporation from
indemnifying a director either (1) in connection with a proceeding by or in the
right of the corporation wherein the director was adjudged liable to the
corporation or (2) in connection with any other proceeding charging improper
personal benefit to the director (regardless of the existence of official
capacity) wherein the director was adjudged liable to the corporation based on
the receipt of such improper benefit. This restriction does not apply, however,
to the extent that the court in which the action is brought determines that such
officer or director is entitled to indemnity for particular limited expenses.
Finally, subsection 10-2B-8.52 of the ABCA mandates that a corporation
indemnify a director or officer who successfully defends a proceeding (or a
claim, issue, or matter therein) where he/she was a party to the proceeding
based upon his/her status as a director of the corporation, against reasonable
expenses (including counsel fees) incurred therein, notwithstanding the outcome
of any other claim, issue, or matter in any such proceeding.
Sheffield Motel Enterprises, Inc.'s Fourth Amended and Restated Articles of
Incorporation, Gadsden Hospitality, Inc.'s Second Amended and Restated Articles
of Incorporation, Dothan Hospitality 3053, Inc.'s Second Amended and Restated
Articles of Incorporation and Dothan Hospitality 3071, Inc.'s Second Amended and
Restated Articles of Incorporation (collectively, the "Alabama Articles")
mandate that the Alabama corporations shall indemnify their current and former
directors and officers to the fullest extent permitted by law. However, the
Articles provide that the Alabama corporations' obligation to indemnify its
directors and officers shall be subordinate, in all respects, to obligations of
the corporations arising out of certain loan documents and shall not constitute
a claim against the corporation to the extent that the corporation is unable to
pay any amounts it is obligated to pay under such loan documents.
The Arizona Business Corporation Act (the "AZBCA") gives Arizona
corporations broad powers to indemnify their present and former directors and
officers against expenses incurred in the defense of any lawsuit to which they
are made parties by reason of being or having been such directors or officers.
Subject to specific conditions and exclusions, the AZBCA requires an Arizona
corporation to indemnify directors and officers who successfully defend actions,
and it permits a corporation to indemnify its directors and officers under other
circumstances as the corporation deems appropriate, if certain statutory
standards are met. The indemnification required and permitted under the AZBCA is
not exclusive of any other rights to which those indemnified may be entitled
under any statute, provision of the articles of incorporation, by-law,
agreement, vote of shareholders or disinterested directors or otherwise. The
AZBCA also authorizes Arizona corporations to buy directors' and officers'
liability insurance regardless of the corporation's authority to indemnify the
director or officer per applicable statutes.
Specifically, subsection 10-851-A of the AZBCA empowers a corporation,
subject to a finding of authorization by the corporation pursuant to subsection
10-855, to indemnify an individual who was, is, or is threatened to be made a
party to a threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, or investigative because he/she is or
was a director of the corporation (or, while a director of the corporation is or
was serving at the corporation's request as a director, officer, partner,
trustee, employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, employee benefit plan, or other enterprise)
against liability incurred in such proceeding (including reasonable expenses),
provided the individual (1) conducted himself/herself in good faith and (2)
reasonably believed that he/she was acting (in his/her official capacity) in the
best interests of the corporation (or, in other than his/her official capacity,
reasonably believed to be acting in a
II-3
<PAGE>
manner not opposed to the best interests of the corporation), and (3) with
respect to any criminal proceeding, the individual had no reasonable cause to
believe his/her conduct was unlawful. Subsection 10-851-C provides that the
termination of a proceeding by judgment, order, settlement, conviction, or on a
plea of no contest is not, in itself, determinative that the director did not
meet the standard of conduct in subsection 10-851. Subsection 10-856 permits a
corporation to indemnify an officer who is not a director of the corporation to
the same extent as permissible for a director.
Further, subsection 10-851-D of the AZBCA prohibits a corporation from
indemnifying a director either (1) in connection with a proceeding by or in the
right of the corporation wherein the director was adjudged liable to the
corporation or (2) in connection with any other proceeding charging improper
personal benefit to the director (regardless of the existence of official
capacity) wherein the director was adjudged liable to the corporation based on
the receipt of such improper benefit. This restriction does not apply, however,
to the extent that the court in which the action is brought determines that such
officer or director is entitled to indemnity for particular limited expenses.
Finally, subsection 10-852 of the AZBCA mandates that a corporation
indemnify a director or officer who successfully defends a proceeding (or a
claim, issue, or matter therein) where he/she was a party to the proceeding
based upon his/her status as a director of the corporation, against reasonable
expenses (including counsel fees) incurred therein, notwithstanding the outcome
of any other claim, issue, or matter in any such proceeding.
Servico Flagstaff, Inc.'s Second Amended and Restated Articles of
Incorporation (the "Arizona Articles") mandate that Servico Flagstaff, Inc.
shall indemnify its current and former directors and officers to the fullest
extent permitted by law. However, the Arizona Articles provide that Servico
Flagstaff, Inc.'s obligation to indemnify its directors and officers shall be
subordinate, in all respects, to obligations of the corporation arising out of
certain loan documents and shall not constitute a claim against the corporation
to the extent that the corporation is unable to pay any amounts it is obligated
to pay under such loan documents.
Section 317 of the California Corporations Code generally allows
indemnification in matters not involving the rights of the corporation to
indemnify an agent of the corporation if such person acted in good faith, in a
manner such person reasonably believed to be in the best interests of the
corporation and, in the case of a criminal matter, had no reasonable cause to
believe the conduct of such person was unlawful. California law, with respect to
matters involving the rights of a corporation, allows indemnification of an
agent of the corporation if such person acted in good faith and in a manner such
person believed to be in the best interests of the corporation and its
shareholders; provided, however, that indemnification shall not be permitted
for: (i) expenses incurred in defending pending matters which are settled
without court approval; or (ii) matters in which such director or officer shall
have been adjudged to be liable to the corporation and its shareholders, unless
the court determined that such person is entitled to be indemnified.
In addition, as permitted by section 204(a)(10) of the California
Corporations Code, the Articles of Incorporation of Lodgian Anaheim, Inc. and
Lodgian Ontario, Inc. ("the California Corporations") provide that the liability
of a director to the California Corporations for monetary damages shall be
eliminated to the fullest extent permissible under California law. In accordance
with California law, however, such limitation of liability will not act to limit
the liability of a director for: (i) acts or omissions that involve intentional
misconduct or a knowing and culpable violation of the law; (ii) acts or
omissions that a director believes to be contrary to the best interest of the
California Corporations or its (their) shareholders or that involve the absence
of good faith on the part of the director, (iii) any transaction from which a
director derived an improper personal benefit; (iv) acts or omissions that show
a reckless disregard for the director's duty to the California Corporations or
its (their) shareholders in circumstances in which the director was aware or
should have been aware, in the ordinary course of performing director's duties,
of a risk of serious injury to the California Corporations or its (their)
shareholders; (v) acts or omissions
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that constitute an unexcused pattern of inattention that amounts to an
abdication of the director's duty to the California Corporations or its (their)
shareholders; (vi) any improper transactions between a director and the
Registrant(s) in which the director has a material financial interest; or (vii)
any unlawful distributions to the shareholders of the California Corporations or
any unlawful loan of money or property to, or guarantee of the obligation of,
any director or officer of the California Corporations.
With respect to Brunswick Motel Enterprises, Inc., a Georgia corporation
(the "Georgia Corporation"), Section 14-2-850 et seq. of the Georgia Business
Corporation Code and Article 8 of the Amended and Restated Articles of
Incorporation set forth the extent to which the Georgia Corporation's directors
and officers may be indemnified by the Georgia Corporation against liability
that they may incur while serving in such capacity. These provisions generally
provide that the directors and officers of the Georgia Corporation will be
indemnified by the Georgia Corporation against any losses incurred in connection
with any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the Georgia Corporation by reason of the fact that he is or was a
director or officer of the Georgia Corporation or served as such with another
corporation, partnership, joint venture, trust or other enterprise at the
request of the Georgia Corporation if such director or officer acted in a manner
he reasonably believed to be in or not opposed to the best interest of the
Georgia Corporation, and with respect to any criminal proceeding, had no
reasonable cause to believe his conduct was unlawful. Under these provisions,
the Georgia Corporation may provide advances for expenses incurred in defending
any such action, suit or proceeding, upon receipt of an undertaking by or on
behalf of such officer or director to repay such advances unless it is
ultimately determined that he is entitled to indemnification by the Georgia
Corporation. The Georgia Corporation shall not indemnify a director or officer
for any liability incurred in a proceeding in which the director is judged
liable to the Georgia Corporation or is subjected to injunctive relief in favor
of the Georgia Corporation: (i) for any appropriation, in violation of the
director's duties, of any business opportunity of the Georgia Corporation; (ii)
for acts or omissions which involve intentional misconduct or knowing violation
of law; (iii) for certain liabilities for unlawful distributions specified by
the Georgia Business Corporation Code or for any transaction from which he or
she received an improper personal benefit.
The Georgia Business Corporation Code and Article 7 of the Amended and
Restated Articles of Incorporation of the Georgia Corporation provide that no
director of the Georgia Corporation shall be personally liable to the Georgia
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Georgia Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Sections 14-2-830 and 14-2-832 of the Georgia
Business Corporation Code, or (iv) for any transaction from which the director
derived an improper personal benefit.
With respect to Atlanta-Hillsboro Lodging L.L.C. and Lodgian Richmond,
L.L.C., each a Georgia limited liability company (collectively, the "Georgia
LLCs"), under Section 14-11-306 of the Georgia Limited Liability Company Act,
the Georgia LLCs are empowered to indemnify and hold harmless any member or
manager or other person from and against any and all claims and demands
whatsoever arising in connection with the Georgia LLCs except the liability of a
member or manager shall not be eliminated or limited for intentional misconduct
or a knowing violation of law or for any transaction for which the person
received a personal benefit in violation or breach of any provisions of the
written operating agreement of the Registrant.
Each Georgia LLC has agreed to indemnify its manager and officers from and
against any claim, loss, expense, liability, action or demand incurred by the
manager or officers in respect of any omission to act or of any act performed by
them in the good faith belief that they were acting or refraining from acting
within the scope of their authority under the operating agreement, on behalf of
the Georgia LLCs or in furtherance of the Georgia LLCs' interests. However, no
such manager or officer shall be entitled to any
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indemnity for any loss sustained or fees or expenses incurred by reason of the
fraud, gross negligence or willful misfeasance of such manager or officer.
With respect to Little Rock Lodging Associates I, L.P., a Georgia limited
partnership (the "Georgia LP"), the Georgia Limited Partnership Act empowers the
Georgia LP to indemnify and hold harmless any partner or other person from and
against any and all claims and demands whatsoever except (i) for intentional
misconduct or knowing violation of law or (ii) for any transaction for which the
person received a personal benefit in violation or breach of any provision of
the partnership agreement. In addition, the Georgia Limited Partnership Act
permits the exculpation of a partner's liability except for provisions which
eliminate or limit the liability of a partner for intentional misconduct or a
knowing violation of law or for any transaction for which the partner received a
personal benefit in violation or breach of any provision of the partnership
agreement. Under the Georgia LP's limited partnership agreement, the partnership
agrees to indemnify, defend and save harmless the general partner from and
against any claim, loss, expense, liability, action or demand incurred by the
general partner in respect of any omission to act or any act performed by the
general partner, in the good faith belief that it was acting or refraining from
acting in the scope of its authority on behalf of the Registrant or in
furtherance of the Georgia LP's interests. However, the general partner is not
entitled to indemnification for any loss sustained or fees or expenses incurred
by a general partner by reason of the fraud, gross negligence or willful
misfeasance of the general partner.
Article VII of the Articles of Incorporation of Servico Cedar Rapids, Inc.,
an Iowa corporation ("Servico Cedar Rapids"), provide that Servico Cedar Rapids
shall indemnify any present or former officer or director to the fullest extent
permitted by law. Subsection 1 of Section 851 of the Iowa Business Corporation
Act (the "IBCA") allows Servico Cedar Rapids to indemnify an individual that is
made or threatened to be made a party to a proceeding, whether civil, criminal,
administrative or investigative, because the individual is or was a director
against liability incurred in the proceeding if the individual (i) acted in good
faith (ii) reasonably believing that, in the case of conduct in the individual's
official capacity with Servico Cedar Rapids, that the individual's conduct was
in Servico Cedar Rapids's best interests, and in all other cases, that the
individual's conduct was at least not opposed to Servico Cedar Rapids's best
interests, (iii) with respect to any criminal proceeding, the individual had no
reasonable cause to believe the conduct was unlawful and (iv) with respect to a
proceeding by or in the right of Servico Cedar Rapids, the director was not
adjudged liable to Servico Cedar Rapids, and in connection with any other
proceeding charging improper personal benefit to the director (whether or not
involving action in the director's official capacity), the director was not
adjudged liable on the basis that personal benefit was improperly received by
the director. Any indemnification provided pursuant to Section 851 of the IBCA
in connection with a proceeding by or in the right of the corporation shall be
limited to reasonable expenses incurred in connection with the proceeding. A
decision as to required indemnification is made by a disinterested majority of
the Board of Directors present at a meeting at which a disinterested quorum is
present, or by a designated committee of the Board, by special legal counsel or
by the shareholders.
Section 853 of the IBCA permits Servico Cedar Rapids to pay for or reimburse
the reasonable expenses incurred by a director who is a party to a proceeding in
advance of final disposition of the proceeding if (i) the director furnishes
Servico Cedar Rapids either a written affirmation of the director's good faith
belief that the director has met the standard of conduct in Section 851 of the
IBCA or a written undertaking, executed personally or on the director's behalf,
to repay the advance if it is ultimately determined that the director did not
meet the standard of conduct, or (ii) a determination is made that the facts
then known would not preclude indemnification under Section 851 of the IBCA.
Pursuant to Section 852 of the IBCA, Servico Cedar Rapids must indemnify a
director or an officer who was wholly successful, on the merits or otherwise, in
the defense of any proceeding to which the director or the officer was a party
because the director or officer is or was a director or officer of the
corporation. Indemnification shall be limited to reasonable expenses incurred by
the director or the officer in connection with the proceeding.
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A director or an officer of Servico Cedar Rapids who is a party to a
proceeding may apply for court-ordered indemnification pursuant to Section 854
of the IBCA. The court may order indemnification if it determines (i) the
director or officer is entitled to mandatory indemnification under Section 852
of the IBCA, in which event Servico Cedar Rapids shall pay the director's or
officer's reasonable expenses incurred to obtain court-ordered indemnification,
or (ii) the director or officer is fairly and reasonably entitled to
indemnification in view of all the relevant circumstances, regardless of whether
the director or officer met the standard of conduct or was adjudged liable as
described in Section 851 of the IBCA (but if the director or officer was
adjudged liable, indemnification shall be limited to reasonable expenses
incurred).
Subsection 2 of Section 856 of the IBCA permits Servico Cedar Rapids to
indemnify and advance expenses to an officer, employee or agent of the
corporation to the same extent as a director.
Subsection (a) of Section 8.75 of the Illinois Business Corporation Act of
1983 (the "IBCA") empowers a corporation to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he or she is or was a director, officer, employee or
agent of the corporation or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if he
or she acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the corporation and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful.
Subsection (b) of Section 8.75 of the IBCA empowers a corporation to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
(including attorneys' fees) actually and reasonably incurred by such person in
connection with the defense or settlement of such action or suit if he or she
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interests of the corporation and except that no
indemnification may be made in respect to any claim, issue or matter as to which
such person shall have been adjudged to be liable to the corporation unless and
only to the extent that the court in which such action or suit was brought shall
determine upon application that despite the adjudication of liability, but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the court shall deem proper.
Section 8.75 of the IBCA further provides: (a) that to the extent a
director, officer, employee or agent of a corporation has been successful on the
merits or otherwise in the defense of any action, suit or proceeding referred to
in subsections (a) and (b) or in the defense of any claim, issue or matter
therein, he or she shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by such person in connection therewith;
(b) that indemnification or advancement of expenses provided for by Section 8.75
shall not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled; and (c) empowers the
corporation to purchase and maintain insurance on behalf of any person acting in
any of the capacities set forth above against any liability asserted against
such person or incurred by him or her in any such capacity or arising out of his
or her status as such whether or not the corporation would have the power to
indemnify him or her against such liabilities under Section 8.75.
The corporate deocuments of Servico Rolling Meadows, an Illinois
corporation, do not contain any indemnification provisions.
Section 83 of the Louisiana Business Corporation Law, Title 12, Chapter 1 of
the Louisiana Revised Statutes, ("LBCL") empowers a corporation to indemnify its
directors and officers. Subsection (A) of
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Section 83 of the LBCL empowers a corporation to indemnify any person who was or
is a party or is threatened to be made a party to any action, suit, or
proceedings, whether civil, criminal, administrative, or investigative,
including any action by or in the right of the corporation, by reason of the
fact that he is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another business, foreign or nonprofit
corporation, partnership, joint venture, or other enterprise against expenses,
including attorneys' fees, judgments, fines, and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit, or
proceedings if he acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful.
In case of actions by or in the right of the corporation, this indemnity is
limited to expenses, including attorneys' fees and amounts paid in settlement
not exceeding, in the judgment of the board of directors, the estimated expense
of litigating the action to conclusion, actually and reasonably incurred in
connection with the defense or settlement of such action, and no indemnification
may be made in respect of any claim, issue, or matter as to which such person
shall have been adjudged by a court of competent jurisdiction, after exhaustion
of all appeals therefrom, to be liable for willful or intentional misconduct in
the performance of his duty to the corporation, unless, and only to the extent
that, the court shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case, he is fairly and
reasonably entitled to indemnity for such expenses which the court deems proper.
Subsection (B) of Section 83 of the LBCL provides that to the extent that a
director, officer, employee, or agent of a corporation has been successful on
the merits or otherwise in defense of any such action, suit, or proceeding, or
in defense of any claim, issue, or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection therewith; that indemnification or advancement of expenses
provided for by Section 83 shall not be deemed exclusive of any other rights to
which the indemnified party may be entitled; that a corporation may purchase and
maintain insurance on behalf of a director, officer, employee, or agent of the
corporation against any liability asserted against him or incurred by him in any
such capacity or arising out of his status as such whether or not the
corporation would have the power to indemnify him against such liabilities under
Section 145. Without limiting the power of a corporation to procure such
insurance, a corporation may, under Section 83 of the LBCL, create a trust fund
or other form of self-insurance arrangement for the benefit of persons
indemnified by the corporation and may procure or maintain such insurance with
any insurer deemed appropriate by the board of directors regardless of whether
all or part of the stock or other securities thereof are owned in whole or in
part by the corporation. In the absence of actual fraud, the judgment of the
board of directors as of the terms and conditions of such insurance or
self-insurance arrangement shall be conclusive. As an alternative to
self-insurance, Section 83 of the LBCL provides that the Louisiana Insurance
Code, Title 22 of the Louisiana Revised Statute of 1950, shall not apply to a
wholly-owned subsidiary of a business corporation that issues no contracts of
insurance other then as permitted by Section 83 of LBCL for coverage of a person
who is or was a director, officer, employee, or agent of its parent corporation,
or who is or was serving at the request of the parent corporation as a director,
officer, employee, or agent of another business, nonprofit or foreign
corporation, partnership, joint venture, or other enterprise, which contracts of
insurance for such directors, officer, employees, or agents may be issued by
such wholly- owned subsidiary without compliance with the provisions of the
Insurance Code.
Article 8 of the Articles of Incorporation of Servico Metairie, Inc.
provides that no director of the corporation shall be personally liable to the
corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 92 of the LBCL, or (iv) for any
transaction from which the director derived an improper personal benefit. It
further provides that if the
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LBCL is amended after April 1, 1996 to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability
of a director of the corporation shall be eliminated or limited to the fullest
extent permitted by the LBCL, as so amended.
Section 2-418 of the Maryland General Corporation Law ("MGCL") provides that
a Maryland corporation may indemnify directors and officers against liabilities
they may incur in such capacities unless it is established that: (a) the
director's act or omission was material and (i) was committed in bad faith or
(ii) was the result of active and deliberate dishonesty; or (b) the director
actually received an improper personal benefit; or (c) the director had
reasonable cause to believe that the act or omission was unlawful. Unless
limited by the charter, a corporation is required to indemnify directors and
officers against expenses they may incur in defending actions against them in
such capacities if they are successful on the merits or otherwise in the defense
of such actions. The MGCL provides that the foregoing provisions shall not be
deemed exclusive of any other rights to which a director or officer seeking
indemnification may be entitled under, among other things, any charter or bylaws
provision.
The Articles of Amendment and Restatement of Servico Colesville, Inc.,
Servico Columbia, Inc., and Servico Maryland, Inc. (collectively, the "Maryland
Companies") provide that each Maryland Company shall indemnify any officer or
director or any former officer or director of such Maryland Company to the
fullest extent permitted by law. The right to indemnification is not exclusive
of any other rights to which any director, officer, employee or agent may be
entitled as a matter of law or which may be lawfully granted. The obligations of
each Maryland Company to indemnify any officer or director is subordinate in all
respects to the obligations of each Maryland Company arising out of the loan
documents related to a certain credit agreement, among Lodgian Financing Corp.,
as borrower, Lodgian, Inc., Impac Hotel Group, LLC, Servico, Inc., and other
affiliated entities, as affiliate guarantors, among others, for the financing or
refinancing of certain property located at 8727 Colesville Road, Silver Spring,
Maryland, as to Servico Colesville, Inc., 5485 Twin Knolls Road, Columbia,
Maryland, as to Servico Columbia, Inc., and 8777 Georgia Avenue, Silver Spring,
Maryland, as to Servico Maryland, Inc., and shall not constitute a claim against
the Maryland Company to the extent that the Maryland Company is unable to pay
any amounts it is obligated to pay under such loan documents.
Section 561 of the Michigan Business Corporation Act (the "MBCA") empowers a
Michigan corporation to indemnify a person who was or is a party or is
threatened to be made a party to a threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative, and
whether formal or informal (other than an action by or in the right of the
corporation) by reason of the fact that he or she is or was a director, officer,
employee or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, partner, trustee, employee or agent of
another foreign or domestic corporation, partnership, joint venture, trust or
other enterprise, whether for profit or not, against expenses (including
attorneys' fees), judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred, if the person acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation or its shareholders (or if a criminal proceeding,
had no reasonable cause to believe his or her conduct was unlawful).
Sections 562 and 564c of the MBCA empower a Michigan corporation to
indemnify a person who was or is a party or is threatened to be made a party to
a threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
(including attorneys' fees), and amounts paid in settlement, actually and
reasonably incurred, if the person acted in good faith and in a manner he or she
reasonably believed to be in and not opposed to the best interests of the
corporation or its shareholders, except that no indemnification may be made if
such person has been found liable to the corporation, unless a court
determination is made that such person is fairly and reasonably entitled to such
indemnification, in which case his or her indemnification is limited to
reasonable expenses incurred.
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Section 563 of the MBCA further provides that to the extent a director,
officer, employee or agent of a Michigan corporation has been successful in the
defense of any action, suit or proceeding referred to in Sections 561 and 562 or
in the defense of any claim, issue or matter therein, he or she shall be
indemnified against actual and reasonable expenses (including attorneys' fees),
incurred by him or her in connection therewith and incurred in connection with
an action, suit or proceeding brought to enforce the mandatory indemnification
provided in Section 563.
Section 565 of the MBCA provides that the indemnification or advancement of
expenses provided under the above-discussed Sections is not exclusive of other
rights to which a person seeking indemnification or advancement of expenses may
be entitled under the articles of incorporation, bylaws, or a contractual
agreement. However, the total amount of expenses advanced or indemnified from
all sources combined cannot exceed the amount of actual expenses incurred by the
person seeking indemnification or advancement of expenses.
Section 567 of the MBCA further empowers a Michigan corporation to purchase
and maintain insurance on behalf of a director, officer, employee or agent of
the corporation against any liability asserted against him or her or incurred by
him or her in any such capacity or arising out of his or her status as such
whether or not the corporation would have the power to indemnify him or her
against such liabilities under Sections 561 to 565, inclusive, of the MBCA.
Article VIII of the Articles of Incorporation of NH Motel Enterprises, Inc.
("NH Motel") provides, in effect, for the indemnification by NH Motel, of any
officer or director of NH Motel to the fullest extent permitted by law.
Article VII of NH Motel's By-laws provide, in effect, that NH Motel shall
indemnify to the fullest extent permitted by the MBCA any person who is made or
threatened to be made a party to an action, suit or proceeding, whether civil,
criminal, administrative or investigative, by the reason of the fact that such
person is or was a director, officer, employee or agent of NH Motel or serves or
served any other enterprise at the request of NH Motel.
Article VII of NH Motel's Articles of Incorporation further provide that a
director of NH Motel shall not be personally liable to NH Motel or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of a director's duty of loyalty to NH
Motel or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 551 of the MBCA, or (iv) for any transaction from which the director
derived an improper personal benefit. It also provides that if the MBCA is
amended to authorize corporate action further eliminating or limiting the
personal liability of NH Motel's directors, then the liability of each director
of NH Motel shall be eliminated or limited to the fullest extent permitted by
the MBCA, as so amended.
The New Jersey Business Corporation Act ("NJBCA") provides a detailed
statutory framework for the indemnification of "corporate agents" against
expenses and liability in connection with their positions with the corporation
and the performance of their corporate duties. The provisions of the NJBCA are
found in New Jersey Statutes N.J.S. 14A:1-1, et seq. "Corporate agents" are
defined as any person who is or was a director, officer, trustee, employee, or
agent of the indemnifying Corporation and any person who is or was a director,
officer, trustee, employee or agent of another enterprise but serving at the
request of the indemnifying corporation. [N.J.S. 14A:3-5(1)(a)]. A corporation
may indemnify a corporate agent against expenses and liabilities incurred in
connection with any proceeding involving the agent because of his or her status,
as long as the agent acted in good faith and in a manner he or she reasonably
believed to be in the best interests of the corporation, or not opposed to those
interests [N.J.S. 14A:3-5(2)(a), 14A:3-5(3)]. Additionally, with respect to any
criminal proceeding, the agent must have had no reasonable cause to believe that
his or her conduct was unlawful [N.J.S. 14A:3-5(2)(b)]. If an agent is adjudged
liable to the corporation, no indemnity is permitted unless the court deems
indemnification proper [N.J.S. 14A:3-5(3)].
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A corporation may only authorize the indemnification of an agent after first
making a determination that indemnification is proper under the circumstances
because the agent met the applicable standard of conduct, unless a court has
ordered indemnification. [N.J.S. 14A3-5(5)]. Unless otherwise provided in the
certificate of incorporation or by-laws, that determination is to be made by the
board of directors, or a committee of the board, acting by a majority vote of a
quorum of disinterested directors [N.J.S. 14A:3-5(5)(a)]. If a quorum is not
obtainable, or if so directed by majority vote of the disinterested directors,
the determination may be made by independent legal counsel designated by the
board [N.J.S. 14A:3-5(5)(b)]. The determination must be made by the shareholders
if required by the certificate of incorporation, the by-laws, or a resolution of
the board of the shareholders. [N.J.S. 14A:3-5(5)(c)].
A corporation must indemnify an agent against expenses to the extent that he
or she has been successful on the merits or otherwise in any proceeding or in
defense of any claim [N.J.S. 14A:3-5(4)]. The agent may petition the court for
an award of indemnification if the corporation improperly denies mandatory
indemnification [N.J.S. 14A:3-5(7)(a)]. Except when indemnification is
mandatory, no indemnification may be made by the corporation or authorized by a
court if the power to indemnify or the right to receive indemnification is
prohibited, limited, or otherwise conditioned by the certificate of
incorporation, the by-laws, a resolution of the board or the shareholders, an
agreement, or other proper corporate action in effect when the alleged cause of
action accrued [N.J.S. 14A:3-5(11)].
There are no statutory limitations on a corporation's power to indemnify a
current or former director for expenses incurred in connection with the
director's appearance as a witness in a proceeding to which the director is not
a party. [N.J.S. 14A:3-5(12)].
The corporation may exercise the statutory powers of indemnification in the
absence of any provision in the certificate or by-laws authorizing
indemnification [N.J.S. 14A:3-5(10)]. These statutory powers are not exclusive,
and a corporate agent may be entitled to other indemnification rights under the
certificate of incorporation, the by-laws, an agreement, a vote of shareholders,
or otherwise, including the right to be indemnified against liabilities and
expenses incurred in proceedings by or in the right of the corporation. [N.J.S.
14A:3-5(8)]. No indemnification is permitted, however, if a judgment or other
final adjudication establishes that the agent's conduct (1) breached the duty of
loyalty to the corporation or its shareholders, as defined in New Jersey
Statutes Section 14A:2-7(3), (2) was not undertaken in good faith, (3) involved
a knowing violation of the law, or (4) resulted in the receipt by the agent of
an improper personal benefit. [N.J.S. 14A:3-5(8)].
The Certificate of Incorporation of Lodgian Mount Laurel, Inc., a New Jersey
corporation ("Lodgian Mount Laurel") provides, in effect, for indemnification by
Lodgian Mount Laurel of any officer or director, or any former officer or
director, to the fullest extent permitted by law. The By-Laws of Lodgian Mount
Laurel contain no additional indemnification provisions.
The South Carolina Business Corporation Act empowers a South Carolina
corporation to indemnify directors and officers against liabilities and
reasonable expenses incurred in connection with any action, suit or proceeding
to which such person may be a party because he is or was a director or officer
of the corporation or serving in a similar capacity at the corporation's request
for another entity or an employee benefit plan. Under the laws of the State of
South Carolina, unless limited by its articles of incorporation, a corporation
shall indemnify a director or officer who was wholly successful, on the merits
or otherwise, in the defense of any proceeding to which he was a party because
he is or was a director or officer of such corporation, against reasonable
expenses incurred by him in connection with the proceeding. South Carolina law
also provides that indemnification of a director or officer may be made if he
acted (a) in good faith and (b) in a manner reasonably believed to be, (i) with
respect to conduct in his official capacity, in the best interests of the
corporation, or, (ii) with respect to all other cases, in a manner he reasonably
believed to be not opposed to the best interests of the corporation. Further,
with respect to any criminal action or proceeding, a director or officer must
also have had no reason to believe his conduct was unlawful in order to qualify
for indemnification. With respect to suits by or in the right of the
corporation,
II-11
<PAGE>
such a person may be indemnified if he acted in good faith and, in the case of
conduct within his official capacity, he reasonably believed his conduct to be
in the corporation's best interest, and, in all other cases, he shall not have
been adjudged to be liable to the corporation. A South Carolina corporation may
purchase and maintain insurance against liabilities of its directors and
executive officers whether or not such liabilities are subject to
indemnification.
The Articles of Incorporation of Service Hilton Head, Inc., a South Carolina
corporation ("Servico Hilton Head"), provide for indemnification of directors
and officers (and former directors and officers) to the fullest extent permitted
by South Carolina law. The Articles of Incorporation also provide that the
obligation of Servico Hilton Head to indemnify its directors and officers is
subordinate in all respects to its obligations as a guarantor under the loan
documents described therein.
Disclosure relating to indemnification of officers and directors of the
Florida, Minnesota, North Carolina, Pennsylvania and Texas corporations will be
filed by amendment.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- --------------------------------------------------------------------------------------------------------
<C> <S>
1.1 Purchase Agreement, dated June 9, 1998, by Lodgian Capital Trust I and NationsBanc Montgomery Securities
LLC (incorporated by reference to Exhibit 1.1 to the Company's Registration Statement on Form S-1, as
amended, filed on July 14, 1999 (Registration Number 333-82859))
3.1.1 Certificate of Incorporation of Lodgian Financing Corp.
3.1.2 Bylaws of Lodgian Financing Corp.
3.2.1 Restated Certificate of Incorporation of Lodgian, Inc. (incorporated by reference to Appendix 6 to the
Company's Registration Statement on Form S-4, as amended, filed on July 17, 1998 (Registration Number.
333- 59315))
3.2.2 Restated Bylaws of Lodgian, Inc. (incorporated by reference to Appendix H to the Company's Registration
Statement on Form S-4, as amended, filed on July 17, 1998 (Registration Number 333-59315))
3.3.1 Amended and Restated Articles of Incorporation of Dothan Hospitality 3053, Inc.
3.3.2 Bylaws of Dothan Hospitality 3053, Inc.
3.4.1 Amended and Restated Articles of Incorporation of Dothan Hospitality 3071, Inc.
3.4.2 Bylaws of Dothan Hospitality 3071, Inc.
3.5.1 Amended and Restated Articles of Incorporation of Gadsden Hospitality, Inc.
3.5.2 Bylaws of Gadsden Hospitality, Inc.
3.6.1 Amended and Restated Articles of Incorporation of Sheffield Motel Enterprises, Inc.
3.6.2 Bylaws of Sheffield Motel Enterprises, Inc.
3.7.1 Articles of Incorporation of Lodgian Anaheim Inc.
3.7.2 Bylaws of Lodgian Anaheim Inc.
3.8.1 Articles of Incorporation of Lodgian Ontario Inc.
3.8.2 Bylaws of Lodgian Ontario Inc.
</TABLE>
II-12
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- --------------------------------------------------------------------------------------------------------
<C> <S>
3.9.1 Amended and Restated Articles of Incorporation of Servico Ft. Pierce, Inc.
3.9.2 Bylaws of Servico Ft. Pierce, Inc.
3.10.1 Amended and Restated Articles of Incorporation of Servico Pensacola 7200, Inc.
3.10.2 Bylaws of Servico Pensacola 7200, Inc.
3.11.1 Amended and Restated Articles of Incorporation of Servico Pensacola 7330, Inc.
3.11.2 Bylaws of Servico Pensacola 7330, Inc.
3.12.1 Amended and Restated Articles of Incorporation of Servico Pensacola, Inc.
3.12.2 Bylaws of Servico Pensacola, Inc.
3.13.1 Partnership Agreement of AMI Operating Partners, L.P., as amended.
3.14.1 Amended and Restated Articles of Incorporation of Albany Hotel, Inc.
3.14.2 Bylaws of Albany Hotel, Inc.
3.15.1 Amended and Restated Articles of Incorporation of Servico Flagstaff, Inc.
3.15.2 Bylaws of Servico Flagstaff, Inc.
3.16.1 Amended and Restated Articles of Incorporation of Servico Northwoods, Inc.
3.16.2 Bylaws of Servico Northwoods, Inc.
3.17.1 Amended and Restated Articles of Incorporation of Servico Silver Spring, Inc.
3.17.2 Bylaws of Servico Silver Spring, Inc.
3.18.1 Amended and Restated Articles of Incorporation of Servico West Palm Beach, Inc.
3.18.2 Bylaws of Servico West Palm Beach, Inc.
3.19.1 Amended and Restated Articles of Incorporation of Servico Windsor, Inc.
3.19.2 Bylaws of Servico Windsor, Inc.
3.20.1 Amended and Restated Articles of Incorporation of Servico Winter Haven, Inc.
3.20.2 Bylaws of Servico Winter Haven, Inc.
3.21.1 Amended and Restated Articles of Incorporation of Brunswick Motel Enterprises, Inc.
3.21.2 Bylaws of Brunswick Motel Enterprises, Inc.
3.22.1 Operating Agreement of Atlanta-Hillsboro Lodging, LLC
3.23.1 Operating Agreement of Lodgian Richmond, LLC
3.24.1 Partnership Agreement of Little Rock Lodging Associates I, L.P.*
3.25.1 Amended and Restated Articles of Incorporation of Servico Cedar Rapids, Inc.
3.25.2 Bylaws of Servico Cedar Rapids, Inc.
3.26.1 Amended and Restated Articles of Incorporation of Servico Rolling Meadows, Inc.
3.26.2 Bylaws of Servico Rolling Meadows, Inc.
3.27.1 Amended and Restated Articles of Incorporation of Servico Metairie, Inc.
</TABLE>
II-13
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- --------------------------------------------------------------------------------------------------------
<C> <S>
3.27.2 Bylaws of Servico Metairie, Inc.
3.28.1 Amended and Restated Articles of Incorporation of Servico Colesville, Inc.
3.28.2 Bylaws of Servico Colesville, Inc.
3.29.1 Amended and Restated Articles of Incorporation of Servico Columbia, Inc.
3.29.2 Bylaws of Servico Columbia, Inc.
3.30.1 Amended and Restated Articles of Incorporation of Servico Maryland, Inc.
3.30.2 Bylaws of Servico Maryland, Inc.
3.31.1 Amended and Restated Articles of Incorporation of NH Motel Enterprises, Inc.
3.31.2 Bylaws of NH Motel Enterprises, Inc.
3.32.1 Amended and Restated Articles of Incorporation of Minneapolis Motel Enterprises, Inc.
3.32.2 Bylaws of Minneapolis Motel Enterprises, Inc.
3.33.1 Amended and Restated Articles of Incorporation of Servico Roseville, Inc.
3.33.2 Bylaws of Servico Roseville, Inc.
3.34.1 Amended and Restated Articles of Incorporation of Lodgian Mount Laurel, Inc.
3.34.2 Bylaws of Lodgian Mount Laurel, Inc.
3.35.1 Amended and Restated Articles of Incorporation of Servico Grand Island, Inc.
3.35.2 Bylaws of Servico Grand Island, Inc.
3.36.1 Amended and Restated Articles of Incorporation of Servico Jamestown, Inc.
3.36.2 Bylaws of Servico Jamestown, Inc.
3.37.1 Amended and Restated Articles of Incorporation of Servico New York, Inc.
3.37.2 Bylaws of Servico New York, Inc.
3.38.1 Amended and Restated Articles of Incorporation of Servico Niagara Falls, Inc.
3.38.2 Bylaws of Servico Niagara Falls, Inc.
3.39.1 Amended and Restated Articles of Incorporation of Fayetteville Motel Enterprises, Inc.
3.39.2 Bylaws of Fayetteville Motel Enterprises, Inc.
3.40.1 Amended and Restated Articles of Incorporation of Apico Hills, Inc.
3.40.2 Bylaws of Apico Hills, Inc.
3.41.1 Amended and Restated Articles of Incorporation of Apico Inns of Green Tree, Inc.
3.41.2 Bylaws of Apico Inns of Green Tree, Inc.
3.42.1 Amended and Restated Articles of Incorporation of Servico Hilton Head, Inc.
3.42.2 Bylaws of Servico Hilton Head, Inc.
3.43.1 Amended and Restated Articles of Incorporation of Servico Austin, Inc.
3.43.2 Bylaws of Servico Austin, Inc.
</TABLE>
II-14
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- --------------------------------------------------------------------------------------------------------
<C> <S>
3.44.1 Amended and Restated Articles of Incorporation of Servico Houston, Inc.
3.44.2 Bylaws of Servico Houston, Inc.
3.45.1 Amended and Restated Articles of Incorporation of Servico Market Center, Inc.
3.45.2 Bylaws of Servico Market Center, Inc.
3.46.1 Amended and Restated Articles of Incorporation of Palm Beach Motel Enterprises, Inc.
3.46.2 Bylaws of Palm Beach Motel Enterprises, Inc.*
4.1 Indenture, dated as of July 23, 1999, by and among Lodgian Financing Corp., Lodgian, Inc., the
subsidiary guarantors named therein and Bankers Trust Company, as trustee
4.2 Registration Rights Agreement, dated as of July 20, 1999, by and among Lodgian Financing Corp., Lodgian,
Inc., the subsidiary guarantors named therein and Morgan Stanley & Co. Incorporated, Lehman Brothers Inc
and Bear, Stearns & Co. Inc.
4.3 Form of Letter of Transmittal
4.4 Indenture, dated as of June 17, 1998, between Servico, Inc., Lodgian, Inc. and Wilmington Trust Company,
as Trustee (incorporated by reference to Exhibit 10.1 to the Company's Registration Statement on Form
S-4, as amended, filed on July 17, 1998 (Registration Number 333-59315))
4.5 First Supplemental Indenture, dated as of June 17, 1998, between Servico, Inc., Lodgian, Inc. and
Wilmington Trust Company, as Trustee (incorporated by reference to Exhibit 10.2 to the Company's
Registration Statement on Form S-4, as amended, filed on July 17, 1998 (Registration Number 333-59315))
4.6 Guarantee Agreement, dated as of June 17, 1998, between Servico, Inc., Lodgian, Inc. and Wilmington
Trust Company, as Guarantee Trustee (incorporated by reference to Exhibit 10.3 to the Company's
Registration Statement on Form S-4, as amended, filed on July 17, 1998 (Registration Number 333-59315))
4.7 Amended and Restated Declaration of Trust of Lodgian Capital Trust I, dated as of June 17, 1998, between
Servico, Inc., as Sponsor, David A. Buddemeyer, Charles M. Diaz and Phillip R. Hale, as Regular
Trustees, and Wilmington Trust Company, as Delaware Trust and Property Trustee (incorporated by
reference to Exhibit 10.5 to the Company's Registration Statement on Form S-4, as amended, filed on July
17, 1998 (Registration Number 333-59315))
4.8 Specimen Note (included as an exhibit to 4.1)
4.9 Specimen CRESTS (included as an exhibit to Exhibit 4.5)
4.10 Specimen Convertible Debenture (included as an exhibit to Exhibit 4.3)
5.1 Form of Opinion of Cadwalader, Wickersham & Taft regarding the validity of the issuance of the Notes
being registered hereby
8.1 Opinion of Cadwalader, Wickersham & Taft (included in Exhibit 5.1)
</TABLE>
II-15
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- --------------------------------------------------------------------------------------------------------
<C> <S>
10.1 Credit Agreement, dated as of July 23, 1999, among Lodgian Financing Corp, Lodgian, Inc., Impac Hotel
Group, LLC, Servico, Inc., and the other affiliate guarantors party thereto and the initial lenders and
initial issuing bank named therein and Morgan Stanley Senior Funding, Inc., as Administrative Agent and
Collateral Agent, and Morgan Stanley Senior Funding, Inc., as Co-Lead Arranger, Joint-Book Manager and
Syndication Agent, and Lehman Brothers Inc., as Co-Lead Arranger and Joint-Book Manager*
10.2 Security Agreement, dated July 23, 1999, from Lodgian Financing Corp., Servico, Inc., Impac Hotel Group,
LLC, and the other grantors referred to therein to Morgan Stanley Senior Funding, Inc., as Collateral
Agent*
10.3.1 Loan Agreement, dated December 8, 1998, between Sheraton Concord, Inc. and Banc One Capital Funding
Corporation
10.3.2 Guaranty and Indemnity Agreement, dated December 8, 1998, by Lodgian AMI, Inc., Penmoco, Inc. and Island
Motel Enterprises, Inc. in favor of Banc One Capital Funding Corporation
10.3.3 Limited Guaranty and Indemnity Agreement dated December 8, 1998, by Lodgian, Inc. in favor of Banc One
Capital Funding Corporation
10.4.1 Loan Agreement, dated December 8, 1998, between Island Motel Enterprises, Inc., Penmoco, Inc. and Banc
One Capital Funding Corporation
10.4.2 Guaranty and Indemnity Agreement, dated December 8, 1998, by Servico Concord, Inc. and Lodgian AMI, Inc.
in favor of Banc One Capital Funding Corporation
10.4.3 Limited Guaranty and Indemnity Agreement dated December 8, 1998, by Lodgian, Inc. in favor of Banc One
Capital Funding Corporation
10.5.1 Loan Agreement, dated December 8, 1998, between Lodgian AMI, Inc. and Banc One Capital Funding
Corporation (relating to Holiday Inn--Lancaster East)
10.5.2 Guaranty and Indemnity Agreement, dated December 8, 1998, by Servico Concord, Inc., Penmoco, Inc. and
Island Motel Enterprises, Inc. in favor of Banc One Capital Funding Corporation
10.5.3 Limited Guaranty and Indemnity Agreement dated December 8, 1998, by Lodgian, Inc. in favor of Banc One
Capital Funding Corporation
10.6.1 Loan Agreement, dated December 8, 1998, between Lodgian AMI, Inc. and Banc One Capital Funding
Corporation (relating to Holdiay Inn--International Airport)
10.6.2 Guaranty and Indemnity Agreement, dated December 8, 1998, by Servico Concord, Inc., Penmoco, Inc. and
Island Motel Enterprises, Inc. in favor of Banc One Capital Funding Corporation
10.6.3 Limited Guaranty and Indemnity Agreement dated December 8, 1998, by Lodgian, Inc. in favor of Banc One
Capital Funding Corporation
10.7.1 Loan Agreement dated as of July 18, 1996, among GMAC Commercial Mortgage Corporation and Servico Council
Bluffs, Inc., Servico West Des Moines, Inc., Servico Omaha, Inc., Servico Omaha Central, Inc., and
Servico Wichita, Inc.
10.7.2 Mortgage Note in the amount of $16.84 million, dated as of July 18, 1996, by Servico Council Bluffs,
Inc., Servico West Des Moines, Inc., Servico Omaha, Inc., Servico Omaha Central, Inc., and Servico
Wichita, Inc., in favor of GMAC Commercial Mortgage Corporation
</TABLE>
II-16
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- --------------------------------------------------------------------------------------------------------
<C> <S>
10.8.1 Loan Agreement dated as of May 7, 1996, between GMAC Commercial Mortgage Corporation and Servico
Lansing, Inc.
10.8.2 Mortgage Note in the original amount of $5.687 million, dated as of May 7, 1996, by Servico Lansing,
Inc. in favor of GMAC Commercial Mortgage Corporation.
10.9.1 Loan Agreement dated as of January 17, 1996, among GMAC Commercial Mortgage Corporation and Brecksville
Hospitality, L.P., Sioux City Hospitality, L.P. and 1075 Hospitality, L.P.
10.9.2 Mortgage Note in the original amount of $12.91 million by Brecksville Hospitality, L.P., Sioux City
Hospitality, L.P. and 1075 Hospitality, L.P. in favor of GMAC Commercial Mortgage Corporation.
10.10.1 Loan Agreement dated as of January 31, 1995, by and among Column Financial, Inc., and Servico Fort
Wayne, Inc., Washington Motel Enterprises, Inc., Servico Hotels I, Inc., Servico Hotels II, Inc.,
Servico Hotels III, Inc., Servico Hotels IV, Inc., New Orleans Airport Motel Associates, Ltd., Wilpen,
Inc., Hilton Head Motel Enterprises, Inc., and Moon Airport Hotel, Inc.
10.10.2 Promissory Note in the original amount of $60.5 million, dated as of January 31, 1995, by Servico Fort
Wayne, Inc., Washington Motel Enterprises, Inc., Servico Hotels I, Inc., Servico Hotels II, Inc.,
Servico Hotels III, Inc., Servico Hotels IV, Inc., New Orleans Airport Motel Associates, Ltd., Wilpen,
Inc., Hilton Head Motel Enterprises, Inc., and Moon Airport Hotel, Inc. in favor of Column Financial,
Inc.
10.11.1 Loan Agreement dated as of June 29, 1995, between Column Financial, Inc., and East Washington
Hospitality Limited Partnership.
10.11.2 Promissory Note in the original amount of $11.0 million, dated as of June 29, 1995, by East Washington
Hospitality Limited Partnership in favor of Column Financial, Inc.
10.12.1 Loan Agreement, dated as of January 31, 1995 and amended as of June 29, 1995, between Column Financial,
Inc., and McKnight Motel, Inc.
10.12.2 Promissory Note in the original amount of $3.9 million, dated as of January 31, 1995 and amended as of
June 29, 1995, by McKnight Motel, Inc. in favor of Column Financial, Inc.
10.13.1 Loan Agreement, dated December 8, 1998, between Lodgian AMI, Inc. and Banc One Capital Funding
Corporation (relating to Holiday Inn--Glen Burnie)
10.13.2 Guaranty and Indemnity Agreement, dated December 8, 1998, by Servico Concord, Inc., Penmoco, Inc. and
Island Motel Enterprises, Inc. in favor of Banc One Capital Funding Corporation
10.13.3 Limited Guaranty and Indemnity Agreement dated December 8, 1998, by Lodgian, Inc. in favor of Banc One
Capital Funding Corporation
10.14.1 Loan Agreement, dated December 8, 1998, between Lodgian AMI, Inc. and Banc One Capital Funding
Corporation (relating to Holiday Inn--Inner Harbor)
10.14.2 Guaranty and Indemnity Agreement, dated December 8, 1998, by Servico Concord, Inc., Penmoco, Inc. and
Island Motel Enterprises, Inc. in favor of Banc One Capital Funding Corporation
10.14.3 Limited Guaranty and Indemnity Agreement dated December 8, 1998, by Lodgian, Inc. in favor of Banc One
Capital Funding Corporation
</TABLE>
II-17
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- --------------------------------------------------------------------------------------------------------
<C> <S>
12.1 Statement Regarding Computation of Earnings to Fixed Charges (incorporated by reference to the Company's
Registration Statement on Form S-1, as amended, filed on July 14, 1999 (Registration Number 333-82859))
21.1 Subsidiaries of Lodgian Financing Corp. (incorporated by reference to the Company's Registration
Statement on Form S-1, as amended, filed on July 14, 1999 (Registration Number 333-82859))
23.1 Consent of Cadwalader, Wickersham & Taft (included in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP
23.3 Consent of PricewaterhouseCoopers LLP
24.1 Power of Attorney (included with signature pages to this Registration Statement)
25.1 Form T-1: Statement of Eligibility of Bankers Trust Company
25.2 Form T-1: Statement of Eligibility of Wilmington Trust Company to act as trustee under the CRESTS
Guarantee (incorporated by reference to the Company's Registration Statement on Form S-1, as amended,
filed on July 14, 1999 (Registration Number 333-82859))
25.3 Form T-1: Statement of Eligibility of Wilmington Trust Company to act as trustee under the CRESTS
Indenture (incorporated by reference to the Company's Registration Statement on Form S-1, as amended,
filed on July 14, 1999 (Registration Number 333-82859))
25.4 Form T-1: Statement of Eligibility of Wilmington Trust Company to act as trustee under the CRESTS
Amended and Restated Declaration of Trust (incorporated by reference to the Company's Registration
Statement on Form S-1, as amended, filed on July 14, 1999 (Registration Number 333-82859))
27.1 Financial Data Schedule (incorporated by reference to the Company's Registration Statement on Form S-1,
as amended, filed on July 14, 1999 (Registration Number 333-82859))
</TABLE>
- ------------------------
* To be filed by amendment.
(b) Financial Statement Schedules.
All schedules are omitted because they are not applicable or the required
information is shown in the consolidated financial statements or notes thereto.
ITEM 22. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling any
Registrant pursuant to the foregoing provisions, each Registrant has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by a Registrant of expenses
incurred or paid by a director, officer or controlling person of a Registrant in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, each Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
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<PAGE>
The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of a registration statement in reliance upon Rule 430A and contained in the
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned Registrants hereby undertake to supply be means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each of the
registrants has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Atlanta,
State of Georgia, on , 1999.
<TABLE>
<S> <C> <C>
LODGIAN FINANCING CORP.
BY: /S/ ROBERT S. COLE
-----------------------------------------
Robert S. Cole
PRESIDENT AND CHIEF EXECUTIVE OFFICER
LODGIAN, INC.
BY: /S/ ROBERT S. COLE
-----------------------------------------
Robert S. Cole
PRESIDENT AND CHIEF EXECUTIVE OFFICER
SHEFFIELD MOTEL ENTERPRISES, INC.
DOTHAN HOSPITALITY 3053, INC.
DOTHAN HOSPITALITY 3071, INC.
GADSDEN HOSPITALITY, INC.
SERVICO FLAGSTAFF, INC.
LODGIAN ANAHEIM, INC.
LODGIAN ONTARIO INC.
SERVICO PENSACOLA, INC.
SERVICO PENSACOLA 7200, INC.
SERVICO PENSACOLA 7330, INC.
SERVICO FT. PIERCE, INC.
PALM BEACH MOTEL ENTERPRISES, INC.
SERVICO WEST PALM BEACH, INC.
SERVICO WINTER HAVEN, INC.
SERVICO SILVER SPRING, INC.
ALBANY HOTEL, INC.
SERVICO NORTHWOODS, INC.
SERVICO WINDSOR, INC.
BRUNSWICK MOTEL ENTERPRISES, INC.
SERVICO ROLLING MEADOWS, INC.
SERVICO CEDAR RAPIDS, INC.
SERVICO METAIRIE, INC.
SERVICO COLUMBIA, INC.
SERVICO COLESVILLE, INC.
SERVICO MARYLAND, INC.
NH MOTEL ENTERPRISES, INC.
MINNEAPOLIS MOTEL ENTERPRISES, INC.
SERVICO ROSEVILLE, INC.
LODGIAN MOUNT LAUREL, INC.
SERVICO JAMESTOWN, INC.
SERVICO NEW YORK, INC.
</TABLE>
II-20
<PAGE>
<TABLE>
<S> <C> <C>
SERVICO NIAGARA FALLS, INC.
SERVICO GRAND ISLAND, INC.
FAYETTEVILLE MOTEL ENTERPRISES, INC.
APICO INNS OF GREEN TREE, INC.
APICO HILLS, INC.
SERVICO HILTON HEAD, INC.
SERVICO AUSTIN, INC.
SERVICO MARKET CENTER, INC.
SERVICO HOUSTON, INC.
By: /s/ ROBERT M. FLANDERS
-----------------------------------------
Robert M. Flanders
PRESIDENT
AMI OPERATING PARTNERS, L.P.
By: /s/ ROBERT M. FLANDERS
-----------------------------------------
Robert M. Flanders
PRESIDENT OF AMIOP ACQUSITION CORP., GENERAL
PARTNER OF AMI OPERATING PARTNERS, L.P.
LITTLE ROCK LODGING ASSOCIATES I, L.P.
LODGIAN RICHMOND, LLC
By: /s/ ROBERT M. FLANDERS
-----------------------------------------
Robert M. Flanders
PRESIDENT OF LODGIAN RICHMOND SPE, INC.,
GENERAL
PARTNER OF LITTLE ROCK LODGING ASSOCIATES I,
L.P. AND
MANAGING MEMBER OF LODGIAN RICHMOND, LLC
ATLANTA HILLSBORO LODGING, LLC
By: /s/ ROBERT S. COLE
-----------------------------------------
Robert S. Cole
MANAGER
</TABLE>
II-21
<PAGE>
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Robert S. Cole and Robert M. Flanders and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform such and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on , 1999
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ ---------------------------
<C> <S>
Lodgian Financing Corp.
/s/ ROBERT S. COLE Director and President
- ------------------------------ (Principal Executive
Robert S. Cole Officer)
Executive Vice President
/s/ KENNETH R. POSNER and Chief Financial
- ------------------------------ Officer (Principal
Kenneth R. Posner Financial and Accounting
Officer)
/s/ JOSEPH C. CALABRO Director
- ------------------------------
Joseph C. Calabro
Lodgian, Inc.
Chief Executive Officer,
/s/ ROBERT S. COLE President and Director
- ------------------------------ (Principal Executive
Robert S. Cole Officer)
Executive Vice President
/s/ KENNETH R. POSNER and Chief Financial
- ------------------------------ Officer (Principal
Kenneth R. Posner Financial and Accounting
Officer)
/s/ JOSEPH C. CALABRO Director
- ------------------------------
Joseph C. Calabro
/s/ PETER R. TYSON Director
- ------------------------------
Peter R. Tyson
</TABLE>
II-22
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ ---------------------------
<C> <S>
Director
- ------------------------------
/s/ MICHAEL A. LEVEN Director
- ------------------------------
Michael A. Leven
/s/ RICHARD H. WIENER Director
- ------------------------------
Richard H. Wiener
* Constitutes a majority of the Board of Directors
Sheffield Motel Enterprises, Inc.
Dothan Hospitality 3053, Inc.
Dothan Hospitality 3071, Inc.
Gadsden Hospitality, Inc.
Servico Flagstaff, Inc.
Servico Pensacola, Inc.
Servico Pensacola 7200, Inc.
Servico Pensacola 7330, Inc.
Servico Ft. Pierce, Inc.
Palm Beach Motel Enterprises, Inc.
Servico West Palm Beach, Inc.
Servico Winter Haven, Inc.
Servico Silver Spring, Inc.
Albany Hotel, Inc.
Servico Northwoods, Inc.
Servico Windsor, Inc.
Brunswick Motel Enterprises, Inc.
Servico Rolling Meadows, Inc.
Servico Cedar Rapids, Inc.
Servico Metairie, Inc.
Servico Columbia, Inc.
Servico Colesville, Inc.
Servico Maryland, Inc.
NH Motel Enterprises, Inc.
Minneapolis Motel Enterprises, Inc.
Servico Roseville, Inc.
Lodgian Mount Laurel, Inc.
Servico Jamestown, Inc.
Servico New York, Inc.
Servico Niagara Falls, Inc.
Servico Grand Island, Inc.
Fayetteville Motel Enterprises, Inc.
Apico Inns of Green Tree, Inc.
Apico Hills, Inc.
Servico Hilton Head, Inc.
Servico Austin, Inc.
Servico Market Center, Inc.
Servico Houston, Inc.
</TABLE>
II-23
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ ---------------------------
<C> <S>
/s/ ROBERT M. FLANDERS President and Director
- ------------------------------ (Principal Executive
Robert M. Flanders Officer)
/s/ KENNETH R. POSNER Chief Financial Officer
- ------------------------------ (Principal Financial and
Kenneth R. Posner Accounting Officer)
/s/ MARK K. RAFUSE Director
- ------------------------------
Mark K. Rafuse
/s/ CARL MCKENRY Director
- ------------------------------
Carl McKenry
Lodgian Anaheim, Inc.
Lodgian Ontario Inc.
/s/ ROBERT M. FLANDERS President and Director
- ------------------------------ (Principal Executive
Robert M. Flanders Officer)
/s/ KENNETH R. POSNER Chief Financial Officer
- ------------------------------ (Principal Financial and
Kenneth R. Posner Accounting Officer)
/s/ MARK K. RAFUSE Director
- ------------------------------
Mark K. Rafuse
AMI Operating Partners, L.P.
President and Director
(Principal Executive
/s/ ROBERT M. FLANDERS Officer) of AMIOP
- ------------------------------ Acquisition Corp.,
Robert M. Flanders general partner of AMI
Operating Partners, L.P.
Chief Financial Officer
(Principal Financial and
/s/ KENNETH R. POSNER Accounting Officer) of
- ------------------------------ AMIOP Acquisition Corp.,
Kenneth R. Posner general partner of AMI
Operating Partners, L.P.
Director of AMIOP
/s/ MARK K. RAFUSE Acquisition Corp.,
- ------------------------------ general partner of AMI
Mark K. Rafuse Operating Partners, L.P.
</TABLE>
II-24
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ ---------------------------
<C> <S>
Director of AMIOP
/s/ CARL MCKENRY Acquisition Corp.,
- ------------------------------ general partner of AMI
Carl McKenry Operating Partners, L.P.
Little Rock Lodging Associates I, L.P.
Lodgian Richmond, LLC
President and Director
(Principal Executive
Officer) of Lodgian
/s/ ROBERT M. FLANDERS Richmond SPEC, Inc.,
- ------------------------------ general partner of Little
Robert M. Flanders Rock Lodging
Associates I, LP and
managing member of
Lodgian Richmond, LLC
Chief Financial Officer
(Principal Financial and
Accounting Officer) of
/s/ KENNETH R. POSNER Lodgian Richmond SPE,
- ------------------------------ Inc., general partner of
Kenneth R. Posner Little Rock Lodging
Associates I, LP and
managing member of
Lodgian Richmond, LLC
Director of Lodgian
Richmond SPE, Inc.,
/s/ MARK K. RAFUSE general
- ------------------------------ partner of Little Rock
Mark K. Rafuse Lodging Associates I, LP
and managing member of
Lodgian Richmond, LLC
Director of Lodgian
Richmond SPE, Inc.,
/s/ CARL MCKENRY general
- ------------------------------ partner of Little Rock
Carl McKenry Lodging Associates I, LP
and managing member of
Lodgian Richmond, LLC
Atlanta-Hillsboro Lodging, LLC
/s/ ROBERT S. COLE Manager and President
- ------------------------------ (Principal Executive
Robert S. Cole Officer)
/s/ KENNETH R. POSNER Chief Financial Officer
- ------------------------------ (Principal Financial and
Kenneth R. Posner Accounting Officer)
</TABLE>
II-25
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
- --------- ------------------------------------------------------------------------------------------------ ---------
<C> <S> <C>
1.1 Purchase Agreement, dated June 9, 1998, by Lodgian Capital Trust I and NationsBanc Montgomery
Securities LLC (incorporated by reference to Exhibit 1.1 to the Company's Registration Statement
on Form S-1, as amended, filed on July 14, 1999 (Registration Number 333-82859))
3.1.1 Certificate of Incorporation of Lodgian Financing Corp.
3.1.2 Bylaws of Lodgian Financing Corp.
3.2.1 Restated Certificate of Incorporation of Lodgian, Inc. (incorporated by reference to Appendix 6
to the Company's Registration Statement on Form S-4, as amended, filed on July 17, 1998
(Registration Number. 333- 59315))
3.2.2 Restated Bylaws of Lodgian, Inc. (incorporated by reference to Appendix H to the Company's
Registration Statement on Form S-4, as amended, filed on July 17, 1998 (Registration Number
333-59315))
3.3.1 Amended and Restated Articles of Incorporation of Dothan Hospitality 3053, Inc.
3.3.2 Bylaws of Dothan Hospitality 3053, Inc.
3.4.1 Amended and Restated Articles of Incorporation of Dothan Hospitality 3071, Inc.
3.4.2 Bylaws of Dothan Hospitality 3071, Inc.
3.5.1 Amended and Restated Articles of Incorporation of Gadsden Hospitality, Inc.
3.5.2 Bylaws of Gadsden Hospitality, Inc.
3.6.1 Amended and Restated Articles of Incorporation of Sheffield Motel Enterprises, Inc.
3.6.2 Bylaws of Sheffield Motel Enterprises, Inc.
3.7.1 Articles of Incorporation of Lodgian Anaheim Inc.
3.7.2 Bylaws of Lodgian Anaheim Inc.
3.8.1 Articles of Incorporation of Lodgian Ontario Inc.
3.8.2 Bylaws of Lodgian Ontario Inc.
3.9.1 Amended and Restated Articles of Incorporation of Servico Ft. Pierce, Inc.
3.9.2 Bylaws of Servico Ft. Pierce, Inc.
3.10.1 Amended and Restated Articles of Incorporation of Servico Pensacola 7200, Inc.
3.10.2 Bylaws of Servico Pensacola 7200, Inc.
3.11.1 Amended and Restated Articles of Incorporation of Servico Pensacola 7330, Inc.
3.11.2 Bylaws of Servico Pensacola 7330, Inc.
3.12.1 Amended and Restated Articles of Incorporation of Servico Pensacola, Inc.
3.12.2 Bylaws of Servico Pensacola, Inc.
3.13.1 Partnership Agreement of AMI Operating Partners, L.P., as amended.
3.14.1 Amended and Restated Articles of Incorporation of Albany Hotel, Inc.
3.14.2 Bylaws of Albany Hotel, Inc.
3.15.1 Amended and Restated Articles of Incorporation of Servico Flagstaff, Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
- --------- ------------------------------------------------------------------------------------------------ ---------
<C> <S> <C>
3.15.2 Bylaws of Servico Flagstaff, Inc.
3.16.1 Amended and Restated Articles of Incorporation of Servico Northwoods, Inc.
3.16.2 Bylaws of Servico Northwoods, Inc.
3.17.1 Amended and Restated Articles of Incorporation of Servico Silver Spring, Inc.
3.17.2 Bylaws of Servico Silver Spring, Inc.
3.18.1 Amended and Restated Articles of Incorporation of Servico West Palm Beach, Inc.
3.18.2 Bylaws of Servico West Palm Beach, Inc.
3.19.1 Amended and Restated Articles of Incorporation of Servico Windsor, Inc.
3.19.2 Bylaws of Servico Windsor, Inc.
3.20.1 Amended and Restated Articles of Incorporation of Servico Winter Haven, Inc.
3.20.2 Bylaws of Servico Winter Haven, Inc.
3.21.1 Amended and Restated Articles of Incorporation of Brunswick Motel Enterprises, Inc.
3.21.2 Bylaws of Brunswick Motel Enterprises, Inc.
3.22.1 Operating Agreement of Atlanta-Hillsboro Lodging, LLC
3.23.1 Operating Agreement of Lodgian Richmond, LLC
3.24.1 Partnership Agreement of Little Rock Lodging Associates I, L.P.*
3.25.1 Amended and Restated Articles of Incorporation of Servico Cedar Rapids, Inc.
3.25.2 Bylaws of Servico Cedar Rapids, Inc.
3.26.1 Amended and Restated Articles of Incorporation of Servico Rolling Meadows, Inc.
3.26.2 Bylaws of Servico Rolling Meadows, Inc.
3.27.1 Amended and Restated Articles of Incorporation of Servico Metairie, Inc.
3.27.2 Bylaws of Servico Metairie, Inc.
3.28.1 Amended and Restated Articles of Incorporation of Servico Colesville, Inc.
3.28.2 Bylaws of Servico Colesville, Inc.
3.29.1 Amended and Restated Articles of Incorporation of Servico Columbia, Inc.
3.29.2 Bylaws of Servico Columbia, Inc.
3.30.1 Amended and Restated Articles of Incorporation of Servico Maryland, Inc.
3.30.2 Bylaws of Servico Maryland, Inc.
3.31.1 Amended and Restated Articles of Incorporation of NH Motel Enterprises, Inc.
3.31.2 Bylaws of NH Motel Enterprises, Inc.
3.32.1 Amended and Restated Articles of Incorporation of Minneapolis Motel Enterprises, Inc.
3.32.2 Bylaws of Minneapolis Motel Enterprises, Inc.
3.33.1 Amended and Restated Articles of Incorporation of Servico Roseville, Inc.
3.33.2 Bylaws of Servico Roseville, Inc.
3.34.1 Amended and Restated Articles of Incorporation of Lodgian Mount Laurel, Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
- --------- ------------------------------------------------------------------------------------------------ ---------
<C> <S> <C>
3.34.2 Bylaws of Lodgian Mount Laurel, Inc.
3.35.1 Amended and Restated Articles of Incorporation of Servico Grand Island, Inc.
3.35.2 Bylaws of Servico Grand Island, Inc.
3.36.1 Amended and Restated Articles of Incorporation of Servico Jamestown, Inc.
3.36.2 Bylaws of Servico Jamestown, Inc.
3.37.1 Amended and Restated Articles of Incorporation of Servico New York, Inc.
3.37.2 Bylaws of Servico New York, Inc.
3.38.1 Amended and Restated Articles of Incorporation of Servico Niagara Falls, Inc.
3.38.2 Bylaws of Servico Niagara Falls, Inc.
3.39.1 Amended and Restated Articles of Incorporation of Fayetteville Motel Enterprises, Inc.
3.39.2 Bylaws of Fayetteville Motel Enterprises, Inc.
3.40.1 Amended and Restated Articles of Incorporation of Apico Hills, Inc.
3.40.2 Bylaws of Apico Hills, Inc.
3.41.1 Amended and Restated Articles of Incorporation of Apico Inns of Green Tree, Inc.
3.41.2 Bylaws of Apico Inns of Green Tree, Inc.
3.42.1 Amended and Restated Articles of Incorporation of Servico Hilton Head, Inc.
3.42.2 Bylaws of Servico Hilton Head, Inc.
3.43.1 Amended and Restated Articles of Incorporation of Servico Austin, Inc.
3.43.2 Bylaws of Servico Austin, Inc.
3.44.1 Amended and Restated Articles of Incorporation of Servico Houston, Inc.
3.44.2 Bylaws of Servico Houston, Inc.
3.45.1 Amended and Restated Articles of Incorporation of Servico Market Center, Inc.
3.45.2 Bylaws of Servico Market Center, Inc.
3.46.1 Amended and Restated Articles of Incorporation of Palm Beach Motel Enterprises, Inc.
3.46.2 Bylaws of Palm Beach Motel Enterprises, Inc.*
4.1 Indenture, dated as of July 23, 1999, by and among Lodgian Financing Corp., Lodgian, Inc., the
subsidiary guarantors named therein and Bankers Trust Company, as trustee
4.2 Registration Rights Agreement, dated as of July 20, 1999, by and among Lodgian Financing Corp.,
Lodgian, Inc., the subsidiary guarantors named therein and Morgan Stanley & Co. Incorporated,
Lehman Brothers Inc and Bear, Stearns & Co. Inc.
4.3 Form of Letter of Transmittal
4.4 Indenture, dated as of June 17, 1998, between Servico, Inc., Lodgian, Inc. and Wilmington Trust
Company, as Trustee (incorporated by reference to Exhibit 10.1 to the Company's Registration
Statement on Form S-4, as amended, filed on July 17, 1998 (Registration Number 333-59315))
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
- --------- ------------------------------------------------------------------------------------------------ ---------
<C> <S> <C>
4.5 First Supplemental Indenture, dated as of June 17, 1998, between Servico, Inc., Lodgian, Inc.
and Wilmington Trust Company, as Trustee (incorporated by reference to Exhibit 10.2 to the
Company's Registration Statement on Form S-4, as amended, filed on July 17, 1998 (Registration
Number 333-59315))
4.6 Guarantee Agreement, dated as of June 17, 1998, between Servico, Inc., Lodgian, Inc. and
Wilmington Trust Company, as Guarantee Trustee (incorporated by reference to Exhibit 10.3 to the
Company's Registration Statement on Form S-4, as amended, filed on July 17, 1998 (Registration
Number 333-59315))
4.7 Amended and Restated Declaration of Trust of Lodgian Capital Trust I, dated as of June 17, 1998,
between Servico, Inc., as Sponsor, David A. Buddemeyer, Charles M. Diaz and Phillip R. Hale, as
Regular Trustees, and Wilmington Trust Company, as Delaware Trust and Property Trustee
(incorporated by reference to Exhibit 10.5 to the Company's Registration Statement on Form S-4,
as amended, filed on July 17, 1998 (Registration Number 333-59315))
4.8 Specimen Note (included as an exhibit to 4.1)
4.9 Specimen CRESTS (included as an exhibit to Exhibit 4.5)
4.10 Specimen Convertible Debenture (included as an exhibit to Exhibit 4.3)
5.1 Form of Opinion of Cadwalader, Wickersham & Taft regarding the validity of the issuance of the
Notes being registered hereby
8.1 Opinion of Cadwalader, Wickersham & Taft (included in Exhibit 5.1)
10.1 Credit Agreement, dated as of July 23, 1999, among Lodgian Financing Corp, Lodgian, Inc., Impac
Hotel Group, LLC, Servico, Inc., and the other affiliate guarantors party thereto and the
initial lenders and initial issuing bank named therein and Morgan Stanley Senior Funding, Inc.,
as Administrative Agent and Collateral Agent, and Morgan Stanley Senior Funding, Inc., as
Co-Lead Arranger, Joint-Book Manager and Syndication Agent, and Lehman Brothers Inc., as Co-Lead
Arranger and Joint-Book Manager*
10.2 Security Agreement, dated July 23, 1999, from Lodgian Financing Corp., Servico, Inc., Impac
Hotel Group, LLC, and the other grantors referred to therein to Morgan Stanley Senior Funding,
Inc., as Collateral Agent*
10.3.1 Loan Agreement, dated December 8, 1998, between Sheraton Concord, Inc. and Banc One Capital
Funding Corporation
10.3.2 Guaranty and Indemnity Agreement, dated December 8, 1998, by Lodgian AMI, Inc., Penmoco, Inc.
and Island Motel Enterprises, Inc. in favor of Banc One Capital Funding Corporation
10.3.3 Limited Guaranty and Indemnity Agreement dated December 8, 1998, by Lodgian, Inc. in favor of
Banc One Capital Funding Corporation
10.4.1 Loan Agreement, dated December 8, 1998, between Island Motel Enterprises, Inc., Penmoco, Inc.
and Banc One Capital Funding Corporation
10.4.2 Guaranty and Indemnity Agreement, dated December 8, 1998, by Servico Concord, Inc. and Lodgian
AMI, Inc. in favor of Banc One Capital Funding Corporation
10.4.3 Limited Guaranty and Indemnity Agreement dated December 8, 1998, by Lodgian, Inc. in favor of
Banc One Capital Funding Corporation
10.5.1 Loan Agreement, dated December 8, 1998, between Lodgian AMI, Inc. and Banc One Capital Funding
Corporation (relating to Holiday Inn--Lancaster East)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
- --------- ------------------------------------------------------------------------------------------------ ---------
<C> <S> <C>
10.5.2 Guaranty and Indemnity Agreement, dated December 8, 1998, by Servico Concord, Inc., Penmoco,
Inc. and Island Motel Enterprises, Inc. in favor of Banc One Capital Funding Corporation
10.5.3 Limited Guaranty and Indemnity Agreement dated December 8, 1998, by Lodgian, Inc. in favor of
Banc One Capital Funding Corporation
10.6.1 Loan Agreement, dated December 8, 1998, between Lodgian AMI, Inc. and Banc One Capital Funding
Corporation (relating to Holdiay Inn--International Airport)
10.6.2 Guaranty and Indemnity Agreement, dated December 8, 1998, by Servico Concord, Inc., Penmoco,
Inc. and Island Motel Enterprises, Inc. in favor of Banc One Capital Funding Corporation
10.6.3 Limited Guaranty and Indemnity Agreement dated December 8, 1998, by Lodgian, Inc. in favor of
Banc One Capital Funding Corporation
10.7.1 Loan Agreement dated as of July 18, 1996, among GMAC Commercial Mortgage Corporation and Servico
Council Bluffs, Inc., Servico West Des Moines, Inc., Servico Omaha, Inc., Servico Omaha Central,
Inc., and Servico Wichita, Inc.
10.7.2 Mortgage Note in the amount of $16.84 million, dated as of July 18, 1996, by Servico Council
Bluffs, Inc., Servico West Des Moines, Inc., Servico Omaha, Inc., Servico Omaha Central, Inc.,
and Servico Wichita, Inc., in favor of GMAC Commercial Mortgage Corporation
10.8.1 Loan Agreement dated as of May 7, 1996, between GMAC Commercial Mortgage Corporation and Servico
Lansing, Inc.
10.8.2 Mortgage Note in the original amount of $5.687 million, dated as of May 7, 1996, by Servico
Lansing, Inc. in favor of GMAC Commercial Mortgage Corporation.
10.9.1 Loan Agreement dated as of January 17, 1996, among GMAC Commercial Mortgage Corporation and
Brecksville Hospitality, L.P., Sioux City Hospitality, L.P. and 1075 Hospitality, L.P.
10.9.2 Mortgage Note in the original amount of $12.91 million by Brecksville Hospitality, L.P., Sioux
City Hospitality, L.P. and 1075 Hospitality, L.P. in favor of GMAC Commercial Mortgage
Corporation.
10.10.1 Loan Agreement dated as of January 31, 1995, by and among Column Financial, Inc., and Servico
Fort Wayne, Inc., Washington Motel Enterprises, Inc., Servico Hotels I, Inc., Servico Hotels II,
Inc., Servico Hotels III, Inc., Servico Hotels IV, Inc., New Orleans Airport Motel Associates,
Ltd., Wilpen, Inc., Hilton Head Motel Enterprises, Inc., and Moon Airport Hotel, Inc.
10.10.2 Promissory Note in the original amount of $60.5 million, dated as of January 31, 1995, by
Servico Fort Wayne, Inc., Washington Motel Enterprises, Inc., Servico Hotels I, Inc., Servico
Hotels II, Inc., Servico Hotels III, Inc., Servico Hotels IV, Inc., New Orleans Airport Motel
Associates, Ltd., Wilpen, Inc., Hilton Head Motel Enterprises, Inc., and Moon Airport Hotel,
Inc. in favor of Column Financial, Inc.
10.11.1 Loan Agreement dated as of June 29, 1995, between Column Financial, Inc., and East Washington
Hospitality Limited Partnership.
10.11.2 Promissory Note in the original amount of $11.0 million, dated as of June 29, 1995, by East
Washington Hospitality Limited Partnership in favor of Column Financial, Inc.
10.12.1 Loan Agreement, dated as of January 31, 1995 and amended as of June 29, 1995, between Column
Financial, Inc., and McKnight Motel, Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
- --------- ------------------------------------------------------------------------------------------------ ---------
<C> <S> <C>
10.12.2 Promissory Note in the original amount of $3.9 million, dated as of January 31, 1995 and amended
as of June 29, 1995, by McKnight Motel, Inc. in favor of Column Financial, Inc.
10.13.1 Loan Agreement, dated December 8, 1998, between Lodgian AMI, Inc. and Banc One Capital Funding
Corporation (relating to Holiday Inn--Glen Burnie)
10.13.2 Guaranty and Indemnity Agreement, dated December 8, 1998, by Servico Concord, Inc., Penmoco,
Inc. and Island Motel Enterprises, Inc. in favor of Banc One Capital Funding Corporation
10.13.3 Limited Guaranty and Indemnity Agreement dated December 8, 1998, by Lodgian, Inc. in favor of
Banc One Capital Funding Corporation
10.14.1 Loan Agreement, dated December 8, 1998, between Lodgian AMI, Inc. and Banc One Capital Funding
Corporation (relating to Holiday Inn--Inner Harbor)
10.14.2 Guaranty and Indemnity Agreement, dated December 8, 1998, by Servico Concord, Inc., Penmoco,
Inc. and Island Motel Enterprises, Inc. in favor of Banc One Capital Funding Corporation
10.14.3 Limited Guaranty and Indemnity Agreement dated December 8, 1998, by Lodgian, Inc. in favor of
Banc One Capital Funding Corporation
12.1 Statement Regarding Computation of Earnings to Fixed Charges (incorporated by reference to the
Company's Registration Statement on Form S-1, as amended, filed on July 14, 1999 (Registration
Number 333-82859))
21.1 Subsidiaries of Lodgian Financing Corp. (incorporated by reference to the Company's Registration
Statement on Form S-1, as amended, filed on July 14, 1999 (Registration Number 333-82859))
23.1 Consent of Cadwalader, Wickersham & Taft (included in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP
23.3 Consent of PricewaterhouseCoopers LLP
24.1 Power of Attorney (included with signature pages to this Registration Statement)
25.1 Form T-1: Statement of Eligibility of Bankers Trust Company
25.2 Form T-1: Statement of Eligibility of Wilmington Trust Company to act as trustee under the
CRESTS Guarantee (incorporated by reference to the Company's Registration Statement on Form S-1,
as amended, filed on July 14, 1999 (Registration Number 333-82859))
25.3 Form T-1: Statement of Eligibility of Wilmington Trust Company to act as trustee under the
CRESTS Indenture (incorporated by reference to the Company's Registration Statement on Form S-1,
as amended, filed on July 14, 1999 (Registration Number 333-82859))
25.4 Form T-1: Statement of Eligibility of Wilmington Trust Company to act as trustee under the
CRESTS Amended and Restated Declaration of Trust (incorporated by reference to the Company's
Registration Statement on Form S-1, as amended, filed on July 14, 1999 (Registration Number
333-82859))
27.1 Financial Data Schedule (incorporated by reference to the Company's Registration Statement on
Form S-1, as amended, filed on July 14, 1999 (Registration Number 333-82859))
</TABLE>
- ------------------------
* To be filed by amendment.
<PAGE>
Exhibit 3.1.1
CERTIFICATE OF INCORPORATION
OF LODGIAN FINANCING CORP.
ARTICLE I
NAME
Section 1.1 Name. The name of the Corporation is Lodgian Financing
Corp.
ARTICLE II
REGISTERED OFFICE AND REGISTERED AGENT
Section 2.1 Office and Agent. The address of the registered office
of the Corporation in the State of Delaware is Corporation Trust Center, 1209
Orange Street, in the City of Wilmington, County of New Castle. The name of the
registered agent of the Corporation at such address is The Corporation Trust
Company.
ARTICLE III
CORPORATE PURPOSE
Section 3.1 Purpose. The purpose of the Corporation is to engage in
any lawful act or activity for which corporations may be organized under the
Delaware General Corporation Law ("DGCL").
ARTICLE IV
CAPITALIZATION
Section 4.1 Authorized Capital; Shares. The total number of shares
of all classes of stock that the Corporation shall have authority to issue is
Ten Million (10,000,000), of which Seven Million Five Hundred Thousand
(7,500,000) shares shall be shares of Common Stock, par value $0.01 per share
("Common Stock"), and Two Million Five Hundred Thousand (2,500,000) shares shall
be shares of Preferred Stock, par value $0.01 per share ("Preferred Stock").
Section 4.2 Preferred Stock. Shares of Preferred Stock of the
Corporation may be issued from time to time in one or more classes or series,
each of which class or series shall have such distinctive designation or title
as shall be fixed by the affirmative vote of a majority of the whole Board of
Directors of the Corporation (the "Board of Directors") prior to the issuance of
any shares thereof (the number of directors of the Corporation, as so determined
from time to time, being referred to herein as the "Whole Board"). Each such
class or series of Preferred Stock shall have such voting powers, full or
limited, or no voting powers, and such designations, preferences
<PAGE>
and relative, participating, optional or other special rights and
qualifications, limitations or restrictions, including the dividend rate,
redemption price and liquidation preference, and may be convertible into, or
exchangeable for, at the option of either the holder or the Corporation or upon
the happening of a specified event, shares of any other class or classes or any
other series of the same or any other class or classes of capital stock, or any
debt securities, of the Corporation at such price or prices or at such rate or
rates of exchange and with such adjustments as shall be stated and expressed in
this Certificate of Incorporation or in any amendment hereto or in such
resolution or resolutions providing for the issuance of such class or series of
Preferred Stock as may be adopted from time to time by the affirmative vote of
the number of directors constituting the majority of the Whole Board prior to
the issuance of any shares thereof pursuant to the authority hereby expressly
vested in it, all in accordance with the DGCL. The authority of the Board of
Directors with respect to each series shall also include, but not be limited to,
the determination of restrictions, if any, on the issue or reissue of any
additional shares of Preferred Stock.
Section 4.3 No Preemptive Rights. The holders of shares of Common
Stock shall have no preemptive or preferential rights of subscription to any
shares of any class of capital stock of the Corporation or any securities
convertible into or exchangeable for shares of any class of capital stock of the
Corporation.
ARTICLE V
COMPROMISE OR ARRANGEMENT
Section 5.1 Compromise or Arrangement. Whenever a compromise or
arrangement is proposed between the Corporation and its creditors or any class
of them and/or between the Corporation and its stockholders or any class of
them, any court of equitable jurisdiction within the State of Delaware may, on
the application in a summary way of the Corporation or of any creditor or
stockholder thereof or on the application of any receiver or receivers appointed
for the Corporation under the provisions of Section 291 of the DGCL or on the
application of trustees in dissolution or of any receiver or receivers appointed
for the Corporation under the provisions of Section 279 of the DGCL, order a
meeting of the creditors or class of creditors, and/or of the stockholders or
class of stockholders of the Corporation, as the case may be, to be summoned in
such a manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of the
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization, if sanctioned by the
court to which the said application has been made, shall be binding on all the
creditors or the members of the class of creditors, and/or on all the
stockholders or the members of the class of stockholders, of the Corporation, as
the case may be, and also on the Corporation.
ARTICLE VI
<PAGE>
INDEMNIFICATION
Section 7.1 Indemnification. General. The Corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the Corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise, to
the full extent authorized or permitted by law, as now or hereafter in effect,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement or conviction, or upon
a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person seeking indemnification did not act in good faith
and in a manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) Derivative Actions. The Corporation shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise, to
the full extent authorized or permitted by law, as now or hereafter in effect,
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation; PROVIDED, HOWEVER, that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery of the State of
Delaware or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) Successful Defense. To the extent that a present or former
director, officer, employee or agent of the Corporation has been successful on
the merits or otherwise in defense of any action, suit or proceeding referred to
in subsections (a) and (b) above, or in defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
(d) Proceedings Initiated by any Person. Notwithstanding anything to
the contrary contained in subsections (a) or (b) above, except for proceedings
to enforce rights to
<PAGE>
indemnification, the Corporation shall not be obligated to indemnify any person
in connection with a proceeding (or part thereof) initiated by such person
unless such proceeding (or part thereof) was authorized in advance, or
unanimously consented to, by the Board of Directors.
(e) Procedure. Any indemnification under subsections (a) and
(b)above (unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of the
present or former director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
subsections (a) and (b) above. Such determination shall be made with respect to
a person who is a director or officer at the time of such determination, (i) by
a majority vote of a quorum of the directors who are not parties to such action,
suit or proceeding, (ii) by a committee of such nonparty directors designated by
a majority vote of such directors, even though less than a quorum, (iii) if
there are no such directors, or if such directors so direct, by independent
legal counsel in a written opinion, or (iv) by the stockholders of the
Corporation.
(f) Advancement of Expenses. Expenses (including attorneys'
fees)incurred by a director or an officer in defending any civil, criminal,
administrative or investigative action, suit or proceeding shall be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking in form and substance satisfactory to
the Corporation by or on behalf of such director or officer to repay such amount
if it shall ultimately be determined that he is not entitled to be indemnified
by the Corporation pursuant to this Article VI. Such expenses (including
attorneys' fees) incurred by former directors or officers or other employees and
agents may be so paid upon such terms and conditions, if any, as the Board of
Directors deems appropriate.
(g) Rights Not Exclusive. The indemnification and advancement of
expenses provided by, or granted pursuant to, the other subsections of this
Article VI shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under any
law, bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office.
(h) Insurance. The Corporation may purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of the DGCL.
(i) Definition of "Corporation". For purposes of this Article VI,
references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, employees or agents so that any person who is or was a
director, officer, employee or
<PAGE>
agent of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under the provisions of this Article VI with
respect to the resulting or surviving corporation as he would have with respect
to such constituent corporation if its separate existence had continued.
(j) Certain Other Definitions. For purposes of this Article VI,
references to "other enterprises" shall include employee benefit plans;
references to "fines" shall include any excise taxes assessed on a person with
respect to any employee benefit plan; and references to "serving at the request
of the Corporation" shall include any service as a director, officer, employee
or agent of the Corporation which imposes duties on, or involves service by,
such director, officer, employee or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in good faith
and in a manner he reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation," as referred to in
this Article VI.
(k) Continuation of Rights. The indemnification and advancement of
expenses provided by, or granted pursuant to, this Article VI shall, unless
otherwise provided when authorized or ratified, continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person.
(l) Repeal or Modification. Any repeal or modification of this
Article VI by the stockholders of the Corporation shall not adversely affect any
rights to indemnification and to advancement of expenses that any person may
have at the time of such repeal or modification with respect to any acts or
omissions occurring prior to such repeal or modification.
(m) Action Against Corporation. Notwithstanding any provisions of
this Article VI to the contrary, no person shall be entitled to indemnification
or advancement of expenses under this Article VI with respect to any action,
suit or proceeding, or any claim therein, brought or made by him against the
Corporation.
ARTICLE VII
DIRECTORS
Section 7.1 Director Liability. (a) A director of the Corporation
shall not be personally liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the DGCL or (iv) for any transaction from which the director
derived any improper personal benefit.
(b) If the DGCL is amended hereafter to authorize the further
elimination or limitation of the liability of directors, then the liability of a
director of the Corporation shall be eliminated or limited to the fullest extent
authorized by the DGCL, as so amended, without
<PAGE>
further action by either the Board of Directors or the stockholders of the
Corporation.
(c) Any repeal or modification of this Article VII shall not
adversely affect any right or protection of a director of the Corporation
existing hereunder with respect to any act or omission occurring prior to or at
the time of such repeal or modification.
Section 7.2 Removal. Any or all of the directors may be removed only
for due cause by vote of the record holders of a majority of the outstanding
shares of the Corporation entitled to vote thereon at a meeting of the
stockholders; PROVIDED, HOWEVER, that no such removal can be made at such
meeting unless the notice thereof specifies such removal and the reasons
therefor as one of the matters that shall be considered at such meeting.
ARTICLE VIII
MANAGEMENT OF THE AFFAIRS OF THE CORPORATION
Section 8.1 Management of the Affairs of the Corporation. (a) The
business and affairs of the Corporation shall be managed by the Board of
Directors, which may exercise all the powers of the Corporation and do all such
lawful acts and things that are not conferred upon or reserved to the
stockholders by law, by this Certificate of Incorporation or by the bylaws of
the Corporation (the "Bylaws").
(b) Election of directors of the Corporation need not be by written
ballot, unless required by the Bylaws.
(c) The following provisions are inserted for the limitation and
regulation of the powers of the Corporation and of its directors and
stockholders:
(i) The Bylaws, or any of them, may be altered, amended or repealed,
or new bylaws may be made, but only to the extent any such alteration,
amendment, repeal or new bylaw is not inconsistent with any provision of
this Certificate of Incorporation as it may be amended from time to time,
either by the number of directors constituting the majority of the Whole
Board or by the stockholders of the Corporation upon the affirmative vote
of the holders of at least 80% of the outstanding capital stock entitled
to vote thereon.
(ii) The Board of Directors shall be divided into two classes,
designated Class I and Class II. Each class shall consist, as nearly as
may be possible, of one-half of the total number of directors constituting
the entire Board of Directors. The term of the initial Class I directors
shall terminate on the date of the 2000 annual meeting of stockholders the
term of the initial Class II directors shall terminate on the date of the
2001 annual meeting of stockholders. At each annual meeting of
stockholders, beginning with the 2000 annual meeting of stockholders,
successors to the class of directors whose term expires at that annual
meeting shall be elected for a two-year term. If the number of directors
is changed, any increase or decrease shall be apportioned among the
classes so
<PAGE>
as to maintain the number of directors in each class as nearly equal as
possible, but in no case will a decrease in the number of directors
shorten the term of any incumbent director. A director shall hold office
until the annual meeting for the year in which his term expires and until
his successor shall be elected and shall qualify, subject, however, to
prior death, resignation, retirement, disqualification or removal from
office. The term of a director elected by stockholders to fill a newly
created directorship or other vacancy shall expire at the same time as the
terms of the other directors of the class for which the new directorship
is created or in which the vacancy occurred. Any director elected by the
Board of Directors to fill a vacancy shall hold office for a term that
shall coincide with the term of the class to which such director shall
have been elected.
Notwithstanding the foregoing, whenever the holders of any one or
more classes or series of Preferred Stock issued by the Corporation shall
have the right, voting separately by class or series, to elect directors
at an annual or special meeting of stockholders, the election, term of
office, filling of vacancies and other features of such directorships
shall be governed by the terms of this Certificate of Incorporation or the
resolution or resolutions adopted by the Board of Directors pursuant to
Section 4.2 of Article IV hereof applicable thereto, and such directors so
elected shall not be divided into classes pursuant to this Section 8.1(c)
unless expressly provided by such terms.
(iii) Subject to the rights, if any, of the holders of shares of
Preferred Stock then outstanding and the notice provisions set forth in
Section 7.2 of Article VII, any or all of the directors of the Corporation
may be removed from office at any time only for cause by the affirmative
vote of holders of a majority of the outstanding shares of the Corporation
entitled to vote generally in the election of directors, considered for
purposes of this paragraph as one class.
(iv) Special meetings of the stockholders of the Corporation for any
purpose or purposes may be called at any time by a majority of the members
of the Board of Directors or Chief Executive Officer of the Corporation. A
special meeting of the stockholders of the Corporation may not be called
by any other person or persons.
ARTICLE IX
PRIVATE PROPERTY
Section 9.1 Private Property. The private property of the
stockholders of the Corporation shall not be subject to the payment of corporate
debts to any extent whatsoever.
ARTICLE X
SHAREHOLDER CONSENT
Section 10.1 No Stockholders' Consent in Lieu of Meeting. Any action
required or permitted to be taken by the stockholders of the Corporation must be
effected at a duly called annual
<PAGE>
meeting or special meeting of such stockholders and may not be effected by any
consent in writing by any such stockholders.
ARTICLE XI
AMENDMENT
Section 11.1 Amendments. Notwithstanding anything contained in this
Certificate of Incorporation to the contrary, the affirmative vote of the
holders of at least 80% of the outstanding shares of capital stock of the
Corporation entitled to vote thereon shall be required to amend, repeal, or
adopt any provision inconsistent with, Section 7.2 of Article VII, Section
8.1(c) of Article VIII or this Article XI of this Certificate of Incorporation.
ARTICLE XII
EFFECTIVE DATE
Section 12.1 Effective Date. This Certificate of Incorporation shall
become effective upon filing with the Secretary of State of the State of
Delaware.
ARTICLE XIII
INCORPORATOR
Section 13.1 Incorporator. The name and address of the incorporator
is:
Name Address Zip Code
- ---- ------- --------
Colin McClellan Breeze, Esq. Cadwalader, Wickersham & Taft 10038
100 Maiden Lane
New York, NY
IN WITNESS WHEREOF, the incorporator, being over the age of eighteen
years, has signed this Certificate this 19th day of July, 1999.
/s/ Colin McClellan Breeze
Colin McClellan Breeze, Incorporator
<PAGE>
Exhibit 3.1.2
BYLAWS
OF
LODGIAN FINANCING CORP.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
OFFICES
Section 1. Registered Office in Delaware..................................1
Section 2. Other Offices..................................................1
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Annual Meeting.................................................1
Section 2. Special Meetings...............................................1
Section 3. Notice of Meetings.............................................1
Section 4. Waiver of Notice...............................................2
Section 5. Adjournments...................................................2
Section 6. Quorum.........................................................2
Section 7. Voting.........................................................3
Section 8. Proxies........................................................3
Section 9. Organization...................................................3
Section 10. Advance Notice of Business to be Transacted At Annual
Meetings.......................................................3
ARTICLE III
BOARD OF DIRECTORS
Section 1. General Powers.................................................4
Section 2. Number and Term of Holding Office..............................4
Section 3. Nomination of Directors and Advance Notice Thereof.............5
Section 4. Resignation....................................................6
Section 5. Vacancies......................................................6
Section 6. Meetings.......................................................6
Section 7. Action by Consent..............................................7
Section 8. Meetings by Conference Telephone, Etc..........................7
Section 9. Compensation...................................................7
ARTICLE IV
COMMITTEES
<PAGE>
Section 1. Committees.....................................................7
ARTICLE V
OFFICERS
Section 2. Authority and Duties...........................................8
Section 3. Term of Office, Resignation and Removal........................8
Section 4. Vacancies......................................................9
Section 5. The Chairman...................................................9
Section 6. The President..................................................9
Section 7. Vice Presidents................................................9
Section 8. The Secretary..................................................9
Section 9. Assistant Secretaries..........................................9
Section 10. Chief Financial Officer.......................................10
Section 11. The Treasurer.................................................10
Section 12. Assistant Treasurers..........................................10
Section 13. Additional Officers...........................................10
ARTICLE VI
DIVIDENDS, CHECKS, DRAFTS, NOTES AND PROXIES
Section 1. Dividends.....................................................10
Section 2. Checks, Drafts and Notes......................................10
Section 3. Execution of Proxies..........................................11
ARTICLE VII
SHARES AND TRANSFER OF SHARES
Section 1. Certificates of Stock.........................................11
Section 2. Record........................................................11
Section 3. Transfer of Stock.............................................11
Section 4. Addresses of Stockholders.....................................11
Section 5. Lost, Destroyed or Mutilated Certificates.....................11
Section 6. Facsimile Signatures..........................................12
Section 7. Regulations...................................................12
Section 8. Record Date...................................................12
Section 9. Registered Stockholders.......................................12
ARTICLE VIII
BOOKS AND RECORDS
<PAGE>
Section 1. Books and Records.............................................13
ARTICLE IX
SEAL
Section 1. Seal..........................................................13
ARTICLE X
FISCAL YEAR
Section 1. Fiscal Year...................................................13
ARTICLE XI
INDEMNIFICATION
Section 1. Indemnification...............................................13
ARTICLE XII
AMENDMENTS
Section 1. Amendments....................................................16
<PAGE>
BYLAWS
OF
LODGIAN FINANCING CORP.
ARTICLE I
OFFICES
Section 1. Registered Office in Delaware. The address of the
registered office of Lodgian Financing Corp. (hereinafter called the
"Corporation") in the State of Delaware shall be The Corporation Trust Company,
1209 Orange Street, in the City of Wilmington, County of New Castle, Delaware
19801, and the registered agent in charge thereof shall be The Corporation Trust
Company.
Section 2. Other Offices. The Corporation may also have an office or
offices at any other place or places within or without the State of Delaware as
the Board of Directors of the Corporation (the "Board") may from time to time
determine or the business of the Corporation may from time to time require.
Notwithstanding the foregoing, the corporate headquarters of the Corporation
shall be initially located in Atlanta, Georgia.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Annual Meeting. The annual meeting of stockholders for
the election of directors and for the transaction of such other business as may
properly come before the meeting shall be held at such place within or without
the State of Delaware, and at such date and hour, as shall be designated by the
Board and set forth in the notice or in a duly executed waiver of notice
thereof.
Section 2. Special Meetings. A special meeting of the stockholders
for any purpose or purposes may be called at any time by a majority of the
members of the Board or by the President of the Corporation (the "President"). A
special meeting of stockholders of the Corporation may not be called by any
other person or persons. Any such meeting shall be held at such place within or
without the State of Delaware, and at such date and hour, as shall be designated
in the notice or in a duly executed waiver of notice of such meeting. Only such
business as is stated in the written notice of a special meeting may be acted
upon thereat.
Section 3. Notice of Meetings. Except as otherwise provided bylaw,
written notice of each annual or special meeting of stockholders stating the
place, date and hour of the meeting, and, in the case of a special meeting, the
purpose or purposes for which the meeting is held, shall be given personally or
by first class mail to each stockholder entitled to vote at such meeting, not
less than 10 nor more than 60 calendar days before the date of the meeting. If
mailed, such
<PAGE>
notice shall be deemed to be given when deposited in the United States mail,
postage prepaid, directed to the stockholder at such stockholder's address as it
appears on the records of the Corporation. If, prior to the time of mailing, the
Secretary shall have received from any stockholder entitled to vote a written
request that notices intended for such stockholder are to be mailed to an
address other than the address that appears on the records of the Corporation,
notices intended for such stockholder shall be mailed to the address designated
in such request.
Notice of a special meeting may be given by the person or persons
calling the meeting, or, upon the written request of such person or persons, by
the Secretary of the Corporation on behalf of such person or persons. If the
person or persons calling a special meeting of stockholders gives notice
thereof, such person or persons shall forward a copy thereof to the Secretary.
Every request to the Secretary for the giving of notice of a special meeting of
stockholders shall state the purpose or purposes of such meeting.
Section 4. Waiver of Notice. Notice of any annual or special meeting
of stockholders need not be given to any stockholder entitled to vote at such
meeting who files a written waiver of notice with the Secretary, duly executed
by the person entitled to notice, whether before or after the meeting. Neither
the business to be transacted at, nor the purpose of, any meeting of
stockholders need be specified in any written waiver of notice. Attendance of a
stockholder at a meeting, in person or by proxy, shall constitute a waiver of
notice of such meeting, except as provided by law.
Section 5. Adjournments. When a meeting is adjourned to another
date, hour or place, notice need not be given of the adjourned meeting if the
date, hour and place thereof are announced at the meeting at which the
adjournment is taken. If the adjournment is for more than 30 calendar days, or
if after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the adjourned meeting. At the adjourned meeting any business
may be transacted which might have been transacted at the original meeting.
When any meeting is convened, the presiding officer, if directed by
the Board, may adjourn the meeting if (a) no quorum is present for the
transaction of business, or (b) the Board determines that adjournment is
necessary or appropriate to enable the stockholders (i) to consider fully
information which the Board determines has not been made sufficiently or timely
available to stockholders or (ii) otherwise to exercise effectively their voting
rights.
Section 6. Quorum. Except as otherwise provided by law or the
Certificate of Incorporation of the Corporation (the "Certificate of
Incorporation"), whenever a class of stock of the Corporation is entitled to
vote as a separate class, or whenever classes of stock of the Corporation are
entitled to vote together as a single class, on any matter brought before any
meeting of the stockholders, whether annual or special, holders of shares
entitled to cast a majority of the votes entitled to be cast by all the holders
of the shares of stock of such class voting as a separate class, or classes
voting together as a single class, as the case may be, outstanding and entitled
to vote thereon, present in person or by proxy, shall constitute a quorum
entitled to take action with respect to that vote on that matter at any such
meeting of the
<PAGE>
stockholders. If, however, such quorum shall not be present or represented, the
stockholders entitled to vote thereon may adjourn the meeting with respect to
that matter from time to time in accordance with Section 5 of this Article II
until a quorum shall be present or represented.
Section 7. Voting. Unless otherwise provided in the Certificate of
Incorporation, each stockholder represented at a meeting of stockholders shall
be entitled to cast one vote for each share of capital stock entitled to vote
thereat held by such stockholder. Except as otherwise provided by law or the
Certificate of Incorporation or these Bylaws, when a quorum is present with
respect to any matter brought before any meeting of the stockholders, the vote
of the holders of stock casting a majority of the votes present in person or
represented by proxy and entitled to be cast on the matter shall decide any such
matter. Votes need not be by written ballot, unless the Board, in its
discretion, requires any vote or votes cast at such meeting to be cast by
written ballot.
Section 8. Proxies. Each stockholder entitled to vote at a meeting
of stockholders may authorize another person or persons to act for such
stockholder by proxy. Such proxy shall be filed with the Secretary before such
meeting of stockholders at such time as the Board may require. No proxy shall be
voted or acted upon after three years from its date, unless the proxy provides
for a longer period.
Section 9. Organization. Meetings of stockholders of the Corporation
shall be presided over by the President in accordance with Article V, Section 6,
or in the absence of the President by a director chosen by a majority of the
directors present at such meeting. The Secretary of the Corporation (the
"Secretary"), or in the absence of the Secretary an Assistant Secretary, shall
act as secretary of the meeting, but in the absence of the Secretary and any
Assistant Secretary the chairman of the meeting may appoint any person to act as
secretary of the meeting.
Section 10. Advance Notice of Business to be Transacted At Annual
Meetings. (a) To be properly brought before the annual meeting of stockholders,
business must be either (i) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board (or any duly
authorized committee thereof), (ii) otherwise properly brought before the
meeting by or at the direction of the Board (or any duly authorized committee
thereof) or (iii) otherwise properly brought before the meeting by any
stockholder of the Corporation (A) who is a stockholder of record on the date of
the giving of the notice provided for in this Section 10 and on the record date
for the determination of stockholders entitled to vote at such meeting and (B)
who complies with the notice procedures set forth in this Section 10. In
addition to any other applicable requirements, including but not limited to the
requirements of Rule 14a-8 promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), for
business to be properly brought before an annual meeting by a stockholder
pursuant to clause (iii) of this Section 10(a), such stockholder must have given
timely notice thereof in proper written form to the Secretary of the
Corporation.
(b) To be timely, a stockholder's notice to the Secretary pursuant
to clause (iii) of Section 10(a) must be delivered to or mailed and received at
the principal executive offices of the Corporation, not less than 60 days nor
more than 90 days prior to the anniversary date of the
<PAGE>
immediately preceding annual meeting of stockholders; provided, however, that in
the event that the annual meeting is called for a date that is not within 30
days before or after such anniversary date, notice by the stockholder in order
to be timely must be so received no later than the close of business on the
tenth day following the day on which such notice of the date of the annual
meeting is mailed or such public disclosure of the date of the annual meeting is
made, whichever first occurs.
(c) To be in proper written form, a stockholder's notice to the
Secretary pursuant to clause (iii) of Section 10(a) must set forth as to each
matter such stockholder proposes to bring before the annual meeting (i) a brief
description of the business desired to be brought before the meeting and the
reasons for conducting such business at the meeting, (ii) the name and record
address of such stockholder, (iii) the class or series and number of shares of
capital stock of the Corporation which are owned beneficially or of record by
such stockholder, together with evidence reasonably satisfactory to the
Secretary of such beneficial ownership, (iv) a description of all arrangements
or understandings between such stockholder and any other person or persons
(including their names) in connection with the proposal of such business by such
stockholder and any material interest of such stockholder in such business and
(v) a representation that such stockholder intends to appear in person or by
proxy at the annual meeting to bring such business before the meeting.
(d) Notwithstanding anything in these Bylaws to the contrary, no
business shall be conducted at the annual meeting of stockholders except
business brought before such meeting in accordance with the procedures set forth
in this Section 10; provided, however, that, once business has been properly
brought before such meeting in accordance with such procedures, nothing in this
Section 10 shall be deemed to preclude discussion by any stockholder of any such
business. If the chairman of such meeting determines that business was not
properly brought before the meeting in accordance with the foregoing procedures,
the chairman shall declare to the meeting that the business was not properly
brought before the meeting and such business shall not be transacted.
ARTICLE III
BOARD OF DIRECTORS
Section 1. General Powers. The property, business and affairs of the
Corporation shall be managed by the Board, which may exercise all such powers of
the Corporation and do all such lawful acts and things as are not by law or by
the Certificate of Incorporation directed or required to be exercised or done by
the stockholders.
Section 2. Number and Term of Holding Office. The Board of the
Corporation shall consist of not less than two members, the exact number to be
determined from time to time by resolution adopted by the affirmative vote of a
majority of all directors of the Corporation then holding office at any special
or regular meeting. Any such resolution increasing or decreasing the number of
directors shall have the effect of creating or eliminating a vacancy or
vacancies, as the case may be, provided that no such resolution shall reduce the
number of directors below the
<PAGE>
number then holding office. Except as provided in Section 5 of this Article III,
directors shall be elected by a plurality of the votes cast at annual meetings
of stockholders, and each director so elected shall hold office as provided by
Article VIII of the Certificate of Incorporation. None of the directors need be
stockholders of the Corporation.
Section 3. Nomination of Directors and Advance Notice Thereof. (a)
Only persons who are nominated in accordance with the following procedures shall
be eligible for election as directors of the Corporation, except as may be
otherwise provided in the Certificate of Incorporation with respect to the right
of holders of preferred stock of the Corporation to nominate and elect a
specified number of directors in certain circumstances. Nominations of persons
for election to the Board may be made at any annual meeting of stockholders, or
at any special meeting of stockholders called for the purpose of electing
directors, (i) by or at the direction of the Board (or any duly authorized
committee thereof) or (ii) by any stockholder of the Corporation (A) who is a
stockholder of record on the date of the giving of the notice provided for in
this Section 3 and on the record date for the determination of stockholders
entitled to vote at such meeting and (B) who complies with the notice procedures
set forth in this Section 3. In addition to any other applicable requirements,
for a nomination to be made by a stockholder pursuant to clause (ii) of this
Section 3(a), such stockholder must have given timely notice thereof in proper
written form to the Secretary of the Corporation.
(b) To be timely, a stockholder's notice to the Secretary pursuant
to clause (ii) of Section 3(a) must be delivered to or mailed and received at
the principal executive offices of the Corporation (i) in the case of an annual
meeting, not less than 60 days nor more than 90 days prior to the anniversary
date of the immediately preceding annual meeting of stockholders; provided,
however, that in the event that the annual meeting is called for a date that is
not within 30 days before or after such anniversary date, notice by the
stockholder in order to be timely must be so received not later than the close
of business on the tenth day following the day on which such notice of the date
of the annual meeting is mailed or such public disclosure of the date of the
annual meeting is made, whichever first occurs, or (ii) in the case of a special
meeting of stockholders called for the purpose of electing directors, not later
than the close of business on the tenth day following the day on which notice of
the date of the special meeting is mailed or public disclosure of the date of
the special meeting is made, whichever first occurs.
(c) To be in proper written form, a stockholder's notice to the
Secretary pursuant to clause (ii) of Section 3(a) must set forth (i) as to each
person whom the stockholder proposes to nominate for election as a director, (A)
the name, age, business address and residence address of the person, (B) the
principal occupation or employment of the person, (C) the class or series and
number of shares of capital stock of the Corporation which are owned
beneficially or of record by the person and (D) any other information relating
to the person that would be required to be disclosed in a proxy statement or
other filings required to be made in connection with solicitations of proxies
for election of directors pursuant to Section 14 of the Exchange Act and the
rules and regulations promulgated thereunder; and (ii) as to the stockholder
giving the notice, (A) the name and record address of such stockholder, (B) the
class or series and number of shares of capital stock of the Corporation which
are owned beneficially or of record by such stockholder, together with evidence
reasonably satisfactory to the Secretary of such beneficial
<PAGE>
ownership, (C) a description of all arrangements or understandings between such
stockholder and each proposed nominee and any other person or persons (including
their names) pursuant to which the nomination(s) are to be made by such
stockholder, (D) a representation that such stockholder intends to appear in
person or by proxy at the meeting to nominate the persons named in its notice
and (E) any other information relating to such stockholder that would be
required to be disclosed in a proxy statement or other filings required to be
made in connection with solicitations of proxies for election of directors
pursuant to Section 14 of the Exchange Act and the rules and regulations
promulgated thereunder. Such notice must be accompanied by a written consent of
each proposed nominee to being named as a nominee and to serve as a director if
elected.
(d) No person shall be eligible for election as a director of the
Corporation unless nominated in accordance with the procedures set forth in this
Section 3. If the chairman of the meeting determines that a nomination was not
made in accordance with the foregoing procedures, the chairman of the meeting
shall declare to the meeting that the nomination was defective and such
defective nomination shall be disregarded.
Section 4. Resignation. Any director may resign at any time by
giving written notice to the Board, the President or the Secretary of the
Corporation. Any such resignation shall take effect at the time specified
therein or, if the time when it shall become effective shall not be specified
therein, then it shall take effect when accepted by action of the Board. Except
as aforesaid, acceptance of such resignation shall not be necessary to make it
effective.
Section 5. Vacancies. Any vacancy occurring in the Board, including
a vacancy created by an increase in the number of directors, may be filled by
the stockholders or by the affirmative vote of a majority of the remaining
directors though less than a quorum of the Board. A director elected to fill a
vacancy shall hold office only until the next election of directors by the
stockholders. If there are no remaining directors, the vacancy shall be filled
by the stockholders.
Section 6. Meetings. (a) Annual Meetings. As soon as practicable
after each annual election of directors, the Board shall meet for the purpose of
organization and the transaction of other business, unless it shall have
transacted all such business by written consent pursuant to Section 7 of this
Article III.
(b) Other Meetings. Other meetings of the Board shall be held at
such times as the Board shall from time to time determine or upon call by the
Chairman, the President or any two directors.
(c) Notice of Meetings. Regular meetings of the Board may beheld
without notice. The Secretary of the Corporation shall give notice to each
director of each special meeting, including the time and place of such special
meeting. Notice of each such meeting shall be given to each director either by
mail, at least two days before the day on which such meeting is to be held, or
by telephone, telegram, facsimile, telex or cable not later than the day before
the day on which such meeting is to be held or on such shorter notice as the
person or persons calling such meeting may deem necessary or appropriate in the
circumstances. Notice of any meeting shall not be required to be given to any
director who shall attend such meeting. A waiver of notice by
<PAGE>
the person entitled thereto, whether before or after the time of any such
meeting, shall be deemed equivalent to adequate notice.
(d) Place of Meetings. The Board may hold its meetings at such place
or places within or without the State of Delaware as the Board may from time to
time by resolution determine or as shall be designated in the respective notices
or waivers of notice thereof.
(e) Quorum and Manner of Acting. Except as otherwise provided by
law, the Certificate of Incorporation or these Bylaws, a majority of the total
number of directors then in office shall be necessary at any meeting of the
Board in order to constitute a quorum for the transaction of business at such
meeting, and the affirmative vote of a majority of those directors present at
any such meeting at which a quorum is present shall be necessary for the passage
of any resolution or act of the Board. In the absence of a quorum for any such
meeting, a majority of the directors present thereat may adjourn such meeting
from time to time until a quorum shall be present thereat. Notice of any
adjourned meeting need not be given.
(f) Minutes of Meetings. The Secretary or, in the case of his
absence, any person (who shall be an Assistant Secretary, if an Assistant
Secretary is present) whom the chairman of the meeting shall appoint shall act
as secretary of such meeting and keep the minutes thereof.
Section 7. Action by Consent. Any action required or permitted to be
taken at any meeting of the Board or of any committee thereof may be taken
without a meeting if a written consent or consents thereto is signed by all
members of the Board or such committee, as the case may be, and such written
consent or consents are filed with the minutes of the proceedings of the Board
or such committee.
Section 8. Meetings by Conference Telephone, Etc. Any one or more
members of the Board, or of any committee thereof, may participate in a meeting
of the Board, or of such committee, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting by such means shall
constitute presence in person at such meeting.
Section 9. Compensation. Each director, in consideration of his
serving as such, shall be entitled to receive from the Corporation such amount
per annum, if any, or such fees, if any, for attendance at meetings of the Board
or of any committee thereof, or both, as the Board shall from time to time
determine. The Board may likewise provide that the Corporation shall reimburse
each director or member of a committee for any expenses incurred by him on
account of his attendance at any such meeting. Nothing contained in this Section
9 shall be construed to preclude any director from serving the Corporation in
any other capacity and receiving compensation therefor.
ARTICLE IV
COMMITTEES
<PAGE>
Section 1. Committees. The Board, by resolution passed by a majority
of the number of directors constituting the whole Board, may designate members
of the Board to constitute one or more committees which shall in each case
consist of such number of directors, not fewer than two, and, to the extent
permitted by law and provided in the resolution establishing such committee,
shall have and exercise all the powers and authority of the Board in the
management of the business and affairs of the Corporation. The Board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified members at any meeting of any such committee.
In the absence or disqualification of a member of a committee, and in the
absence of a designation by the Board of an alternate member to replace the
absent or disqualified member, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board to act at the
meeting in the place of any absent or disqualified member. A majority of all the
members of any such committee may fix its rules of procedure, determine its
action and fix the time and place, whether within or without the State of
Delaware, of its meetings and specify what notice thereof, if any, shall be
given, unless the Board shall otherwise by resolution provide. The Board, upon
approval of a majority of the number of directors constituting the whole Board,
shall have power to change the members of any such committee at any time, to
fill vacancies therein and to discharge any such committee, either with or
without cause, at any time. Each committee shall keep regular minutes and report
to the Board when required.
ARTICLE V
OFFICERS
Section 1. Officers. The officers of the Corporation shall be the
President, the Secretary and a Treasurer and may include one or more Vice
Presidents and one or more Assistant Secretaries and one or more Assistant
Treasurers. The Board of Directors from time to time may elect a Chairman or
Co-Chairmen of the Board. Any two or more offices may be held by the same
person.
Section 2. Authority and Duties. All officers shall have such
authority and perform such duties in the management of the Corporation as may be
provided in these Bylaws or, to the extent not so provided, by resolution of the
Board.
Section 3. Term of Office, Resignation and Removal. (a) Each officer
shall be appointed by the Board and shall hold office for such term as may be
determined by the Board. Each officer shall hold office until his successor has
been appointed and qualified or his earlier death or resignation or removal in
the manner hereinafter provided. The Board may require any officer to give
security for the faithful performance of his duties.
(b) Any officer may resign at any time by giving written notice to
the Board, the President or the Secretary. Such resignation shall take effect at
the time specified in such notice or, if the time be not specified, upon receipt
thereof by the Board, the President or the Secretary,
<PAGE>
as the case may be. Unless otherwise specified therein, acceptance of such
resignation shall not be necessary to make it effective.
(c) All officers and agents appointed by the Board shall be subject
to removal, with or without cause, at any time by the Board or by the action of
the recordholders of a majority of the Shares entitled to vote thereon.
Section 4. Vacancies. Any vacancy occurring in any office of the
Corporation, for any reason, shall be filled by action of the Board. Unless
earlier removed pursuant to Section 3 hereof, any officer appointed by the Board
to fill any such vacancy shall serve only until such time as the unexpired term
of his predecessor expires unless reappointed by the Board.
Section 5. The Chairman. The Chairman of the Board of Directors
shall preside at all meetings of the Board of Directors and he shall have and
perform such other duties as from time to time may be assigned to him by the
Board of Directors. The Board of Directors may appoint more than one person to
serve as Co-Chairmen of the Board of Directors. If the Chairman or any
Co-Chairman is not available to preside over a meeting of the Board, a director
chosen by a majority of the directors present shall preside over the meeting.
Section 6. The President. The President shall have the power to call
special meetings of the Board. If the President is not present at such meeting,
a director or officer chosen by a majority of the directors present shall
preside over the meeting. The President shall exercise supervision over the
business of the Corporation and over its several officers, subject to the
oversight of the Board. The President shall have such additional duties
specified in any Employment Agreement between the Corporation and such officer
in effect from time to time.
Section 7. Vice Presidents. Vice Presidents, if any, in such order
as may be determined by the Board, shall generally assist the President and
perform such other duties as the Board or the President shall prescribe.
The Board shall have the right to appoint a Vice President of
Finance who shall assist the President with respect to financing and capital
raising activities.
Section 8. The Secretary. The Secretary shall, to the extent
practicable, attend all meetings of the Board and all meetings of stockholders
and shall record all votes and the minutes of all proceedings in a book to be
kept for that purpose, and shall perform the same duties for any committee of
the Board when so requested by such committee. He shall give or cause to be
given notice of all meetings of stockholders and of the Board, shall perform
such other duties as may be prescribed by the Board or the President and shall
act under the supervision of the President. He shall keep in safe custody the
seal of the Corporation and affix the same to any instrument that requires that
the seal be affixed to it and which shall have been duly authorized for
signature in the name of the Corporation and, when so affixed, the seal shall be
attested by his signature or by the signature of the Treasurer of the
Corporation (the "Treasurer") or an Assistant Secretary or Assistant Treasurer
of the Corporation. He shall keep in safe custody the certificate books and
stockholder records and such other books and records of the Corporation as the
Board or the President may direct and shall perform all other duties incident to
the office of Secretary
<PAGE>
and such other duties as from time to time may be assigned to him by the Board
or the President.
Section 9. Assistant Secretaries. Assistant Secretaries of the
Corporation ("Assistant Secretaries"), if any, in order of their seniority or in
any other order determined by the Board, shall generally assist the Secretary
and perform such other duties as the Board of the Secretary shall prescribe,
and, in the absence or disability of the Secretary, shall perform the duties and
exercise the powers of the Secretary.
Section 10. Chief Financial Officer. The Chief Financial Officer
shall exercise supervision over all of the financial affairs of the Corporation,
shall perform such other duties as may be prescribed by the Board or the
President and shall act under the supervision of the President.
Section 11. The Treasurer. The Treasurer shall have the care and
custody of all the funds of the Corporation and shall deposit such funds in such
banks or other depositories as the Board, or any officer or officers, or any
officer and agent jointly, duly authorized by the Board, shall, from time to
time, direct or approve. He shall disburse the funds of the Corporation under
the direction of the Board and the President. He shall keep a full and accurate
account of all moneys received and paid on account of the Corporation and shall
render a statement of his accounts whenever the Board or the President shall so
request. He shall perform all other necessary actions and duties in connection
with the administration of the financial affairs of the Corporation and shall
generally perform all the duties usually appertaining to the office of treasurer
of a corporation. When required by the Board, he shall give bonds for the
faithful discharge of his duties in such sums and with such sureties as the
Board shall approve.
Section 12. Assistant Treasurers. Assistant Treasurers of the
Corporation ("Assistant Treasurers"), if any, in order of their seniority or in
any other order determined by the Board, shall generally assist the Treasurer
and perform such other duties as the Board or the Treasurer shall prescribe,
and, in the absence or disability of the Treasurer, shall perform the duties and
exercise the powers of the Treasurer.
Section 13. Additional Officers. The Board or the President may
appoint such other officers and assistant officers and agents as it or he shall
deem necessary, who shall hold their offices for such terms and shall have
authority and exercise such powers and perform such duties as shall be
determined from time to time by the Board, by resolution not inconsistent with
these Bylaws, or by the President.
ARTICLE VI
DIVIDENDS, CHECKS, DRAFTS, NOTES AND PROXIES
Section 1. Dividends. Dividends shall be declared only out of any
assets or funds of the Corporation legally available for the payment of
dividends at such times as the Board shall direct. Dividends shall be paid to
holders of the stock of the Corporation in U.S. dollars.
Section 2. Checks, Drafts and Notes. All checks, drafts and other
orders for the payment of
<PAGE>
money, notes and other evidences of indebtedness issued in the name of the
Corporation shall be signed by such officer or officers, agent or agents of the
Corporation and in such manner as shall be determined, from time to time, by
resolution of the Board.
Section 3. Execution of Proxies. The President or any Vice President
may authorize, from time to time, the execution and issuance of proxies to vote
shares of stock or other securities of other corporations held of record by the
Corporation and the execution of consents to action taken or to be taken by any
such corporation. All such proxies and consents, unless otherwise authorized by
the Board, shall be signed in the name of the Corporation by the President or
any Vice President.
ARTICLE VII
SHARES AND TRANSFER OF SHARES
Section 1. Certificates of Stock. Every owner of shares of stock of
the Corporation shall be entitled to have a certificate evidencing the number of
shares of stock of the Corporation owned by him or it and designating the class
of stock to which such shares belong, which shall otherwise be in such form as
the Board shall prescribe. Each such certificate shall bear the signature (or a
facsimile thereof) of the President or any Vice President and of the Treasurer
or any Assistant Treasurer or the Secretary or any Assistant Secretary of the
Corporation.
Section 2. Record. A record shall be kept of the name of the person,
firm or corporation owning the stock represented by each certificate evidencing
stock of the Corporation issued, the number of shares represented by each such
certificate, and the date thereof, and, in the case of cancellation, the date of
cancellation. Except as otherwise expressly required by law, the person in whose
name shares of stock stand on the books of the Corporation shall be deemed the
owner thereof for all purposes as regards the Corporation.
Section 3. Transfer of Stock. (a) The transfer of shares of stock
and the certificates evidencing such shares of stock of the Corporation shall be
governed by Article 8 of Subtitle I of Title 6 of the Delaware Code(the Uniform
Commercial Code), as amended from time to time.
(b) Registration of transfers of shares of stock of the Corporation
shall be made only on the books of the Corporation upon request of the
registered holder thereof, or of his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary of the Corporation, and upon
the surrender of the certificate or certificates evidencing such shares properly
endorsed or accompanied by a stock power duly executed.
Section 4. Addresses of Stockholders. Each stockholder shall
designate to the Secretary of the Corporation an address at which notices of
meetings and all other corporate notices may be served or mailed to him, and, if
any stockholder shall fail to so designate such an address, corporate notices
may be served upon him by mail directed to him at his post office address, if
any, as the same appears on the share record books of the Corporation or at his
last known post office address.
<PAGE>
Section 5. Lost, Destroyed or Mutilated Certificates. A holder of
any shares of stock of the Corporation shall promptly notify the Corporation of
any loss, destruction or mutilation of any certificate or certificates
evidencing all or any such shares of stock. The Board may, in its discretion,
cause the Corporation to issue a new certificate in place of any certificate
theretofore issued by it and alleged to have been mutilated, lost, stolen or
destroyed, upon the surrender of the mutilated certificate or, in the case of
loss, theft or destruction of the certificate, upon satisfactory proof of such
loss, theft or destruction, and the Board may, in its discretion, require the
owner of the lost, stolen or destroyed certificate or his legal representative
to give the Corporation a bond sufficient to indemnify the Corporation against
any claim made against it on account of the alleged loss, theft or destruction
of any such certificate or the issuance of such new certificate.
Section 6. Facsimile Signatures. Any or all of the signatures on a
certificate evidencing shares of stock of the Corporation may be facsimiles.
Section 7. Regulations. The Board may make such rules and
regulations as it may deem expedient, not inconsistent with the Certificate of
Incorporation or these Bylaws, concerning the issue, transfer and registration
of certificates evidencing stock of the Corporation. It may appoint, or
authorize any principal officer or officers to appoint, one or more transfer
agents and one or more registrars, and may require all certificates of stock to
bear the signature or signatures (or a facsimile or facsimiles thereof) of any
of them. The Board may at any time terminate the employment of any transfer
agent or any registrar of transfers. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall cease to be such officer, transfer agent or registrar, whether
because of death, resignation, removal or otherwise, before such certificate or
certificates shall have been delivered by the Corporation, such certificate or
certificates may nevertheless be adopted by the Corporation and be issued and
delivered as though the person or persons who signed or whose facsimile
signature has been placed upon such certificate or certificates had not ceased
to be such officer, transfer agent or registrar.
Section 8. Record Date. In order that the Corporation may determine
the stockholders entitled to notice of, or to vote at, any meeting of
stockholders or any adjournment thereof, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board may fix, in advance, a
record date, which shall not be more than 60 nor less than 10 days before the
date of such meeting, nor more than 60 days prior to any other such action. A
determination of stockholders entitled to notice of, or to vote at, any meeting
of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board may fix a new record date for the adjourned meeting.
Section 9. Registered Stockholders. The Corporation shall be
entitled to recognize the exclusive right of a person registered on its records
as the owner of shares of stock to receive dividends and to vote as such owner,
shall be entitled to hold liable for calls and assessments a person registered
on its records as the owner of shares of stock, and shall not be bound to
<PAGE>
recognize any equitable or other claim to or interest in such share or shares of
stock on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of the State of
Delaware.
ARTICLE VIII
BOOKS AND RECORDS
Section 1. Books and Records. The books and records of the
Corporation may be kept at such place or places within or without the State of
Delaware as the Board may from time to time determine.
ARTICLE IX
SEAL
Section 1. Seal. The Board shall provide a corporate seal which
shall bear the full name of the Corporation.
ARTICLE X
FISCAL YEAR
Section 1. Fiscal Year. The fiscal year of the Corporation shall be
fixed, and shall be subject to change from time to time, by the Board.
ARTICLE XI
INDEMNIFICATION
Section 1. Indemnification (a) General. The Corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the Corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise, to
the full extent authorized or permitted by law, as now or hereafter in effect,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement or conviction, or upon
a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person seeking indemnification did
<PAGE>
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
(b) Derivative Actions. The Corporation shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise, to
the full extent authorized or permitted by law, as now or hereafter in effect,
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation; provided, however, that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery of the State of
Delaware or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) Successful Defense. To the extent that a present or former
director, officer, employee or agent of the Corporation has been successful on
the merits or otherwise in defense of any action, suit or proceeding referred to
in subsections (a) and (b) above, or in defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
(d) Proceedings Initiated by any Person. Notwithstanding anything to
the contrary contained in subsections (a) or (b) above, except for proceedings
to enforce rights to indemnification, the Corporation shall not be obligated to
indemnify any person in connection with a proceeding (or part thereof) initiated
by such person unless such proceeding (or part thereof) was authorized in
advance, or unanimously consented to, by the Board.
(e) Procedure. Any indemnification under subsections (a) and(b)
above (unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of the
present or former director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
subsections (a) and (b) above. Such determination shall be made, with respect to
a person who is a director or officer at the time of such determination (i) by a
majority vote of a quorum of the directors who are not parties to such action,
suit or proceeding, (ii) by a committee of such directors designated by majority
vote of such directors, even though less than a quorum, (iii) if there are no
such directors, or if such directors so direct by independent legal counsel in a
written opinion, or (iv) by the stockholders of the Corporation.
(f) Advancement of Expenses. Expenses (including attorneys' fees)
incurred by a
<PAGE>
director or an officer in defending any civil, criminal, administrative or
investigative action, suit or proceeding shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking in form and substance satisfactory to the Corporation by or on
behalf of such director or officer to repay such amount if it shall ultimately
be determined that he is not entitled to be indemnified by the Corporation
pursuant to this Article XI. Such expenses (including attorneys' fees) incurred
by former directors and officers or other employees and agents may be so paid
upon such terms and conditions, if any, as the Board deems appropriate.
(g) Rights Not Exclusive. The indemnification and advancement of
expenses provided by, or granted pursuant to, the other subsections of this
Article XI shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under any
law, by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office.
(h) Insurance. The Corporation may purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of the General Corporation Law of the State
of Delaware.
(i) Definition of "Corporation". For purposes of this Article XI,
references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, employees or agents so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under the provisions
of this Article XI with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
(j) Certain Other Definitions. For purposes of this Article XI,
references to "other enterprises" shall include employee benefit plans;
references to "fines" shall include any excise taxes assessed on a person with
respect to any employee benefit plan; and references to "serving at the request
of the Corporation" shall include any service as a director, officer, employee
or agent of the Corporation which imposes duties on, or involves service by,
such director, officer, employee or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in good faith
and in a manner he reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation," as referred to in
this Article XI.
<PAGE>
(k) Continuation of Rights. The indemnification and advancement of
expenses provided by, or granted pursuant to, this Article XI shall, unless
otherwise provided when authorized or ratified, continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person.
(l) Repeal or Modification. Any repeal or modification of this
Article XI by the stockholders of the Corporation shall not adversely affect any
rights to indemnification and to advancement of expenses that any person may
have at the time of such repeal or modification with respect to any acts or
omissions occurring prior to such repeal or modification.
(m) Action Against Corporation. Notwithstanding any provisions of
this Article XI to the contrary, no person shall be entitled to indemnification
or advancement of expenses under this Article XI with respect to any action,
suit or proceeding, or any claim therein, brought or made by him against the
Corporation.
ARTICLE XII
AMENDMENTS
Section 1. Amendments. These Bylaws, or any of them, may be altered,
amended or repealed, or new bylaws may be made, but only to the extent any such
alteration, amendment, repeal or new bylaw is not inconsistent with any
provision of the Certificate of Incorporation, either by a majority of the
number of directors constituting the whole Board or by the stockholders of the
Corporation upon the affirmative vote of the holders of 80% of the outstanding
shares of capital stock of the Corporation entitled to vote thereon.
<PAGE>
Exhibit 3.3.1
SECOND AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
DOTHAN HOSPITALITY 3053, INC.
Pursuant to Sections 10-2B-10.06 and 10-2B-10.07 of the Alabama
Business Corporation Act, DOTHAN HOSPITALITY 3053, INC., an Alabama corporation
(the "Corporation"), hereby certifies that these Second Amended and Restated
Articles of Incorporation (the "Amended Articles"), which contain amendments
requiring shareholder approval, were duly adopted by the Board of Directors of
the Corporation and by the sole shareholder of the Corporation by written
consent without a meeting, pursuant to Sections l0-2B-8.21 and l0-2B-7.04 of the
Alabama Business Corporation Act, as of July ___, 1999. The number of
outstanding shares of common stock of the Corporation (and the number of shares
entitled to vote thereon) is 1,000. These Amended Articles correctly set forth
the provisions of the Articles of Incorporation as heretofore amended. These
Amended Articles supercede the original Articles of Incorporation and all
amendments thereto.
ARTICLE I
The name of the Corporation is DOTHAN HOSPITALITY 3053, INC.
ARTICLE II
The total number of shares of common stock which the Corporation
shall have authority to issue is 1,000 shares of common stock, par value $0.01
per share.
ARTICLE III
The street address of the registered office of the Corporation is
The Corporation Company, 60 Commerce Street, Suite 1100, Montgomery, Alabama
36104, and the name of its registered agent at that office is The Corporation
Company.
ARTICLE IV
The name and address of the incorporator of the Corporation was
David Buddemeyer, 1601 Belvedere Road, West Palm Beach, Florida 33406.
ARTICLE V
The number of directors constituting the board of directors of the
corporation shall be at least one (1), and the name and address of the person
who is to serve as the sole director until the annual meeting of shareholders
and until his successor is elected and shall qualify is as
-1-
<PAGE>
follows:
Name Address
Robert M. Flanders 3445 Peachtree Road, N.E.,
Two Live Oak Center, Suite 700,
Atlanta, GA 30326.
ARTICLE VI
(a) The purpose for which the Corporation is organized is limited
to: (i) acquiring, owning, leasing, operating, using and managing that certain
real property commonly known as the Holiday Inn West, located at 3053 Ross Clark
Circle, Dothan, Alabama 36301 (the "Property"); (ii) entering into and
performing its obligations under the credit agreement, among Lodgian Financing
Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel Group, LLC, Servico,
Inc. and other affiliated entities, as affiliate guarantors, the initial lenders
and initial issuing bank named therein, the collateral agent, the administrative
agent, Morgan Stanley Senior Funding, Inc., as co-lead arranger, joint-book
manager and syndication agent and Lehman Brothers, as co-lead arranger,
joint-book manager and documentation agent relating to the financing or
refinancing of the Property (the "Loan Agreement") which provides the lender
thereunder with a first priority lien on the Property, any promissory-note
evidencing indebtedness incurred pursuant to the Loan Agreement, any mortgage
securing such indebtedness and encumbering the Property (the "Mortgage") and any
other documents securing such indebtedness and any related collateral documents,
each as amended (or pursuant to a consent obtained in accordance with the terms
thereof) (collectively, the "Loan Documents"); (iii) entering into and
performing its obligations under the Indenture (the "Indenture"), among Lodgian
Financing Corp, as issuer, Lodgian, Inc., the Subsidiary Guarantors defined
therein and Bankers Trust Company, as trustee, relating to the issuance of the
12 1/4% Senior Subordinated Notes due 2009 and the Guarantee in favor of the
holders of the Notes and (iv) transacting any and all lawful business that is
incident and necessary or appropriate to the ownership and to the management of
the Property for which a corporation may be incorporated under the laws of the
State of Alabama.
(b) Notwithstanding any other provision of these Amended Articles
and any provision of law that otherwise so empowers the Corporation, until such
time as the Property is released from the lien of the Mortgage, the Corporation
shall not, without the unanimous affirmative vote of the members of its Board of
Directors, (i) amend, alter, change, repeal or adopt any resolution setting
forth a proposed amendment to, any provision of these Articles of Incorporation,
(ii) dissolve or liquidate, in whole or in part, consolidate or merge with or
into any other entity or convey, sell or transfer its properties and assets
substantially as an entirety to any entity, (iii) file a voluntary petition or
otherwise initiate, or consent to, proceedings for the Corporation to be
adjudicated insolvent or seeking an order for relief as a debtor under the
United States Bankruptcy Code, as amended (11 U.S.C. ss.ss. 101 et seq.), or
(iv) file any petition, or consent to any petition, seeking any composition,
reorganization, readjustment, liquidation, dissolution or similar relief under
the present or any future federal bankruptcy laws or any other present or future
applicable federal, state or other statute or law relative to bankruptcy,
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<PAGE>
insolvency or other relief for debtors; or (v) seek or consent to the
appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, or liquidator (or other similar official) of the Corporation or of
all or any substantial part of the properties and assets of the Corporation, or
(vi) make any general assignment for the benefit of creditors, or (vii) admit in
writing its inability to pay its debts generally as they become due, or (viii)
declare or effect a moratorium on its debt or take any corporate action in
furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all times
until the Property is released from the lien of the Mortgage, include an
independent director (the "Independent Director"). The Independent Director
shall be a person who is not at the time of appointment and who has not at any
time during the prior five years been and who is not while serving as the
Independent Director (i) a director, stockholder, officer or employee of the
Corporation or any affiliates thereof, other than with respect to such person's
service as an Independent Director of the Corporation and such person's service
in similar "Independent Director" positions for affiliates of the Corporation;
(ii) a creditor, customer, supplier, independent contractor, manager or any
other person who derives more than 10% of its gross revenues from its activities
with the Corporation or any affiliates thereof; (iii) a person controlling any
such stockholder, creditor, customer, supplier, independent contractor, manager
or other person; (iv) the legal or beneficial owner, at any time while serving
as director of the Corporation, of any beneficial interest in the Corporation;
or (v) a member of the immediate family of any such stockholder, officer,
employee, creditor, customer, supplier, director, independent contractor,
manager or any other person of the Corporation. As used herein, the term
"affiliate" means any person controlling, under common control wit, or
controlled by the person in question, and the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through ownership
of voting securities, by contact or otherwise. In the event of the death,
incapacity, or resignation of an Independent Director, or the vacancy of the
Independent Director's seat on the Corporation's Board of Directors for any
reason, a successor Independent Director shall be appointed by the remaining
directors.
(d) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(ix) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as
the Property is
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<PAGE>
subject to the lien of the Mortgage, the Corporation shall not (i) commingle its
assets with those of, or pledge its assets for the benefit of, any other person
or entity; (ii) assume, guarantee or become obligated, or hold out its credit as
being available to satisfy, the liabilities or obligations of any other person
or entity; (iii) reduce its capital below an amount which is adequate in light
of its contemplated business operations; (iv) acquire obligations or securities
of, or make loans or advances to, any affiliate; (v) incur or assume any
indebtedness other than (A) the indebtedness underlying the Loan Agreement (B)
the indebtedness underlying the Indenture, and (C) liabilities (including, but
not limited to, trade payables) arising in the ordinary course of the
Corporation's business relating to the acquisition, ownership, operation, lease,
use or management of the Property; (vi) amend, alter, change or repeal any
provision of Article VI and the last sentence of Article IX of these Amended
Articles; (vii) engage in any dissolution or liquidation, in whole or in part,
consolidation or merger with or into any other entity or conveyance, sale or
transfer of its properties and assets substantially as an entirety to any
entity; or (viii) engage in any business or activity other than as set forth in
these Amended Articles. Notwithstanding anything contained herein to the
contrary, nothing herein shall be deemed to prohibit or otherwise limit any
dividends or other distributions from the Corporation to its shareholders.
ARTICLE VII
The Board of Directors is expressly authorized to adopt, alter,
amend or repeal the Bylaws of the Corporation subject to the limitations set
forth in these Amended Articles. Election of directors need not be by written
ballot unless and to the extent provided in the Bylaws of the Corporation.
ARTICLE VIII
The business and affairs of the Corporation shall be managed and
regulated by the board of directors of the Corporation. No director of the
Corporation shall be personally liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duties as a director, except for
liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not on good faith or
which involve intentional misconduct or a knowing violation of law, or (iii) for
any transaction from which the director derived an improper personal benefit. If
the Alabama Business Corporation Act is amended after the date of these Amended
Articles to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Alabama Business Corporation Act, as so amended.
The rights and authority conferred in this Article VIII shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, provision of these Amended Articles or Bylaws of the
Corporation, agreement, vote of stockholders or disinterested directors, or
otherwise.
ARTICLE IX
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<PAGE>
The Corporation shall indemnify any officer or director, or any
former officer or director of the Corporation, to the fullest extent permitted
by law. The foregoing right of indemnification shall not be exclusive of any
other rights to which any director, officer, employee or agent may be entitled
as a matter of law or which he may be lawfully granted. The Corporation's
obligation to indemnify its officers and directors pursuant to this Article
shall be subordinate in all respects to the obligations of the Corporation
arising out of the Loan Documents and shall not constitute a claim against the
Corporation to the extent that the Corporation is unable to pay any amounts it
is obligated to pay under the Loan Documents.
-5-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed these Second
Amended and Restated Articles of Incorporation this 27th day of July, 1999.
DOTHAN HOSPITALITY 3053, INC.
By: /s/ Thomas S. Gryboski
--------------------------
Name: Tom Gryboski
Title: Assistant Secretary
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<PAGE>
Exhibit 3.3.2
BYLAWS
OF
DOTHAN HOSPITALITY 3053 OF ALABAMA, INC.
an Alabama corporation
<PAGE>
TABLE OF CONTENTS
-----------------
ARTICLE I Offices
ARTICLE II Shareholders
Section 2.1 Annual Meetings
Section 2.2 Special Meetings
Section 2.3 Place of Meetings
Section 2.4 Notice of Meetings
Section 2.5 Closing of Transfer Books
or Fixing of Record Date
Section 2.6 Voting Record
Section 2.7 Proxies
Section 2.8 Quorum
Section 2.9 Voting of Shares
Section 2.10 Voting of Shares by Certain
Holders
Section 2.11 Action by Shareholders Without
a Meeting
ARTICLE III Board of Directors
Section 3.1 General Powers
Section 3.2 Number, Tenure and Qualifications
Section 3.3 Vacancies
Section 3.4 Meetings
Section 3.5 Meeting by Telephone
Section 3.6 Quorum
Section 3.7 Acts of the Board
Section 3.8 Presumption of Assent
Section 3.9 Action Without a Meeting
Section 3.10 Committees of Directors
Section 3.11 Compensation
Section 3.12 Director Conflicts of Interest
Section 3.13 Loans to Employees and Directors
<PAGE>
ARTICLE IV Waiver of Notice
Section 4.1 Directors
Section 4.2 Shareholders
ARTICLE V Officers
Section 5.1 Positions
Section 5.2 Election and Term of Office
Section 5.3 Vacancies
Section 5.4 Removal
Section 5.5 Duties of Officers
Section 5.6 Compensation
ARTICLE VI Indemnification of Directors, Officers
and Employees
ARTICLE VII Certificates Representing Shares
Section 7.1 Certificates Representing Shares
Section 7.2 Legends on Certificates
Section 7.3 Transfer of Shares
Section 7.4 Lost, Stolen, Destroyed, or
Mutilated Certificates
ARTICLE VIII General
Section 8.1 Fiscal Year
Section 8.2 Dividends
Section 8.3 Checks
Section 8.4 Corporate Seal
Section 8.5 Right of Corporation to Acquire its
Own Shares
Section 8.6 Voting of Corporation's Securities
ARTICLE IX Amendment of Bylaws
ii
<PAGE>
BYLAWS
OF
DOTHAN HOSPITALITY 3053 OF ALABAMA, INC.
an Alabama corporation
ARTICLE I
OFFICES
The principal office of the corporation shall be located in Dothan,
Alabama. The corporation may have such other offices, within and without the
State of Alabama, as the board of directors may determine or as the business of
the corporation may require.
The registered office of the corporation, required by the Alabama Business
Corporation Act to be maintained in the State of Alabama, may but need not be
the same as its principal office in the State of Alabama. The address of the
registered office may be changed from time to time by the board of directors.
ARTICLE II
SHAREHOLDERS
Section 2.1 Annual Meetings. The annual meeting of the shareholders,
commencing with the year 1996, shall be held on the second Tuesday of December
in each year if not a legal holiday in the State of Alabama, and if a legal
holiday, then on the next succeeding business day not a legal holiday, at 10:00
a.m., or at such other date and time as shall be designated from time to time by
the board of directors and stated in the notice of the meeting, for the purpose
of electing directors and for the transaction of such other business as may come
before the meeting. If the election of directors shall not be held on the day
designated herein for the annual meeting of the shareholders, or at any
adjournment thereof, the board of directors shall cause the election to be held
at a special meeting of the shareholders as soon thereafter as may be
conveniently held.
Section 2.2 Special Meetings. Special meetings of the shareholders may be
called by the board of directors, the chairman of the board, the president or
the holders of not less than one-tenth of all shares of the corporation entitled
to vote at the meeting.
Section 2.3 Place of Meetings. Annual and special meetings shall be held
at the principal office of the corporation in the State of Alabama, or at such
other place, within or without the State of Alabama, as may be designated by the
board of directors or the person or persons calling the meeting and stated in
the notice of the meeting.
<PAGE>
Section 2.4 Notice of Meetings. Unless otherwise required by law, written
notice of shareholder meetings, stating the place, day and hour of the meeting
and, in case of a special meeting, the purpose or purposes for which the meeting
is called, shall, unless otherwise prescribed by statute, be delivered not less
than ten nor more than fifty days before the date of the meeting, either
personally or by mail, by or at the direction of the chairman of the board, the
president, the secretary, or the officer or other persons calling the meeting,
to each shareholder of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail,
addressed to the shareholder at his address as it appears on the stock transfer
books of the corporations with postage thereon prepaid. Notwithstanding the
provisions of this section, the stock or bond indebtedness of the corporation
shall not be increased at a meeting unless notice of such meeting shall have
been given as may be required by section 234 of the Constitution of Alabama as
the same may be amended from time to time.
Section 2.5 Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the board of directors of the
corporation may provide that the stock transfer books shall be closed for stated
period not to exceed fifty days. If the stock transfer books shall be closed for
the purpose of determining shareholders entitled to notice of or to vote at a
meeting of shareholders, such books shall be closed for at least ten days
immediately preceding such meeting. In lieu of closing the stock transfer books,
the board of directors may fix in advance a date as the record date for any such
determination of shareholders, such date to be not more than fifty days and, in
case of a meeting of shareholders, not less than ten days prior to the date on
which the particular action, requiring such determination of shareholders, is to
be taken. If the stock transfer books are not closed and no record date is fixed
for the determination of shareholders entitled to notice of or to vote at a
meeting of shareholders, or shareholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed or the date on which
the resolution of the board of directors declaring such dividend is adopted, as
the case may be, shall be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof except where the
determination has been made through the closing of the stock transfer books and
the stated period of closing has expired.
Section 2.6 Voting Record. The officer or agent having charge of the stock
transfer books for shares of the corporation shall make, at least ten days
before each meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting or any adjournment thereof, arranged in
alphabetical order with the address of and the number of shares held by each.
Such list shall be kept on file at the principal office of the corporation for a
period often days prior to such meeting of shareholders and shall be subject to
inspection by any shareholder making written request therefor at any time during
usual
2
<PAGE>
business hours. Such list shall also be produced and kept open at the time and
place of the meeting and shall be subject to the inspection of any shareholder
during the whole time of the meeting. The original stock transfer books shall be
prima facie evidence as to who are the shareholders entitled to examine such
list or transfer books or to vote at any meeting of shareholders. Failure to
comply with the requirements of this section shall not affect the validity of
any action taken at such meeting.
Section 2.7 Proxies. At all meetings of shareholders, a shareholder may
vote in person or by proxy executed in writing by the shareholder or by his duly
authorized attorney-in-fact. Such proxy shall be filed with the secretary of the
corporation before or at the time of the meeting. No proxy shall be valid after
eleven months from the date of its execution, unless otherwise provided in the
proxy.
Section 2.8 Quorum. Unless otherwise provided in the articles of
incorporation, a majority of the shares of the corporation entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
shareholders. If a quorum is not present at a meeting, a majority of the shares
so represented may adjourn the meeting from time to time without further notice,
other than announcement at the meeting. At such adjourned meeting at which a
quorum shall be present, any business may be transacted which might have been
transacted at the meeting as originally noticed. The shareholders present at a
duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum.
Section 2.9 Voting of Shares. Subject to the provisions of the next
sentence of this Section 2.9, each outstanding share entitled to vote shall be
entitled to one vote upon each matter submitted to a vote at a meeting of
shareholders. At each election for directors every shareholder entitled to vote
at such election shall have the right to vote, in person or by proxy, the number
of shares owned by him for as many persons as there are directors to be elected
and for whose election he has a right to vote, or, if cumulative voting is
authorized by the articles of incorporation, to cumulate his votes by giving one
candidate as many votes as the number of such directors multiplied by the number
of his shares shall equal, or by distributing such votes on the same principle
among any number of such candidates. If a quorum is present, the affirmative
vote of the majority of the shares represented at the meeting and entitled to
vote on the subject matter shall be the act of the shareholders, unless the vote
of a greater number or voting by classes is required by the Constitution of
Alabama, the Alabama Business Corporation Act, the articles of incorporation or
these bylaws.
Section 2.10 Voting of Shares by Certain Holders. Shares standing in the
name of another corporation, domestic or foreign, may be voted by such officer,
agent or proxy as the bylaws of such other corporation may prescribe, or, in the
absence of such provision, as the board of directors of such other corporation
may determine.
3
<PAGE>
Shares held by an administrator, executor, guardian or conservator may be
voted by him, either in person or by proxy, without a transfer of such shares
into his name. Shares standing in the name of a trustee may be voted by him,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of such shares into his name and no corporate
trustee shall be entitled to vote in the election of directors shares held by it
solely in a fiduciary capacity if such shares are shares issued by the corporate
trustee itself.
Shares standing in the name of a receiver may be voted by such receiver,
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into his name if authority to do so is
contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Neither treasury shares of its own stock held by the corporation, nor
shares held by another corporation if a majority of the shares entitled to vote
for the election of directors of such other corporation is held by the
corporation, shall be voted at any meeting or counted in determining the total
number of outstanding shares at any given time.
Section 2.11 Action by Shareholders Without a Meeting. Any action required
or permitted to be taken at a meeting of the shareholders may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the shareholders entitled to vote with respect to the subject
matter thereof.
ARTICLE III
BOARD OF DIRECTORS
Section 3.1 General Powers. All corporate powers shall be exercised by or
under authority of, and the business and affairs of the corporation shall be
managed under the direction of, its board of directors.
Section 3.2 Number, Tenure and Qualifications. The number of directors
constituting the initial board of directors is set forth in the articles of
incorporation, and the members of the first board shall hold office until the
first annual meeting of shareholders and until their successors shall have been
elected and qualified. Thereafter, the number of directors constituting the
board of directors shall be not less than one nor more than ten, the exact
number to be determined by resolution of the board of directors. The minimum and
maximum number of directors may be increased or decreased from time to time in
the mariner provided by the bylaws for the amendment thereof, but no decrease
shall have the effect of shortening the term of any incumbent director.
Directors shall hold office until the
4
<PAGE>
next succeeding annual meeting of shareholders and until their successors shall
have been elected and qualified. Directors need not be shareholders or residents
of the State of Alabama.
Section 3.3 Vacancies. Any vacancy occurring in the board of directors may
be filled by the affirmative vote of a majority of the remaining directors
though less than a quorum of the board of directors. A director elected to fill
a vacancy shall be elected to serve until the next annual meeting of
shareholders. Any directorship to be filled by reason of an increase in the
number of directors shall be filled by election at an annual meeting or at a
special meeting of shareholders called for that purpose.
Section 3.4 Meetings. Meetings of the board of directors, regular or
special, may be held either within or without the State of Alabama. A regular
meeting of the board of directors shall be held without notice immediately
after, and at the same place as, the annual meeting of shareholders. Other
regular meetings may be held upon such notice and at such time and place as
shall be determined by the board. Special meetings of the board of directors may
be called by the chairman of the board, the president or by any two directors on
three days written notice to each director, delivered personally or mailed to
each director at his business address or by telegram. The secretary, at the
request in writing of the chairman of the board, the president or any two
directors, shall send such written notice on his or their behalf. If mailed,
such notice shall be deemed to be delivered when deposited in the United States
mail, so addressed, with postage thereon prepaid. If by telegram, such notice
shall be deemed to be delivered when the telegram is delivered to the telegraph
company. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the board of directors need be specified in the
notice of such meeting.
Section 3.5 Meeting by Telephone. Members of the board of directors or any
committee designated thereby may participate in a meeting of such board or
committee by means of a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other
at the same time and participation by such means shall constitute presence in
person at a meeting.
Section 3.6 Quorum. A majority of the whole number of directors of the
board shall constitute a quorum for the transaction of business at any meeting
of the board of directors. If less than a majority is present at a meeting, a
majority of the directors present may adjourn the meeting from time to time
without further notice. If a quorum is present when the meeting is convened, the
directors present may continue to do business, taking action by a vote of a
majority of a quorum, until adjournment, notwithstanding the withdrawal of
enough directors to leave less than a quorum present or the refusal of any
director present to vote.
Section 3.7 Acts of the Board. The act of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors.
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Section 3.8 Presumption of Assent. A director of the corporation who is
present at a meeting of the board of directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his dissent shall be entered in the minutes of the meeting or unless he shall
file his written dissent to such action with the person acting as the secretary
of the meeting before the adjournment thereof or shall forward such dissent by
registered mail to the secretary of the corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
Section 3.9 Action Without a Meeting. Any action required or permitted to
be taken by the board of directors or a committee thereof at a meeting may be
taken without a meeting if a consent in writing, setting forth the action so
taken, shall be signed by all of the directors or all of the members of the
committee, as the case may be. Such consent shall have the same effect as a
unanimous vote of the directors or the members of such committee.
Section 3.10 Committees of Directors. The board of directors, by
resolution passed by a majority of the whole board of directors, may designate
from among its members one or more committees, each committee to consist of one
or more of the directors of the corporation. Each such committee, to the extent
provided in the resolutions of the board of directors, shall have and may
exercise all the powers and authority of the board of directors, except that no
such committee shall have the authority of the board in reference to declaring a
dividend or distribution from capital stock, issuing capital stock, amending the
articles of incorporation, adopting a plan of merger or consolidation,
recommending to the shareholders the sale, lease, mortgage, exchange or other
disposition of all or substantially all of the property and assets of the
corporation other than in the usual and regular course of business, recommending
to the shareholders a voluntary dissolution of the corporation or a revocation
of a dissolution, filling vacancies in the board of directors, or amending the
bylaws of the corporation. Such committee or committees shall have such name or
names as may be determined from time to time by resolution adopted by the board
of directors. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors when required.
Section 3.11 Compensation. By resolution of the board of directors, each
director may be paid his expenses, if any, of attendance at each meeting of the
board of directors, and may be paid a stated salary as director or a fixed sum
for attendance at each meeting of the board of directors or both. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
Section 3.12 Director Conflicts of Interest. No contract or other
transaction between the corporation and one or more of its directors or any
other corporation, firm, association or entity in which one or more of its
directors are directors or officers or are financially interested, shall be
either void or voidable because of such relationship or interest or because such
director or directors are present at the meeting of the board of directors or
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a committee thereof which authorizes, approves or ratifies such contract or
transaction, if the contract or transaction is fair and reasonable to the
corporation and if either the fact of such relationship or interest is disclosed
to the board of directors or committee which authorizes, approves or ratifies
the contract or transaction by a vote or consent sufficient for the purpose
without counting the votes or consents of such interested directors or the fact
of such relationship or interest is disclosed to the shareholders entitled to
vote and they authorize, approve or ratify such contract or transaction by vote
or written consent.
Common or interested directors may not be counted in determining the
presence of a quorum at a meeting of the board of directors or a committee
thereof which authorizes, approves or ratifies such contract or transaction.
Section 3.13 Loans to Employees and Directors. The corporation shall not
lend money to or use its credit to assist its directors without authorization in
the particular case by its shareholders, but may lend money to and use its
credit to assist any employee of the corporation or of a subsidiary, including
any such employee who is a director of the corporation, if the board of
directors decides that such loan or assistance may benefit the corporation.
ARTICLE IV
WAIVER OF NOTICE
Section 4.1 Directors. Whenever any notice is required to be given to any
director of the corporation under the provisions of the Constitution of Alabama,
the Alabama Business Corporation Act, the articles of incorporation, or these
bylaws, a waiver thereof in writing signed by the person or persons entitled to
such notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice. Neither the business to be transacted
at, nor the purpose of, any regular or special meeting of the board of directors
or any committee designated thereby need be specified in the waiver of notice.
The attendance of a director at a meeting shall constitute a waiver of notice of
such meeting, except where a director attends a meeting for the express purpose
of objecting to the transaction of any business because the meeting is not
lawfully called or convened.
Section 4.2 Shareholders. Whenever any notice is required to be given to
any shareholder of the corporation under the provisions of the Constitution of
Alabama, the Alabama Business Corporation Act, the articles of incorporation, or
the bylaws, a waiver thereof in writing signed by the person or persons entitled
to such notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice.
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ARTICLE V
OFFICERS
Section 5.1 Positions. The officers of the corporation shall be elected by
the board of directors and shall consist of a chairman of the board, a
president, a secretary, and such other officers and assistant officers as may be
deemed necessary by the board of directors. Any two or more offices may be held
by the same person.
Section 5.2 Election and Term of Office. The first officers of the
corporation shall be elected by the board of directors at the first meeting of
the board of directors. Each officer shall hold office at the pleasure of the
board of directors or until his death or he shall resign or shall have been
removed in the manner hereinafter provided.
Section 5.3 Vacancies. A vacancy in any office may be filled by the board
of directors.
Section 5.4 Removal. Any officer or agent may be removed by the board of
directors whenever in its judgment the best interests of the corporation will be
served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election or appointment of an officer
or agent shall not of itself create contract rights.
Section 5.5 Duties of Officers. The officers of the corporation, if and
when elected by the board of directors of the corporation, shall have the
following duties:
(a) Chairman of the Board. The chairman of the board shall be the
chief executive officer of the corporation and shall, subject to the
direction of the board of directors, supervise and control the business
and affairs of the corporation. He shall, when present, preside at all
meetings of the shareholders and of the board of directors. He may sign
certificates for shares of the corporation and deeds, mortgages, bonds,
contracts, or other instruments on behalf of the corporation, except where
required by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation. In general,
he shall perform all duties incident to the office of chairman of the
board and such other duties as may be prescribed by the board of
directors.
(b) President. The president shall be the chief administrative
officer of the corporation and shall have general and active management of
such areas and divisions of the business of the corporation as may be
designated by the board of directors or by the chairman of the board. The
president of the corporation shall carry into effect the orders of the
chairman of the board. In
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the absence of the chairman of the board or in the event of his death or
inability to act, the president shall perform the duties of the chairman
of the board, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the chairman of the board. The
president may sign certificates for shares of the corporation and deeds,
mortgages, bonds, contracts or other instruments on behalf of the
corporation except where required by law to be otherwise signed and
executed and except where the signing and execution thereof shall be
expressly delegated by the board of directors to some other officer or
agent of the corporation. In general, he shall perform all duties incident
to the office of president and such other duties as may be prescribed by
the chairman of the board or the board of directors.
(c) Vice-Presidents. In the absence of the president or in the event
of his death or inability to act, the vice-president (or in the event
there be more than one vice-president, the vice-presidents in the order
determined by the board of directors) shall perform the duties of the
president, and when so acting, shall have all the powers of and be subject
to all the restrictions upon the president. Any vice-president may sign
certificates for shares of the corporation and shall perform such other
duties as from time to time may be assigned to him by the chairman of the
board, the president or the board of directors.
(d) Secretary. The secretary shall keep the minutes of the
proceedings of the shareholders and of the board of directors in one or
more books provided for that purpose; see that all notices are duly given
in accordance with the provisions of these bylaws or as required by law;
be custodian of the corporate records and of the seal of the corporation;
see that the seal of the corporation is affixed to all documents, the
execution of which on behalf of the corporation under its seal is duly
authorized; keep a register of the post office address of each shareholder
which shall be furnished to the secretary by each shareholder; sign with
the chairman of the board, the president, any vice-president, or the
treasurer certificates for shares of the corporation, the issuance of
which shall have been authorized by resolution of the board of directors;
have general charge of the stock transfer books of the corporation; and in
general perform all duties incident to the office of secretary and such
other duties as from time to time may be assigned to him by the chairman
of the board, the president or the board of directors. If there is no
treasurer of the corporation, the secretary shall assume the authority and
duties of treasurer.
(e) Treasurer. The treasurer shall have charge and custody of and be
responsible for all funds and securities of the corporation, receive and
give receipts for moneys due and payable to the corporation from any
source whatsoever, and deposit all such moneys in the name of the
corporation in such banks, trust companies or other depositories as may be
designated by the board of directors, and in general perform all of the
duties incident to the office of
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treasurer and such other duties as from time to time may be assigned to
him by the chairman of the board, the president or the board of directors.
The treasurer may sign certificates for shares of the corporation. If
required by the board of directors, the treasurer shall give a bond for
the faithful discharge of his duties in such sum and with such surety or
sureties as the board of directors shall determine.
(f) Assistant Secretaries and Assistant Treasurers. The assistant
secretary, or if there shall be more than one, the assistant secretaries
in the order determined by the board of directors, shall, in the absence
or disability of the secretary, perform the duties and exercise the powers
of the secretary. The assistant treasurer, or, if there shall be more than
one, the assistant treasurers in the order determined by the board of
directors, shall, in the absence or disability of the treasurer, perform
the duties and exercise the powers of the treasurer. The board of
directors may require any assistant treasurer to give a bond for the
faithful discharge of his duties in such sums and with such surety or
sureties as the board of directors shall determine. The assistant
secretaries and assistant treasurers shall all perform such other duties
as shall be assigned to them by the secretary and treasurer, respectively,
or by the chairman of the board, the president or the board of directors.
Section 5.6 Compensation. The compensation of the officers shall be fixed
from time to time by the board of directors, and no officer shall be prevented
from receiving such compensation by reason of the fact that he is also a
director of the corporation.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS,
OFFICERS AND EMPLOYEES
Section 6.1 The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed claim, action, suit or proceeding, whether civil, criminal,
administrative or investigative, including appeals (other than an action by or
in the right of the corporation), by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, partner, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such claim, action, suit or proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
claim, action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo
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contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation, and
with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
Section 6.2 The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed claim, action or suit by or in the right of the corporation to procure
a judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, partner, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the corporation unless and only to
the extent that the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem proper.
Section 6.3 To the extent that a director, officer, employee or agent of
the corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Sections 6.1 and 6.2 of this Article
VI, or in defense or any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection therewith, notwithstanding that he has not been successful on
any other claim, issue or matter in any such action, suit or proceeding.
Section 6.4 Any indemnification under Sections 6.1 and 6.2 of this Article
VI (unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification of the
director, officer, employee or agent is proper in the circumstances because he
has met the applicable standard of conduct set forth in Sections 6.1 and 6.2 of
this Article VI. Such determination shall be made (a) by the board of directors
by a majority vote of a quorum consisting of directors who were not parties to,
or who have been wholly successful on the merits or otherwise with respect to,
such claim, action, suit or proceeding, or (b) if such a quorum is not
obtainable, or, even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (c) by the
shareholders.
Section 6.5 Expenses (including attorneys' fees) incurred in defending a
civil or criminal claim, action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such claim, action, suit or
proceeding as authorized in the manner provided in Section 6.4 of this Article
VI upon receipt of an undertaking by or on behalf of the director, officer,
employee or agent to repay such amount if and to the extent that it
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shall be ultimately determined that he is not entitled to be indemnified by the
corporation as authorized in this Article VI.
Section 6.6 The indemnification authorized in and provided by this Article
VI shall not be deemed exclusive of and shall be in addition to any other right
to which those indemnified may be entitled under any statute, rule of law,
provisions of articles of incorporation, bylaw, agreement, vote of shareholders
or disinterested directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director, officer, employee
or agent and shall insure to the benefit of the heirs, executors and
administrators of such a person.
Section 6.7 The corporation may purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, partner, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity or arising out of
his status as such, whether or not the corporation is required or permitted to
indemnify him against such liability under the provisions of this Article VI or
any statute.
ARTICLE VII
CERTIFICATES REPRESENTING SHARES
Section 7.1 Certificates Representing Shares. Certificates representing
shares of the corporation shall be in such form as shall be determined by the
board of directors. Such certificates shall be signed by the chairman of the
board, the president, any vice-president, or the treasurer, and by the
secretary, an assistant vice-president, an assistant secretary, or an assistant
treasurer, and sealed with the corporate seal or a facsimile thereof. The
signatures of both of such officers upon a certificate may be facsimiles if the
certificate is countersigned by a transfer agent or registered by a registrar,
other than the corporation itself or one of its employees. In case any officer
who has signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer at the date of its issue. Each certificate for shares shall be
consecutively numbered or otherwise identified. The name and address of the
person to whom the shares represented thereby are issued, with the number and
class of shares and date of issue, shall be entered on the stock transfer books
of the corporation. All certificates surrendered to the corporation for transfer
shall be cancelled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been surrendered and
cancelled, except that in case of a lost, destroyed or mutilated certificate a
new one may be issued therefor upon such terms and indemnity to the corporation
as the board of directors may prescribe.
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Section 7.2 Legends on Certificates. Any written restriction on the
transfer of shares of the corporation must be noted conspicuously on the
certificate representing such shares. In addition, if the corporation is
authorized to issue shares of more than one class, there shall be set forth upon
the face or back of every certificate, or every certificate shall have a
statement that the corporation will furnish to any shareholder upon request and
without charge, a full statement of the designations, preferences, limitations,
and relative rights of the shares of each class authorized to be issued, and if
the corporation is authorized to issue any preferred or special class in series,
the variations in the relative rights and preferences between the shares of each
such series so far as the same have been fixed and determined and the authority
of the board of directors to fix and determine the relative rights and
preferences of subsequent series.
Section 7.3 Transfer of Shares. Transfer of shares of the corporation
shall be made only on the stock transfer books of the corporation by the holder
of record thereof or by his legal representative, who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the secretary of the
corporation, and on surrender for cancellation of the certificate for such
shares. The person in whose name shares stand on the books of the corporation
shall be deemed by the corporation to be the owner thereof for all purposes.
Section 7.4 Lost, Stolen, Destroyed, or Mutilated Certificates. The board
of directors may direct a new certificate to be issued in place of any
certificate theretofore issued by the corporation alleged to have been lost or
destroyed. When authorizing such issue of a new certificate, the board of
directors, in its discretion and as a condition precedent to the issuance
thereof, may prescribe such terms and conditions as it deems expedient, and may
require such indemnities as it deems adequate, to protect the corporation from
any claim that may be made against it with respect to any such certificate
alleged to have been lost or destroyed.
ARTICLE VIII
GENERAL
Section 8.1 Fiscal Year. The fiscal year of the corporation shall be fixed
by resolution of the board of directors.
Section 8.2 Dividends. The board of directors, from time to time, may
declare, and the corporation may pay, dividends on its outstanding shares in the
manner and upon the terms and conditions provided by law.
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Section 8.3 Checks. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
Section 8.4 Corporate Seal The board of directors shall select a corporate
seal which shall have inscribed thereon the name of the corporation, the words
"Alabama" and "Corporate Seal," and such seal may include the date of
incorporation of the corporation. The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or in any manner reproduced.
Section 8.5 Right of Corporation to Acquire its Own Shares. The
corporation shall have the right to purchase, take, receive or otherwise
acquire, hold, own, pledge and transfer or otherwise dispose of its own shares.
Purchases by the corporation of its own shares, whether direct or indirect, may
be made to the extent of unreserved and unrestricted earned surplus available
therefor and, if permitted by the articles of incorporation of the corporation
(or, if not so permitted by the articles of incorporation of the corporation,
with the affirmative vote of the holders of two-thirds of all shares entitled to
vote thereon), to the extent of unreserved and unrestricted capital surplus of
the corporation available therefor.
Section 8.6 Voting of Corporation's Securities. Unless otherwise ordered
by the board of directors, the chairman of the board, the president or any
vice-president, or such other officer as may be designated by the board of
directors to act in the absence of the chairman of the board, the president or
any vice-president, shall have full power and authority on behalf of the
corporation to attend and to act and to vote, and to execute a proxy or proxies
empowering others to attend and to act and to vote, at any meetings of security
holders of any corporation in which the corporation may hold securities, and at
such meetings the chairman of the board, or such other officer of the
corporations or such proxy shall possess and may exercise any and all rights and
powers incident to the ownership of such securities, and which as the owner
thereof the corporation might have possessed and exercised, if present. The
secretary or any assistant secretary may affix the corporate seal to any such
proxy or proxies so executed by the chairman of the board, or such other
officer, and attest the same. The board of directors by resolution from time to
time may confer like powers upon any other person or persons.
ARTICLE IX
AMENDMENT OF BYLAWS
These bylaws may be altered, amended or repealed and new bylaws may be
adopted by the board of directors or by the shareholders at any regular or
special meeting thereof; provided, however, that the board of directors may not
alter, amend or repeal any bylaw establishing what constitutes a quorum at
shareholders' meetings.
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BYLAWS
OF
DOTHAN HOSPITALITY 3053 OF ALABAMA, INC.
an Alabama corporation
<PAGE>
Exhibit 3.4.1
SECOND AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
DOTHAN HOSPITALITY 3071, INC.
Pursuant to Sections 10-2B-10.06 and 10-2B-10.07 of the Alabama
Business Corporation Act, DOTHAN HOSPITALITY 3071, INC., an Alabama corporation
(the "Corporation"), hereby certifies that these Second Amended and Restated
Articles of Incorporation (the "Amended Articles"), which contain amendments
requiring shareholder approval, were duly adopted by the Board of Directors of
the Corporation and by the sole shareholder of the Corporation by written
consent without a meeting, pursuant to Sections l0-2B-8.21 and l0-2B-7.04 of the
Alabama Business Corporation Act, as of July ___, 1998. The number of
outstanding shares of common stock of the Corporation (and the number of shares
entitled to vote thereon) is 1,000. These Amended Articles correctly set forth
the provisions of the Articles of Incorporation as heretofore amended. These
Amended Articles supercede the original Articles of Incorporation and all
amendments thereto.
ARTICLE I
The name of the Corporation is DOTHAN HOSPITALITY 3071, INC.
ARTICLE II
The aggregate number of shares of capital stock which the
Corporation shall have authority to issue is 1,000 shares of common stock, par
value $0.01 per share.
ARTICLE III
The street address of the registered office of the Corporation is
The Corporation Company, 60 Commerce Street, Suite 1100, Montgomery, Alabama
36104, and the name of its registered agent at that office is The Corporation
Company.
ARTICLE IV
The name and address of the incorporator of the Corporation was
David Buddemeyer, 1601 Belvedere Road, West Palm Beach, Florida 33406.
ARTICLE V
The number of directors constituting the board of directors of the
corporation shall be at least one (1), and the name and address of the person
who is to serve as the sole director until the annual meeting of shareholders
and until his successor is elected and shall qualify is as
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follows:
Name Address
Robert M. Flanders 3445 Peachtree Road, N.E.,
Two Live Oak Center, Suite 700,
Atlanta, GA 30326.
ARTICLE VI
(a) The purpose for which the Corporation is organized is limited
to: (i) acquiring, owning, leasing, operating, using and managing that certain
real property commonly known as the Hampton Inn, located at 3071 Ross Clark
Circle, Dothan, Alabama 36301 (the "Property"); (ii) entering into and
performing its obligations under the credit agreement, among Lodgian Financing
Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel Group, LLC, Servico,
Inc. and other affiliated entities, as affiliate guarantors, the initial lenders
and initial issuing bank named therein, the collateral agent, the administrative
agent, Morgan Stanley Senior Funding, Inc., as co-lead arranger, joint-book
manager and syndication agent and Lehman Brothers, as co-lead arranger,
joint-book manager and documentation agent relating to the financing or
refinancing of the Property (the "Loan Agreement") which provides the lender
thereunder with a first priority lien on the Property, any promissory-note
evidencing indebtedness incurred pursuant to the Loan Agreement, any mortgage
securing such indebtedness and encumbering the Property (the "Mortgage") and any
other documents securing such indebtedness and any related collateral documents,
each as amended (or pursuant to a consent obtained in accordance with the terms
thereof) (collectively, the "Loan Documents"); (iii) entering into and
performing its obligations under the Indenture (the "Indenture"), among Lodgian
Financing Corp, as issuer, Lodgian, Inc., the Subsidiary Guarantors defined
therein and Bankers Trust Company, as trustee, relating to the issuance of the
12 1/4% Senior Subordinated Notes due 2009 and the Guarantee in favor of the
holders of the Notes and (iv) transacting any and all lawful business that is
incident and necessary or appropriate to the ownership and to the management of
the Property for which a corporation may be incorporated under the laws of the
State of Alabama.
(b) Notwithstanding any other provision of these Amended Articles
and any provision of law that otherwise so empowers the Corporation, until such
time as the Property is released from the lien of the Mortgage, the Corporation
shall not, without the unanimous affirmative vote of the members of its Board of
Directors, (i) amend, alter, change, repeal or adopt any resolution setting
forth a proposed amendment to, any provision of these Articles of Incorporation,
(ii) dissolve or liquidate, in whole or in part, consolidate or merge with or
into any other entity or convey, sell or transfer its properties and assets
substantially as an entirety to any entity, (iii) file a voluntary petition or
otherwise initiate, or consent to, proceedings for the Corporation to be
adjudicated insolvent or seeking an order for relief as a debtor under the
United States Bankruptcy Code, as amended (11 U.S.C. ss.ss. 101 et seq.), or
(iv) file any petition, or consent to any petition, seeking any composition,
reorganization, readjustment, liquidation, dissolution or similar relief under
the present or any future federal bankruptcy laws or any other present or future
applicable federal, state or other statute or law relative to bankruptcy,
insolvency or other relief for debtors; or (v) seek or consent to the
appointment of any trustee,
-2-
<PAGE>
receiver, conservator, assignee, sequestrator, custodian, or liquidator (or
other similar official) of the Corporation or of all or any substantial part of
the properties and assets of the Corporation, or (vi) make any general
assignment for the benefit of creditors, or (vii) admit in writing its inability
to pay its debts generally as they become due, or (viii) declare or effect a
moratorium on its debt or take any corporate action in furtherance of any such
action.
(c) The Board of Directors of the Corporation shall, at all times
until the Property is released from the lien of the Mortgage, include an
independent director (the "Independent Director"). The Independent Director
shall be a person who is not at the time of appointment and who has not at any
time during the prior five years been and who is not while serving as the
Independent Director (i) a director, stockholder, officer or employee of the
Corporation or any affiliates thereof, other than with respect to such person's
service as an Independent Director of the Corporation and such person's service
in similar "Independent Director" positions for affiliates of the Corporation;
(ii) a creditor, customer, supplier, independent contractor, manager or any
other person who derives more than 10% of its gross revenues from its activities
with the Corporation or any affiliates thereof; (iii) a person controlling any
such stockholder, creditor, customer, supplier, independent contractor, manager
or other person; (iv) the legal or beneficial owner, at any time while serving
as director of the Corporation, of any beneficial interest in the Corporation;
or (v) a member of the immediate family of any such stockholder, officer,
employee, creditor, customer, supplier, director, independent contractor,
manager or any other person of the Corporation. As used herein, the term
"affiliate" means any person controlling, under common control wit, or
controlled by the person in question, and the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through ownership
of voting securities, by contact or otherwise. In the event of the death,
incapacity, or resignation of an Independent Director, or the vacancy of the
Independent Director's seat on the Corporation's Board of Directors for any
reason, a successor Independent Director shall be appointed by the remaining
directors.
(d) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(ix) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall not
(i) commingle its assets with those
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<PAGE>
of, or pledge its assets for the benefit of, any other person or entity; (ii)
assume, guarantee or become obligated, or hold out its credit as being available
to satisfy, the liabilities or obligations of any other person or entity; (iii)
reduce its capital below an amount which is adequate in light of its
contemplated business operations; (iv) acquire obligations or securities of, or
make loans or advances to, any affiliate; (v) incur or assume any indebtedness
other than (A) the indebtedness underlying the Loan Agreement (B) the
indebtedness underlying the Indenture, and (C) liabilities (including, but not
limited to, trade payables) arising in the ordinary course of the Corporation's
business relating to the acquisition, ownership, operation, lease, use or
management of the Property; (vi) amend, alter, change or repeal any provision of
Article VI and the last sentence of Article IX of these Amended Articles; (vii)
engage in any dissolution or liquidation, in whole or in part, consolidation or
merger with or into any other entity or conveyance, sale or transfer of its
properties and assets substantially as an entirety to any entity; or (viii)
engage in any business or activity other than as set forth in these Amended
Articles. Notwithstanding anything contained herein to the contrary, nothing
herein shall be deemed to prohibit or otherwise limit any dividends or other
distributions from the Corporation to its shareholders.
ARTICLE VII
The Board of Directors is expressly authorized to adopt, alter,
amend or repeal the Bylaws of the Corporation subject to the limitations set
forth in these Amended Articles. Election of directors need not be by written
ballot unless and to the extent provided in the Bylaws of the Corporation.
ARTICLE VIII
The business and affairs of the Corporation shall be managed and
regulated by the board of directors of the Corporation. No director of the
Corporation shall be personally liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duties as a director, except for
liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not on good faith or
which involve intentional misconduct or a knowing violation of law, or (iii) for
any transaction from which the director derived an improper personal benefit. If
the Alabama Business Corporation Act is amended after the date of these Amended
Articles to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Alabama Business Corporation Act, as so amended.
The rights and authority conferred in this Article VIII shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, provision of these Amended Articles or Bylaws of the
Corporation, agreement, vote of stockholders or disinterested directors, or
otherwise.
ARTICLE IX
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The Corporation shall indemnify any officer or director, or any
former officer or director of the Corporation, to the fullest extent permitted
by law. The foregoing right of indemnification shall not be exclusive of any
other rights to which any director, officer, employee or agent may be entitled
as a matter of law or which he may be lawfully granted. The Corporation's
obligation to indemnify its officers and directors pursuant to this Article
shall be subordinate in all respects to the obligations of the Corporation
arising out of the Loan Documents and shall not constitute a claim against the
Corporation to the extent that the Corporation is unable to pay any amounts it
is obligated to pay under the Loan Documents.
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<PAGE>
IN WITNESS WHEREOF, the undersigned has executed these Second
Amended and Restated Articles of Incorporation this 27th day of July, 1999.
DOTHAN HOSPITALITY 3071, INC.
By: /s/ Thomas S. Gryboski
------------------------------------
Name:
Title:
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<PAGE>
Exhibit 3.4.2
BYLAWS
OF
DOTHAN HOSPITALITY 3071 OF ALABAMA, INC.
an Alabama corporation
<PAGE>
TABLE OF CONTENTS
-----------------
ARTICLE I Offices
ARTICLE II Shareholders
Section 2.1 Annual Meetings
Section 2.2 Special Meetings
Section 2.3 Place of Meetings
Section 2.4 Notice of Meetings
Section 2.5 Closing of Transfer Books
or Fixing of Record Date
Section 2.6 Voting Record
Section 2.7 Proxies
Section 2.8 Quorum
Section 2.9 Voting of Shares
Section 2.10 Voting of Shares by Certain
Holders
Section 2.11 Action by Shareholders Without
a Meeting
ARTICLE III Board of Directors
Section 3.1 General Powers
Section 3.2 Number, Tenure and Qualifications
Section 3.3 Vacancies
Section 3.4 Meetings
Section 3.5 Meeting by Telephone
Section 3.6 Quorum
Section 3.7 Acts of the Board
Section 3.8 Presumption of Assent
Section 3.9 Action Without a Meeting
Section 3.10 Committees of Directors
Section 3.11 Compensation
Section 3.12 Director Conflicts of Interest
Section 3.13 Loans to Employees and Directors
<PAGE>
ARTICLE IV Waiver of Notice
Section 4.1 Directors
Section 4.2 Shareholders
ARTICLE V Officers
Section 5.1 Positions
Section 5.2 Election and Term of Office
Section 5.3 Vacancies
Section 5.4 Removal
Section 5.5 Duties of Officers
Section 5.6 Compensation
ARTICLE VI Indemnification of Directors, Officers
and Employees
ARTICLE VII Certificates Representing Shares
Section 7.1 Certificates Representing Shares
Section 7.2 Legends on Certificates
Section 7.3 Transfer of Shares
Section 7.4 Lest, Stolen, Destroyed, or
Mutilated Certificates
ARTICLE VIII General
Section 8.1 Fiscal Year
Section 8.2 Dividends
Section 8.3 Checks
Section 8.4 Corporate Seal
Section 8.5 Right of Corporation to Acquire its
Own Shares
Section 8.6 Voting of Corporation's Securities
ARTICLE IX Amendment of Bylaws
ii
<PAGE>
BYLAWS
OF
DOTHAN HOSPITALITY 3071 OF ALABAMA, INC.
an Alabama corporation
ARTICLE I
OFFICES
The principal office of the corporation shall be located in Dothan,
Alabama. The corporation may have such other offices, within and without the
State of Alabama, as the board of directors may determine or as the business of
the corporation may require.
The registered office of the corporation, required by the Alabama Business
Corporation Act to be maintained in the State of Alabama, may but need not be
the same as its principal office in the State of Alabama. The address of the
registered office may be changed from time to time by the board of directors.
ARTICLE II
SHAREHOLDERS
Section 2.1 Annual Meetings. The annual meeting of the shareholders,
commencing with the year 1996, shall be held on the second Tuesday of December
in each year if not a legal holiday in the State of Alabama, and if a legal
holiday, then on the next succeeding business day not a legal holiday, at 10:00
a.m., or at such other date and time as shall be designated from time to time
by the board of directors and stated in the notice of the meeting, for the
purpose of electing directors and for the transaction of such other business as
may come before the meeting. If the election of directors shall not be held on
the day designated herein for the annual meeting of the shareholders, or at any
adjournment thereof, the board of directors shall cause the election to be held
at a special meeting of the shareholders as soon thereafter as may be
conveniently held.
Section 2.2 Special Meetings. Special meetings of the shareholders may be
called by the board of directors, the chairman of the board, the president or
the holders of not less than one-tenth of all shares of the corporation entitled
to vote at the meeting.
Section 2.3 Place of Meetings. Annual and special meetings shall be held
at the principal office of the corporation in the State of Alabama, or at such
other place, within or without the State of Alabama, as may be designated by the
board of directors or the person or persons calling the meeting and stated in
the notice of the meeting.
<PAGE>
Section 2.4 Notice of Meetings. Unless otherwise required by law, written
notice of shareholder meetings, stating the place, day and hour of the meeting
and, in case of a special meeting, the purpose or purposes for which the meeting
is called, shall, unless otherwise prescribed by statute, be delivered not less
than ten nor more than fifty days before the date of the meeting, either
personally or by mail, by or at the direction of the chairman of the board, the
president, the secretary, or the officer or other persons calling the meeting,
to each shareholder of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail,
addressed to the shareholder at his address as it appears on the stock transfer
books of the corporation, with postage thereon prepaid. Notwithstanding the
provisions of this section, the stock or bond indebtedness of the corporation
shall not be increased at a meeting unless notice of such meeting shall have
been given as may be required by section 234 of the Constitution of Alabama as
the same may be amended from time to time.
Section 2.5 Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the board of directors of the
corporation may provide that the stock transfer books shall be closed for stated
period not to exceed fifty days. If the stock transfer books shall be closed for
the purpose of determining shareholders entitled to notice of or to vote at a
meeting of shareholders, such books shall be closed for at least ten days
immediately preceding such meeting. In lieu of closing the stock transfer books,
the board of directors may fix in advance a date as the record date for any such
determination of shareholders, such date to be not more than fifty days and, in
case of a meeting of shareholders, not less than ten days prior to the date on
which the particular action, requiring such determination of shareholders, is to
be taken. If the stock transfer books are not closed and no record date is fixed
for the determination of shareholders entitled to notice of or to vote at a
meeting of shareholders, or shareholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed or the date on which
the resolution of the board of directors declaring such dividend is adopted, as
the case may be, shall be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof except where the
determination has been made through the closing of the stock transfer books and
the stated period of closing has expired.
Section 2.6 Voting Record. The officer or agent having charge of the stock
transfer books for shares of the corporation shall make, at least ten days
before each meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting or any adjournment thereof, arranged in
alphabetical order with the address of and the number of shares held by each.
Such list shall be kept on file at the principal office of the corporation for a
period of ten days prior to such meeting of shareholders and shall be subject to
inspection by any shareholder making written request therefor at any time during
usual
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business hours. Such list shall also be produced and kept open at the time and
place of the meeting and shall be subject to the inspection of any shareholder
during the whole time of the meeting. The original stock transfer books shall be
prima facie evidence as to who are the shareholders entitled to examine such
list or transfer books or to vote at any meeting of shareholders. Failure to
comply with the requirements of this section shall not affect the validity of
any action taken at such meeting.
Section 2.7 Proxies. At all meetings of shareholders, a shareholder may
vote in person or by proxy executed in writing by the shareholder or by his duly
authorized attorney-in-fact. Such proxy shall be filed with the secretary of the
corporation before or at the time of the meeting. No proxy shall be valid after
eleven months from the date of its execution, unless otherwise provided in the
proxy.
Section 2.8 Quorum. Unless otherwise provided in the articles of
incorporation, a majority of the shares of the corporation entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
shareholders. If a quorum is not present at a meeting, a majority of the shares
so represented may adjourn the meeting from time to time without further notice,
other than announcement at the meeting. At such adjourned meeting at which a
quorum shall be present, any business may be transacted which might have been
transacted at the meeting as originally noticed. The shareholders present at a
duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum.
Section 2.9 Voting of Shares. Subject to the provisions of the next
sentence of this Section 2.9, each outstanding share entitled to vote shall be
entitled to one vote upon each matter submitted to a vote at a meeting of
shareholders. At each election for directors every shareholder entitled to vote
at such election shall have the right to vote, in person or by proxy, the number
of shares owned by him for as many persons as there are directors to be elected
and for whose election he has a right to vote, or, if cumulative voting is
authorized by the articles of incorporation, to cumulate his votes by giving one
candidate as many votes as the number of such directors multiplied by the number
of his shares shall equal, or by distributing such votes on the same principle
among any number of such candidates. If a quorum is present, the affirmative
vote of the majority of the shares represented at the meeting and entitled to
vote on the subject matter shall be the act of the shareholders, unless the vote
of a greater number or voting by classes is required by the Constitution of
Alabama, the Alabama Business Corporation Act, the articles of incorporation or
these bylaws.
Section 2.10 Voting of Shares by Certain Holders. Shares standing in the
name of another corporation, domestic or foreign, may be voted by such officer,
agent or proxy as the bylaws of such other corporation may prescribe, or, in the
absence of such provision, as the board of directors of such other corporation
may determine.
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<PAGE>
Shares held by an administrator, executor, guardian or conservator may be
voted by him, either in person or by proxy, without a transfer of such shares
into his name. Shares standing in the name of a trustee may be voted by him,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of such shares into his name and no corporate
trustee shall be entitled to vote in the election of directors shares held by it
solely in a fiduciary capacity if such shares are shares issued by the corporate
trustee itself
Shares standing in the name of a receiver may be voted by such receiver,
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into his name if authority to do so is
contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Neither treasury shares of its own stock held by the corporation, nor
shares held by another corporation if a majority of the shares entitled to vote
for the election of directors of such other corporation is held by the
corporation, shall be voted at any meeting or counted in determining the total
number of outstanding shares at any given time.
Section 2.11 Action by Shareholders Without a Meeting. Any action required
or permitted to be taken at a meeting of the shareholders may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the shareholders entitled to vote with respect to the subject
matter thereof.
ARTICLE III
BOARD OF DIRECTORS
Section 3.1 General Powers. All corporate powers shall be exercised by or
under authority of, and the business and affairs of the corporation shall be
managed under the direction of, its board of directors.
Section 3.2 Number, Tenure and Qualifications. The number of directors
constituting the initial board of directors is set forth in the articles of
incorporation, and the members of the first board shall hold office until the
first annual meeting of shareholders and until their successors shall have been
elected and qualified. Thereafter, the number of directors constituting the
board of directors shall be not less than one nor more than ten, the exact
number to be determined by resolution of the board of directors. The minimum and
maximum number of directors may be increased or decreased from time to time in
the manner provided by the bylaws for the amendment thereof, but no decrease
shall have the effect of shortening the term of any incumbent director.
Directors shall hold office until the
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<PAGE>
next succeeding annual meeting of shareholders and until their successors shall
have been elected and qualified. Directors need not be shareholders or residents
of the State of Alabama.
Section 3.3 Vacancies. Any vacancy occurring in the board of directors may
be filled by the affirmative vote of a majority of the remaining directors
though less than a quorum of the board of directors. A director elected to fill
a vacancy shall be elected to serve until the next annual meeting of
shareholders. Any directorship to be filled by reason of an increase in the
number of directors shall be filled by election at an annual meeting or at a
special meeting of shareholders called for that purpose.
Section 3.4 Meetings. Meetings of the board of directors, regular or
special, may be held either within or without the State of Alabama. A regular
meeting of the board of directors shall be held without notice immediately
after, and at the same place as, the annual meeting of shareholders. Other
regular meetings may be held upon such notice and at such time and place as
shall be determined by the board. Special meetings of the board of directors may
be called by the chairman of the board, the president or by any two directors on
three days written notice to each director, delivered personally or mailed to
each director at his business address or by telegram. The secretary, at the
request in writing of the chairman of the board, the president or any two
directors, shall send such written notice on his or their behalf. If mailed,
such notice shall be deemed to be delivered when deposited in the United States
mail, so addressed, with postage thereon prepaid. If by telegram, such notice
shall be deemed to be delivered when the telegram is delivered to the telegraph
company. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the board of directors need be specified in the
notice of such meeting.
Section 3.5 Meeting by Telephone. Members of the board of directors or any
committee designated thereby may participate in a meeting of such board or
committee by means of a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other
at the same time and participation by such means shall constitute presence in
person at a meeting.
Section 3.6 Quorum. A majority of the whole number of directors of the
board shall constitute a quorum for the transaction of business at any meeting
of the board of directors. If less than a majority is present at a meeting, a
majority of the directors present may adjourn the meeting from time to time
without further notice. If a quorum is present when the meeting is convened, the
directors present may continue to do business, taking action by a vote of a
majority of a quorum, until adjournment, notwithstanding the withdrawal of
enough directors to leave less than a quorum present or the refusal of any
director present to vote.
Section 3.7 Acts of the Board. The act of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors.
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<PAGE>
Section 3.8 Presumption of Assent. A director of the corporation who is
present at a meeting of the board of directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his dissent shall be entered in the minutes of the meeting or unless he shall
file his written dissent to such action with the person acting as the secretary
of the meeting before the adjournment thereof or shall forward such dissent by
registered mail to the secretary of the corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
Section 3.9 Action Without a Meeting. Any action required or permitted to
be taken by the board of directors or a committee thereof at a meeting may be
taken without a meeting if a consent in writing, setting forth the action so
taken, shall be signed by all of the directors or all of the members of the
committee, as the case may be. Such consent shall have the same effect as a
unanimous vote of the directors or the members of such committee.
Section 3.10 Committees of Directors. The board of directors, by
resolution passed by a majority of the whole board of directors, may designate
from among its members one or more committees, each committee to consist of one
or more of the directors of the corporation. Each such committee, to the extent
provided in the resolutions of the board of directors, shall have and may
exercise all the powers and authority of the board of directors, except that no
such committee shall have the authority of the board in reference to declaring a
dividend or distribution from capital stock, issuing capital stock, amending the
articles of incorporation, adopting a plan of merger or consolidation,
recommending to the shareholders the sale, lease, mortgage, exchange or other
disposition of all or substantially all of the property and assets of the
corporation other than in the usual and regular course of business, recommending
to the shareholders a voluntary dissolution of the corporation or a revocation
of a dissolution, filling vacancies in the board of directors, or amending the
bylaws of the corporation. Such committee or committees shall have such name or
names as may be determined from time to time by resolution adopted by the board
of directors. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors when required.
Section 3.11 Compensation. By resolution of the board of directors, each
director may be paid his expenses, if any, of attendance at each meeting of the
board of directors, and may be paid a stated salary as director or a fixed sum
for attendance at each meeting of the board of directors or both. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
Section 3.12 Director Conflicts of Interest. No contract or other
transaction between the corporation and one or more of its directors or any
other corporation, firm, association or entity in which one or more of its
directors are directors or officers or are financially interested, shall be
either void or voidable because of such relationship or interest or because such
director or directors are present at the meeting of the board of directors or
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a committee thereof which authorizes, approves or ratifies such contract or
transaction, if the contract or transaction is fair and reasonable to the
corporation and if either the fact of such relationship or interest is disclosed
to the board of directors or committee which authorizes, approves or ratifies
the contract or transaction by a vote or consent sufficient for the purpose
without counting the votes or consents of such interested directors or the fact
of such relationship or interest is disclosed to the shareholders entitled to
vote and they authorize, approve or ratify such contract or transaction by vote
or written consent.
Common or interested directors may not be counted in determining the
presence of a quorum at a meeting of the board of directors or a committee
thereof which authorizes, approves or ratifies such contract or transaction.
Section 3.13 Loans to Employees and Directors. The corporation shall not
lend money to or use its credit to assist its directors without authorization in
the particular case by its shareholders, but may lend money to and use its
credit to assist any employee of the corporation or of a subsidiary, including
any such employee who is a director of the corporation, if the board of
directors decides that such loan or assistance may benefit the corporation.
ARTICLE IV
WAIVER OF NOTICE
Section 4.1 Directors. Whenever any notice is required to be given to any
director of the corporation under the provisions of the Constitution of Alabama,
the Alabama Business Corporation Act, the articles of incorporation, or these
bylaws, a waiver thereof in writing signed by the person or persons entitled to
such notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice. Neither the business to be transacted
at, nor the purpose of, any regular or special meeting of the board of directors
or any committee designated thereby need be specified in the waiver of notice.
The attendance of a director at a meeting shall constitute a waiver of notice of
such meeting, except where a director attends a meeting for the express purpose
of objecting to the transaction of any business because the meeting is not
lawfully called or convened.
Section 4.2 Shareholders. Whenever any notice is required to be given to
any shareholder of the corporation under the provisions of the Constitution of
Alabama, the Alabama Business Corporation Act, the articles of incorporation, or
the bylaws, a waiver thereof in writing signed by the person or persons entitled
to such notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice.
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ARTICLE V
OFFICERS
Section 5.1 Positions. The officers of the corporation shall be elected by
the board of directors and shall consist of a chairman of the board, a
president, a secretary, and such other officers and assistant officers as may be
deemed necessary by the board of directors. Any two or more offices may be held
by the same person.
Section 5.2 Election and Term of Office. The first officers of the
corporation shall be elected by the board of directors at the first meeting of
the board of directors. Each officer shall hold office at the pleasure of the
board of directors or until his death or he shall resign or shall have been
removed in the manner hereinafter provided.
Section 5.3 Vacancies. A vacancy in any office may be filled by the board
of directors.
Section 5.4 Removal. Any officer or agent may be removed by the board of
directors whenever in its judgment the best interests of the corporation will be
served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election or appointment of an officer
or agent shall not of itself create contract rights.
Section 5.5 Duties of Officers. The officers of the corporation, if and
when elected by the board of directors of the corporation, shall have the
following duties:
(a) Chairman of the Board. The chairman of the board shall be the
chief executive officer of the corporation and shall, subject to the
direction of the board of directors, supervise and control the business
and affairs of the corporation. He shall, when present, preside at all
meetings of the shareholders and of the board of directors. He may sign
certificates for shares of the corporation and deeds, mortgages, bonds,
contracts, or other instruments on behalf of the corporation, except where
required by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation. In general,
he shall perform all duties incident to the office of chairman of the
board and such other duties as may be prescribed by the board of
directors.
(b) President. The president shall be the chief administrative
officer of the corporation and shall have general and active management of
such areas and divisions of the business of the corporation as may be
designated by the board of directors or by the chairman of the board. The
president of the corporation shall carry into effect the orders of the
chairman of the board. In
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the absence of the chairman of the board or in the event of his death or
inability to act, the president shall perform the duties of the chairman
of the board, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the chairman of the board. The
president may sign certificates for shares of the corporation and deeds,
mortgages, bonds, contracts or other instruments on behalf of the
corporation except where required by law to be otherwise signed and
executed and except where the signing and execution thereof shall be
expressly delegated by the board of directors to some other officer or
agent of the corporation. In general, he shall perform all duties incident
to the office of president and such other duties as may be prescribed by
the chairman of the board or the board of directors.
(c) Vice-Presidents. In the absence of the president or in the event
of his death or inability to act, the vice-president (or in the event
there be more than one vice-president, the vice-presidents in the order
determined by the board of directors) shall perform the duties of the
president, and when so acting, shall have all the powers of and be subject
to all the restrictions upon the president. Any vice-president may sign
certificates for shares of the corporation and shall perform such other
duties as from time to time may be assigned to him by the chairman of the
board, the president or the board of directors.
(d) Secretary. The secretary shall keep the minutes of the
proceedings of the shareholders and of the board of directors in one or
more books provided for that purpose; see that all notices are duly given
in accordance with the provisions of these bylaws or as required by law;
be custodian of the corporate records and of the seal of the corporation;
see that the seal of the corporation is affixed to all documents, the
execution of which on behalf of the corporation under its seal is duly
authorized; keep a register of the post office address of each shareholder
which shall be furnished to the secretary by each shareholder; sign with
the chairman of the board, the president, any vice-president, or the
treasurer certificates for shares of the corporation, the issuance of
which shall have been authorized by resolution of the board of directors;
have general charge of the stock transfer books of the corporation; and in
general perform all duties incident to the office of secretary and such
other duties as from time to time may be assigned to him by the chairman
of the board, the president or the board of directors. If there is no
treasurer of the corporation, the secretary shall assume the authority and
duties of treasurer.
(e) Treasurer. The treasurer shall have charge and custody of and be
responsible for all funds and securities of the corporation, receive and
give receipts for moneys due and payable to the corporation from any
source whatsoever, and deposit all such moneys in the name of the
corporation in such banks, trust companies or other depositories as may be
designated by the board of directors, and in general perform all of the
duties incident to the office of
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treasurer and such other duties as from time to time may be assigned to
him by the chairman of the board, the president or the board of directors.
The treasurer may sign certificates for shares of the corporation. If
required by the board of directors, the treasurer shall give a bond for
the faithful discharge of his duties in such sum and with such surety or
sureties as the board of directors shall determine.
(f) Assistant Secretaries and Assistant Treasurers. The assistant
secretary, or if there shall be more than one, the assistant secretaries
in the order determined by the board of directors, shall, in the absence
or disability of the secretary, perform the duties and exercise the powers
of the secretary. The assistant treasurer, or, if there shall be more than
one, the assistant treasurers in the order determined by the board of
directors, shall, in the absence or disability of the treasurer, perform
the duties and exercise the powers of the treasurer. The board of
directors may require any assistant treasurer to give a bond for the
faithful discharge of his duties in such sums and with such surety or
sureties as the board of directors shall determine. The assistant
secretaries and assistant treasurers shall all perform such other duties
as shall be assigned to them by the secretary and treasurer, respectively,
or by the chairman of the board, the president or the board of directors.
Section 5.6 Compensation. The compensation of the officers shall be fixed
from time to time by the board of directors, and no officer shall be prevented
from receiving such compensation by reason of the fact that he is also a
director of the corporation.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS,
OFFICERS AND EMPLOYEES
Section 6.1 The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed claim, action, suit or proceeding, whether civil, criminal,
administrative or investigative, including appeals (other than an action by or
in the right of the corporation), by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, partner, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such claim, action, suit or proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
claim, action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo
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contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation, and
with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
Section 6.2 The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed claim, action or suit by or in the right of the corporation to procure
a judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, partner, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the corporation unless and only to
the extent that the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem proper.
Section 6.3 To the extent that a director, officer, employee or agent of
the corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Sections 6.1 and 6.2 of this Article
VI, or in defense or any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection therewith, notwithstanding that he has not been successful on
any other claim, issue or matter in any such action, suit or proceeding.
Section 6.4 Any indemnification under Sections 6.1 and 6.2 of this Article
VI (unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification of the
director, officer, employee or agent is proper in the circumstances because he
has met the applicable standard of conduct set forth in Sections 6.1 and 6.2 of
this Article VI. Such determination shall be made (a) by the board of directors
by a majority vote of a quorum consisting of directors who were not parties to,
or who have been wholly successful on the merits or otherwise with respect to,
such claim, action, suit or proceeding, or (b) if such a quorum is not
obtainable, or, even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (c) by the
shareholders.
Section 6.5 Expenses (including attorneys' fees) incurred in defending a
civil or criminal claim, action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such claim, action, suit or
proceeding as authorized in the manner provided in Section 6.4 of this Article
VI upon receipt of an undertaking by or on behalf of the director, officer,
employee or agent to repay such amount if and to the extent that it
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shall be ultimately determined that he is not entitled to be indemnified by the
corporation as authorized in this Article VI.
Section 6.6 The indemnification authorized in and provided by this Article
VI shall not be deemed exclusive of and shall be in addition to any other right
to which those indemnified may be entitled under any statute, rule of law,
provisions of articles of incorporation, bylaw, agreement, vote of shareholders
or disinterested directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director, officer, employee
or agent and shall insure to the benefit of the heirs, executors and
administrators of such a person.
Section 6.7 The corporation may purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, partner, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity or arising out of
his status as such, whether or not the corporation is required or permitted to
indemnify him against such liability under the provisions of this Article VI or
any statute.
ARTICLE VII
CERTIFICATES REPRESENTING SHARES
Section 7.1 Certificates Representing Shares. Certificates representing
shares of the corporation shall be in such form as shall be determined by the
board of directors. Such certificates shall be signed by the chairman of the
board, the president, any vice-president, or the treasurer, and by the
secretary, an assistant vice-president, an assistant secretary, or an assistant
treasurer, and sealed with the corporate seal or a facsimile thereof. The
signatures of both of such officers upon a certificate may be facsimiles if the
certificate is countersigned by a transfer agent or registered by a registrar,
other than the corporation itself or one of its employees. In case any officer
who has signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer at the date of its issue. Each certificate for shares shall be
consecutively numbered or otherwise identified. The name and address of the
person to whom the shares represented thereby are issued, with the number and
class of shares and date of issue, shall be entered on the stock transfer books
of the corporation. All certificates surrendered to the corporation for transfer
shall be cancelled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been surrendered and
cancelled, except that in case of a lost, destroyed or mutilated certificate a
new one may be issued therefor upon such terms and indemnity to the corporation
as the board of directors may prescribe.
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Section 7.2 Legends on Certificates. Any written restriction on the
transfer of shares of the corporation must be noted conspicuously on the
certificate representing such shares. In addition, if the corporation is
authorized to issue shares of more than one class, there shall be set forth upon
the face or back of every certificate, or every certificate shall have a
statement that the corporation will furnish to any shareholder upon request and
without charge, a full statement of the designations, preferences, limitations,
and relative rights of the shares of each class authorized to be issued, and if
the corporation is authorized to issue any preferred or special class in series,
the variations in the relative rights and preferences between the shares of each
such series so far as the same have been fixed and determined and the authority
of the board of directors to fix and determine the relative rights and
preferences of subsequent series.
Section 7.3 Transfer of Shares. Transfer of shares of the corporation
shall be made only on the stock transfer books of the corporation by the holder
of record thereof or by his legal representative, who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the secretary of the
corporation, and on surrender for cancellation of the certificate for such
shares. The person in whose name shares stand on the books of the corporation
shall be deemed by the corporation to be the owner thereof for all purposes.
Section 7.4 Lost, Stolen, Destroyed, or Mutilated Certificates. The board
of directors may direct a new certificate to be issued in place of any
certificate theretofore issued by the corporation alleged to have been lost or
destroyed. When authorizing such issue of a new certificate, the board of
directors, in its discretion and as a condition precedent to the issuance
thereof, may prescribe such terms and conditions as it deems expedient, and may
require such indemnities as it deems adequate, to protect the corporation from
any claim that may be made against it with respect to any such certificate
alleged to have been lost or destroyed.
ARTICLE VIII
GENERAL
Section 8.1 Fiscal Year. The fiscal year of the corporation shall be fixed
by resolution of the board of directors.
Section 8.2 Dividends. The board of directors, from time to time, may
declare, and the corporation may pay, dividends on its outstanding shares in the
manner and upon the terms and conditions provided by law.
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Section 8.3 Checks. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
Section 8.4 Corporate Seal The board of directors shall select a corporate
seal which shall have inscribed thereon the name of the corporation, the words
"Alabama" and "Corporate Seal," and such seal may include the date of
incorporation of the corporation. The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or in any manner reproduced.
Section 8.5 Right of Corporation to Acquire its Own Shares. The
corporation shall have the right to purchase, take, receive or otherwise
acquire, hold, own, pledge and transfer or otherwise dispose of its own shares.
Purchases by the corporation of its own shares, whether direct or indirect, may
be made to the extent of unreserved and unrestricted earned surplus available
therefor and, if permitted by the articles of incorporation of the corporation
(or, if not so permitted by the articles of incorporation of the corporation,
with the affirmative vote of the holders of two-thirds of all shares entitled to
vote thereon), to the extent of unreserved and unrestricted capital surplus of
the corporation available therefor.
Section 8.6 Voting of Corporation's Securities. Unless otherwise ordered
by the board of directors, the chairman of the board, the president or any
vice-president, or such other officer as may be designated by the board of
directors to act in the absence of the chairman of the board, the president or
any vice-president, shall have full power and authority on behalf of the
corporation to attend and to act and to vote, and to execute a proxy or proxies
empowering others to attend and to act and to vote, at any meetings of security
holders of any corporation in which the corporation may hold securities, and at
such meetings the chairman of the board, or such other officer of the
corporation, or such proxy shall possess and may exercise any and all rights and
powers incident to the ownership of such securities, and which as the owner
thereof the corporation might have possessed and exercised, if present. The
secretary or any assistant secretary may affix the corporate seal to any such
proxy or proxies so executed by the chairman of the board, or such other
officer, and attest the same. The board of directors by resolution from time to
time may confer like powers upon any other person or persons.
ARTICLE IX
AMENDMENT OF BYLAWS
These bylaws may be altered, amended or repealed and new bylaws may be
adopted by the board of directors or by the shareholders at any regular or
special meeting thereof; provided, however, that the board of directors may not
alter, amend or repeal any bylaw establishing what constitutes a quorum at
shareholders' meetings.
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Exhibit 3.5.1
SECOND AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
GADSDEN HOSPITALITY, INC.
Pursuant to Sections 10-2B-10.06 and 10-2B-10.07 of the Alabama
Business Corporation Act, GADSDEN HOSPITALITY, INC., an Alabama corporation (the
"Corporation"), hereby certifies that these Second Amended and Restated Articles
of Incorporation (the "Amended Articles"), which contain amendments requiring
shareholder approval, were duly adopted by the Board of Directors of the
Corporation and by the sole shareholder of the Corporation by written consent
without a meeting, pursuant to Sections l0-2B-8.21 and l0-2B-7.04 of the Alabama
Business Corporation Act, as of July ___, 1999. The number of outstanding shares
of common stock of the Corporation (and the number of shares entitled to vote
thereon) is 1,000. These Amended Articles correctly set forth the provisions of
the Articles of Incorporation as heretofore amended. These Amended Articles
supercede the original Articles of Incorporation and all amendments thereto.
ARTICLE I
The name of the Corporation is GADSDEN HOSPITALITY, INC.
ARTICLE II
The total number of shares of common stock which the Corporation
shall have authority to issue is 1,000 shares of common stock, par value $0.01
per share.
ARTICLE III
The street address of the registered office of the Corporation is
The Corporation Company, 60 Commerce Street, Suite 1100, Montgomery, Alabama
36104, and the name of its registered agent at that office is The Corporation
Company.
ARTICLE IV
The name and address of the incorporator of the Corporation was
David Buddemeyer, 1601 Belvedere Road, West Palm Beach, Florida 33406.
ARTICLE V
The number of directors constituting the board of directors of the
Corporation shall be at least one (1), and the name and address of the person
who is to serve as the sole director until the annual meeting of shareholders
and until his successor is elected and shall
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qualify is as follows:
Name Address
Robert M. Flanders 3445 Peachtree Road, N.E.,
Two Live Oak Center, Suite 700,
Atlanta, GA 30326.
ARTICLE VI
(a) The purpose for which the Corporation is organized is limited
to: (i) acquiring, owning, leasing, operating, using and managing that certain
real property commonly known as the Holiday Inn Express, located at 801 Ross
Cleveland Avenue, Gadsden, Alabama 35954 (the "Property"); (ii) entering into
and performing its obligations under the credit agreement, among Lodgian
Financing Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel Group, LLC,
Servico, Inc. and other affiliated entities, as affiliate guarantors, the
initial lenders and initial issuing bank named therein, the collateral agent,
the administrative agent, Morgan Stanley Senior Funding, Inc., as co-lead
arranger, joint-book manager and syndication agent and Lehman Brothers, as
co-lead arranger, joint-book manager and documentation agent relating to the
financing or refinancing of the Property (the "Loan Agreement") which provides
the lender thereunder with a first priority lien on the Property, any
promissory-note evidencing indebtedness incurred pursuant to the Loan Agreement,
any mortgage securing such indebtedness and encumbering the Property (the
"Mortgage") and any other documents securing such indebtedness and any related
collateral documents, each as amended (or pursuant to a consent obtained in
accordance with the terms thereof) (collectively, the "Loan Documents"); (iii)
entering into and performing its obligations under the Indenture (the
"Indenture"), among Lodgian Financing Corp, as issuer, Lodgian, Inc., the
Subsidiary Guarantors defined therein and Bankers Trust Company, as trustee,
relating to the issuance of the 12 1/4% Senior Subordinated Notes due 2009 and
the Guarantee in favor of the holders of the Notes and (iv) transacting any and
all lawful business that is incident and necessary or appropriate to the
ownership and to the management of the Property for which a corporation may be
incorporated under the laws of the State of Alabama.
(b) Notwithstanding any other provision of these Amended Articles
and any provision of law that otherwise so empowers the Corporation, until such
time as the Property is released from the lien of the Mortgage, the Corporation
shall not, without the unanimous affirmative vote of the members of its Board of
Directors, (i) amend, alter, change, repeal or adopt any resolution setting
forth a proposed amendment to, any provision of these Articles of Incorporation,
(ii) dissolve or liquidate, in whole or in part, consolidate or merge with or
into any other entity or convey, sell or transfer its properties and assets
substantially as an entirety to any entity, (iii) file a voluntary petition or
otherwise initiate, or consent to, proceedings for the Corporation to be
adjudicated insolvent or seeking an order for relief as a debtor under the
United States Bankruptcy Code, as amended (11 U.S.C. ss.ss. 101 et seq.), or
(iv) file any petition, or consent to any petition, seeking any composition,
reorganization, readjustment, liquidation, dissolution or similar relief under
the present or any future federal bankruptcy laws or any other present or future
applicable federal, state or other statute or law relative to bankruptcy,
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<PAGE>
insolvency or other relief for debtors; or (v) seek or consent to the
appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, or liquidator (or other similar official) of the Corporation or of
all or any substantial part of the properties and assets of the Corporation, or
(vi) make any general assignment for the benefit of creditors, or (vii) admit in
writing its inability to pay its debts generally as they become due, or (viii)
declare or effect a moratorium on its debt or take any corporate action in
furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all times
until the Property is released from the lien of the Mortgage, include an
independent director (the "Independent Director"). The Independent Director
shall be a person who is not at the time of appointment and who has not at any
time during the prior five years been and who is not while serving as the
Independent Director (i) a director, stockholder, officer or employee of the
Corporation or any affiliates thereof, other than with respect to such person's
service as an Independent Director of the Corporation and such person's service
in similar "Independent Director" positions for affiliates of the Corporation;
(ii) a creditor, customer, supplier, independent contractor, manager or any
other person who derives more than 10% of its gross revenues from its activities
with the Corporation or any affiliates thereof; (iii) a person controlling any
such stockholder, creditor, customer, supplier, independent contractor, manager
or other person; (iv) the legal or beneficial owner, at any time while serving
as director of the Corporation, of any beneficial interest in the Corporation;
or (v) a member of the immediate family of any such stockholder, officer,
employee, creditor, customer, supplier, director, independent contractor,
manager or any other person of the Corporation. As used herein, the term
"affiliate" means any person controlling, under common control wit, or
controlled by the person in question, and the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through ownership
of voting securities, by contact or otherwise. In the event of the death,
incapacity, or resignation of an Independent Director, or the vacancy of the
Independent Director's seat on the Corporation's Board of Directors for any
reason, a successor Independent Director shall be appointed by the remaining
directors.
(d) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(ix) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as
the Property is
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<PAGE>
subject to the lien of the Mortgage, the Corporation shall not (i) commingle its
assets with those of, or pledge its assets for the benefit of, any other person
or entity; (ii) assume, guarantee or become obligated, or hold out its credit as
being available to satisfy, the liabilities or obligations of any other person
or entity; (iii) reduce its capital below an amount which is adequate in light
of its contemplated business operations; (iv) acquire obligations or securities
of, or make loans or advances to, any affiliate; (v) incur or assume any
indebtedness other than (A) the indebtedness underlying the Loan Agreement (B)
the indebtedness underlying the Indenture, and (C) liabilities (including, but
not limited to, trade payables) arising in the ordinary course of the
Corporation's business relating to the acquisition, ownership, operation, lease,
use or management of the Property; (vi) amend, alter, change or repeal any
provision of Article VI and the last sentence of Article IX of these Amended
Articles; (vii) engage in any dissolution or liquidation, in whole or in part,
consolidation or merger with or into any other entity or conveyance, sale or
transfer of its properties and assets substantially as an entirety to any
entity; or (viii) engage in any business or activity other than as set forth in
these Amended Articles. Notwithstanding anything contained herein to the
contrary, nothing herein shall be deemed to prohibit or otherwise limit any
dividends or other distributions from the Corporation to its shareholders.
ARTICLE VII
The Board of Directors is expressly authorized to adopt, alter,
amend or repeal the Bylaws of the Corporation subject to the limitations set
forth in these Amended Articles. Election of directors need not be by written
ballot unless and to the extent provided in the Bylaws of the Corporation.
ARTICLE VIII
The business and affairs of the Corporation shall be managed and
regulated by the board of directors of the Corporation. No director of the
Corporation shall be personally liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duties as a director, except for
liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not on good faith or
which involve intentional misconduct or a knowing violation of law, or (iii) for
any transaction from which the director derived an improper personal benefit. If
the Alabama Business Corporation Act is amended after the date of these Amended
Articles to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Alabama Business Corporation Act, as so amended.
The rights and authority conferred in this Article VIII shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, provision of these Amended Articles or Bylaws of the
Corporation, agreement, vote of stockholders or disinterested directors, or
otherwise.
ARTICLE IX
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The Corporation shall indemnify any officer or director, or any
former officer or director of the Corporation, to the fullest extent permitted
by law. The foregoing right of indemnification shall not be exclusive of any
other rights to which any director, officer, employee or agent may be entitled
as a matter of law or which he may be lawfully granted. The Corporation's
obligation to indemnify its officers and directors pursuant to this Article
shall be subordinate in all respects to the obligations of the Corporation
arising out of the Loan Documents and shall not constitute a claim against the
Corporation to the extent that the Corporation is unable to pay any amounts it
is obligated to pay under the Loan Documents.
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<PAGE>
IN WITNESS WHEREOF, the undersigned has executed these Second
Amended and Restated Articles of Incorporation this 23rd day of July, 1999.
GADSDEN HOSPITALITY, INC.
By: /s/ Thomas S. Gryboski
------------------------------------
Name: Tom Gyboski
Title: Assistant Secretary
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<PAGE>
Exhibit 3.5.2
BYLAWS
OF
GADSDEN HOSPITALITY OF ALABAMA, INC.
an Alabama corporation
<PAGE>
TABLE OF CONTENTS
-----------------
ARTICLE I Offices
ARTICLE II Shareholders
Section 2.1 Annual Meetings
Section 2.2 Special Meetings
Section 2.3 Place of Meetings
Section 2.4 Notice of Meetings
Section 2.5 Closing of Transfer Books
or Fixing of Record Date
Section 2.6 Voting Record
Section 2.7 Proxies
Section 2.8 Quorum
Section 2.9 Voting of Shares
Section 2.10 Voting of Shares by Certain
Holders
Section 2.11 Action by Shareholders Without
a Meeting
ARTICLE III Board of Directors
Section 3.1 General Powers
Section 3.2 Number, Tenure and Qualifications
Section 3.3 Vacancies
Section 3.4 Meetings
Section 3.5 Meeting by Telephone
Section 3.6 Quorum
Section 3.7 Acts of the Board
Section 3.8 Presumption of Assent
Section 3.9 Action Without a Meeting
Section 3.10 Committees of Directors
Section 3.11 Compensation
Section 3.12 Director Conflicts of Interest
Section 3.13 Loans to Employees and Directors
<PAGE>
ARTICLE IV Waiver of Notice
Section 4.1 Directors
Section 4.2 Shareholders
ARTICLE V Officers
Section 5.1 Positions
Section 5.2 Election and Term of Office
Section 5.3 Vacancies
Section 5.4 Removal
Section 5.5 Duties of Officers
Section 5.6 Compensation
ARTICLE VI Indemnification of Directors, Officers
and Employees
ARTICLE VII Certificates Representing Shares
Section 7.1 Certificates Representing Shares
Section 7.2 Legends on Certificates
Section 7.3 Transfer of Shares
Section 7.4 Lest, Stolen, Destroyed, or
Mutilated Certificates
ARTICLE VIII General
Section 8.1 Fiscal Year
Section 8.2 Dividends
Section 8.3 Checks
Section 8.4 Corporate Seal
Section 8.5 Right of Corporation to Acquire its
Own Shares
Section 8.6 Voting of Corporation's Securities
ARTICLE IX Amendment of Bylaws
ii
<PAGE>
BYLAWS
OF
GADSDEN HOSPITALITY OF ALABAMA, INC.
an Alabama corporation
ARTICLE I
OFFICES
The principal office of the corporation shall be located in Attalla,
Alabama. The corporation may have such other offices, within and without the
State of Alabama, as the board of directors may determine or as the business of
the corporation may require.
The registered office of the corporation, required by the Alabama Business
Corporation Act to be maintained in the State of Alabama, may but need not be
the same as its principal office in the State of Alabama. The address of the
registered office may be changed from time to time by the board of directors.
ARTICLE II
SHAREHOLDERS
Section 2.1 Annual Meetings. The annual meeting of the shareholders,
commencing with the year 1996, shall be held on the second Tuesday of December
in each year if not a legal holiday in the State of Alabama, and if a legal
holiday, then on the next succeeding business day not a legal holiday, at 10:00
a.m., or at such other date and time as shall be designated from time to time by
the board of directors and stated in the notice of the meeting, for the purpose
of electing directors and for the transaction of such other business as may come
before the meeting. If the election of directors shall not be held on the day
designated herein for the annual meeting of the shareholders, or at any
adjournment thereof, the board of directors shall cause the election to be held
at a special meeting of the shareholders as soon thereafter as may be
conveniently held.
Section 2.2 Special Meetings. Special meetings of the shareholders may be
called by the board of directors, the chairman of the board, the president or
the holders of not less than one-tenth of all shares of the corporation entitled
to vote at the meeting.
Section 2.3 Place of Meetings. Annual and special meetings shall be held
at the principal office of the corporation in the State of Alabama, or at such
other place, within or without the State of Alabama, as may be designated by the
board of directors or the person or persons calling the meeting and stated in
the notice of the meeting.
<PAGE>
Section 2.4 Notice of Meetings. Unless otherwise required by law, written
notice of shareholder meetings, stating the place, day and hour of the meeting
and, in case of a special meeting, the purpose or purposes for which the meeting
is called, shall, unless otherwise prescribed by statute, be delivered not less
than ten nor more than fifty days before the date of the meeting, either
personally or by mail, by or at the direction of the chairman of the board, the
president, the secretary, or the officer or other persons calling the meeting,
to each shareholder of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail,
addressed to the shareholder at his address as it appears on the stock transfer
books of the corporation, with postage thereon prepaid. Notwithstanding the
provisions of this section, the stock or bond indebtedness of the corporation
shall not be increased at a meeting unless notice of such meeting shall have
been given as may be required by section 234 of the Constitution of Alabama as
the same may be amended from time to time.
Section 2.5 Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the board of directors of the
corporation may provide that the stock transfer books shall be closed for stated
period not to exceed fifty days. If the stock transfer books shall be closed for
the purpose of determining shareholders entitled to notice of or to vote at a
meeting of shareholders, such books shall be closed for at least ten days
immediately preceding such meeting. In lieu of closing the stock transfer books,
the board of directors may fix in advance a date as the record date for any such
determination of shareholders, such date to be not more than fifty days and, in
case of a meeting of shareholders, not less than ten days prior to the date on
which the particular action, requiring such determination of shareholders, is to
be taken. If the stock transfer books are not closed and no record date is fixed
for the determination of shareholders entitled to notice of or to vote at a
meeting of shareholders, or shareholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed or the date on which
the resolution of the board of directors declaring such dividend is adopted, as
the case may be, shall be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof except where the
determination has been made through the closing of the stock transfer books and
the stated period of closing has expired.
Section 2.6 Voting Record. The officer or agent having charge of the stock
transfer books for shares of the corporation shall make, at least ten days
before each meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting or any adjournment thereof, arranged in
alphabetical order with the address of and the number of shares held by each.
Such list shall be kept on file at the principal office of the corporation for a
period often days prior to such meeting of shareholders and shall be subject to
inspection by any shareholder making written request therefor at any time during
usual
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business hours. Such list shall also be produced and kept open at the time and
place of the meeting and shall be subject to the inspection of any shareholder
during the whole time of the meeting. The original stock transfer books shall be
prima facie evidence as to who are the shareholders entitled to examine such
list or transfer books or to vote at any meeting of shareholders. Failure to
comply with the requirements of this section shall not affect the validity of
any action taken at such meeting.
Section 2.7 Proxies. At all meetings of shareholders, a shareholder may
vote in person or by proxy executed in writing by the shareholder or by his duly
authorized attorney-in-fact. Such proxy shall be filed with the secretary of the
corporation before or at the time of the meeting. No proxy shall be valid after
eleven months from the date of its execution, unless otherwise provided in the
proxy.
Section 2.8 Quorum. Unless otherwise provided in the articles of
incorporation, a majority of the shares of the corporation entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
shareholders. If a quorum is not present at a meeting, a majority of the shares
so represented may adjourn the meeting from time to time without further notice,
other than announcement at the meeting. At such adjourned meeting at which a
quorum shall be present, any business may be transacted which might have been
transacted at the meeting as originally noticed. The shareholders present at a
duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum.
Section 2.9 Voting of Shares. Subject to the provisions of the next
sentence of this Section 2.9, each outstanding share entitled to vote shall be
entitled to one vote upon each matter submitted to a vote at a meeting of
shareholders. At each election for directors every shareholder entitled to vote
at such election shall have the right to vote, in person or by proxy, the number
of shares owned by him for as many persons as there are directors to be elected
and for whose election he has a right to vote, or, if cumulative voting is
authorized by the articles of incorporation, to cumulate his votes by giving one
candidate as many votes as the number of such directors multiplied by the number
of his shares shall equal, or by distributing such votes on the same principle
among any number of such candidates. If a quorum is present, the affirmative
vote of the majority of the shares represented at the meeting and entitled to
vote on the subject matter shall be the act of the shareholders, unless the vote
of a greater number or voting by classes is required by the Constitution of
Alabama, the Alabama Business Corporation Act, the articles of incorporation or
these bylaws.
Section 2.10 Voting of Shares by Certain Holders. Shares standing in the
name of another corporation, domestic or foreign, may be voted by such officer,
agent or proxy as the bylaws of such other corporation may prescribe, or, in the
absence of such provision, as the board of directors of such other corporation
may determine.
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Shares held by an administrator, executor, guardian or conservator may be
voted by him, either in person or by proxy, without a transfer of such shares
into his name. Shares standing in the name of a trustee may be voted by him,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of such shares into his name and no corporate
trustee shall be entitled to vote in the election of directors shares held by it
solely in a fiduciary capacity if such shares are shares issued by the corporate
trustee itself.
Shares standing in the name of a receiver may be voted by such receiver,
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into his name if authority to do so is
contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Neither treasury shares of its own stock held by the corporation, nor
shares held by another corporation if a majority of the shares entitled to vote
for the election of directors of such other corporation is held by the
corporation, shall be voted at any meeting or counted in determining the total
number of outstanding shares at any given time.
Section 2.11 Action by Shareholders Without a Meeting. Any action required
or permitted to be taken at a meeting of the shareholders may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the shareholders entitled to vote with respect to the subject
matter thereof.
ARTICLE III
BOARD OF DIRECTORS
Section 3.1 General Powers. All corporate powers shall be exercised by or
under authority of, and the business and affairs of the corporation shall be
managed under the direction of, its board of directors.
Section 3.2 Number, Tenure and Qualifications. The number of directors
constituting the initial board of directors is set forth in the articles of
incorporation, and the members of the first board shall hold office until the
first annual meeting of shareholders and until their successors shall have been
elected and qualified. Thereafter, the number of directors constituting the
board of directors shall be not less than one nor more than ten, the exact
number to be determined by resolution of the board of directors. The minimum and
maximum number of directors may be increased or decreased from time to time in
the manner provided by the bylaws for the amendment thereof, but no decrease
shall have the effect of shortening the term of any incumbent director.
Directors shall hold office until the
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next succeeding annual meeting of shareholders and until their successors shall
have been elected and qualified. Directors need not be shareholders or residents
of the State of Alabama.
Section 3.3 Vacancies. Any vacancy occurring in the board of directors may
be filled by the affirmative vote of a majority of the remaining directors
though less than a quorum of the board of directors. A director elected to fill
a vacancy shall be elected to serve until the next annual meeting of
shareholders. Any directorship to be filled by reason of an increase in the
number of directors shall be filled by election at an annual meeting or at a
special meeting of shareholders called for that purpose.
Section 3.4 Meetings. Meetings of the board of directors, regular or
special, may be held either within or without the State of Alabama. A regular
meeting of the board of directors shall be held without notice immediately
after, and at the same place as, the annual meeting of shareholders. Other
regular meetings may be held upon such notice and at such time and place as
shall be determined by the board. Special meetings of the board of directors may
be called by the chairman of the board, the president or by any two directors on
three days written notice to each director, delivered personally or mailed to
each director at his business address or by telegram. The secretary, at the
request in writing of the chairman of the board, the president or any two
directors, shall send such written notice on his or their behalf. If mailed,
such notice shall be deemed to be delivered when deposited in the United States
mail, so addressed, with postage thereon prepaid. If by telegram, such notice
shall be deemed to be delivered when the telegram is delivered to the telegraph
company. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the board of directors need be specified in the
notice of such meeting.
Section 3.5 Meeting by Telephone. Members of the board of directors or any
committee designated thereby may participate in a meeting of such board or
committee by means of a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other
at the same time and participation by such means shall constitute presence in
person at a meeting.
Section 3.6 Quorum. A majority of the whole number of directors of the
board shall constitute a quorum for the transaction of business at any meeting
of the board of directors. If less than a majority is present at a meeting, a
majority of the directors present may adjourn the meeting from time to time
without further notice. If a quorum is present when the meeting is convened, the
directors present may continue to do business, taking action by a vote of a
majority of a quorum, until adjournment, notwithstanding the withdrawal of
enough directors to leave less than a quorum present or the refusal of any
director present to vote.
Section 3.7 Acts of the Board. The act of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors.
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Section 3.8 Presumption of Assent. A director of the corporation who is
present at a meeting of the board of directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his dissent shall be entered in the minutes of the meeting or unless he shall
file his written dissent to such action with the person acting as the secretary
of the meeting before the adjournment thereof or shall forward such dissent by
registered mail to the secretary of the corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
Section 3.9 Action Without a Meeting. Any action required or permitted to
be taken by the board of directors or a committee thereof at a meeting may be
taken without a meeting if a consent in writing, setting forth the action so
taken, shall be signed by all of the directors or all of the members of the
committee, as the case may be. Such consent shall have the same effect as a
unanimous vote of the directors or the members of such committee.
Section 3.10 Committees of Directors. The board of directors, by
resolution passed by a majority of the whole board of directors, may designate
from among its members one or more committees, each committee to consist of one
or more of the directors of the corporation. Each such committee, to the extent
provided in the resolutions of the board of directors, shall have and may
exercise all the powers and authority of the board of directors, except that no
such committee shall have the authority of the board in reference to declaring a
dividend or distribution from capital stock, issuing capital stock, amending the
articles of incorporation, adopting a plan of merger or consolidation,
recommending to the shareholders the sale, lease, mortgage, exchange or other
disposition of all or substantially all of the property and assets of the
corporation other than in the usual and regular course of business, recommending
to the shareholders a voluntary dissolution of the corporation or a revocation
of a dissolution, filling vacancies in the board of directors, or amending the
bylaws of the corporation. Such committee or committees shall have such name or
names as may be determined from time to time by resolution adopted by the board
of directors. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors when required.
Section 3.11 Compensation. By resolution of the board of directors, each
director may be paid his expenses, if any, of attendance at each meeting of the
board of directors, and may be paid a stated salary as director or a fixed sum
for attendance at each meeting of the board of directors or both. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
Section 3.12 Director Conflicts of Interest. No contract or other
transaction between the corporation and one or more of its directors or any
other corporation, firm, association or entity in which one or more of its
directors are directors or officers or are financially interested, shall be
either void or voidable because of such relationship or interest or because such
director or directors are present at the meeting of the board of directors or
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a committee thereof which authorizes, approves or ratifies such contract or
transaction, if the contract or transaction is fair and reasonable to the
corporation and if either the fact of such relationship or interest is disclosed
to the board of directors or committee which authorizes, approves or ratifies
the contract or transaction by a vote or consent sufficient for the purpose
without counting the votes or consents of such interested directors or the fact
of such relationship or interest is disclosed to the shareholders entitled to
vote and they authorize, approve or ratify such contract or transaction by vote
or written consent.
Common or interested directors may not be counted in determining the
presence of a quorum at a meeting of the board of directors or a committee
thereof which authorizes, approves or ratifies such contract or transaction.
Section 3.13 Loans to Employees and Directors. The corporation shall not
lend money to or use its credit to assist its directors without authorization in
the particular case by its shareholders, but may lend money to and use its
credit to assist any employee of the corporation or of a subsidiary, including
any such employee who is a director of the corporation, if the board of
directors decides that such loan or assistance may benefit the corporation.
ARTICLE IV
WAIVER OF NOTICE
Section 4.1 Directors. Whenever any notice is required to be given to any
director of the corporation under the provisions of the Constitution of Alabama,
the Alabama Business Corporation Act, the articles of incorporation, or these
bylaws, a waiver thereof in writing signed by the person or persons entitled to
such notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice. Neither the business to be transacted
at, nor the purpose of, any regular or special meeting of the board of directors
or any committee designated thereby need be specified in the waiver of notice.
The attendance of a director at a meeting shall constitute a waiver of notice of
such meeting, except where a director attends a meeting for the express purpose
of objecting to the transaction of any business because the meeting is not
lawfully called or convened.
Section 4.2 Shareholders. Whenever any notice is required to be given to
any shareholder of the corporation under the provisions of the Constitution of
Alabama, the Alabama Business Corporation Act, the articles of incorporation, or
the bylaws, a waiver thereof in writing signed by the person or persons entitled
to such notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice.
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ARTICLE V
OFFICERS
Section 5.1 Positions. The officers of the corporation shall be elected by
the board of directors and shall consist of a chairman of the board, a
president, a secretary, and such other officers and assistant officers as may be
deemed necessary by the board of directors. Any two or more offices may be held
by the same person.
Section 5.2 Election and Term of Office. The first officers of the
corporation shall be elected by the board of directors at the first meeting of
the board of directors. Each officer shall hold office at the pleasure of the
board of directors or until his death or he shall resign or shall have been
removed in the manner hereinafter provided.
Section 5.3 Vacancies. A vacancy in any office may be filled by the board
of directors.
Section 5.4 Removal. Any officer or agent may be removed by the board of
directors whenever in its judgment the best interests of the corporation will be
served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election or appointment of an officer
or agent shall not of itself create contract rights.
Section 5.5 Duties of Officers. The officers of the corporation, if and
when elected by the board of directors of the corporation, shall have the
following duties:
(a) Chairman of the Board. The chairman of the board shall be the
chief executive officer of the corporation and shall, subject to the
direction of the board of directors, supervise and control the business
and affairs of the corporation. He shall, when present, preside at all
meetings of the shareholders and of the board of directors. He may sign
certificates for shares of the corporation and deeds, mortgages, bonds,
contracts, or other instruments on behalf of the corporation, except where
required by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation. In general,
he shall perform all duties incident to the office of chairman of the
board and such other duties as may be prescribed by the board of
directors.
(b) President. The president shall be the chief administrative
officer of the corporation and shall have general and active management of
such areas and divisions of the business of the corporation as may be
designated by the board of directors or by the chairman of the board. The
president of the corporation shall carry into effect the orders of the
chairman of the board. In
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the absence of the chairman of the board or in the event of his death or
inability to act, the president shall perform the duties of the chairman
of the board, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the chairman of the board. The
president may sign certificates for shares of the corporation and deeds,
mortgages, bonds, contracts or other instruments on behalf of the
corporation except where required by law to be otherwise signed and
executed and except where the signing and execution thereof shall be
expressly delegated by the board of directors to some other officer or
agent of the corporation. In general, he shall perform all duties incident
to the office of president and such other duties as may be prescribed by
the chairman of the board or the board of directors.
(c) Vice-Presidents. In the absence of the president or in the event
of his death or inability to act, the vice-president (or in the event
there be more than one vice-president, the vice-presidents in the order
determined by the board of directors) shall perform the duties of the
president, and when so acting, shall have all the powers of and be subject
to all the restrictions upon the president. Any vice-president may sign
certificates for shares of the corporation and shall perform such other
duties as from time to time may be assigned to him by the chairman of the
board, the president or the board of directors.
(d) Secretary. The secretary shall keep the minutes of the
proceedings of the shareholders and of the board of directors in one or
more books provided for that purpose; see that all notices are duly given
in accordance with the provisions of these bylaws or as required by law;
be custodian of the corporate records and of the seal of the corporation;
see that the seal of the corporation is affixed to all documents, the
execution of which on behalf of the corporation under its seal is duly
authorized; keep a register of the post office address of each shareholder
which shall be furnished to the secretary by each shareholder; sign with
the chairman of the board, the president, any vice-president, or the
treasurer certificates for shares of the corporation, the issuance of
which shall have been authorized by resolution of the board of directors;
have general charge of the stock transfer books of the corporation; and in
general perform all duties incident to the office of secretary and such
other duties as from time to time may be assigned to him by the chairman
of the board, the president or the board of directors. If there is no
treasurer of the corporation, the secretary shall assume the authority and
duties of treasurer.
(e) Treasurer. The treasurer shall have charge and custody of and be
responsible for all funds and securities of the corporation, receive and
give receipts for moneys due and payable to the corporation from any
source whatsoever, and deposit all such moneys in the name of the
corporation in such banks, trust companies or other depositories as may be
designated by the board of directors, and in general perform all of the
duties incident to the office of
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treasurer and such other duties as from time to time may be assigned to
him by the chairman of the board, the president or the board of directors.
The treasurer may sign certificates for shares of the corporation. If
required by the board of directors, the treasurer shall give a bond for
the faithful discharge of his duties in such sum and with such surety or
sureties as the board of directors shall determine.
(f) Assistant Secretaries and Assistant Treasurers. The assistant
secretary, or if there shall be more than one, the assistant secretaries
in the order determined by the board of directors, shall, in the absence
or disability of the secretary, perform the duties and exercise the powers
of the secretary. The assistant treasurer, or, if there shall be more than
one, the assistant treasurers in the order determined by the board of
directors, shall, in the absence or disability of the treasurer, perform
the duties and exercise the powers of the treasurer. The board of
directors may require any assistant treasurer to give a bond for the
faithful discharge of his duties in such sums and with such surety or
sureties as the board of directors shall determine. The assistant
secretaries and assistant treasurers shall all perform such other duties
as shall be assigned to them by the secretary and treasurer, respectively,
or by the chairman of the board, the president or the board of directors.
Section 5.6 Compensation. The compensation of the officers shall be fixed
from time to time by the board of directors, and no officer shall be prevented
from receiving such compensation by reason of the fact that he is also a
director of the corporation.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS,
OFFICERS AND EMPLOYEES
Section 6.1 The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed claim, action, suit or proceeding, whether civil, criminal,
administrative or investigative, including appeals (other than an action by or
in the right of the corporation), by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, partner, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such claim, action, suit or proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
claim, action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo
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contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation, and
with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
Section 6.2 The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed claim, action or suit by or in the right of the corporation to procure
a judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the corporation or is or was serving at the
request of the corporation as a director, officer, partner, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the corporation unless and only to
the extent that the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem proper.
Section 6.3 To the extent that a director, officer, employee or agent of
the corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Sections 6.1 and 6.2 of this Article
VI, or in defense or any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection therewith, notwithstanding that he has not been successful on
any other claim, issue or matter in any such action, suit or proceeding.
Section 6.4 Any indemnification under Sections 6.1 and 6.2 of this Article
VI (unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification of the
director, officer, employee or agent is proper in the circumstances because he
has met the applicable standard of conduct set forth in Sections 6.1 and 6.2 of
this Article VI. Such determination shall be made (a) by the board of directors
by a majority vote of a quorum consisting of directors who were not parties to,
or who have been wholly successful on the merits or otherwise with respect to,
such claim, action, suit or proceeding, or (b) if such a quorum is not
obtainable, or, even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (c) by the
shareholders.
Section 6.5 Expenses (including attorneys' fees) incurred in defending a
civil or criminal claim, action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such claim, action, suit or
proceeding as authorized in the manner provided in Section 6.4 of this Article
VI upon receipt of an undertaking by or on behalf of the director, officer,
employee or agent to repay such amount if and to the extent that it
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shall be ultimately determined that he is not entitled to be indemnified by the
corporation as authorized in this Article VI.
Section 6.6 The indemnification authorized in and provided by this Article
VI shall not be deemed exclusive of and shall be in addition to any other right
to which those indemnified may be entitled under any statute, rule of law,
provisions of articles of incorporation, bylaw, agreement, vote of shareholders
or disinterested directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director, officer, employee
or agent and shall insure to the benefit of the heirs, executors and
administrators of such a person.
Section 6.7 The corporation may purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, partner, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity or arising out of
his status as such, whether or not the corporation is required or permitted to
indemnify him against such liability under the provisions of this Article VI or
any statute.
ARTICLE VII
CERTIFICATES REPRESENTING SHARES
Section 7.1 Certificates Representing Shares. Certificates representing
shares of the corporation shall be in such form as shall be determined by the
board of directors. Such certificates shall be signed by the chairman of the
board, the president, any vice-president, or the treasurer, and by the
secretary, an assistant vice-president, an assistant secretary, or an assistant
treasurer, and sealed with the corporate seal or a facsimile thereof. The
signatures of both of such officers upon a certificate may be facsimiles if the
certificate is countersigned by a transfer agent or registered by a registrar,
other than the corporation itself or one of its employees. In case any officer
who has signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer at the date of its issue. Each certificate for shares shall be
consecutively numbered or otherwise identified. The name and address of the
person to whom the shares represented thereby are issued, with the number and
class of shares and date of issue, shall be entered on the stock transfer books
of the corporation. All certificates surrendered to the corporation for transfer
shall be cancelled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been surrendered and
cancelled, except that in case of a lost, destroyed or mutilated certificate a
new one may be issued therefor upon such terms and indemnity to the corporation
as the board of directors may prescribe.
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Section 7.2 Legends on Certificates. Any written restriction on the
transfer of shares of the corporation must be noted conspicuously on the
certificate representing such shares. In addition, if the corporation is
authorized to issue shares of more than one class, there shall be set forth upon
the face or back of every certificate, or every certificate shall have a
statement that the corporation will furnish to any shareholder upon request and
without charge, a full statement of the designations, preferences, limitations,
and relative rights of the shares of each class authorized to be issued, and if
the corporation is authorized to issue any preferred or special class in series,
the variations in the relative rights and preferences between the shares of each
such series so far as the same have been fixed and determined and the authority
of the board of directors to fix and determine the relative rights and
preferences of subsequent series.
Section 7.3 Transfer of Shares. Transfer of shares of the corporation
shall be made only on the stock transfer books of the corporation by the holder
of record thereof or by his legal representative, who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the secretary ,of the
corporation, and on surrender for cancellation of the certificate for such
shares. The person in whose name shares stand on the books of the corporation
shall be deemed by the corporation to be the owner thereof for all purposes.
Section 7.4 Lost, Stolen, Destroyed, or Mutilated Certificates. The board
of directors may direct a new certificate to be issued in place of any
certificate theretofore issued by the corporation alleged to have been lost or
destroyed. When authorizing such issue of a new certificate, the board of
directors, in its discretion and as a condition precedent to the issuance
thereof, may prescribe such terms and conditions as it deems expedient, and may
require such indemnities as it deems adequate, to protect the corporation from
any claim that may be made against it with respect to any such certificate
alleged to have been lost or destroyed.
ARTICLE VIII
GENERAL
Section 8.1 Fiscal Year. The fiscal year of the corporation shall be fixed
by resolution of the board of directors.
Section 8.2 Dividends. The board of directors, from time to time, may
declare, and the corporation may pay, dividends on its outstanding shares in the
manner and upon the terms and conditions provided by law.
13
<PAGE>
Section 8.3 Checks. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
Section 8.4 Corporate Seal. The board of directors shall select a
corporate seal which shall have inscribed thereon the name of the
corporation, the words "Alabama" and "Corporate Seal," and such seal may
include the date of incorporation of the corporation. The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or in any manner
reproduced.
Section 8.5 Right of Corporation to Acquire its Own Shares. The
corporation shall have the right to purchase, take, receive or otherwise
acquire, hold, own, pledge and transfer or otherwise dispose of its own shares.
Purchases by the corporation of its own shares, whether direct or indirect, may
be made to the extent of unreserved and unrestricted earned surplus available
therefor and, if permitted by the articles of incorporation of the corporation
(or, if not so permitted by the articles of incorporation of the corporation,
with the affirmative vote of the holders of two-thirds of all shares entitled to
vote thereon), to the extent of unreserved and unrestricted capital surplus of
the corporation available therefor.
Section 8.6 Voting of Corporation's Securities. Unless otherwise ordered
by the board of directors, the chairman of the board, the president or any
vice-president, or such other officer as may be designated by the board of
directors to act in the absence of the chairman of the board, the president or
any vice-president, shall have full power and authority on behalf of the
corporation to attend and to act and to vote, and to execute a proxy or proxies
empowering others to attend and to act and to vote, at any meetings of security
holders of any corporation in which the corporation may hold securities, and at
such meetings the chairman of the board, or such other officer of the
corporations or such proxy shall possess and may exercise any and all rights and
powers incident to the ownership of such securities, and which as the owner
thereof the corporation might have possessed and exercised, if present. The
secretary or any assistant secretary may affix the corporate seal to any such
proxy or proxies so executed by the chairman of the board, or such other
officer, and attest the same. The board of directors by resolution from time to
time may confer like powers upon any other person or persons.
ARTICLE IX
AMENDMENT OF BYLAWS
These bylaws may be altered, amended or repealed and new bylaws may be
adopted by the board of directors or by the shareholders at any regular or
special meeting thereof; provided, however, that the board of directors may not
alter, amend or repeal any bylaw establishing what constitutes a quorum at
shareholders' meetings.
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<PAGE>
Exhibit 3.6.1
FOURTH AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
SHEFFIELD MOTEL ENTERPRISES, INC.
Pursuant to Sections 10-2B-10.06 and 10-2B-10.07 of the Alabama
Business Corporation Act, SHEFFIELD MOTEL ENTERPRISES, INC., an Alabama
corporation (the "Corporation"), hereby certifies that these Fourth Amended and
Restated Articles of Incorporation (the "Amended Articles"), which contain
amendments requiring shareholder approval, were duly adopted by the Board of
Directors of the Corporation and by the sole shareholder of the Corporation by
written consent without a meeting, pursuant to Sections l0-2B-8.21 and
l0-2B-7.04 of the Alabama Business Corporation Act, as of July ___, 1999. The
number of outstanding shares of common stock of the Corporation (and the number
of shares entitled to vote thereon) is 1,000. These Amended Articles correctly
set forth the provisions of the Articles of Incorporation as heretofore amended.
These Amended Articles supercede the original Articles of Incorporation and all
amendments thereto.
ARTICLE I
(a) The name of the Corporation is SHEFFIELD MOTEL ENTERPRISES, INC.
The address of the principal office and the mailing address of the Corporation
is 3445 Peachtree Road, N.E., Two Live Oak Center, Suite 700, Atlanta, GA 30326.
ARTICLE II
(a) The purpose for which the Corporation is organized is limited
to: (i) acquiring, owning, leasing, operating, using and managing that certain
real property commonly known as the Holiday Inn Sheffield, located at 4900 Hatch
Boulevard, Sheffield, Alabama 35660 (the "Property"); (ii) entering into and
performing its obligations under the credit agreement, among Lodgian Financing
Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel Group, LLC, Servico,
Inc. and other affiliated entities, as affiliate guarantors, the initial lenders
and initial issuing bank named therein, the collateral agent, the administrative
agent, Morgan Stanley Senior Funding, Inc., as co-lead arranger, joint-book
manager and syndication agent and Lehman Brothers, as co-lead arranger,
joint-book manager and documentation agent relating to the financing or
refinancing of the Property (the "Loan Agreement") which provides the lender
thereunder with a first priority lien on the Property, any promissory-note
evidencing indebtedness incurred pursuant to the Loan Agreement, any mortgage
securing such indebtedness and encumbering the Property (the "Mortgage") and any
other documents securing such indebtedness and any related collateral documents,
each as amended (or pursuant to a consent obtained in accordance with the terms
thereof) (collectively, the "Loan Documents"); (iii) entering into and
performing its obligations under the Indenture (the "Indenture"), among Lodgian
Financing Corp, as issuer, Lodgian, Inc., the Subsidiary Guarantors defined
therein and
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<PAGE>
Bankers Trust Company, as trustee, relating to the issuance of the 12 1/4%
Senior Subordinated Notes due 2009 and the Guarantee in favor of the holders of
the Notes and (iv) transacting any and all lawful business that is incident and
necessary or appropriate to the ownership and to the management of the Property
for which a corporation may be incorporated under the laws of the State of
Alabama.
(b) Notwithstanding any other provision of these Amended Articles
and any provision of law that otherwise so empowers the Corporation, until such
time as the Property is released from the lien of the Mortgage, the Corporation
shall not, without the unanimous affirmative vote of the members of its Board of
Directors, (i) amend, alter, change, repeal or adopt any resolution setting
forth a proposed amendment to, any provision of these Articles of Incorporation,
(ii) dissolve or liquidate, in whole or in part, consolidate or merge with or
into any other entity or convey, sell or transfer its properties and assets
substantially as an entirety to any entity, (iii) file a voluntary petition or
otherwise initiate, or consent to, proceedings for the Corporation to be
adjudicated insolvent or seeking an order for relief as a debtor under the
United States Bankruptcy Code, as amended (11 U.S.C. ss.ss. 101 et seq.), or
(iv) file any petition, or consent to any petition, seeking any composition,
reorganization, readjustment, liquidation, dissolution or similar relief under
the present or any future federal bankruptcy laws or any other present or future
applicable federal, state or other statute or law relative to bankruptcy,
insolvency or other relief for debtors; or (v) seek or consent to the
appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, or liquidator (or other similar official) of the Corporation or of
all or any substantial part of the properties and assets of the Corporation, or
(vi) make any general assignment for the benefit of creditors, or (vii) admit in
writing its inability to pay its debts generally as they become due, or (viii)
declare or effect a moratorium on its debt or take any corporate action in
furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all times
until the Property is released from the lien of the Mortgage, include an
independent director (the "Independent Director"). The Independent Director
shall be a person who is not at the time of appointment and who has not at any
time during the prior five years been and who is not while serving as the
Independent Director (i) a director, stockholder, officer or employee of the
Corporation or any affiliates thereof, other than with respect to such person's
service as an Independent Director of the Corporation and such person's service
in similar "Independent Director" positions for affiliates of the Corporation;
(ii) a creditor, customer, supplier, independent contractor, manager or any
other person who derives more than 10% of its gross revenues from its activities
with the Corporation or any affiliates thereof; (iii) a person controlling any
such stockholder, creditor, customer, supplier, independent contractor, manager
or other person; (iv) the legal or beneficial owner, at any time while serving
as director of the Corporation, of any beneficial interest in the Corporation;
or (v) a member of the immediate family of any such stockholder, officer,
employee, creditor, customer, supplier, director, independent contractor,
manager or any other person of the Corporation. As used herein, the term
"affiliate" means any person controlling, under common control wit, or
controlled by the person in question, and the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through ownership
of voting securities, by contact or otherwise. In the event of the death,
incapacity, or resignation of an Independent Director, or
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<PAGE>
the vacancy of the Independent Director's seat on the Corporation's Board of
Directors for any reason, a successor Independent Director shall be appointed by
the remaining directors.
(d) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(ix) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall not
(i) commingle its assets with those of, or pledge its assets for the benefit of,
any other person or entity; (ii) assume, guarantee or become obligated, or hold
out its credit as being available to satisfy, the liabilities or obligations of
any other person or entity; (iii) reduce its capital below an amount which is
adequate in light of its contemplated business operations; (iv) acquire
obligations or securities of, or make loans or advances to, any affiliate; (v)
incur or assume any indebtedness other than (A) the indebtedness underlying the
Loan Agreement (B) the indebtedness underlying the Indenture, and (C)
liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article II and the last sentence of
Article VI of these Amended Articles; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in these Amended Articles. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
ARTICLE III
The total number of shares of common stock which the Corporation
shall have the authority to issue is One Thousand (1,000), par value $0.01 per
share. Such stock may be issued by the Corporation from time to time for such
consideration as may be fixed from time to time by the Board of Directors
thereof.
ARTICLE IV
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<PAGE>
The Board of Directors of the Corporation shall be comprised of
three (3) persons subject to the provisions of Article II(c). The number of
directors may be either increased or decreased from time to time as provided for
in the Bylaws of the Corporation, but shall never be less than one (1).
ARTICLE V
The Corporation reserves to its shareholders the right to amend or
repeal any provisions now or hereafter contained in these Amended Articles,
subject to the limitations set forth in these Amended Articles. Subject to the
foregoing, any rights which the Amended Articles may confer upon the Corporation
may be modified or canceled by a vote of the holders of a majority of the
Corporation's stock entitled to vote thereon to amend or repeal said Amended
Articles.
ARTICLE VI
The Corporation shall indemnify any officer or director, or any
former officer or director of the Corporation, to the fullest extent permitted
by law. The foregoing right of indemnification shall not be exclusive of any
other rights to which any director, officer, employee or agent may be entitled
as a matter of law or which he may be lawfully granted. The Corporation's
obligation to indemnify its officers and directors pursuant to this Article
shall be subordinate in all respects to the obligations of the Corporation
arising out of the Loan Documents and shall not constitute a claim against the
Corporation to the extent that the Corporation is unable to pay any amounts it
is obligated to pay under the Loan Documents.
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<PAGE>
IN WITNESS WHEREOF, the undersigned has executed these Fourth
Amended and Restated Articles of Incorporation this 23rd day of July, 1999.
SHEFFIELD MOTEL ENTERPRISES, INC.
By: /s/ Thomas S. Gryboski
------------------------------------
Name: Tom Gryboski
Title: Assistant Secretary
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<PAGE>
Exhibit 3.6.2
SHEFFIELD MOTEL ENTERPRISES, INC.
* * * * *
BY -LAWS
* * * * *
ARTICLE I
OFFICES
Section 1. The principal office shall be located in Montgomery,
Alabama.
Section 2. The corporation may also have offices at such other
places both within and without the State of Alabama as the board of directors
may from time to time determine or the business of the corporation may require.
ARTICLE II
ANNUAL MEETINGS OF STOCKHOLDERS
Section 1. All meetings of stockholders for the election of directors
shall be held at such place as may be fixed from time to time by the board of
directors.
Section 2. Annual meetings of stockholders, commencing with the year
1980, shall be held on such date and time as shall be designated from time to
time by the board of directors,
<PAGE>
at which they shall elect by a plurality vote a board of directors, and transact
such other business as may properly be brought before the meeting.
Section 3. Written or printed notice of the annual meeting stating
the place, day and hour of the meeting shall be delivered not less than ten nor
more than fifty days before the date of the meeting, either personally or by
mail, by or at the direction of the president, the secretary, or the officer or
persons calling the meeting to each stockholder of record entitled to vote at
such meeting.
The notice shall also set forth the purpose or purposes for which
the meeting is called if special action is proposed to be taken at the annual
meeting, and if one of the purposes of an annual meeting is to increase the
stock or bonded indebtedness of the corporation, such notice shall be
delivered not less than thirty days before the date of the meeting.
ARTICLE III
SPECIAL MEETINGS OF STOCKHOLDERS
Section 1. Special meetings of stockholders for any purpose other
than the election of directors may be held at such time and place within or
without the State of Alabama as shall be stated in the notice of the meeting or
in a duly executed waiver of notice thereof.
Section 2. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by
<PAGE>
statute or by the certificate of incorporation, may be called by the president,
the board of directors, or the holders of not less than one-tenth of all the
shares of stock entitled to vote at the meeting.
Section 3. Written or printed notice of a special meeting stating
the place, day and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than fifty days
before the date of the meeting, either personally or by mail, by or at the
direction of the president, the secretary, or the officer or persons calling the
meeting, to each stockholder of record entitled to vote at such meeting.
If one of the purposes of a special meeting is to increase the stock
or bonded indebtedness of the corporation, such notice shall be delivered not
less than thirty days before the date of the meeting.
Section 4. The business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of stock issued
and outstanding and entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business
<PAGE>
except as otherwise provided by statute or by the certificate of incorporation.
If, however, such quorum shall not be present or represented at any meeting of
the stockholders, the stockholders present in person or represented by proxy
shall have power to adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented any business may be transacted which might have been transacted at
the meeting as originally notified.
Section 2. If a quorum is present, the affirmative vote of a
majority of the shares of stock represented at the meeting shall be the act of
the stockholders unless the vote of a greater number of shares of stock is
required by law or the certificate of incorporation.
Section 3. Each outstanding share of stock, having voting power,
shall be entitled to one vote on each matter submitted to a vote at a meeting of
stockholders. A stockholder may vote either in person or by proxy executed in
writing by the stockholder or by his duly authorized attorney-in-fact.
Section 4. Any action required to be taken at a meeting of the
stockholders may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the stockholders entitled
to vote with respect to the subject matter thereof.
<PAGE>
ARTICLE V
DIRECTORS
Section 1. The number of directors shall be three. Directors need
not be residents of the State of Alabama nor stockholders of the corporation.
The directors, other than the first board of directors, shall be elected at the
annual meeting of the stockholders, and each director elected shall serve until
the next succeeding annual meeting and until his successor shall have been
elected and qualified. The first board of directors shall hold office until the
first annual meeting of stockholders.
Section 2. Any vacancy occurring in the board of directors may be
filled by the affirmative vote of a majority of the remaining directors though
less than a quorum of the board of directors. A director elected to fill a
vacancy shall be elected for the unexpired portion of the term of his
predecessor in office.
Any directorship to be filled by reason of an increase in the number
of directors shall be filled by election at an annual meeting or at a special
meeting of stockholders called for that purpose. A director elected to fill a
newly created directorship shall serve until the next succeeding annual meeting
of stockholders and until his successor shall have been elected and qualified.
<PAGE>
Section 3. The business affairs of the corporation shall be managed
by its board of directors which may exercise all such powers of the corporation
and do all such lawful acts and things as are not by statute or by the
certificate of incorporation or by these by-laws directed or required to be
exercised or done by the stockholders.
Section 4. The directors may keep the books of the corporation,
except such as are required by law to be kept within the state, outside of the
State of Alabama, at such place or places as they may from time to time
determine.
Section 5. The board of directors, by the affirmative vote of a
majority of the directors then in office, and irrespective of any personal
interest of any of its members, shall have authority to establish reasonable
compensation of all directors for services to the corporation as directors,
officers or otherwise.
ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular or special,
may be held either within or without the State of Alabama.
Section 2. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the vote of
the stockholders at the annual
<PAGE>
meeting and no notice of such meeting shall be necessary to the newly elected
directors in order legally to constitute the meeting, provided a quorum shall be
present, or it may convene at such place and time as shall be fixed by the
consent in writing of all the directors.
Section 3. Regular meetings of the board of directors may be held
upon such notice, or without notice, and at such time and at such place as shall
from time to time be determined by the board.
Section 4. Special meetings of the board of directors may be called
by the president on three days' notice to each director, either personally or by
mail or by telegram; special meetings shall be called by the president or
secretary in like manner and on like notice on the written request of two
directors.
Section 5. Attendance of a director at any meeting shall constitute
a waiver of notice of such meeting, except where a director attends for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the board
of directors need be specified in the notice or waiver of notice of such
meeting.
<PAGE>
Section 6. A majority of the directors shall constitute a quorum for
the transaction of business unless a greater number is required by law or by the
certificate of incorporation. The act of a majority of the directors present at
any meeting at which a quorum is present shall be the act of the board of
directors, unless the act of a greater number is required by statute or by the
certificate of incorporation. If a quorum shall not be present at any meeting of
directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
ARTICLE VII
EXECUTIVE COMMITTEE
Section 1. The board of directors, by resolution adopted by a
majority of the number of directors fixed by the by-laws or otherwise, may
designate two or more directors to constitute an executive committee, which
committee, to the extent provided in such resolution, shall have and exercise
all of the authority of the board of directors in the management of the
corporation, except as otherwise required by law. Vacancies in the membership of
the committee shall be filled by the board of directors at a regular or special
meeting of the board of directors. The executive committee shall keep regular
minutes of its proceedings and report the same to the board when required.
<PAGE>
ARTICLES VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these by-laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
Section 2. Whenever any notice whatever is required to be given
under the provisions of the statutes or under the provisions of the certificate
of incorporation or these by-laws, a waiver thereof in writing signed by the
person or persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to to the giving of such notice.
ARTICLE IX
OFFICERS
Section 1. The officers of the corporation shall be chosen by the
board of directors and shall be a president, a vice-president, a secretary and a
treasurer. The board of
<PAGE>
directors may also choose additional vice-presidents, and one or more assistant
secretaries and assistant treasurers.
Section 2. The board of directors at its first meeting after each
annual meeting of stockholders shall choose a president, one or more
vice-presidents, a secretary and a treasurer, none of whom need be a member of
the board.
Section 3. The board of directors may appoint such other officers
and agents as it shall deem necessary who shall hold their offices for such
terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board of directors.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by the
board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the stockholders and the board of
directors, shall have
<PAGE>
general and active management of the business of the corporation and shall see
that all orders and resolutions of the board of directors are carried into
effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
THE VICE-PRESIDENTS
Section 8. The vice-president, or if there shall be more than one,
the vice-presidents in the order determined by the board of directors, shall, in
the absence or disability of the president, perform the duties and exercise the
powers of the president and shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be
<PAGE>
given, notice of all meetings of the stockholders and special meetings of the
board of directors, and shall perform such other duties as may be prescribed by
the board of directors or president, under whose supervision he shall be. He
shall have custody of the corporate seal of the corporation and he, or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature or by the
signature of such assistant secretary. The board of directors may give general
authority to any other officer to affix the seal of the corporation and to
attest the affixing by his signature.
Section 10. The assistant secretary, or if there be more than one,
the assistant secretaries in the order determined by the board of directors,
shall, in the absence or disability of the secretary, perform the duties and
exercise the powers of the secretary and shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and
<PAGE>
other valuable effects in the name and to the credit of the corporation in such
depositories as may be designated by the board of directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.
Section 14. The assistant treasurer, or, if there shall be more than
one, the assistant treasurers in the order determined by the board of directors,
shall, in the absence or disability of the treasurer, perform the duties and
exercise the powers of the treasurer and shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
<PAGE>
ARTICLE X
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by
certificates signed by the chairman of the board, president, an executive
vice-president, a vice-president or the treasurer and the secretary, an
assistant vice-president, an assistant secretary or an assistant treasurer, of
the corporation, and may be sealed with the seal of the corporation or a
facsimile thereof.
When the corporation is authorized to issue shares of more than one
class there shall be set forth upon the face or back of the certificate, or the
certificate shall have a statement that the corporation will furnish to any
stockholder upon request and without charge, a full or summary statement of the
designations, preferences, limitations, and relative rights of the shares of
each class authorized to be issued and, if the corporation is authorized to
issue any preferred or special class in series, the variations in the relative
rights and preferences between the shares of each such series so far as the same
have been fixed and determined and the authority of the board of directors to
fix and determine the relative rights and preferences of subsequent series.
Section 2. The signatures of the officers upon a certificate may be
facsimiles if the certificate is countersigned by a transfer agent, or
registered by a registrar,
<PAGE>
other than the corporation itself or an employee of the corporation. In case any
officer who has signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer at the date of its issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate to be
issued in place of any certificate theretofore issued by the corporation alleged
to have been lost or destroyed. When authorizing such issue of a new
certificate, the board of directors, in its discretion and as a condition
precedent to the issuance thereof, may prescribe such terms and conditions as it
deems expedient, and may require such indemnities as it deems adequate, to
protect the corporation from any claim that may be made against it with respect
to any such certificate alleged to have been lost or destroyed.
TRANSFERS OF SHARES
Section 4. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate representing shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, a new certificate shall be issued to the person entitled thereto, and
the old certificate cancelled and the transaction recorded upon the books of the
corporation.
<PAGE>
CLOSING OF TRANSFER BOOKS
Section 5. For the purpose of determining stockholders entitled to
notice of or to vote at any meeting of stockholders, or any adjournment thereof
or entitled to receive payment of any dividend, or in order to make a
determination of stockholders for any other proper purpose, the board of
directors may provide that the stock transfer books shall be closed for a stated
period but not to exceed, in any case, fifty days. If the stock transfer books
shall be closed for the purpose of determining stockholders entitled to notice
of or to vote at a meeting of stockholders, such books shall be closed for at
least ten days immediately preceding such meeting. In lieu of closing the stock
transfer books, the board of directors may fix in advance a date as the record
date for any such determination of stockholders, such date in any case to be not
more than fifty days and, in case of a meeting of stockholders, not less than
ten days prior to the date on which the particular action, requiring such
determination of stockholders, is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of stockholders
entitled to notice of or to vote at a meeting of stockholders, or stockholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is called or the date on which the resolution of the board of directors
declaring such dividend is adapted, as
<PAGE>
the case may be, shall be the record date for such determination of
stockholders. When a determination of stockholders entitled to vote at any
meeting of stockholders has been made as provided in this section, such
determination shall apply to any adjournment thereof.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the law of
Alabama.
LIST OF STOCKHOLDERS
Section 7. The officer or agent having charge of the transfer books
for shares shall make, at least ten days before each meeting of stockholders, a
complete list of the stockholders entitled to vote at such meeting, arranged in
alphabetical order, with the address of each and the number of shares held by
each, which list, for a period of ten days prior to such meeting, shall be kept
on file
<PAGE>
at the principal office of the corporation and shall be subject to inspection
by any stockholder at any time during usual business hours. Such list shall also
be produced and kept open at the time and place of the meeting and shall be
subject to the inspection of any stockholder during the whole time of the
meeting. The original stock ledger or transfer book, or a duplicate thereof,
shall be prima facie evidence as to who are the stockholders entitled to examine
such list or stock ledger or transfer book or to vote at any meeting of the
stockholders.
ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the certificate of
incorporation relating thereto, if any, dividends may be declared by the board
of directors at any regular or special meeting, pursuant to law. Dividends may
be paid in cash, in property or in shares of the capital stock, subject to any
provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside
out of any funds of the corporation available for dividends such sum or sums as
the directors from time to time, in their absolute discretion, think proper as a
<PAGE>
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its organization and the words "Corporate Seal,
Alabama". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
<PAGE>
ARTICLE XII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new
by-laws may be adopted by the affirmative vote of a majority of the board of
directors at any regular or special meeting of the board.
The board of directors shall not make or alter any by-law fixing the
number of directors, the time or place of stockholders meetings or what
constitutes a quorum at such stockholders' meetings.
<PAGE>
Exhibit 3.7.1
ARTICLES OF INCORPORATION
OF
Lodgian Anaheim, Inc.
FIRST: That the name of the corporation is Lodgian Anaheim, Inc.
SECOND: The name of this corporation's initial agent for service of
process in the State of California is:
C T CORPORATION SYSTEM
THIRD: This corporation is authorized to issue only one class of shares of
stock; and the total number of shares which this corporation is authorized to
issue is: One Thousand (1,000).
FOURTH: The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business or
the practice of a profession, permitted to be incorporated by the California
Corporations Code.
FIFTH: The liability of the directors of this corporation for monetary
damages shall be eliminated to the fullest extent permissible under California
law.
IN WITNESS WHEREOF, the undersigned has executed these Articles this July
9, 1998.
/s/ Andrea Vines
----------------------------
Andrea Vines
Incorporator
Page 1
<PAGE>
Exhibit 3.7.2
LODGIAN ANAHEIM, INC.
* * * * *
BY-LAWS
* * * * *
ARTICLE I
OFFICES
Section 1. The registered office shall be located at 915 "L" Street,
Sacramento, California 95814.
Section 2. The corporation may also have offices at such other
places both within and without the State of California as the board of directors
may from time to time determine or the business of the corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of
directors shall be held on such day and at such hour as may be fixed from time
to time by the board of directors. Said meetings may also be held at such other
place either within or without the State of California as shall be designated
from time to time by the board of directors and stated in the notice of the
meeting.
Section 2. Annual meetings of shareholders, commencing with the year
1999, shall be held on the Second Monday in January unless that day is a legal
holiday, and if a legal holiday, then on the next secular day following, at
10:00 a.m., at which they shall elect by a plurality vote a board of directors,
and transact such other business as may properly be brought before the meeting.
Section 3. Written or printed notice of the annual meeting stating
the place, day and hour of the meeting shall be delivered not less than ten nor
more than fifty days before the date of the meeting, either personally or by
mail, by or at the direction of the president, the secretary, or the officer or
persons calling the meeting, to each shareholder of record entitled to vote at
such meeting.
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. Special meetings of shareholders for any purpose other
than the election of directors may be held at such time and place within or
without the State of California as shall be stated in the notice of the meeting
or in a duly executed waiver of notice thereof.
Section 2. Special meetings of the shareholders, for any purposes,
unless otherwise prescribed by statute or by the articles of incorporation, may
be called by the president, the board of
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directors, or the holders of not less than one-tenth of all the shares entitled
to vote at the meeting.
Section 3. Written or printed notice of a special meeting stating
the place, day and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than fifty days
before the date of the meeting, either personally or by mail, by or at the
direction of the president, the secretary, or the officer or persons calling the
meeting, to each shareholder of record entitled to vote at such meeting.
Section 4. The business transacted at any special meeting of
shareholders shall be limited to the purposes stated in the notice.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of stock issued
and outstanding and entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by statute or by the articles of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the shareholders, the shareholders present in person or
represented by proxy shall have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented any business may be transacted which might have
been transacted at the meeting as originally notified.
Section 2. If a quorum is present, the affirmative vote of a
majority of the shares of stock represented at the meeting shall be the act of
the shareholders unless the vote of a greater number of shares of stock is
required by law or the articles of incorporation.
Section 3. Each outstanding share of stock, having voting power,
shall be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. A shareholder may vote either in person or by proxy executed in
writing by the shareholder or by his duly authorized attorney-in-fact.
Section 4. Any action required to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the shareholders entitled
to vote with respect to the subject matter thereof
ARTICLE V
DIRECTORS
Section 1. The Board of Directors of the Corporation shall consist
of one (1) member. The number of directors may be either increased or decreased
from time to time by
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resolution of the Board of Directors, but shall never be less than one (1).
Directors need not be residents of the State of California nor shareholders of
the corporation. The directors, other than the first board of directors, shall
be elected at the annual meeting of the shareholders, and each directors elected
shall serve until the next succeeding annual meeting and until his successor
shall have been elected and qualified. The first board of directors shall hold
office until the first annual meeting of shareholders.
Section 2. Any vacancy occurring in the board of directors may be
filled by the shareholders at an annual or a special meeting or by the
affirmative vote of a majority of the remaining directors though less than a
quorum of the board of directors. A director elected to fill a vacancy shall be
elected for the unexpired portion of the terms of his predecessor in office.
Any directorship to be filled by reason of an increase in the number
of directors may be filled by election at an annual meeting or at a special
meeting of shareholders called for that purpose. A director elected to fill a
newly created directorship shall serve until the next succeeding annual meeting
of shareholders and until his successor shall have been elected and qualified.
Any directorship to filled by reason of an increase in the number of directors
may also be filled by the board of directors for a term of office until the next
election of directors by shareholders; provide no more than two directorships
may be so filled during a period between any two successive annual meetings of
shareholders.
Whenever the holders of any class or series of shares are entitled
to elect one or more directors by the provisions of the articles of
incorporation, any vacancies in such directorships and any newly created
directorships of such class of series to be filled by reason of an increase in
the number of such directors may be filled by the affirmative vote of a majority
of the directors elected by such class or series then in office or by a sole
remaining director so elected, or by the vote of the holders of the outstanding
shares of such class or series, and such directorships shall not in any case be
filled by the vote of the remaining directors or the holders of the outstanding
shares as a whole unless otherwise provided in the articles of incorporation.
Section 3. The business affairs of the corporation shall be managed
by its board of directors which may exercise all such powers of the corporation
and do all such lawful acts and things as are not by statute or by the articles
of incorporation or by these by-laws directed or required to be exercised or
done by the shareholders.
Section 4. The directors may keep the books of the corporation,
except such as are required by law to be kept within the state, outside of the
State of California, at such place or places as they may from time to time
determine.
Section 5. The board of directors, by the affirmative vote of a
majority of the directors then in office, and irrespective of any personal
interest to any of its members, shall have authority to establish reasonable
compensation of all directors for services to the corporation as directors,
officers or otherwise.
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ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular or special,
may be held either within or without the State of California.
Section 2. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the vote of
the shareholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting provided a quorum shall be present, or it may convene at such place and
time as shall be fixed by the consent in writing of all the directors.
Section 3. Regular meetings of the board of directors may be held
upon such notice, or without notice, and at such time and at such place as shall
from time to time be determined by the board.
Section 4. Special meetings of the board of directors may be called
by the president on two days' notice to each director, either personally or by
mail or by telegram; special meeting shall be called by the president or
secretary in like manner and on like notice on the written request of two
directors.
Section 5. Attendance of a director at any meeting shall constitute
a waiver of notice of such meeting, except where a director attends for the
express purpose of objecting to the transaction of any business because the
meeting as not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the board
of directors need be specified in the notice or waiver of notice of such
meeting.
Section 6. A majority of the directors shall constitute a quorum for
the transaction of business unless greater number is required by law or by the
articles of incorporation. The act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the board of directors,
unless the act of a greater number is required by statute or by the articles of
incorporation. If a quorum shall not be present at any meeting of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 7. Unless otherwise restricted by the articles of
incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting, if all members of the board of committee, as the case may be,
consent thereto in writing which shall set forth the action taken ad be signed
by all members of the board of directors or of the committee as the case may be.
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<PAGE>
ARTICLE III
COMMITTEES OF DIRECTORS
Section 1. The board of directors, by resolution adopted by a
majority of the full board of directors, may designate from among its members an
executive committee and one or more other committees, each of which shall be
comprised of one or more members and, to the extent provided in the resolution,
shall have and may exercise all of the authority of the board of directors,
except that no such committee shall have the authority of the board of directors
in reference to amending the articles of incorporation, approving a plan of
merger or consolidation, recommending to the shareholders the sale, lease, or
exchange of all or substantially all of the property and assets of the
corporation otherwise than in the usual and regular course of its business,
recommending to the shareholders a voluntary dissolution of the corporation or a
revocation thereof, amending, altering, or repealing the by-laws of the
corporation or adopting new by-laws for the corporation, filling vacancies in
the board of directors to be filled by reason of an increase in the number of
directors, electing or removing officers or members of an committee, fixing the
compensation of any member of a committee, or altering or repealing any
resolution of the board of directors which by its terms provides that it shall
not be so amendable or repealable; and, unless the resolution expressly so
provides, no committee shall have the power of authority to declare a dividend
or to authorize the issuance of shares of the corporation.
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes of the
articles of incorporation or of these by-laws, notice is required to be given to
any director or shareholder, it shall not be construed to mean personal notice,
but such notice may be given in writing, by mail, addressed to such director or
shareholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telegram.
Section 2. Whenever any notice whatever is required to be given
under the provisions of the statutes or under the provisions of the articles of
incorporation or these by-laws, a waiver thereof in writing signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
ARTICLE IX
OFFICERS
Section 1. The offices of the corporation shall be chosen by the
board of directors and shall be a president and a secretary. The board of
directors may also elect or appoint such other officers, including assistant
officers and agents as may be deemed necessary.
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Section 2. The board of directors at its first meeting after each
annual meeting of shareholders shall choose a president and a secretary neither
of whom need be a member of the board.
Section 3. The board of directors may also appoint such other
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall
exercise such powers and perform such duties as shall be determined from time to
time by the board of directors.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officers elected or appointed by
the board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the shareholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
THE VICE PRESIDENTS
Section 8. The vice-president, if there is one, or if there shall be
more than one, the vice-presidents in the order determined by the board of
directors, shall, in the absence of disability of the president, perform the
duties and exercise the powers of the president and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the shareholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the shareholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He
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shall have custody of the corporate seal of the corporation and he, or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature or by the
signature of such assistance secretary. The board of directors may give general
authority to any other officer to affect the affixing by his signature.
Section 10. The assistant secretary, if there is one, or if there be
more than one, the assistant secretaries in the order determined by the board of
directors, shall, in the absence or disability of the secretary, perform the
duties and exercise the powers of the secretary and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer, if there is one, shall have the custody
of the corporate funds and securities and shall keep full and accurate accounts
of receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the board of
directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind of his possession or under
his control belonging to the corporation.
Section 14. The assistant treasurer, if there is one, or, if there
shall be more than one, the assistant treasurers in the order determined by the
board of directors, shall, in the absence or disability of the treasurer,
perform the duties and exercise the powers of the treasurer and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
ARTICLE X
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by
certificates signed by the president and secretary or such other officers as may
be elected or appointed, and may be sealed with the seal of the corporation or a
facsimile thereof.
When the corporation is authorized to issue shares of more than one
class there shall
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be set forth upon the face or back of the certificate, or the certificate shall
have a statement that the corporation will furnish to any shareholder upon
request and without charge, a full statement of the designations, preferences,
limitations and relative rights of the shares of each class authorized to be
issued and, if the corporation is authorized to issue any preferred or special
class in series, the variations in the relative rights and preferences between
the shares of each such series so far as the same have been fixed and determined
and the relative rights and preferences of subsequent series. When the
corporation is authorized to issue shares of more than one class, every
certificate shall also set forth upon the face or the back of such certificate a
statement that there is set forth in the articles of incorporation on file in
the office of the Secretary of State a full statement of all the designations,
preferences, limitations and relative rights, including voting rights, or the
shares of each class authorized to be issued and the corporation at its
principal place of business or registered office. Every certificate shall have
noted thereon any information required to be set forth by the California
Business Corporation Act and such information shall be set forth in the manner
provided in said Act.
Section 2. The signatures of the officers of the corporation upon a
certificate may be facsimiles of the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the corporation itself or an
employee of the corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of its
issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate to be
issued in place of any certificate therefore issued by the corporation alleged
to have been lost or destroyed. When authorizing such issue of a new
certificate, the board of directors, in its discretion and as a condition
precedent to the issuance thereof, may prescribe such terms and conditions as
its deems expedient, and may require such indemnities as its deems adequate, to
protect the corporation from any claim that may be made against it with respect
to any such certificate alleged to have been lost or destroyed
TRANSFERS OF SHARES
Section 4. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate representing shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, a new certificate shall be issued to the person entitled thereto, and
the old certificate canceled and the transaction recorded upon the books of the
corporation.
CLOSING OF TRANSFER BOOKS
Section 5. For the purpose of determining shareholders entitled to
notice of or to vote at any meeting of shareholders, or any adjournment thereof
or entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose the board of
directors may provide that the stack transfer books shall be closed for a stated
period but not to
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exceed, in any case, fifty days. If the stock transfer books shall be closed for
the purpose of determining shareholders entitled to notice of or to vote at a
meeting of shareholders, such books shall be closed for at least ten days
immediately preceding such meeting. In lieu of closing the stock transfer books,
the board of directors may fix in advance a date as the record date for any such
determination of shareholder, such date in any case to be not more than fifty
days and, incase of a meeting of shareholders, not less than ten days prior to
the date on which the particular action, requiring such determination of
shareholders, is to be taken. If the stock transfer books are not closed and no
record date is fixed for the determination of shareholders, or shareholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is mailed or the date on which the resolution of the board of directors
declaring such dividend is adopted, as the case may be, shall be the record date
for such determination of shareholders. When a determination of shareholders
entitled to vote at any meeting of shareholders has been made as provided in
this section, such determination shall apply to any adjournment thereof.
REGISTERED SHAREHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize and equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
California.
LIST OF SHAREHOLDERS
Section 7. The officer or agent having charge of the transfer books
for shares shall make, at least ten days before each meeting of shareholders, a
complete list of the shareholders entitled to vote at such meeting, arranged in
alphabetical order, with the address of each and the number of shares held by
each, which list, for a period often days prior to such meeting, shall be kept
on file at the registered office of the corporation and shall be subject to
inspection by any shareholder at any time during usual business hours. Such list
shall also be produced and kept open at the time and place of the meeting and
shall be subject to the inspection of any shareholders during the whole time of
the meeting. The original share ledger or transfer book, or a duplicate thereof,
shall be prima facie evidence as to who are the shareholders entitled to examine
such list or share ledger or transfer book or to vote at any meeting of the
shareholders.
ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the articles of
incorporation relating thereto, if any, dividends may be declared by the board
of directors at any regular or special meeting, pursuant to law. Dividends may
be paid in cash, in property or in shares of the capital stock, subject to any
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provisions of the articles or incorporation.
Section 2. Before payment of any dividend, there may be set aside
out of any finds of the corporation available for dividends such sum or sums as
the directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time delegate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its organization and the words "Corporate Seal,
California." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
ARTICLE XII
AMENDMENTS
Section 1. These by-laws maybe altered, amended, or repealed or new
by-laws may be adopted by the affirmative vote of a majority of the board of
directors at any regular or special meeting of the board subject to repeal or
change at any regular or special meeting of shareholders at which a quorum is
present or represented, by the affirmative vote of a majority of the stock
entitled to vote, provided notice of the proposed repeal or change be contained
in the notice of such meeting.
ARTICLE XIII
AMENDMENTS
Section 1. These by-laws maybe altered, amended or repealed or new
by-laws may be adopted at any regular or special meeting of shareholders at
which a quorum is present or represented, by the affirmative vote of a majority
of the stock entitled to vote, provided notice of the proposed alteration,
amendment or repeal be contained in the notice of such meeting.
Dated: July 10, 1998
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Exhibit 3.8.1
ARTICLES OF INCORPORATION
OF
Lodgian Ontario, Inc.
FIRST: That the name of the corporation is Lodgian Ontario, Inc.
SECOND: The name of this corporation's initial agent for service of
process in the State of California is:
C T CORPORATION SYSTEM
THIRD: This corporation is authorized to issue only one class of shares of
stock; and the total number of shares which this corporation is authorized to
issue is: One Thousand (1,000).
FOURTH: The purpose Of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business or
the practice of a profession, permitted to be incorporated by the California
Corporations Code.
FIFTH: The liability of the directors of this corporation for monetary
damages shall be eliminated to the fullest extent permissible under California
law.
IN WITNESS WHEREOF, the undersigned has executed these Articles this June
3, 1998.
/s/ Barbara Lowes
--------------------------------
BARBARA LOWES
INCORPORATOR
Page 1
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Exhibit 3.8.2
LODGIAN ONTARIO, INC.
* * * * *
BY-LAWS
* * * * *
ARTICLE I
OFFICES
Section 1. The registered office shall be located at 915 "L" Street,
Sacramento, California 95814.
Section 2. The corporation may also have offices at such other
places both within and without the State of California as the bard of directors
may from time to time determine or the business of the corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of
directors shall be held on such day and at such hour as may be fixed from time
to time by the board of directors. Said meetings may also be held at such other
place either within or without the State of California as shall be designated
from time to time by the board of directors and stated in the notice of the
meeting.
Section 2. Annual meetings of shareholders, commencing with the year
1999, shall be held on the Second Monday in January unless that day is a legal
holiday, and if a legal holiday, then on the next secular day following, at
10:00 a.m., at which they shall elect by a plurality vote a board of directors,
and transact such other business as may properly be brought before the meeting.
Section 3. Written or printed notice of the annual meeting stating
the place, day and hour of the meeting shall be delivered not less than ten nor
more than fifty days before the date of the meeting, either personally or by
mail, by or at the direction of the president, the secretary, or the officer or
persons calling the meeting, to each shareholder of record entitled to vote at
such meeting.
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. Special meetings of shareholders for any purpose other
than the election of directors may be held at such time and place within or
without the State of California as shall be stated in the notice of the meeting
or in a duly executed waiver of notice thereof.
Section 2. Special meetings of the shareholders, for any purposes,
unless otherwise prescribed by statute or by the articles of incorporation, may
be called by the president, the board of
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directors, or the holders of not less than one-tenth of all the shares entitled
to vote at the meeting.
Section 3. Written or printed notice of a special meeting stating
the place, day and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than fifty days
before the date of the meeting, either personally or by mail, by or at the
direction of the president, the secretary, or the officer or persons calling the
meeting, to each shareholder of record entitled to vote at such meeting.
Section 4. The business transacted at any special meeting of
shareholders shall be limited to the purposes stated in the notice.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of stock issued
and outstanding and entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by statute or by the articles of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the shareholders, the shareholders present in person or
represented by proxy shall have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented any business may be transacted which might have
been transacted at the meeting as originally notified.
Section 2. If a quorum is present, the affirmative vote of a
majority of the shares of stock represented at the meeting shall be the act of
the shareholders unless the vote of a greater number of shares of stock is
required by law or the articles of incorporation.
Section 3. Each outstanding share of stock, having voting power,
shall be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. A shareholder may vote either in person or by proxy executed in
writing by the shareholder or by his duly authorized attorney-in-fact.
Section 4. Any action required to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the shareholders entitled
to vote with respect to the subject matter therof.
ARTICLE V
DIRECTORS
Section 1. The Board of Directors of the Corporation shall consist
of one (1) member. The number of directors may be either increased or decreased
from time to time by
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resolution of the Board of Directors, but shall never be less than one (1).
Directors need not be residents of the State of California nor shareholders of
the corporation. The directors, other than the first board of directors, shall
be elected at the annual meeting of the shareholders, and each directors elected
shall serve until the next succeeding annual meeting and until his successor
shall have been elected and qualified. The first board of directors shall hold
office until the first annual meeting of shareholders.
Section 2. Any vacancy occurring in the board of directors may be
filled by the shareholders at an annual or a special meeting or by the
affirmative vote of a majority of the remaining directors though less than a
quorum of the board of directors. A director elected to fill a vacancy shall be
elected for the unexpired portion of the terms of his predecessor in office.
Any directorship to be filled by reason of an increase in the number
of directors may be filled by election at an annual meeting or at a special
meeting of shareholders called for that purpose. A director elected to fill a
newly created directorship shall serve until the next succeeding annual meeting
of shareholders and until his successor shall have been elected and qualified.
Any directorship to filled by reason of an increase in the number of directors
may also be filled by the board of directors for a term of office until the next
election of directors by shareholders; provide no more than two directorships
may be so filled during a period between any two successive annual meetings of
shareholders.
Whenever the holders of any class or series of shares are entitled
to elect one or more directors by the provisions of the articles of
incorporation, any vacancies in such directorships and any newly created
directorships of such class of series to be filled by reason of an increase in
the number of such directors may be filled by the affirmative vote of a majority
of the directors elected by such class or series then in office or by a sole
remaining director so elected, or by the vote of the holders of the outstanding
shares of such class or series, and such directorships shall not in any case be
filled by the vote of the remaining directors or the holders of the outstanding
shares as a whole unless otherwise provided in the articles of incorporation.
Section 3. The business affairs of the corporation shall be managed
by its board of directors which may exercise all such powers of the corporation
and do all such lawful acts and things as are not by statute or by the articles
of incorporation or by these by-laws directed or required to be exercised or
done by the shareholders.
Section 4. The directors may keep the books of the corporation,
except such as are required by law to be kept within the state, outside of the
State of California, at such place or places as they may from time to time
determine.
Section 5. The board of directors, by the affirmative vote of a
majority of the directors then in office, and irrespective of any personal
interest to any of its members, shall have authority to establish reasonable
compensation of all directors for services to the corporation as directors,
officers or otherwise.
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ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular or special,
may be held either within or without the State of California.
Section 2. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the vote of
the shareholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting provided a quorum shall be present, or it may convene at such place and
time as shall be fixed by the consent in writing of all the directors.
Section 3. Regular meetings of the board of directors may be held
upon such notice, or without notice, and at such time and at such place as shall
from time to time be determined by the board.
Section 4. Special meetings of the board of directors may be called
by the president on two days' notice to each director, either personally or by
mail or by telegram; special meeting shall be called by the president or
secretary in like manner and on like notice on the written request of two
directors.
Section 5. Attendance of a director at any meeting shall constitute
a waiver of notice of such meeting, except where a director attends for the
express purpose of objecting to the transaction of any business because the
meeting as not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the board
of directors need be specified in the notice or waiver of notice of such
meeting.
Section 6. A majority of the directors shall constitute a quorum for
the transaction of business unless greater number is required by law or by the
articles of incorporation. The act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the board of directors,
unless the act of a greater number is required by statute or by the articles of
incorporation. If a quorum shall not be present at any meeting of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 7. Unless otherwise restricted by the articles of
incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting, if all members of the board of committee, as the case may be,
consent thereto in writing which shall set forth the action taken ad be signed
by all members of the board of directors or of the committee as the case may be.
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ARTICLE III
COMMITTEES OF DIRECTORS
Section 1. The board of directors, by resolution adopted by a
majority of the full board of directors, may designate from among its members an
executive committee and one or more other committees, each of which shall be
comprised of one or more members and, to the extent provided in the resolution,
shall have and may exercise all of the authority of the board of directors,
except that no such committee shall have the authority of the board of directors
in reference to amending the articles of incorporation, approving a plan of
merger or consolidation, recommending to the shareholders the sale, lease, or
exchange of all or substantially all of the property and assets of the
corporation otherwise than in the usual and regular course of its business,
recommending to the shareholders a voluntary dissolution of the corporation or a
revocation thereat amending, altering, or repealing the by-laws of the
corporation or adopting new by-laws for the corporation, filling vacancies in
the board of directors to be filled by reason of an increase in the number of
directors, electing or removing officers or members of an committee, fixing the
compensation of any member of a committee, or altering or repealing any
resolution of the board of directors which by its terms provides that it shall
not be so amendable or repealable; and, unless the resolution expressly so
provides, no committee shall have the power of authority to declare a dividend
or to authorize the issuance of shares of the corporation.
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes of the
articles of incorporation or of these by-laws, notice is required to be given to
any director or shareholder, it shall not be construed to mean personal notice,
but such notice may be given in writing, by mail, addressed to such director or
shareholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telegram.
Section 2. Whenever any notice whatever is required to be given
under the provisions of the statutes or under the provisions of the articles of
incorporation or these by-laws, a waiver thereof in writing signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
ARTICLE IX
OFFICERS
Section 1. The offices of the corporation shall be chosen by the
board of directors and shall be a president and a secretary. The board of
directors may also elect or appoint such other officers, including assistant
officers and agents as may be deemed necessary.
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Section 2. The board of directors at its first meeting after each
annual meeting of shareholders shall choose a president and a secretary neither
of whom need be a member of the board.
Section 3. The board of directors may also appoint such other
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall
exercise such powers and perform such duties as shall be determined from time to
time by the board of directors.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officers elected or appointed by
the board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the shareholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
THE VICE PRESIDENTS
Section 8. The vice-president, if there is one, or if there shall be
more than one, the vice-presidents in the order determined by the board of
directors, shall, in the absence of disability of the president, perform the
duties and exercise the powers of the president and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the shareholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the shareholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He
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shall have custody of the corporate seal of the corporation and he, or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature or by the
signature of such assistance secretary. The board of directors may give general
authority to any other officer to affect the affixing by his signature.
Section 10. The assistant secretary, if there is one, or if there be
more than one, the assistant secretaries in the order determined by the board of
directors, shall, in the absence or disability of the secretary, perform the
duties and exercise the powers of the secretary and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer, if there is one, shall have the custody
of the corporate funds and securities and shall keep full and accurate accounts
of receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the board of
directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind of his possession or under
his control belonging to the corporation.
Section 14. The assistant treasurer, if there is one, or, if there
shall be more than one, the assistant treasurers in the order determined by the
bard of directors, shall, in the absence or disability of the treasurer, perform
the duties and exercise the powers of the treasurer and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
ARTICLE X
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by
certificates signed by the president and secretary or such other officers as may
be elected or appointed, and may be sealed with the seal of the corporation or a
facsimile thereof.
When the corporation is authorized to issue shares of more than one
class there shall
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be set forth upon the face or back of the certificate, or the certificate shall
have a statement that the corporation will furnish to any shareholder upon
request and without charge, a full statement of the designations, preferences,
limitations and relative rights of the shares of each class authorized to be
issued and, if the corporation is authorized to issue any preferred or special
class in series, the variations in the relative rights and preferences between
the shares of each such series so far as the same have been fixed and determined
and the relative rights and preferences of subsequent series. When the
corporation is authorized to issue shares of more than one class, every
certificate shall also set forth upon the face or the back of such certificate a
statement that there is set forth in the articles of incorporation on file in
the office of the Secretary of State a full statement of all the designations,
preferences, limitations and relative rights, including voting rights, or the
shares of each class authorized to be issued and the corporation at its
principal place of business or registered office. Every certificate shall have
noted thereon any information required to be set forth by the California
Business Corporation Act and such information shall be set forth in the manner
provided in said Act.
Section 2. The signatures of the officers of the corporation upon a
certificate may be facsimiles of the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the corporation itself or an
employee of the corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of its
issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate to be
issued in place of any certificate therefore issued by the corporation alleged
to have been lost or destroyed. When authorizing such issue of a new
certificate, the board of directors, in its discretion and as a condition
precedent to the issuance thereof, may prescribe such terms and conditions as
its deems expedient, and may require such indemnities as its deems adequate, to
protect the corporation from any claim that may be made against it with respect
to any such certificate alleged to have been lost or destroyed.
TRANSFERS OF SHARES
Section 4. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate representing shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, a new certificate shall be issued to the person entitled thereto, and
the old certificate canceled and the transaction recorded upon the books of the
corporation.
CLOSING OF TRANSFER BOOKS
Section 5. For the purpose of determining shareholders entitled to
notice of or to vote at any meeting of shareholders, or any adjournment thereof
or entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose the board of
directors may provide that the stack transfer books shall be closed for a stated
period but not to
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exceed, in any case, fifty days. If the stock transfer books shall be closed for
the purpose of determining shareholders entitled to notice of or to vote at a
meeting of shareholders, such books shall be closed for at least ten days
immediately preceding such meeting. In lieu of closing the stock transfer books,
the board of directors may fix in advance a date as the record date for any such
determination of shareholder, such date in any case to be not more than fifty
days and, incase of a meeting of shareholders, not less than ten days prior to
the date on which the particular action, requiring such determination of
shareholders, is to be taken. If the stock transfer books are not closed and no
record date is fixed for the determination of shareholders, or shareholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is mailed or the date on which the resolution of the board of directors
declaring such dividend is adopted, as the case may be, shall be the record date
for such determination of shareholders. When a determination of shareholders
entitled to vote at any meeting of shareholders has been made as provided in
this section, such determination shall apply to any adjournment thereof.
REGISTERED SHAREHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize and equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
California.
LIST OF SHAREHOLDERS
Section 7. The officer or agent having charge of the transfer books
for shares shall make, at least ten days before each meeting of shareholders, a
complete list of the shareholders entitled to vote at such meeting, arranged in
alphabetical order, with the address of each and the number of shares held by
each, which list, for a period of ten days prior to such meeting, shall be kept
on file at the registered office of the corporation and shall be subject to
inspection by any shareholder at any time during usual business hours. Such list
shall also be produced and kept open at the time and place of the meeting and
shall be subject to the inspection of any shareholders during the whole time of
the meeting. The original share ledger or transfer book, or a duplicate thereof,
shall be prima facie evidence as to who are the shareholders entitled to examine
such list or share ledger or transfer book or to vote at any meeting of the
shareholders.
ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the articles of
incorporation relating thereto, if any, dividends may be declared by the board
of directors at any regular or special meeting, pursuant to law. Dividends may
be paid in cash, in property or in shares of the capital stock, subject to any
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provisions of the articles or incorporation.
Section 2. Before payment of any dividend, there may be set aside
out of any finds of the corporation available for dividends such sum or sums as
the directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time delegate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its organization and the words "Corporate Seal,
California." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
ARTICLE XII
AMENDMENTS
Section 1. These by-laws maybe altered, amended, or repealed or new
by-laws may be adopted by the affirmative vote of a majority of the board of
directors at any regular or special meeting of the board subject to repeal or
change at any regular or special meeting of shareholders at which a quorum is
present or represented, by the affirmative vote of a majority of the stock
entitled to vote, provided notice of the proposed repeal or change be contained
in the notice of such meeting.
ARTICLE XIII
AMENDMENTS
Section 1. These by-laws maybe altered, amended or repealed or new
by-laws may be adopted at any regular or special meeting of shareholders at
which a quorum is present or represented, by the affirmative vote of a majority
of the stock entitled to vote, provided notice of the proposed alteration,
amendment or repeal be contained in the notice of such meeting.
Dated: July 4, 1998
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Exhibit 3.9.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
SERVICO FT. PIERCE, INC.
Pursuant to Sections 242 and 245 of the Delaware General Corporation
Law, SERVICO FT. PIERCE, INC., a Delaware corporation (the "Corporation"),
hereby certifies that this Amended and Restated Certificate of Incorporation
(the "Amended Certificate"), which contains amendments requiring shareholder
approval, was duly adopted by the Board of Directors of the Corporation and by
the sole shareholder of the Corporation by written consent without a meeting,
pursuant to Sections l41(f) and 228 of the Delaware Corporation Law, as of July
22, 1999. The original Certificate of Incorporation was filed with the Secretary
of State of the State of Delaware on July 13, 1995.
ARTICLE I
The name of the Corporation is SERVICO FT.PIERCE, INC.
ARTICLE II
The registered office of the Corporation is located at Corporation
Trust Center, 1209 Orange Street, City of Wilmington, County of New Castle,
State of Delaware 19801. The name of its registered agent at that address is The
Corporation Trust Company.
ARTICLE III
(a) The purpose for which the Corporation is organized is limited to:
(i) acquiring, owning, leasing, operating, using and managing that certain real
property commonly known as the Holiday Inn Express, located at 7151 Okeechobee
Road, Ft. Pierce, Florida 34945 (the "Property"); (ii) entering into and
performing its obligations under the credit agreement, among Lodgian Financing
Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel Group, LLC, Servico,
Inc. and other affiliated entities, as affiliate guarantors, the initial lenders
and initial issuing bank named therein, the collateral agent, the administrative
agent, Morgan Stanley Senior Funding, Inc., as co-lead arranger, joint-book
manager and syndication agent and Lehman Brothers, as co-lead arranger,
joint-book manager and documentation agent relating to the financing or
refinancing of the Property (the "Loan Agreement") which provides the lender
thereunder with a first priority lien on the Property, any promissory-note
evidencing indebtedness incurred pursuant to the Loan Agreement, any mortgage
securing such indebtedness and encumbering the Property (the "Mortgage") and any
other documents securing such indebtedness and any related collateral documents,
each as amended (or pursuant to a consent obtained in accordance with the terms
thereof) (collectively, the "Loan Documents"); (iii) entering into and
performing its obligations under the Indenture (the "Indenture"), among Lodgian
Financing Corp, as issuer, Lodgian, Inc., the Subsidiary Guarantors defined
therein and Bankers Trust Company, as trustee, relating to the issuance of the
12 1/4% Senior Subordinated Notes due 2009 and the Guarantee in favor of the
holders of the Notes and (iv) transacting any and all lawful business that is
incident and necessary or appropriate to the ownership and to the
<PAGE>
management of the Property for which a corporation may be incorporated under the
laws of the State of Delaware.
(b) Notwithstanding any other provision of these Amended Articles and
any provision of law that otherwise so empowers the Corporation, until such time
as the Property is released from the lien of the Mortgage, the Corporation shall
not, without the unanimous affirmative vote of the members of its Board of
Directors, (i) amend, alter, change, repeal or adopt any resolution setting
forth a proposed amendment to, any provision of these Articles of Incorporation,
(ii) dissolve or liquidate, in whole or in part, consolidate or merge with or
into any other entity or convey, sell or transfer its properties and assets
substantially as an entirety to any entity, (iii) file a voluntary petition or
otherwise initiate, or consent to, proceedings for the Corporation to be
adjudicated insolvent or seeking an order for relief as a debtor under the
United States Bankruptcy Code, as amended (11 U.S.C. Section 101 ET SEQ.), or
(iv) file any petition, or consent to any petition, seeking any composition,
reorganization, readjustment, liquidation, dissolution or similar relief under
the present or any future federal bankruptcy laws or any other present or future
applicable federal, state or other statute or law relative to bankruptcy,
insolvency or other relief for debtors; or (v) seek or consent to the
appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, or liquidator (or other similar official) of the Corporation or of
all or any substantial part of the properties and assets of the Corporation, or
(vi) make any general assignment for the benefit of creditors, or (vii) admit in
writing its inability to pay its debts generally as they become due, or (viii)
declare or effect a moratorium on its debt or take any corporate action in
furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all times until
the Property is released from the lien of the Mortgage, include an independent
director (the "Independent Director"). The Independent Director shall be a
person who is not at the time of appointment and who has not at any time during
the prior five years been and who is not while serving as the Independent
Director (i) a director, stockholder, officer or employee of the Corporation or
any affiliates thereof, other than with respect to such person's service as an
Independent Director of the Corporation and such person's service in similar
"Independent Director" positions for affiliates of the Corporation; (ii) a
creditor, customer, supplier, independent contractor, manager or any other
person who derives more than 10% of its gross revenues from its activities wit
the Corporation or any affiliates thereof; (iii) a person controlling any such
stockholder, creditor, customer, supplier, independent contractor, manager or
other person; (iv) the legal or beneficial owner, at any time while serving as
director of the Corporation, of any beneficial interest in the Corporation; or
(v) a member of the immediate family of any such stockholder, officer, employee,
creditor, customer, supplier, director, independent contractor, manager or any
other person of the Corporation. As used herein, the term "affiliate" means any
person controlling, under common control with, or controlled by the person in
question, and the term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a person, whether through ownership of voting securities, by contract or
otherwise. In the event of the death, incapacity, or resignation of an
Independent Director, or the vacancy of the Independent Director's seat on the
Corporation's Board of Directors for any reason, a successor Independent
Director shall be appointed by the remaining directors.
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(d) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(ix) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall not (i)
commingle its assets with those of, or pledge its assets for the benefit of, any
other person or entity; (ii) assume, guarantee or become obligated, or hold out
its credit as being available to satisfy, the liabilities or obligations of any
other person or entity; (iii) reduce its capital below an amount which is
adequate in light of its contemplated business operations; (iv) acquire
obligations or securities of, or make loans or advances to, any affiliate; (v)
incur or assume any indebtedness other than (A) the indebtedness underlying the
Loan Agreement, (B) the indebtedness underlying the Indenture, and (C)
liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article Third and the last sentence of
Article Seventh of this Amended Certificate; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in this Amended Certificate. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
ARTICLE IV
The total number of shares of stock which the Corporation is authorized
to issue is One Thousand (1,000) shares of Common Stock with the par value of
one cent ($0.01) per share.
ARTICLE V
The Board of Directors is expressly authorized to adopt, alter, amend
or repeal the Bylaws of the Corporation subject to the limitations set forth in
this Amended Certificate. Election of directors need not be by written ballot
unless and to the extent provided in the Bylaws of the Corporation.
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ARTICLE VI
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit. If the Delaware General Corporation Law is amended after the
date of this Amended Certificate to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability
of each director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the Delaware General Corporation Law, as so amended.
The right and authority conferred in this Article Sixth shall not be
exclusive of any other rights that any person may have or hereafter acquire
under any statute, provision of this Amended Certificate or the Bylaws of the
Corporation, agreement, vote of the stockholders or disinterested directors or
otherwise.
ARTICLE VII
The Corporation shall indemnify any officer or director, or any former
officer or director of the Corporation, to the fullest extent permitted by law.
The foregoing right of indemnification shall not be exclusive of any other
rights to which any director, officer, employee or agent may be entitled as a
matter of law or which he may be lawfully granted. The Corporation's obligation
to indemnify its officers and directors pursuant to this Article shall be
subordinate in all respects to the obligations of the Corporation arising out of
the Loan Documents and shall not constitute a claim against the Corporation to
the extent that the Corporation is unable to pay any amounts it is obligated to
pay under the Loan Documents.
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IN WITNESS WHEREOF, the undersigned has executed this Second Amended
and Restated Certificate of Incorporation this 23rd day of July, 1999, and
acknowledge, under penalties of perjury, that this instrument is the act and
deed of the Corporation, and that the facts stated herein are true and correct.
SERVICO FT. PIERCE, INC.
By: /s/ Thomas S. Gryboski
--------------------------
Name: Thomas S. Gryboski
Title: Assistant Secretary
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<PAGE>
Exhibit 3.9.2
BYLAWS
OF
SERVICO FT. PIERCE, INC.
a Delaware corporation
<PAGE>
BYLAWS
OF
SERVICO FT. PIERCE, INC.
a Delaware corporation
ARTICLE I
OFFICES
Section 1. The location of the registered office of the corporation
shall be as stated in the Certificate of Incorporation, which location may be
changed from time to time by the board of directors.
Section 2. The corporation may also have offices or branches at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or as the business of the corporation
may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders shall be held at the
registered office of the corporation, or at such other place either within or
without the State of Delaware as shall be designated from time to time by the
board of directors and stated in the notice of the meeting.
Section 2. Annual meetings of stockholders shall be held on the
first Tuesday of the third month of each fiscal year of the corporation if not a
legal holiday in the state in which the meeting shall be held, and if a legal
holiday, then on the next secular day following, at such time as determined by
the board of directors, or at such other date and time as shall be designated
from time to time by the board of directors and stated in the notice of the
meeting. At the annual meeting, the stockholders shall elect a board of
directors and transact such other business as may properly be brought before the
meeting. If the annual meeting is not held on the date designated therefor, the
board of directors shall cause the meeting to be held as soon thereafter as
convenient.
Section 3. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the Certificate of
Incorporation, may be called by the chairman of the board or president, and
shall be called by the chairman of the board or president at the request in
writing of a majority of the
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board of directors or at the request in writing of the holders of not less than
10% of all the shares entitled to vote at a meeting. Such request shall state
the purpose or purposes of the proposed meeting.
Section 4. The officer or agent who has charge of the stock ledger
of the corporation shall at least 10 days before every meeting of stockholders
make and certify a complete list of the stockholders entitled to vote at a
stockholders' meeting, or any adjournment thereof. The list shall be arranged in
alphabetical order with each class and series and show the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours for a period of at least
10 days prior to the meeting, at a place within the city where the meeting is to
be held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present.
Section 5. Except as may be provided by statute, written notice of
an annual or special meeting of stockholders stating the place, date and hour of
the meeting, where the list of stockholders may be inspected (if other than at
the place of the meeting), and the purpose or purposes for which the meeting is
called, shall be delivered, either personally or by first-class mail, not less
than 10 nor more than 60 days before the date of the meeting, to each
stockholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail
addressed to the stockholder at his address as it appears on the records of the
corporation with postage thereon prepaid.
Section 6. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise expressly required by statute or by
the Certificate of Incorporation. All stockholders present in person or
represented by proxy at such meeting may continue to do business until
adjournment, notwithstanding the withdrawal of enough stockholders to leave less
than a quorum. If, however, such quorum shall not be initially present at any
meeting of stockholders, a majority of the stockholders entitled to vote thereat
shall nevertheless have power to adjourn the meeting from time to time and to
another place, without notice other than announcement at the meeting, until a
quorum shall be present or represented. At such adjourned meeting, at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally notified. If after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned
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meeting shall be given to each stockholder of record entitled to vote at the
meeting.
Section 7. When an action other than the election of directors is to
be taken by vote of the stockholders, it shall be authorized by the affirmative
vote of a majority of the shares represented at the meeting and entitled to vote
on the subject matter, unless a greater plurality is required by express
requirement of the statutes or of the Certificate of Incorporation, in which
case such express provision shall govern and control the decision of such
question. "Shares represented at the meeting" shall be determined as of the time
the existence of the quorum is determined and shall indicate shares present in
person or represented by proxy. Except as otherwise expressly required by the
Certificate of Incorporation, directors shall be elected by a plurality of the
votes cast at an election.
Section 8. Each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of the
capital stock having voting power held by such stockholder except as otherwise
expressly required in the Articles of Incorporation. A vote may be cast either
orally or in writing. Each proxy shall be in writing and signed by the
stockholder or his authorized agent or representative. A proxy is not valid
after the expiration of three years after its date unless the person executing
it specifies therein the length of time for which it is to continue in force.
Unless prohibited by law, a proxy otherwise validly granted by telegram shall be
deemed to have been signed by the granting stockholder. All questions regarding
the qualification of voters, the validity of proxies and the acceptance or
rejection of votes shall be decided by the presiding officer of the meeting.
Section 9. Attendance of a person at a meeting of stockholders in
person or by proxy constitutes a waiver of notice of the meeting except where
the stockholder attends a meeting for the express purpose of objecting at the
beginning of the meeting to the transaction of any business because the meeting
was not lawfully called or convened.
Section 10. Unless otherwise provided by the Certificate of
Incorporation, any action required to be taken at any annual or special meeting
of the stockholders, or any other action which may be taken at any annual or
special meeting of the stockholders may be taken without a meeting, without
prior notice, and without a vote if a consent in writing, setting forth the
action so taken, shall be signed by holders of outstanding stock having not less
than the minimum number of votes that would be necessary to authorize such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Promptly after obtaining such authorization by written consent,
notice shall be given to those
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stockholders who have not consented in writing. The notice shall fairly
summarize the material features of the authorized action.
ARTICLE III
DIRECTORS
Section 1. The business and affairs of the corporation shall be
managed by or under the direction of its board of directors which may exercise
all such powers of the corporation and do all such lawful acts and things as
are not by statute or by the Certificate of Incorporation or by these Bylaws
directed or required to be exercised or done by the stockholders.
Section 2. The number of directors which shall constitute the whole
board shall not be less than one nor more than seven. The number of directors
shall be determined from time to time by resolution of the board of directors.
In the absence of an express determination by the board, the number of
directors, until changed by the board, shall be that number of directors elected
at the most recently held annual meeting of stockholders or, if no such meeting
has been held, the number elected by the incorporator in the initially filed
Certificate of Incorporation. The directors shall be elected at the annual
meeting of the stockholders, except as provided in Section 3 of this article,
and each director elected shall hold office until his successor is elected and
qualified or until his resignation or removal. Directors need not be
stockholders or officers of the corporation.
Section 3. Vacancies and newly created directorships resulting from
any increase in the authorized number of directors may be filled by the
affirmative vote of a majority of the directors then in office, though less than
a quorum, or by a sole remaining director, or by the stockholders, and the
directors so chosen shall hold office until the next annual election of
directors by the stockholders and until their successors are duly elected and
qualified or until their resignation or removal. Any director may be removed,
with or without cause, by the stockholders at a meeting of the stockholders
called expressly for that purpose.
Section 4. The board of directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Delaware. Unless otherwise restricted by the Certificate of Incorporation,
members of the board of directors, or any committee designated by the board, may
participate in a meeting of the board or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant to this section shall constitute presence in person at such meeting.
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<PAGE>
Section 5. The first board of directors shall hold office until the
first annual meeting of stockholders. Thereafter, the first meeting of each
newly elected board of directors shall be held promptly following the annual
meeting of stockholders on the date thereof. No notice of such meeting shall be
necessary to the newly elected directors in order to legally constitute the
meeting, provided a quorum shall be present. In the event such meeting is not so
held, the meeting may be held at such time and place as shall be specified in a
notice given as hereinafter provided for special meetings of the board of
directors.
Section 6. Regular meetings of the board of directors may be held at
such time and at such place as shall from time to time be determined by the
board of directors or by the chairman of the board or president. Any notice
given of a regular meeting need not specify the business to be transacted or the
purpose of the meeting.
Section 7. Special meetings of the board may be called by the
chairman of the board or president on four days' notice to each director by mail
or 24 hours' notice either personally, by telephone or by telegram; special
meetings shall be called by the chairman of the board or president in like
manner and on like notice on the written request of two directors. The notice
need not specify the business to be transacted or the purpose of the special
meetings. The notice shall specify the place of the special meeting.
Section 8. At all meetings of the board, a majority of the number of
directors determined pursuant to Article III, Section 2 of these Bylaws shall
constitute a quorum for the transaction of business. At all meetings of a
committee of the board, a majority of the directors then members of the
committee in office shall constitute a quorum for the transaction of business.
The act of a majority of the members present at any meeting at which there is a
quorum shall be the act of the board of directors or the committee, unless the
vote of a larger number is specifically required by statute, by the Certificate
of Incorporation, or by these Bylaws. If a quorum shall not be present at any
meeting of the board of directors or a committee, the members present thereat
may adjourn the meeting from time to time and to another place without notice
other than announcement at the meeting, until a quorum shall be present.
Section 9. Unless otherwise provided by the Certificate of
Incorporation, any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting, if, before or after the action, all members of the board or committee
consent thereto in writing. The written consents shall be filed with the minutes
of proceedings of the board or committee. Such consents shall have the same
effect as a vote of the board or committee for all purposes.
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<PAGE>
Section 10. A majority of the whole board of directors may, by
resolution, designate one or more committees, each committee to consist of one
or more of the directors of the corporation. The board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members present at
any meeting and not disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another member of the board of
directors to act at the meeting in the place of such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
board, shall have and may exercise the power and authority of the board of
directors in the management of the business and affairs of the corporation;
provided, however, such a committee shall not have the power or authority to:
(a) amend the Certificate of Incorporation (except that a
committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the board of directors
as provided by statute, fix the designations and any of the preferences or
rights of such shares relating to dividends, redemption, dissolution, any
distribution of assets of the corporation or the conversion into, or the
exchange of such shares for, shares of any other class or classes of any other
series of the same or any other class or classes of stock of the corporation or
fix the number of shares of any series of stock or authorize the increase or
decrease of the shares of any series);
(b) adopt an agreement of merger or consolidation as provided
by statute;
(c) recommend to the stockholders the sale, lease or exchange
of all or substantially all of the corporation's properties and assets;
(d) recommend to the stockholders a dissolution or a
revocation of a dissolution; or
(e) amend the Bylaws of the corporation.
Such committee or committees shall have such name or names as may be determined
from time to time by resolution adopted by the board of directors. A committee,
and each member thereof, shall serve at the pleasure of the board.
Section 11. Each committee shall keep regular minutes of its
meetings and report the same to the board of directors when required.
Section 12. By resolution of the board of directors and
irrespective of any personal interest of any director, the board
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<PAGE>
may establish reasonable compensation of directors for services to the
corporation as directors, officers or members of a committee. No such payment
shall preclude any director from serving the corporation in any other capacity
and receiving compensation therefor.
Section 13. A director may resign by written notice to the
corporation. The resignation is effective upon its receipt by the corporation or
a subsequent time as set forth in the notice of resignation.
Section 14. Attendance of a director at a meeting constitutes a
waiver of the meeting except where a director attends a meeting for the express
purpose of objecting to the transaction of any business because the meeting is
not lawfully called or convened.
Section 15. Unless otherwise restricted by the Certificate of
Incorporation or by law, any director or the entire board of directors may be
removed, with or without cause, by the holders of a majority of shares entitled
to vote at an election of directors.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
Certificate of Incorporation or of these Bylaws, written notice is required to
be given to any director, committee member or stockholder, such notice may be
given in writing by mail (registered, certified or other first class mail)
addressed to such director, stockholder or committee member at his address as it
appears on the records of the corporation, with postage thereon prepaid. Such
notice shall be deemed to be given at the time when the same shall be deposited
in a post office or official depository under the exclusive care and custody of
the United States postal service.
Section 2. Whenever any notice is required to be given under the
provision of the statutes or of the Certificate of Incorporation or of these
Bylaws, a waiver thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the stockholders, directors or a
committee, need be specified in any written waiver of notice.
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<PAGE>
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the
board of directors at its first meeting after each annual meeting of
stockholders. There shall be a president, a secretary and a treasurer. The board
of directors may also create and fill the offices of chairman of the board and
vice-chairman of the board, and may choose one or more vice-presidents, one or
more assistant secretaries, and one or more assistant treasurers. Any number of
offices may be held by the same person, but the board by resolution may require
that at least two persons shall be officers for purposes of compliance with
Article VI, Section 1, hereof.
Section 2. The board of directors may from time to time appoint such
other officers and agents as it shall deem necessary who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the board.
Section 3. The salaries of all officers of the corporation shall be
fixed by the board of directors.
Section 4. The officers of the corporation shall hold office at the
pleasure of the board of directors. Any officer elected or appointed by the
board of directors may be removed at any time by the board of directors with or
without cause whenever, in its judgment, the best interests of the corporation
will be served thereby. Any vacancy occurring in any office of the corporation
by death, resignation, removal or otherwise shall be filled by the board of
directors. An officer may resign by written notice to the corporation. The
resignation is effective upon its receipt by the corporation or at a subsequent
time specified in the notice of resignation.
Section 5. Unless otherwise provided by resolution of the board of
directors, the president shall be the chief executive officer of the
corporation, shall, in the absence or non-election of a chairman or
vice-chairman of the board of directors, preside at all meetings of the
stockholders and the board of directors (i) he shall be a member of the board),
shall have general and active management of the business and affairs of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect. He shall execute on behalf of the
corporation, and may affix or cause the seal to be affixed to, all instruments
requiring such execution except to the extent the signing and execution thereof
shall be expressly delegated by the board of directors to some other officer or
agent of the corporation, and he shall have the authority to vote any shares of
stock owned by the corporation.
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<PAGE>
Section 6. The vice-presidents shall act under the direction of the
president and in the absence or disability of the president shall perform the
duties and exercise the powers of the president. They shall perform such other
duties and have such other powers as the president or the board of directors may
from time to time prescribe. The board of directors may designate one or more
executive vice-presidents or may otherwise specify the order of seniority of the
vice-presidents. The duties and powers of the president shall descend to the
vice-presidents in such specified order of seniority.
Section 7. The secretary shall act under the direction of the
president. Subject to the direction of the president he shall attend all
meetings of the board of directors and all meetings of the stockholders and
record the proceedings. He shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the president or the board of
directors. He shall keep in safe custody the seal of the corporation and, when
authorized by the president or the board of directors, cause it to be affixed to
any instrument requiring it. He shall be responsible for maintaining the stock
transfer book and minute book of the corporation and shall be responsible for
their updating.
Section 8. The assistant secretaries shall act under the direction
of the president. In the order of their seniority in office, unless otherwise
determined by the president or the board of directors, they shall, in the
absence or disability of the secretary, perform the duties and exercise the
powers of the secretary. They shall perform such other duties and have such
other powers as the president or the board of directors may from time to time
prescribe.
Section 9. The treasurer shall act under the direction of the
president. Subject to the direction of the president he shall have custody of
the corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the board of
directors. He shall disburse the funds of the corporation as may be ordered by
the president or the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation. He may affix or cause to be affixed the seal of the corporation to
documents so requiring the seal.
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Section 10. The assistant treasurers in the order of their seniority
of office, unless otherwise determined by the president or the board of
directors shall, in the absence or disability of the treasurer, perform the
duties and exercise the powers of the treasurer. They shall perform such other
duties and have such other powers as the president or the board of directors may
from time to time prescribe.
Section 11. To the extent the powers and duties of the several
officers are not provided from time to time by resolution or other directive of
the board of directors or by the president (with respect to other officers), the
officers shall have all powers and shall discharge the duties customarily and
usually held and performed by like officers of the corporations similar in
organization and business purposes to this corporation.
ARTICLE VI
CERTIFICATES OF STOCK
AND STOCKHOLDERS OF RECORD
Section 1. The shares of stock of the corporation shall be
represented by certificates signed by, or in the name of the corporation by, the
chairman or vice-chairman of the board of directors or the president or a
vice-president and by the secretary or an assistant secretary or the treasurer
or an assistant treasurer of the corporation. Each holder of stock in the
corporation shall be entitled to have such a certificate certifying the number
of shares owned by him in the corporation.
Section 2. Any of or all the signatures on the certificate may be a
facsimile if the certificate is countersigned by a transfer agent or registered
by a registrar other than the corporation itself or its employee. In case any
officer who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer at the date of issue. The seal of the corporation or a facsimile
thereof may, but need not, be affixed to the certificates of stock.
Section 3. The board of directors may direct a new certificate for
shares to be issued in place of any certificate theretofore issued by the
corporation alleged to have been lost or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate of stock to be
lost or destroyed. When authorizing such issue of a new certificate, the board
of directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost or destroyed certificate, or his legal
representative, to give the corporation a bond in such sum as it may direct as
indemnity against any claim
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that may be made against the corporation with respect to the certificate alleged
to have been lost or destroyed.
Section 4. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its stock
transfer book for shares of the corporation.
Section 5. In order that the corporation may determine the
stockholders entitled to notice of, or to vote at, any meeting of stockholders
or any adjournment thereof, or to express consent to, or to dissent from, a
proposal without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the board of directors may fix, in advance,
a date as a record date, which shall not be more than 60 nor less than 10 days
before the date of such meeting, nor more than 60 days prior to any other
action. The stock transfer books of the corporation shall not be closed.
If no record date is fixed:
(a) the record date for determining the stockholders of record
entitled to notice of, or to vote at, a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given,
or, if no notice is waived, at the close of business on the day next preceding
the day on which the meeting is held;
(b) the record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting, when no prior
action by the board of directors is necessary, shall be the day on which the
first written consent is expressed; and
(c) the record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered upon its stock transfer book for shares
of the corporation as the owner of shares
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<PAGE>
for all purposes, including voting and dividends, and shall not be bound to
recognize any equitable or other claim to interest in such share or shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of Florida.
ARTICLE VII
INDEMNIFICATION
Section 1. The corporation shall indemnify, and advance expenses to,
to the fullest extent authorized or permitted by the provisions of Section 145
of the Delaware General Corporation Law (other than Section 145() or any
amendment or successor provision thereof or any other statutory provision
authorizing or permitting such indemnification or advancement of expenses which
is adopted after the date this Article VII is adopted) any person, and his
heirs, executors, administrators and legal representatives, who was or is a
party or is threatened to be made a party to threatened, pending or completed
action, suit or proceeding (whether civil, criminal, administrative or
investigative other than an action by or in the right of the corporation) by
reason of the fact that such person is or was a director, officer, employee or
agent of the corporation or serves or served any other enterprise at the request
of the corporation in any such capacity.
Section 2. Article VII, Section 1 of these Bylaws shall not be
construed to mean that indemnification and advancement of expenses by the
corporation pursuant to Section 145() of the Delaware General Corporation Law is
not permitted. The corporation may indemnify and advance expenses to any person
pursuant to such Section l45(), or any amended or successor section, to the
extent and in the manner desired by the corporation and permitted by law.
ARTICLE VIII
GENERAL PROVISIONS
Section 1. All checks, drafts or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate. All funds of
the corporation not otherwise employed shall be deposited from time to time to
the credit of the corporation in such banks, trust companies or other
depositories as the board of directors may from time to time designate.
Section 2. The fiscal year of the corporation shall be fixed from
time to time by resolution of the board of directors, but shall end on December
31st of each year is not otherwise fixed by the board.
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Section 3. The board of directors may adopt a corporate seal for the
corporation. The corporate seal shall have inscribed thereon the name of the
corporation and the words "Corporate Seal, Delaware." The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.
Section 4. The corporation shall keep within or without the State of
Delaware books and records of account and minutes of the proceedings of its
stockholders, board of directors and executive committee, if any. The
corporation shall keep at its registered office or at the office of its transfer
agent within or without the State of Delaware a stock transfer book for shares
of the corporation containing the names and addresses of all stockholders, the
number, class and series of shares held by each and the dates when they
respectively became holders of record thereof. Any of such stock transfer book,
books, records or minutes may be in written form or in any other form capable of
being converted into written form within a reasonable time.
Section 5. These Bylaws shall govern the internal affairs of the
corporation, but only to the extent they are consistent with governing law and
the Certificate of Incorporation. Nothing contained in the Bylaws shall,
however, prevent the imposition by contract of greater voting, notice or other
requirements than those set forth in these Bylaws.
ARTICLE IX
AMENDMENTS
Section 1. The Bylaws may be amended or repealed, or new Bylaws may
be adopted, by action of the stockholders and, if permitted by the Certificate
of Incorporation, the board of directors. The stockholders may from time to time
specify particular provisions of the Bylaws which shall not be altered or
repealed by the board of directors.
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Exhibit 3.10.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
SERVICO PENSACOLA 7200, INC.
Pursuant to Sections 242 and 245 of the Delaware General Corporation
Law, SERVICO PENSACOLA 7200, INC., a Delaware corporation (the "Corporation"),
hereby certifies that this Amended and Restated Certificate of Incorporation
(the "Amended Certificate"), which contains amendments requiring shareholder
approval, was duly adopted by the Board of Directors of the Corporation and by
the sole shareholder of the Corporation by written consent without a meeting,
pursuant to Sections l41(f) and 228 of the Delaware Corporation Law, as of July
22, 1999. The original Certificate of Incorporation was filed with the Secretary
of State of the State of Delaware on July 13, 1995, and amended on August 18,
1995.
ARTICLE I
The name of the Corporation is SERVICO PENSACOLA 7200, INC.
ARTICLE II
The registered office of the Corporation is located at Corporation
Trust Center, 1209 Orange Street, City of Wilmington, County of New Castle,
State of Delaware 19801. The name of its registered agent at that address is The
Corporation Trust Company.
ARTICLE III
(a) The purpose for which the Corporation is organized is limited to: (i)
acquiring, owning, leasing, operating, using and managing that certain real
property commonly known as the Holiday Inn University Mall, located at 7200
Plantation Road, Pensacola, Florida 32504 (the "Property"); (ii) entering
into and performing its obligations under the credit agreement, among Lodgian
Financing Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel Group,
LLC, Servico, Inc. and other affiliated entities, as affiliate guarantors,
the initial lenders and initial issuing bank named therein, the collateral
agent, the administrative agent, Morgan Stanley Senior Funding, Inc., as
co-lead arranger, joint-book manager and syndication agent and Lehman
Brothers, as co-lead arranger, joint-book manager and documentation agent
relating to the financing or refinancing of the Property (the "Loan
Agreement") which provides the lender thereunder with a first priority lien
on the Property, any promissory-note evidencing indebtedness incurred
pursuant to the Loan Agreement, any mortgage securing such indebtedness and
encumbering the Property (the "Mortgage") and any other documents securing
such indebtedness and any related collateral documents, each as amended (or
pursuant to a consent obtained in accordance with the terms thereof)
(collectively, the "Loan Documents"); (iii) entering into and performing its
obligations under the Indenture (the "Indenture"), among Lodgian Financing
Corp, as issuer, Lodgian, Inc., the Subsidiary Guarantors defined therein and
Bankers Trust Company, as trustee, relating to the issuance of the 12 1/4%
Senior Subordinated Notes due 2009 and the Guarantee in favor of the holders
of the Notes and (iv) transacting any and all lawful business that is
incident and necessary or appropriate to the ownership and to the
<PAGE>
management of the Property for which a corporation may be incorporated under the
laws of the State of Delaware.
(b) Notwithstanding any other provision of these Amended Articles and
any provision of law that otherwise so empowers the Corporation, until such time
as the Property is released from the lien of the Mortgage, the Corporation shall
not, without the unanimous affirmative vote of the members of its Board of
Directors, (i) amend, alter, change, repeal or adopt any resolution setting
forth a proposed amendment to, any provision of these Articles of Incorporation,
(ii) dissolve or liquidate, in whole or in part, consolidate or merge with or
into any other entity or convey, sell or transfer its properties and assets
substantially as an entirety to any entity, (iii) file a voluntary petition or
otherwise initiate, or consent to, proceedings for the Corporation to be
adjudicated insolvent or seeking an order for relief as a debtor under the
United States Bankruptcy Code, as amended (11 U.S.C. ss.ss. 101 ET SEQ.), or
(iv) file any petition, or consent to any petition, seeking any composition,
reorganization, readjustment, liquidation, dissolution or similar relief under
the present or any future federal bankruptcy laws or any other present or future
applicable federal, state or other statute or law relative to bankruptcy,
insolvency or other relief for debtors; or (v) seek or consent to the
appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, or liquidator (or other similar official) of the Corporation or of
all or any substantial part of the properties and assets of the Corporation, or
(vi) make any general assignment for the benefit of creditors, or (vii) admit in
writing its inability to pay its debts generally as they become due, or (viii)
declare or effect a moratorium on its debt or take any corporate action in
furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all times until
the Property is released from the lien of the Mortgage, include an independent
director (the "Independent Director"). The Independent Director shall be a
person who is not at the time of appointment and who has not at any time during
the prior five years been and who is not while serving as the Independent
Director (i) a director, stockholder, officer or employee of the Corporation or
any affiliates thereof, other than with respect to such person's service as an
Independent Director of the Corporation and such person's service in similar
"Independent Director" positions for affiliates of the Corporation; (ii) a
creditor, customer, supplier, independent contractor, manager or any other
person who derives more than 10% of its gross revenues from its activities wit
the Corporation or any affiliates thereof; (iii) a person controlling any such
stockholder, creditor, customer, supplier, independent contractor, manager or
other person; (iv) the legal or beneficial owner, at any time while serving as
director of the Corporation, of any beneficial interest in the Corporation; or
(v) a member of the immediate family of any such stockholder, officer, employee,
creditor, customer, supplier, director, independent contractor, manager or any
other person of the Corporation. As used herein, the term "affiliate" means any
person controlling, under common control with, or controlled by the person in
question, and the term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a person, whether through ownership of voting securities, by contract or
otherwise. In the event of the death, incapacity, or resignation of an
Independent Director, or the vacancy of the Independent Director's seat on the
Corporation's Board of Directors for any reason, a successor Independent
Director shall be appointed by the remaining directors.
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(d) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(ix) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall not (i)
commingle its assets with those of, or pledge its assets for the benefit of, any
other person or entity; (ii) assume, guarantee or become obligated, or hold out
its credit as being available to satisfy, the liabilities or obligations of any
other person or entity; (iii) reduce its capital below an amount which is
adequate in light of its contemplated business operations; (iv) acquire
obligations or securities of, or make loans or advances to, any affiliate; (v)
incur or assume any indebtedness other than (A) the indebtedness underlying the
Loan Agreement, (B) the indebtedness underlying the Indenture, and (C)
liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article Third and the last sentence of
Article Seventh of this Amended Certificate; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in this Amended Certificate. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
ARTICLE IV
The total number of shares of stock which the Corporation is authorized
to issue is One Thousand (1,000) shares of Common Stock with the par value of
one cent ($0.01) per share.
ARTICLE V
The Board of Directors is expressly authorized to adopt, alter, amend
or repeal the Bylaws of the Corporation subject to the limitations set forth in
this Amended Certificate. Election of directors need not be by written ballot
unless and to the extent provided in the Bylaws of the Corporation.
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ARTICLE VI
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit. If the Delaware General Corporation Law is amended after the
date of this Amended Certificate to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability
of each director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the Delaware General Corporation Law, as so amended.
The right and authority conferred in this Article Sixth shall not be
exclusive of any other rights that any person may have or hereafter acquire
under any statute, provision of this Amended Certificate or the Bylaws of the
Corporation, agreement, vote of the stockholders or disinterested directors or
otherwise.
ARTICLE VII
The Corporation shall indemnify any officer or director, or any former
officer or director of the Corporation, to the fullest extent permitted by law.
The foregoing right of indemnification shall not be exclusive of any other
rights to which any director, officer, employee or agent may be entitled as a
matter of law or which he may be lawfully granted. The Corporation's obligation
to indemnify its officers and directors pursuant to this Article shall be
subordinate in all respects to the obligations of the Corporation arising out of
the Loan Documents and shall not constitute a claim against the Corporation to
the extent that the Corporation is unable to pay any amounts it is obligated to
pay under the Loan Documents.
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<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Second Amended
and Restated Certificate of Incorporation this 23rd day of July, 1999, and
acknowledge, under penalties of perjury, that this instrument is the act and
deed of the Corporation, and that the facts stated herein are true and correct.
SERVICO PENSACOLA 7200, INC.
By: /s/ Thomas S. Gryboski
------------------------
Name: Thomas S. Gryboski
Title: Assistant Secretary
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<PAGE>
Exhibit 3.10.2
BYLAWS
OF
SERVICO PENSACOLA 7200, INC.
a Delaware corporation
<PAGE>
BYLAWS
OF
SERVICO PENSACOLA 7200, INC.
a Delaware corporation
ARTICLE I
OFFICES
Section 1. The location of the registered office of the corporation
shall be as stated in the Certificate of Incorporation, which location may be
changed from time to time by the board of directors.
Section 2. The corporation may also have offices or branches at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or as the business of the corporation
may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders shall be held at the
registered office of the corporation, or at such other place either within or
without the State of Delaware as shall be designated from time to time by the
board of directors and stated in the notice of the meeting.
Section 2. Annual meetings of stockholders shall be held on the
first Tuesday of the third month of each fiscal year of the corporation if not a
legal holiday in the state in which the meeting shall be held, and if a legal
holiday, then on the next secular day following, at such time as determined by
the board of directors, or at such other date and time as shall be designated
from time to time by the board of directors and stated in the notice of the
meeting. At the annual meeting, the stockholders shall elect a board of
directors and transact such other business as may properly be brought before the
meeting. If the annual meeting is not held on the date designated therefor, the
board of directors shall cause the meeting to be held as soon thereafter as
convenient.
Section 3. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the Certificate of
Incorporation, may be called by the chairman of the board or president, and
shall be called by the chairman of the board or president at the request in
writing of a majority of the
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<PAGE>
board of directors or at the request in writing of the holders of not less than
10% of all the shares entitled to vote at a meeting. Such request shall state
the purpose or purposes of the proposed meeting.
Section 4. The officer or agent who has charge of the stock ledger
of the corporation shall at least 10 days before every meeting of stockholders
make and certify a complete list of the stockholders entitled to vote at a
stockholders' meeting, or any adjournment thereof. The list shall be arranged in
alphabetical order with each class and series and show the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours for a period of at least
10 days prior to the meeting, at a place within the city where the meeting is to
be held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present.
Section 5. Except as may be provided by statute, written notice of
an annual or special meeting of stockholders stating the place, date and hour of
the meeting, where the list of stockholders may be inspected (if other than at
the place of the meeting), and the purpose or purposes for which the meeting is
called, shall be delivered, either personally or by first-class mail, not less
than 10 nor more than 60 days before the date of the meeting, to each
stockholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail
addressed to the stockholder at his address as it appears on the records of the
corporation with postage thereon prepaid.
Section 6. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise expressly required by statute or by
the Certificate of Incorporation. All stockholders present in person or
represented by proxy at such meeting may continue to do business until
adjournment, notwithstanding the withdrawal of enough stockholders to leave less
than a quorum. If, however, such quorum shall not be initially present at any
meeting of stockholders, a majority of the stockholders entitled to vote thereat
shall nevertheless have power to adjourn the meeting from time to time and to
another place, without notice other than announcement at the meeting, until a
quorum shall be present or represented. At such adjourned meeting, at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally notified. If after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned
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meeting shall be given to each stockholder of record entitled to vote at the
meeting.
Section 7. When an action other than the election of directors is to
be taken by vote of the stockholders, it shall be authorized by the affirmative
vote of a majority of the shares represented at the meeting and entitled to vote
on the subject matter, unless a greater plurality is required by express
requirement of the statutes or of the Certificate of Incorporation, in which
case such express provision shall govern and control the decision of such
question. "Shares represented at the meeting" shall be determined as of the time
the existence of the quorum is determined and shall indicate shares present in
person or represented by proxy. Except as otherwise expressly required by the
Certificate of Incorporation, directors shall be elected by a plurality of the
votes cast at an election.
Section 8. Each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of the
capital stock having voting power held by such stockholder except as otherwise
expressly required in the Articles of Incorporation. A vote may be cast either
orally or in writing. Each proxy shall be in writing and signed by the
stockholder or his authorized agent or representative. A proxy is not valid
after the expiration of three years after its date unless the person executing
it specifies therein the length of time for which it is to continue in force.
Unless prohibited by law, a proxy otherwise validly granted by telegram shall be
deemed to have been signed by the granting stockholder. All questions regarding
the qualification of voters, the validity of proxies and the acceptance or
rejection of votes shall be decided by the presiding officer of the meeting.
Section 9. Attendance of a person at a meeting of stockholders in
person or by proxy constitutes a waiver of notice of the meeting except where
the stockholder attends a meeting for the express purpose of objecting at the
beginning of the meeting to the transaction of any business because the meeting
was not lawfully called or convened.
Section 10. Unless otherwise provided by the Certificate of
Incorporation, any action required to be taken at any annual or special meeting
of the stockholders, or any other action which may be taken at any annual or
special meeting of the stockholders may be taken without a meeting, without
prior notice, and without a vote if a consent in writing, setting forth the
action so taken, shall be signed by holders of outstanding stock having not less
than the minimum number of votes that would be necessary to authorize such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Promptly after obtaining such authorization by written consent,
notice shall be given to those
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<PAGE>
stockholders who have not consented in writing. The notice shall fairly
summarize the material features of the authorized action.
ARTICLE III
DIRECTORS
Section 1. The business and affairs of the corporation shall be
managed by or under the direction of its board of directors which may exercise
all such powers of the corporation and do all such lawful acts and things as
are not by statute or by the Certificate of Incorporation or by these Bylaws
directed or required to be exercised or done by the stockholders.
Section 2. The number of directors which shall constitute the whole
board shall not be less than one nor more than seven. The number of directors
shall be determined from time to time by resolution of the board of directors.
In the absence of an express determination by the board, the number of
directors, until changed by the board, shall be that number of directors elected
at the most recently held annual meeting of stockholders or, if no such meeting
has been held, the number elected by the incorporator in the initially filed
Certificate of Incorporation. The directors shall be elected at the annual
meeting of the stockholders, except as provided in Section 3 of this article,
and each director elected shall hold office until his successor is elected and
qualified or until his resignation or removal. Directors need not be
stockholders or officers of the corporation.
Section 3. Vacancies and newly created directorships resulting from
any increase in the authorized number of directors may be filled by the
affirmative vote of a majority of the directors then in office, though less than
a quorum, or by a sole remaining director, or by the stockholders, and the
directors so chosen shall hold office until the next annual election of
directors by the stockholders and until their successors are duly elected and
qualified or until their resignation or removal. Any director may be removed,
with or without cause, by the stockholders at a meeting of the stockholders
called expressly for that purpose.
Section 4. The board of directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Delaware. Unless otherwise restricted by the Certificate of Incorporation,
members of the board of directors, or any committee designated by the board, may
participate in a meeting of the board or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant to this section shall constitute presence in person at such meeting.
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<PAGE>
Section 5. The first board of directors shall hold office until the
first annual meeting of stockholders. Thereafter, the first meeting of each
newly elected board of directors shall be held promptly following the annual
meeting of stockholders on the date thereof. No notice of such meeting shall be
necessary to the newly elected directors in order to legally constitute the
meeting, provided a quorum shall be present. In the event such meeting is not so
held, the meeting may be held at such time and place as shall be specified in a
notice given as hereinafter provided for special meetings of the board of
directors.
Section 6. Regular meetings of the board of directors may be held at
such time and at such place as shall from time to time be determined by the
board of directors or by the chairman of the board or president. Any notice
given of a regular meeting need not specify the business to be transacted or the
purpose of the meeting.
Section 7. Special meetings of the board may be called by the
chairman of the board or president on four days' notice to each director by mail
or 24 hours' notice either personally, by telephone or by telegram; special
meetings shall be called by the chairman of the board or president in like
manner and on like notice on the written request of two directors. The notice
need not specify the business to be transacted or the purpose of the special
meetings. The notice shall specify the place of the special meeting.
Section 8. At all meetings of the board, a majority of the number of
directors determined pursuant to Article III, Section 2 of these Bylaws shall
constitute a quorum for the transaction of business. At all meetings of a
committee of the board, a majority of the directors then members of the
committee in office shall constitute a quorum for the transaction of business.
The act of a majority of the members present at any meeting at which there is a
quorum shall be the act of the board of directors or the committee, unless the
vote of a larger number is specifically required by statute, by the Certificate
of Incorporation, or by these Bylaws. If a quorum shall not be present at any
meeting of the board of directors or a committee, the members present thereat
may adjourn the meeting from time to time and to another place without notice
other than announcement at the meeting, until a quorum shall be present.
Section 9. Unless otherwise provided by the Certificate of
Incorporation, any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting, if, before or after the action, all members of the board or committee
consent thereto in writing. The written consents shall be filed with the minutes
of proceedings of the board or committee. Such consents shall have the same
effect as a vote of the board or committee for all purposes.
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<PAGE>
Section 10. A majority of the whole board of directors may, by
resolution, designate one or more committees, each committee to consist of one
or more of the directors of the corporation. The board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members present at
any meeting and not disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another member of the board of
directors to act at the meeting in the place of such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
board, shall have and may exercise the power and authority of the board of
directors in the management of the business and affairs of the corporation;
provided, however, such a committee shall not have the power or authority to:
(a) amend the Certificate of Incorporation (except that a
committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the board of directors
as provided by statute, fix the designations and any of the preferences or
rights of such shares relating to dividends, redemption, dissolution, any
distribution of assets of the corporation or the conversion into, or the
exchange of such shares for, shares of any other class or classes of any other
series of the same or any other class or classes of stock of the corporation or
fix the number of shares of any series of stock or authorize the increase or
decrease of the shares of any series);
(b) adopt an agreement of merger or consolidation as provided
by statute;
(c) recommend to the stockholders the sale, lease or exchange
of all or substantially all of the corporation's properties and assets;
(d) recommend to the stockholders a dissolution or a
revocation of a dissolution; or
(e) amend the Bylaws of the corporation.
Such committee or committees shall have such name or names as may be determined
from time to time by resolution adopted by the board of directors. A committee,
and each member thereof, shall serve at the pleasure of the board.
Section 11. Each committee shall keep regular minutes of its
meetings and report the same to the board of directors when required.
Section 12. By resolution of the board of directors and
irrespective of any personal interest of any director, the board
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may establish reasonable compensation of directors for services to the
corporation as directors, officers or members of a committee. No such payment
shall preclude any director from serving the corporation in any other capacity
and receiving compensation therefor.
Section 13. A director may resign by written notice to the
corporation. The resignation is effective upon its receipt by the corporation or
a subsequent time as set forth in the notice of resignation.
Section 14. Attendance of a director at a meeting constitutes a
waiver of the meeting except where a director attends a meeting for the express
purpose of objecting to the transaction of any business because the meeting is
not lawfully called or convened.
Section 15. Unless otherwise restricted by the Certificate of
Incorporation or by law, any director or the entire board of directors may be
removed, with or without cause, by the holders of a majority of shares entitled
to vote at an election of directors.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
Certificate of Incorporation or of these Bylaws, written notice is required to
be given to any director, committee member or stockholder, such notice may be
given in writing by mail (registered, certified or other first class mail)
addressed to such director, stockholder or committee member at his address as it
appears on the records of the corporation, with postage thereon prepaid. Such
notice shall be deemed to be given at the time when the same shall be deposited
in a post office or official depository under the exclusive care and custody of
the United States postal service.
Section 2. Whenever any notice is required to be given under the
provision of the statutes or of the Certificate of Incorporation or of these
Bylaws, a waiver thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the stockholders, directors or a
committee, need be specified in any written waiver of notice.
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<PAGE>
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the
board of directors at its first meeting after each annual meeting of
stockholders. There shall be a president, a secretary and a treasurer. The board
of directors may also create and fill the offices of chairman of the board and
vice-chairman of the board, and may choose one or more vice-presidents, one or
more assistant secretaries, and one or more assistant treasurers. Any number of
offices may be held by the same person, but the board by resolution may require
that at least two persons shall be officers for purposes of compliance with
Article VI, Section 1, hereof.
Section 2. The board of directors may from time to time appoint such
other officers and agents as it shall deem necessary who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the board.
Section 3. The salaries of all officers of the corporation shall be
fixed by the board of directors.
Section 4. The officers of the corporation shall hold office at the
pleasure of the board of directors. Any officer elected or appointed by the
board of directors may be removed at any time by the board of directors with or
without cause whenever, in its judgment, the best interests of the corporation
will be served thereby. Any vacancy occurring in any office of the corporation
by death, resignation, removal or otherwise shall be filled by the board of
directors. An officer may resign by written notice to the corporation. The
resignation is effective upon its receipt by the corporation or at a subsequent
time specified in the notice of resignation.
Section 5. Unless otherwise provided by resolution of the board of
directors, the president shall be the chief executive officer of the
corporation, shall, in the absence or non-election of a chairman or
vice-chairman of the board of directors, preside at all meetings of the
stockholders and the board of directors (i) he shall be a member of the board),
shall have general and active management of the business and affairs of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect. He shall execute on behalf of the
corporation, and may affix or cause the seal to be affixed to, all instruments
requiring such execution except to the extent the signing and execution thereof
shall be expressly delegated by the board of directors to some other officer or
agent of the corporation, and he shall have the authority to vote any shares of
stock owned by the corporation.
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<PAGE>
Section 6. The vice-presidents shall act under the direction of the
president and in the absence or disability of the president shall perform the
duties and exercise the powers of the president. They shall perform such other
duties and have such other powers as the president or the board of directors may
from time to time prescribe. The board of directors may designate one or more
executive vice-presidents or may otherwise specify the order of seniority of the
vice-presidents. The duties and powers of the president shall descend to the
vice-presidents in such specified order of seniority.
Section 7. The secretary shall act under the direction of the
president. Subject to the direction of the president he shall attend all
meetings of the board of directors and all meetings of the stockholders and
record the proceedings. He shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the president or the board of
directors. He shall keep in safe custody the seal of the corporation and, when
authorized by the president or the board of directors, cause it to be affixed to
any instrument requiring it. He shall be responsible for maintaining the stock
transfer book and minute book of the corporation and shall be responsible for
their updating.
Section 8. The assistant secretaries shall act under the direction
of the president. In the order of their seniority in office, unless otherwise
determined by the president or the board of directors, they shall, in the
absence or disability of the secretary, perform the duties and exercise the
powers of the secretary. They shall perform such other duties and have such
other powers as the president or the board of directors may from time to time
prescribe.
Section 9. The treasurer shall act under the direction of the
president. Subject to the direction of the president he shall have custody of
the corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the board of
directors. He shall disburse the funds of the corporation as may be ordered by
the president or the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation. He may affix or cause to be affixed the seal of the corporation to
documents so requiring the seal.
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Section 10. The assistant treasurers in the order of their seniority
of office, unless otherwise determined by the president or the board of
directors shall, in the absence or disability of the treasurer, perform the
duties and exercise the powers of the treasurer. They shall perform such other
duties and have such other powers as the president or the board of directors may
from time to time prescribe.
Section 11. To the extent the powers and duties of the several
officers are not provided from time to time by resolution or other directive of
the board of directors or by the president (with respect to other officers), the
officers shall have all powers and shall discharge the duties customarily and
usually held and performed by like officers of the corporations similar in
organization and business purposes to this corporation.
ARTICLE VI
CERTIFICATES OF STOCK
AND STOCKHOLDERS OF RECORD
Section 1. The shares of stock of the corporation shall be
represented by certificates signed by, or in the name of the corporation by, the
chairman or vice-chairman of the board of directors or the president or a
vice-president and by the secretary or an assistant secretary or the treasurer
or an assistant treasurer of the corporation. Each holder of stock in the
corporation shall be entitled to have such a certificate certifying the number
of shares owned by him in the corporation.
Section 2. Any of or all the signatures on the certificate may be a
facsimile if the certificate is countersigned by a transfer agent or registered
by a registrar other than the corporation itself or its employee. In case any
officer who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer at the date of issue. The seal of the corporation or a facsimile
thereof may, but need not, be affixed to the certificates of stock.
Section 3. The board of directors may direct a new certificate for
shares to be issued in place of any certificate theretofore issued by the
corporation alleged to have been lost or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate of stock to be
lost or destroyed. When authorizing such issue of a new certificate, the board
of directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost or destroyed certificate, or his legal
representative, to give the corporation a bond in such sum as it may direct as
indemnity against any claim
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<PAGE>
that may be made against the corporation with respect to the certificate alleged
to have been lost or destroyed.
Section 4. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its stock
transfer book for shares of the corporation.
Section 5. In order that the corporation may determine the
stockholders entitled to notice of, or to vote at, any meeting of stockholders
or any adjournment thereof, or to express consent to, or to dissent from, a
proposal without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the board of directors may fix, in advance,
a date as a record date, which shall not be more than 60 nor less than 10 days
before the date of such meeting, nor more than 60 days prior to any other
action. The stock transfer books of the corporation shall not be closed.
If no record date is fixed:
(a) the record date for determining the stockholders of record
entitled to notice of, or to vote at, a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given,
or, if no notice is waived, at the close of business on the day next preceding
the day on which the meeting is held;
(b) the record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting, when no prior
action by the board of directors is necessary, shall be the day on which the
first written consent is expressed; and
(c) the record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered upon its stock transfer book for shares
of the corporation as the owner of shares
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for all purposes, including voting and dividends, and shall not be bound to
recognize any equitable or other claim to interest in such share or shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of Florida.
ARTICLE VII
INDEMNIFICATION
Section 1. The corporation shall indemnify, and advance expenses to,
to the fullest extent authorized or permitted by the provisions of Section 145
of the Delaware General Corporation Law (other than Section 145() or any
amendment or successor provision thereof or any other statutory provision
authorizing or permitting such indemnification or advancement of expenses which
is adopted after the date this Article VII is adopted) any person, and his
heirs, executors, administrators and legal representatives, who was or is a
party or is threatened to be made a party to threatened, pending or completed
action, suit or proceeding (whether civil, criminal, administrative or
investigative other than an action by or in the right of the corporation) by
reason of the fact that such person is or was a director, officer, employee or
agent of the corporation or serves or served any other enterprise at the request
of the corporation in any such capacity.
Section 2. Article VII, Section 1 of these Bylaws shall not be
construed to mean that indemnification and advancement of expenses by the
corporation pursuant to Section 145() of the Delaware General Corporation Law is
not permitted. The corporation may indemnify and advance expenses to any person
pursuant to such Section l45(), or any amended or successor section, to the
extent and in the manner desired by the corporation and permitted by law.
ARTICLE VIII
GENERAL PROVISIONS
Section 1. All checks, drafts or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate. All funds of
the corporation not otherwise employed shall be deposited from time to time to
the credit of the corporation in such banks, trust companies or other
depositories as the board of directors may from time to time designate.
Section 2. The fiscal year of the corporation shall be fixed from
time to time by resolution of the board of directors, but shall end on December
31st of each year is not otherwise fixed by the board.
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Section 3. The board of directors may adopt a corporate seal for the
corporation. The corporate seal shall have inscribed thereon the name of the
corporation and the words "Corporate Seal, Delaware." The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.
Section 4. The corporation shall keep within or without the State of
Delaware books and records of account and minutes of the proceedings of its
stockholders, board of directors and executive committee, if any. The
corporation shall keep at its registered office or at the office of its transfer
agent within or without the State of Delaware a stock transfer book for shares
of the corporation containing the names and addresses of all stockholders, the
number, class and series of shares held by each and the dates when they
respectively became holders of record thereof. Any of such stock transfer book,
books, records or minutes may be in written form or in any other form capable of
being converted into written form within a reasonable time.
Section 5. These Bylaws shall govern the internal affairs of the
corporation, but only to the extent they are consistent with governing law and
the Certificate of Incorporation. Nothing contained in the Bylaws shall,
however, prevent the imposition by contract of greater voting, notice or other
requirements than those set forth in these Bylaws.
ARTICLE IX
AMENDMENTS
Section 1. The Bylaws may be amended or repealed, or new Bylaws may
be adopted, by action of the stockholders and, if permitted by the Certificate
of Incorporation, the board of directors. The stockholders may from time to time
specify particular provisions of the Bylaws which shall not be altered or
repealed by the board of directors.
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Exhibit 3.11.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
SERVICO PENSACOLA 7330, INC.
Pursuant to Sections 242 and 245 of the Delaware General Corporation
Law, SERVICO PENSACOLA 7330, INC., a Delaware corporation (the "Corporation"),
hereby certifies that this Amended and Restated Certificate of Incorporation
(the "Amended Certificate"), which contains amendments requiring shareholder
approval, was duly adopted by the Board of Directors of the Corporation and by
the sole shareholder of the Corporation by written consent without a meeting,
pursuant to Sections l41(f) and 228 of the Delaware Corporation Law, as of July
22, 1999. The original Certificate of Incorporation was filed with the Secretary
of State of the State of Delaware on July 13, 1995, and amended on August 18,
1995.
ARTICLE I
The name of the Corporation is SERVICO PENSACOLA 7330, INC.
ARTICLE II
The registered office of the Corporation is located at Corporation
Trust Center, 1209 Orange Street, City of Wilmington, County of New Castle,
State of Delaware 19801. The name of its registered agent at that address is The
Corporation Trust Company.
ARTICLE III
(a) The purpose for which the Corporation is organized is limited to:
(i) acquiring, owning, leasing, operating, using and managing that certain real
property commonly known as the Hampton Inn Pensacola, located at 7330 Plantation
Road, Pensacola, Florida 32504 (the "Property"); (ii) entering into and
performing its obligations under the credit agreement, among Lodgian Financing
Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel Group, LLC, Servico,
Inc. and other affiliated entities, as affiliate guarantors, the initial lenders
and initial issuing bank named therein, the collateral agent, the administrative
agent, Morgan Stanley Senior Funding, Inc., as co-lead arranger, joint-book
manager and syndication agent and Lehman Brothers, as co-lead arranger,
joint-book manager and documentation agent relating to the financing or
refinancing of the Property (the "Loan Agreement") which provides the lender
thereunder with a first priority lien on the Property, any promissory-note
evidencing indebtedness incurred pursuant to the Loan Agreement, any mortgage
securing such indebtedness and encumbering the Property (the "Mortgage") and any
other documents securing such indebtedness and any related collateral documents,
each as amended (or pursuant to a consent obtained in accordance with the terms
thereof) (collectively, the "Loan Documents"); (iii) entering into and
performing its obligations under the Indenture (the "Indenture"), among Lodgian
Financing Corp, as issuer, Lodgian, Inc., the Subsidiary Guarantors defined
therein and Bankers Trust Company, as trustee, relating to the issuance of the
12 1/4% Senior Subordinated Notes due 2009 and the Guarantee in favor of the
holders of the Notes and (iv) transacting any and all lawful business that is
incident and necessary or appropriate to the ownership and to the
<PAGE>
management of the Property for which a corporation may be incorporated under the
laws of the State of Delaware.
(b) Notwithstanding any other provision of these Amended Articles and
any provision of law that otherwise so empowers the Corporation, until such time
as the Property is released from the lien of the Mortgage, the Corporation shall
not, without the unanimous affirmative vote of the members of its Board of
Directors, (i) amend, alter, change, repeal or adopt any resolution setting
forth a proposed amendment to, any provision of these Articles of Incorporation,
(ii) dissolve or liquidate, in whole or in part, consolidate or merge with or
into any other entity or convey, sell or transfer its properties and assets
substantially as an entirety to any entity, (iii) file a voluntary petition or
otherwise initiate, or consent to, proceedings for the Corporation to be
adjudicated insolvent or seeking an order for relief as a debtor under the
United States Bankruptcy Code, as amended (11 U.S.C. Section 101 ET SEQ.), or
(iv) file any petition, or consent to any petition, seeking any composition,
reorganization, readjustment, liquidation, dissolution or similar relief under
the present or any future federal bankruptcy laws or any other present or future
applicable federal, state or other statute or law relative to bankruptcy,
insolvency or other relief for debtors; or (v) seek or consent to the
appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, or liquidator (or other similar official) of the Corporation or of
all or any substantial part of the properties and assets of the Corporation, or
(vi) make any general assignment for the benefit of creditors, or (vii) admit in
writing its inability to pay its debts generally as they become due, or (viii)
declare or effect a moratorium on its debt or take any corporate action in
furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all times until
the Property is released from the lien of the Mortgage, include an independent
director (the "Independent Director"). The Independent Director shall be a
person who is not at the time of appointment and who has not at any time during
the prior five years been and who is not while serving as the Independent
Director (i) a director, stockholder, officer or employee of the Corporation or
any affiliates thereof, other than with respect to such person's service as an
Independent Director of the Corporation and such person's service in similar
"Independent Director" positions for affiliates of the Corporation; (ii) a
creditor, customer, supplier, independent contractor, manager or any other
person who derives more than 10% of its gross revenues from its activities wit
the Corporation or any affiliates thereof; (iii) a person controlling any such
stockholder, creditor, customer, supplier, independent contractor, manager or
other person; (iv) the legal or beneficial owner, at any time while serving as
director of the Corporation, of any beneficial interest in the Corporation; or
(v) a member of the immediate family of any such stockholder, officer, employee,
creditor, customer, supplier, director, independent contractor, manager or any
other person of the Corporation. As used herein, the term "affiliate" means any
person controlling, under common control with, or controlled by the person in
question, and the term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a person, whether through ownership of voting securities, by contract or
otherwise. In the event of the death, incapacity, or resignation of an
Independent Director, or the vacancy of the Independent Director's seat on the
Corporation's Board of Directors for any reason, a successor Independent
Director shall be appointed by the remaining directors.
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(d) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(ix) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall not (i)
commingle its assets with those of, or pledge its assets for the benefit of, any
other person or entity; (ii) assume, guarantee or become obligated, or hold out
its credit as being available to satisfy, the liabilities or obligations of any
other person or entity; (iii) reduce its capital below an amount which is
adequate in light of its contemplated business operations; (iv) acquire
obligations or securities of, or make loans or advances to, any affiliate; (v)
incur or assume any indebtedness other than (A) the indebtedness underlying the
Loan Agreement, (B) the indebtedness underlying the Indenture, and (C)
liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article Third and the last sentence of
Article Seventh of this Amended Certificate; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in this Amended Certificate. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
ARTICLE IV
The total number of shares of stock which the Corporation is authorized
to issue is One Thousand (1,000) shares of Common Stock with the par value of
one cent ($0.01) per share.
ARTICLE V
The Board of Directors is expressly authorized to adopt, alter, amend
or repeal the Bylaws of the Corporation subject to the limitations set forth in
this Amended Certificate. Election of directors need not be by written ballot
unless and to the extent provided in the Bylaws of the Corporation.
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ARTICLE VI
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit. If the Delaware General Corporation Law is amended after the
date of this Amended Certificate to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability
of each director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the Delaware General Corporation Law, as so amended.
The right and authority conferred in this Article Sixth shall not be
exclusive of any other rights that any person may have or hereafter acquire
under any statute, provision of this Amended Certificate or the Bylaws of the
Corporation, agreement, vote of the stockholders or disinterested directors or
otherwise.
ARTICLE VII
The Corporation shall indemnify any officer or director, or any former
officer or director of the Corporation, to the fullest extent permitted by law.
The foregoing right of indemnification shall not be exclusive of any other
rights to which any director, officer, employee or agent may be entitled as a
matter of law or which he may be lawfully granted. The Corporation's obligation
to indemnify its officers and directors pursuant to this Article shall be
subordinate in all respects to the obligations of the Corporation arising out of
the Loan Documents and shall not constitute a claim against the Corporation to
the extent that the Corporation is unable to pay any amounts it is obligated to
pay under the Loan Documents.
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IN WITNESS WHEREOF, the undersigned has executed this Second Amended
and Restated Certificate of Incorporation this 23rd day of July, 1999, and
acknowledge, under penalties of perjury, that this instrument is the act and
deed of the Corporation, and that the facts stated herein are true and correct.
SERVICO PENSACOLA 7330, INC.
By: /s/ Thomas S. Gryboski
-------------------------
Name: Thomas S. Gryboski
Title: Assistant Secretary
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<PAGE>
Exhibit 3.11.2
BYLAWS
OF
SERVICO PENSACOLA 7330, INC.
a Delaware corporation
ARTICLE I
OFFICES
Section 1. The location of the registered office of the corporation
shall be as stated in the Certificate of Incorporation, which location may be
changed from time to time by the board of directors.
Section 2. The corporation may also have offices or branches at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or as the business of the corporation
may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders shall be held at the
registered office of the corporation, or at such other place either within or
without the State of Delaware as shall be designated from time to time by the
board of directors and stated in the notice of the meeting.
Section 2. Annual meetings of stockholders shall be held on the
first Tuesday of the third month of each fiscal year of the corporation if not a
legal holiday in the state in which the meeting shall be held, and if a legal
holiday, then on the next secular day following, at such time as determined by
the board of directors, or at such other date and time as shall be designated
from time to time by the board of directors and stated in the notice of the
meeting. At the annual meeting, the stockholders shall elect a board of
directors and transact such other business as may properly be brought before the
meeting. If the annual meeting is not held on the date designated therefor, the
board of directors shall cause the meeting to be held as soon thereafter as
convenient.
Section 3. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the Certificate of
Incorporation, may be called by the chairman of the board or president, and
shall be called by the chairman of the board or president at the request in
writing of a majority of the
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<PAGE>
board of directors or at the request in writing of the holders of not less than
10% of all the shares entitled to vote at a meeting. Such request shall state
the purpose or purposes of the proposed meeting.
Section 4. The officer or agent who has charge of the stock ledger
of the corporation shall at least 10 days before every meeting of stockholders
make and certify a complete list of the stockholders entitled to vote at a
stockholders' meeting, or any adjournment thereof. The list shall be arranged in
alphabetical order with each class and series and show the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours for a period of at least
10 days prior to the meeting, at a place within the city where the meeting is to
be held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present.
Section 5. Except as may be provided by statute, written notice of
an annual or special meeting of stockholders stating the place, date and hour of
the meeting, where the list of stockholders may be inspected (if other than at
the place of the meeting), and the purpose or purposes for which the meeting is
called, shall be delivered, either personally or by first-class mail, not less
than 10 nor more than 60 days before the date of the meeting, to each
stockholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail
addressed to the stockholder at his address as it appears on the records of the
corporation with postage thereon prepaid.
Section 6. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise expressly required by statute or by
the Certificate of Incorporation. All stockholders present in person or
represented by proxy at such meeting may continue to do business until
adjournment, notwithstanding the withdrawal of enough stockholders to leave less
than a quorum. If, however, such quorum shall not be initially present at any
meeting of stockholders, a majority of the stockholders entitled to vote thereat
shall nevertheless have power to adjourn the meeting from time to time and to
another place, without notice other than announcement at the meeting, until a
quorum shall be present or represented. At such adjourned meeting, at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally notified. If after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned
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meeting shall be given to each stockholder of record entitled to vote at the
meeting.
Section 7. When an action other than the election of directors is to
be taken by vote of the stockholders, it shall be authorized by the affirmative
vote of a majority of the shares represented at the meeting and entitled to vote
on the subject matter, unless a greater plurality is required by express
requirement of the statutes or of the Certificate of Incorporation, in which
case such express provision shall govern and control the decision of such
question. "Shares represented at the meeting" shall be determined as of the time
the existence of the quorum is determined and shall indicate shares present in
person or represented by proxy. Except as otherwise expressly required by the
Certificate of Incorporation, directors shall be elected by a plurality of the
votes cast at an election.
Section 8. Each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of the
capital stock having voting power held by such stockholder except as otherwise
expressly required in the Articles of Incorporation. A vote may be cast either
orally or in writing. Each proxy shall be in writing and signed by the
stockholder or his authorized agent or representative. A proxy is not valid
after the expiration of three years after its date unless the person executing
it specifies therein the length of time for which it is to continue in force.
Unless prohibited by law, a proxy otherwise validly granted by telegram shall be
deemed to have been signed by the granting stockholder. All questions regarding
the qualification of voters, the validity of proxies and the acceptance or
rejection of votes shall be decided by the presiding officer of the meeting.
Section 9. Attendance of a person at a meeting of stockholders in
person or by proxy constitutes a waiver of notice of the meeting except where
the stockholder attends a meeting for the express purpose of objecting at the
beginning of the meeting to the transaction of any business because the meeting
was not lawfully called or convened.
Section 10. Unless otherwise provided by the Certificate of
Incorporation, any action required to be taken at any annual or special meeting
of the stockholders, or any other action which may be taken at any annual or
special meeting of the stockholders may be taken without a meeting, without
prior notice, and without a vote if a consent in writing, setting forth the
action so taken, shall be signed by holders of outstanding stock having not less
than the minimum number of votes that would be necessary to authorize such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Promptly after obtaining such authorization by written consent,
notice shall be given to those
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stockholders who have not consented in writing. The notice shall fairly
summarize the material features of the authorized action.
ARTICLE III
DIRECTORS
Section 1. The business and affairs of the corporation shall be
managed by or under the direction of its board of directors which may exercise
all such powers of the corporation and do all such lawful acts and things as
are not by statute or by the Certificate of Incorporation or by these Bylaws
directed or required to be exercised or done by the stockholders.
Section 2. The number of directors which shall constitute the whole
board shall not be less than one nor more than seven. The number of directors
shall be determined from time to time by resolution of the board of directors.
In the absence of an express determination by the board, the number of
directors, until changed by the board, shall be that number of directors elected
at the most recently held annual meeting of stockholders or, if no such meeting
has been held, the number elected by the incorporator in the initially filed
Certificate of Incorporation. The directors shall be elected at the annual
meeting of the stockholders, except as provided in Section 3 of this article,
and each director elected shall hold office until his successor is elected and
qualified or until his resignation or removal. Directors need not be
stockholders or officers of the corporation.
Section 3. Vacancies and newly created directorships resulting from
any increase in the authorized number of directors may be filled by the
affirmative vote of a majority of the directors then in office, though less than
a quorum, or by a sole remaining director, or by the stockholders, and the
directors so chosen shall hold office until the next annual election of
directors by the stockholders and until their successors are duly elected and
qualified or until their resignation or removal. Any director may be removed,
with or without cause, by the stockholders at a meeting of the stockholders
called expressly for that purpose.
Section 4. The board of directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Delaware. Unless otherwise restricted by the Certificate of Incorporation,
members of the board of directors, or any committee designated by the board, may
participate in a meeting of the board or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant to this section shall constitute presence in person at such meeting.
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Section 5. The first board of directors shall hold office until the
first annual meeting of stockholders. Thereafter, the first meeting of each
newly elected board of directors shall be held promptly following the annual
meeting of stockholders on the date thereof. No notice of such meeting shall be
necessary to the newly elected directors in order to legally constitute the
meeting, provided a quorum shall be present. In the event such meeting is not so
held, the meeting may be held at such time and place as shall be specified in a
notice given as hereinafter provided for special meetings of the board of
directors.
Section 6. Regular meetings of the board of directors may be held at
such time and at such place as shall from time to time be determined by the
board of directors or by the chairman of the board or president. Any notice
given of a regular meeting need not specify the business to be transacted or the
purpose of the meeting.
Section 7. Special meetings of the board may be called by the
chairman of the board or president on four days' notice to each director by mail
or 24 hours' notice either personally, by telephone or by telegram; special
meetings shall be called by the chairman of the board or president in like
manner and on like notice on the written request of two directors. The notice
need not specify the business to be transacted or the purpose of the special
meetings. The notice shall specify the place of the special meeting.
Section 8. At all meetings of the board, a majority of the number of
directors determined pursuant to Article III, Section 2 of these Bylaws shall
constitute a quorum for the transaction of business. At all meetings of a
committee of the board, a majority of the directors then members of the
committee in office shall constitute a quorum for the transaction of business.
The act of a majority of the members present at any meeting at which there is a
quorum shall be the act of the board of directors or the committee, unless the
vote of a larger number is specifically required by statute, by the Certificate
of Incorporation, or by these Bylaws. If a quorum shall not be present at any
meeting of the board of directors or a committee, the members present thereat
may adjourn the meeting from time to time and to another place without notice
other than announcement at the meeting, until a quorum shall be present.
Section 9. Unless otherwise provided by the Certificate of
Incorporation, any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting, if, before or after the action, all members of the board or committee
consent thereto in writing. The written consents shall be filed with the minutes
of proceedings of the board or committee. Such consents shall have the same
effect as a vote of the board or committee for all purposes.
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Section 10. A majority of the whole board of directors may, by
resolution, designate one or more committees, each committee to consist of one
or more of the directors of the corporation. The board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members present at
any meeting and not disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another member of the board of
directors to act at the meeting in the place of such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
board, shall have and may exercise the power and authority of the board of
directors in the management of the business and affairs of the corporation;
provided, however, such a committee shall not have the power or authority to:
(a) amend the Certificate of Incorporation (except that a
committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the board of directors
as provided by statute, fix the designations and any of the preferences or
rights of such shares relating to dividends, redemption, dissolution, any
distribution of assets of the corporation or the conversion into, or the
exchange of such shares for, shares of any other class or classes of any other
series of the same or any other class or classes of stock of the corporation or
fix the number of shares of any series of stock or authorize the increase or
decrease of the shares of any series);
(b) adopt an agreement of merger or consolidation as provided
by statute;
(c) recommend to the stockholders the sale, lease or exchange
of all or substantially all of the corporation's properties and assets;
(d) recommend to the stockholders a dissolution or a
revocation of a dissolution; or
(e) amend the Bylaws of the corporation.
Such committee or committees shall have such name or names as may be determined
from time to time by resolution adopted by the board of directors. A committee,
and each member thereof, shall serve at the pleasure of the board.
Section 11. Each committee shall keep regular minutes of its
meetings and report the same to the board of directors when required.
Section 12. By resolution of the board of directors and
irrespective of any personal interest of any director, the board
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may establish reasonable compensation of directors for services to the
corporation as directors, officers or members of a committee. No such payment
shall preclude any director from serving the corporation in any other capacity
and receiving compensation therefor.
Section 13. A director may resign by written notice to the
corporation. The resignation is effective upon its receipt by the corporation or
a subsequent time as set forth in the notice of resignation.
Section 14. Attendance of a director at a meeting constitutes a
waiver of the meeting except where a director attends a meeting for the express
purpose of objecting to the transaction of any business because the meeting is
not lawfully called or convened.
Section 15. Unless otherwise restricted by the Certificate of
Incorporation or by law, any director or the entire board of directors may be
removed, with or without cause, by the holders of a majority of shares entitled
to vote at an election of directors.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
Certificate of Incorporation or of these Bylaws, written notice is required to
be given to any director, committee member or stockholder, such notice may be
given in writing by mail (registered, certified or other first class mail)
addressed to such director, stockholder or committee member at his address as it
appears on the records of the corporation, with postage thereon prepaid. Such
notice shall be deemed to be given at the time when the same shall be deposited
in a post office or official depository under the exclusive care and custody of
the United States postal service.
Section 2. Whenever any notice is required to be given under the
provision of the statutes or of the Certificate of Incorporation or of these
Bylaws, a waiver thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the stockholders, directors or a
committee, need be specified in any written waiver of notice.
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ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the
board of directors at its first meeting after each annual meeting of
stockholders. There shall be a president, a secretary and a treasurer. The board
of directors may also create and fill the offices of chairman of the board and
vice-chairman of the board, and may choose one or more vice-presidents, one or
more assistant secretaries, and one or more assistant treasurers. Any number of
offices may be held by the same person, but the board by resolution may require
that at least two persons shall be officers for purposes of compliance with
Article VI, Section 1, hereof.
Section 2. The board of directors may from time to time appoint such
other officers and agents as it shall deem necessary who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the board.
Section 3. The salaries of all officers of the corporation shall be
fixed by the board of directors.
Section 4. The officers of the corporation shall hold office at the
pleasure of the board of directors. Any officer elected or appointed by the
board of directors may be removed at any time by the board of directors with or
without cause whenever, in its judgment, the best interests of the corporation
will be served thereby. Any vacancy occurring in any office of the corporation
by death, resignation, removal or otherwise shall be filled by the board of
directors. An officer may resign by written notice to the corporation. The
resignation is effective upon its receipt by the corporation or at a subsequent
time specified in the notice of resignation.
Section 5. Unless otherwise provided by resolution of the board of
directors, the president shall be the chief executive officer of the
corporation, shall, in the absence or non-election of a chairman or
vice-chairman of the board of directors, preside at all meetings of the
stockholders and the board of directors (i) he shall be a member of the board),
shall have general and active management of the business and affairs of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect. He shall execute on behalf of the
corporation, and may affix or cause the seal to be affixed to, all instruments
requiring such execution except to the extent the signing and execution thereof
shall be expressly delegated by the board of directors to some other officer or
agent of the corporation, and he shall have the authority to vote any shares of
stock owned by the corporation.
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Section 6. The vice-presidents shall act under the direction of the
president and in the absence or disability of the president shall perform the
duties and exercise the powers of the president. They shall perform such other
duties and have such other powers as the president or the board of directors may
from time to time prescribe. The board of directors may designate one or more
executive vice-presidents or may otherwise specify the order of seniority of the
vice-presidents. The duties and powers of the president shall descend to the
vice-presidents in such specified order of seniority.
Section 7. The secretary shall act under the direction of the
president. Subject to the direction of the president he shall attend all
meetings of the board of directors and all meetings of the stockholders and
record the proceedings. He shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the president or the board of
directors. He shall keep in safe custody the seal of the corporation and, when
authorized by the president or the board of directors, cause it to be affixed to
any instrument requiring it. He shall be responsible for maintaining the stock
transfer book and minute book of the corporation and shall be responsible for
their updating.
Section 8. The assistant secretaries shall act under the direction
of the president. In the order of their seniority in office, unless otherwise
determined by the president or the board of directors, they shall, in the
absence or disability of the secretary, perform the duties and exercise the
powers of the secretary. They shall perform such other duties and have such
other powers as the president or the board of directors may from time to time
prescribe.
Section 9. The treasurer shall act under the direction of the
president. Subject to the direction of the president he shall have custody of
the corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the board of
directors. He shall disburse the funds of the corporation as may be ordered by
the president or the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation. He may affix or cause to be affixed the seal of the corporation to
documents so requiring the seal.
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Section 10. The assistant treasurers in the order of their seniority
of office, unless otherwise determined by the president or the board of
directors shall, in the absence or disability of the treasurer, perform the
duties and exercise the powers of the treasurer. They shall perform such other
duties and have such other powers as the president or the board of directors may
from time to time prescribe.
Section 11. To the extent the powers and duties of the several
officers are not provided from time to time by resolution or other directive of
the board of directors or by the president (with respect to other officers), the
officers shall have all powers and shall discharge the duties customarily and
usually held and performed by like officers of the corporations similar in
organization and business purposes to this corporation.
ARTICLE VI
CERTIFICATES OF STOCK
AND STOCKHOLDERS OF RECORD
Section 1. The shares of stock of the corporation shall be
represented by certificates signed by, or in the name of the corporation by, the
chairman or vice-chairman of the board of directors or the president or a
vice-president and by the secretary or an assistant secretary or the treasurer
or an assistant treasurer of the corporation. Each holder of stock in the
corporation shall be entitled to have such a certificate certifying the number
of shares owned by him in the corporation.
Section 2. Any of or all the signatures on the certificate may be a
facsimile if the certificate is countersigned by a transfer agent or registered
by a registrar other than the corporation itself or its employee. In case any
officer who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer at the date of issue. The seal of the corporation or a facsimile
thereof may, but need not, be affixed to the certificates of stock.
Section 3. The board of directors may direct a new certificate for
shares to be issued in place of any certificate theretofore issued by the
corporation alleged to have been lost or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate of stock to be
lost or destroyed. When authorizing such issue of a new certificate, the board
of directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost or destroyed certificate, or his legal
representative, to give the corporation a bond in such sum as it may direct as
indemnity against any claim
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that may be made against the corporation with respect to the certificate alleged
to have been lost or destroyed.
Section 4. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its stock
transfer book for shares of the corporation.
Section 5. In order that the corporation may determine the
stockholders entitled to notice of, or to vote at, any meeting of stockholders
or any adjournment thereof, or to express consent to, or to dissent from, a
proposal without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the board of directors may fix, in advance,
a date as a record date, which shall not be more than 60 nor less than 10 days
before the date of such meeting, nor more than 60 days prior to any other
action. The stock transfer books of the corporation shall not be closed.
If no record date is fixed:
(a) the record date for determining the stockholders of record
entitled to notice of, or to vote at, a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given,
or, if no notice is waived, at the close of business on the day next preceding
the day on which the meeting is held;
(b) the record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting, when no prior
action by the board of directors is necessary, shall be the day on which the
first written consent is expressed; and
(c) the record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered upon its stock transfer book for shares
of the corporation as the owner of shares
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for all purposes, including voting and dividends, and shall not be bound to
recognize any equitable or other claim to interest in such share or shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of Florida.
ARTICLE VII
INDEMNIFICATION
Section 1. The corporation shall indemnify, and advance expenses to,
to the fullest extent authorized or permitted by the provisions of Section 145
of the Delaware General Corporation Law (other than Section 145() or any
amendment or successor provision thereof or any other statutory provision
authorizing or permitting such indemnification or advancement of expenses which
is adopted after the date this Article VII is adopted) any person, and his
heirs, executors, administrators and legal representatives, who was or is a
party or is threatened to be made a party to threatened, pending or completed
action, suit or proceeding (whether civil, criminal, administrative or
investigative other than an action by or in the right of the corporation) by
reason of the fact that such person is or was a director, officer, employee or
agent of the corporation or serves or served any other enterprise at the request
of the corporation in any such capacity.
Section 2. Article VII, Section 1 of these Bylaws shall not be
construed to mean that indemnification and advancement of expenses by the
corporation pursuant to Section 145() of the Delaware General Corporation Law is
not permitted. The corporation may indemnify and advance expenses to any person
pursuant to such Section l45(), or any amended or successor section, to the
extent and in the manner desired by the corporation and permitted by law.
ARTICLE VIII
GENERAL PROVISIONS
Section 1. All checks, drafts or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate. All funds of
the corporation not otherwise employed shall be deposited from time to time to
the credit of the corporation in such banks, trust companies or other
depositories as the board of directors may from time to time designate.
Section 2. The fiscal year of the corporation shall be fixed from
time to time by resolution of the board of directors, but shall end on December
31st of each year is not otherwise fixed by the board.
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Section 3. The board of directors may adopt a corporate seal for the
corporation. The corporate seal shall have inscribed thereon the name of the
corporation and the words "Corporate Seal, Delaware." The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.
Section 4. The corporation shall keep within or without the State of
Delaware books and records of account and minutes of the proceedings of its
stockholders, board of directors and executive committee, if any. The
corporation shall keep at its registered office or at the office of its transfer
agent within or without the State of Delaware a stock transfer book for shares
of the corporation containing the names and addresses of all stockholders, the
number, class and series of shares held by each and the dates when they
respectively became holders of record thereof. Any of such stock transfer book,
books, records or minutes may be in written form or in any other form capable of
being converted into written form within a reasonable time.
Section 5. These Bylaws shall govern the internal affairs of the
corporation, but only to the extent they are consistent with governing law and
the Certificate of Incorporation. Nothing contained in the Bylaws shall,
however, prevent the imposition by contract of greater voting, notice or other
requirements than those set forth in these Bylaws.
ARTICLE IX
AMENDMENTS
Section 1. The Bylaws may be amended or repealed, or new Bylaws may
be adopted, by action of the stockholders and, if permitted by the Certificate
of Incorporation, the board of directors. The stockholders may from time to time
specify particular provisions of the Bylaws which shall not be altered or
repealed by the board of directors.
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Exhibit 3.12.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
SERVICO PENSACOLA, INC.
Pursuant to Sections 242 and 245 of the Delaware General Corporation
Law, SERVICO PENSACOLA, INC., a Delaware corporation (the "Corporation"), hereby
certifies that this Amended and Restated Certificate of Incorporation (the
"Amended Certificate"), which contains amendments requiring shareholder
approval, was duly adopted by the Board of Directors of the Corporation and by
the sole shareholder of the Corporation by written consent without a meeting,
pursuant to Sections l41(f) and 228 of the Delaware Corporation Law, as of July
22, 1999. The original Certificate of Incorporation was filed with the Secretary
of State of the State of Delaware on July 13, 1995, and amended on August 18,
1995.
ARTICLE I
The name of the Corporation is SERVICO PENSACOLA, INC.
ARTICLE II
The registered office of the Corporation is located at Corporation
Trust Center, 1209 Orange Street, City of Wilmington, County of New Castle,
State of Delaware 19801. The name of its registered agent at that address is The
Corporation Trust Company.
ARTICLE III
(a) The purpose for which the Corporation is organized is limited to: (i)
acquiring, owning, leasing, operating, using and managing that certain real
property commonly known as the Holiday Inn Express located at 6501 Pensacola
Road, Pensacola, Florida 32505 (the "Property"); (ii) entering into and
performing its obligations under the credit agreement, among Lodgian
Financing Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel Group,
LLC, Servico, Inc. and other affiliated entities, as affiliate guarantors,
the initial lenders and initial issuing bank named therein, the collateral
agent, the administrative agent, Morgan Stanley Senior Funding, Inc., as
co-lead arranger, joint-book manager and syndication agent and Lehman
Brothers, as co-lead arranger, joint-book manager and documentation agent
relating to the financing or refinancing of the Property (the "Loan
Agreement") which provides the lender thereunder with a first priority lien
on the Property, any promissory-note evidencing indebtedness incurred
pursuant to the Loan Agreement, any mortgage securing such indebtedness and
encumbering the Property (the "Mortgage") and any other documents securing
such indebtedness and any related collateral documents, each as amended (or
pursuant to a consent obtained in accordance with the terms thereof)
(collectively, the "Loan Documents"); (iii) entering into and performing its
obligations under the Indenture (the "Indenture"), among Lodgian Financing
Corp, as issuer, Lodgian, Inc., the Subsidiary Guarantors defined therein and
Bankers Trust Company, as trustee, relating to the issuance of the 12 1/4%
Senior Subordinated Notes due 2009 and the Guarantee in favor of the holders
of the Notes and (iv) transacting any and all lawful business that is
incident and necessary or appropriate to the ownership and to the
<PAGE>
management of the Property for which a corporation may be incorporated under
the laws of the State of Delaware.
(b) Notwithstanding any other provision of these Amended Articles and
any provision of law that otherwise so empowers the Corporation, until such time
as the Property is released from the lien of the Mortgage, the Corporation shall
not, without the unanimous affirmative vote of the members of its Board of
Directors, (i) amend, alter, change, repeal or adopt any resolution setting
forth a proposed amendment to, any provision of these Articles of Incorporation,
(ii) dissolve or liquidate, in whole or in part, consolidate or merge with or
into any other entity or convey, sell or transfer its properties and assets
substantially as an entirety to any entity, (iii) file a voluntary petition or
otherwise initiate, or consent to, proceedings for the Corporation to be
adjudicated insolvent or seeking an order for relief as a debtor under the
United States Bankruptcy Code, as amended (11 U.S.C. ss.ss. 101 ET seq.), or
(iv) file any petition, or consent to any petition, seeking any composition,
reorganization, readjustment, liquidation, dissolution or similar relief under
the present or any future federal bankruptcy laws or any other present or future
applicable federal, state or other statute or law relative to bankruptcy,
insolvency or other relief for debtors; or (v) seek or consent to the
appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, or liquidator (or other similar official) of the Corporation or of
all or any substantial part of the properties and assets of the Corporation, or
(vi) make any general assignment for the benefit of creditors, or (vii) admit in
writing its inability to pay its debts generally as they become due, or (viii)
declare or effect a moratorium on its debt or take any corporate action in
furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all times until
the Property is released from the lien of the Mortgage, include an independent
director (the "Independent Director"). The Independent Director shall be a
person who is not at the time of appointment and who has not at any time during
the prior five years been and who is not while serving as the Independent
Director (i) a director, stockholder, officer or employee of the Corporation or
any affiliates thereof, other than with respect to such person's service as an
Independent Director of the Corporation and such person's service in similar
"Independent Director" positions for affiliates of the Corporation; (ii) a
creditor, customer, supplier, independent contractor, manager or any other
person who derives more than 10% of its gross revenues from its activities wit
the Corporation or any affiliates thereof; (iii) a person controlling any such
stockholder, creditor, customer, supplier, independent contractor, manager or
other person; (iv) the legal or beneficial owner, at any time while serving as
director of the Corporation, of any beneficial interest in the Corporation; or
(v) a member of the immediate family of any such stockholder, officer, employee,
creditor, customer, supplier, director, independent contractor, manager or any
other person of the Corporation. As used herein, the term "affiliate" means any
person controlling, under common control with, or controlled by the person in
question, and the term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a person, whether through ownership of voting securities, by contract or
otherwise. In the event of the death, incapacity, or resignation of an
Independent Director, or the vacancy of the Independent Director's seat on the
Corporation's Board of Directors for any reason, a successor Independent
Director shall be appointed by the remaining directors.
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(d) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(ix) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall not (i)
commingle its assets with those of, or pledge its assets for the benefit of, any
other person or entity; (ii) assume, guarantee or become obligated, or hold out
its credit as being available to satisfy, the liabilities or obligations of any
other person or entity; (iii) reduce its capital below an amount which is
adequate in light of its contemplated business operations; (iv) acquire
obligations or securities of, or make loans or advances to, any affiliate; (v)
incur or assume any indebtedness other than (A) the indebtedness underlying the
Loan Agreement, (B) the indebtedness underlying the Indenture, and (C)
liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article Third and the last sentence of
Article Seventh of this Amended Certificate; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in these Amended Articles. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
ARTICLE IV
The total number of shares of stock which the Corporation is authorized
to issue is One Thousand (1,000) shares of Common Stock with the par value of
one cent ($0.01) per share.
ARTICLE V
The Board of Directors is expressly authorized to adopt, alter, amend
or repeal the Bylaws of the Corporation subject to the limitations set forth in
this Amended Certificate. Election of directors need not be by written ballot
unless and to the extent provided in the Bylaws of the Corporation.
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ARTICLE VI
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived
an improper personal benefit. If the Delaware General Corporation Law is
amended after the date of this Amended Certificate to authorize corporate
action further eliminating or limiting the personal liability of directors,
then the liability of each director of the Corporation shall be eliminated or
limited to the fullest extent permitted by the Delaware General Corporation
Law, as so amended.
The right and authority conferred in this Article Sixth shall not be
exclusive of any other rights that any person may have or hereafter acquire
under any statute, provision of this Amended Certificate or the Bylaws of the
Corporation, agreement, vote of the stockholders or disinterested directors or
otherwise.
ARTICLE VII
The Corporation shall indemnify any officer or director, or any former
officer or director of the Corporation, to the fullest extent permitted by law.
The foregoing right of indemnification shall not be exclusive of any other
rights to which any director, officer, employee or agent may be entitled as a
matter of law or which he may be lawfully granted. The Corporation's obligation
to indemnify its officers and directors pursuant to this Article shall be
subordinate in all respects to the obligations of the Corporation arising out of
the Loan Documents and shall not constitute a claim against the Corporation to
the extent that the Corporation is unable to pay any amounts it is obligated to
pay under the Loan Documents.
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IN WITNESS WHEREOF, the undersigned has executed this Second Amended
and Restated Certificate of Incorporation this 23rd day of July, 1999, and
acknowledge, under penalties of perjury, that this instrument is the act and
deed of the Corporation, and that the facts stated herein are true and correct.
SERVICO PENSACOLA, INC.
By: /s/ Thomas S. Gryboski
--------------------------
Name: Thomas S. Gryboski
Title: Assistant Secretary
<PAGE>
Exhibit 3.12.2
BYLAWS
OF
SERVICO PENSACOLA, INC.
a Delaware corporation
<PAGE>
BYLAWS
OF
SERVICO PENSACOLA, INC.
a Delaware corporation
ARTICLE I
OFFICES
Section 1. The location of the registered office of the corporation
shall be as stated in the Certificate of Incorporation, which location may be
changed from time to time by the board of directors.
Section 2. The corporation may also have offices or branches at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or as the business of the corporation
may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders shall be held at the
registered office of the corporation, or at such other place either within or
without the State of Delaware as shall be designated from time to time by the
board of directors and stated in the notice of the meeting.
Section 2. Annual meetings of stockholders shall be held on the
first Tuesday of the third month of each fiscal year of the corporation if not a
legal holiday in the state in which the meeting shall be held, and if a legal
holiday, then on the next secular day following, at such time as determined by
the board of directors, or at such other date and time as shall be designated
from time to time by the board of directors and stated in the notice of the
meeting. At the annual meeting, the stockholders shall elect a board of
directors and transact such other business as may properly be brought before the
meeting. If the annual meeting is not held on the date designated therefor, the
board of directors shall cause the meeting to be held as soon thereafter as
convenient.
Section 3. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the Certificate of
Incorporation, may be called by the chairman of the board or president, and
shall be called by the chairman of the board or president at the request in
writing of a majority of the
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board of directors or at the request in writing of the holders of not less than
10% of all the shares entitled to vote at a meeting. Such request shall state
the purpose or purposes of the proposed meeting.
Section 4. The officer or agent who has charge of the stock ledger
of the corporation shall at least 10 days before every meeting of stockholders
make and certify a complete list of the stockholders entitled to vote at a
stockholders' meeting, or any adjournment thereof. The list shall be arranged in
alphabetical order with each class and series and show the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours for a period of at least
10 days prior to the meeting, at a place within the city where the meeting is to
be held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present.
Section 5. Except as may be provided by statute, written notice of
an annual or special meeting of stockholders stating the place, date and hour of
the meeting, where the list of stockholders may be inspected (if other than at
the place of the meeting), and the purpose or purposes for which the meeting is
called, shall be delivered, either personally or by first-class mail, not less
than 10 nor more than 60 days before the date of the meeting, to each
stockholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail
addressed to the stockholder at his address as it appears on the records of the
corporation with postage thereon prepaid.
Section 6. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise expressly required by statute or by
the Certificate of Incorporation. All stockholders present in person or
represented by proxy at such meeting may continue to do business until
adjournment, notwithstanding the withdrawal of enough stockholders to leave less
than a quorum. If, however, such quorum shall not be initially present at any
meeting of stockholders, a majority of the stockholders entitled to vote thereat
shall nevertheless have power to adjourn the meeting from time to time and to
another place, without notice other than announcement at the meeting, until a
quorum shall be present or represented. At such adjourned meeting, at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally notified. If after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned
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meeting shall be given to each stockholder of record entitled to vote at the
meeting.
Section 7. When an action other than the election of directors is to
be taken by vote of the stockholders, it shall be authorized by the affirmative
vote of a majority of the shares represented at the meeting and entitled to vote
on the subject matter, unless a greater plurality is required by express
requirement of the statutes or of the Certificate of Incorporation, in which
case such express provision shall govern and control the decision of such
question. "Shares represented at the meeting" shall be determined as of the time
the existence of the quorum is determined and shall indicate shares present in
person or represented by proxy. Except as otherwise expressly required by the
Certificate of Incorporation, directors shall be elected by a plurality of the
votes cast at an election.
Section 8. Each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of the
capital stock having voting power held by such stockholder except as otherwise
expressly required in the Articles of Incorporation. A vote may be cast either
orally or in writing. Each proxy shall be in writing and signed by the
stockholder or his authorized agent or representative. A proxy is not valid
after the expiration of three years after its date unless the person executing
it specifies therein the length of time for which it is to continue in force.
Unless prohibited by law, a proxy otherwise validly granted by telegram shall be
deemed to have been signed by the granting stockholder. All questions regarding
the qualification of voters, the validity of proxies and the acceptance or
rejection of votes shall be decided by the presiding officer of the meeting.
Section 9. Attendance of a person at a meeting of stockholders in
person or by proxy constitutes a waiver of notice of the meeting except where
the stockholder attends a meeting for the express purpose of objecting at the
beginning of the meeting to the transaction of any business because the meeting
was not lawfully called or convened.
Section 10. Unless otherwise provided by the Certificate of
Incorporation, any action required to be taken at any annual or special meeting
of the stockholders, or any other action which may be taken at any annual or
special meeting of the stockholders may be taken without a meeting, without
prior notice, and without a vote if a consent in writing, setting forth the
action so taken, shall be signed by holders of outstanding stock having not less
than the minimum number of votes that would be necessary to authorize such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Promptly after obtaining such authorization by written consent,
notice shall be given to those
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stockholders who have not consented in writing. The notice shall fairly
summarize the material features of the authorized action.
ARTICLE III
DIRECTORS
Section 1. The business and affairs of the corporation shall be
managed by or under the direction of its board of directors which may exercise
all such powers of the corporation and do all such lawful acts and things as
are not by statute or by the Certificate of Incorporation or by these Bylaws
directed or required to be exercised or done by the stockholders.
Section 2. The number of directors which shall constitute the whole
board shall not be less than one nor more than seven. The number of directors
shall be determined from time to time by resolution of the board of directors.
In the absence of an express determination by the board, the number of
directors, until changed by the board, shall be that number of directors elected
at the most recently held annual meeting of stockholders or, if no such meeting
has been held, the number elected by the incorporator in the initially filed
Certificate of Incorporation. The directors shall be elected at the annual
meeting of the stockholders, except as provided in Section 3 of this article,
and each director elected shall hold office until his successor is elected and
qualified or until his resignation or removal. Directors need not be
stockholders or officers of the corporation.
Section 3. Vacancies and newly created directorships resulting from
any increase in the authorized number of directors may be filled by the
affirmative vote of a majority of the directors then in office, though less than
a quorum, or by a sole remaining director, or by the stockholders, and the
directors so chosen shall hold office until the next annual election of
directors by the stockholders and until their successors are duly elected and
qualified or until their resignation or removal. Any director may be removed,
with or without cause, by the stockholders at a meeting of the stockholders
called expressly for that purpose.
Section 4. The board of directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Delaware. Unless otherwise restricted by the Certificate of Incorporation,
members of the board of directors, or any committee designated by the board, may
participate in a meeting of the board or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant to this section shall constitute presence in person at such meeting.
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Section 5. The first board of directors shall hold office until the
first annual meeting of stockholders. Thereafter, the first meeting of each
newly elected board of directors shall be held promptly following the annual
meeting of stockholders on the date thereof. No notice of such meeting shall be
necessary to the newly elected directors in order to legally constitute the
meeting, provided a quorum shall be present. In the event such meeting is not so
held, the meeting may be held at such time and place as shall be specified in a
notice given as hereinafter provided for special meetings of the board of
directors.
Section 6. Regular meetings of the board of directors may be held at
such time and at such place as shall from time to time be determined by the
board of directors or by the chairman of the board or president. Any notice
given of a regular meeting need not specify the business to be transacted or the
purpose of the meeting.
Section 7. Special meetings of the board may be called by the
chairman of the board or president on four days' notice to each director by mail
or 24 hours' notice either personally, by telephone or by telegram; special
meetings shall be called by the chairman of the board or president in like
manner and on like notice on the written request of two directors. The notice
need not specify the business to be transacted or the purpose of the special
meetings. The notice shall specify the place of the special meeting.
Section 8. At all meetings of the board, a majority of the number of
directors determined pursuant to Article III, Section 2 of these Bylaws shall
constitute a quorum for the transaction of business. At all meetings of a
committee of the board, a majority of the directors then members of the
committee in office shall constitute a quorum for the transaction of business.
The act of a majority of the members present at any meeting at which there is a
quorum shall be the act of the board of directors or the committee, unless the
vote of a larger number is specifically required by statute, by the Certificate
of Incorporation, or by these Bylaws. If a quorum shall not be present at any
meeting of the board of directors or a committee, the members present thereat
may adjourn the meeting from time to time and to another place without notice
other than announcement at the meeting, until a quorum shall be present.
Section 9. Unless otherwise provided by the Certificate of
Incorporation, any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting, if, before or after the action, all members of the board or committee
consent thereto in writing. The written consents shall be filed with the minutes
of proceedings of the board or committee. Such consents shall have the same
effect as a vote of the board or committee for all purposes.
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<PAGE>
Section 10. A majority of the whole board of directors may, by
resolution, designate one or more committees, each committee to consist of one
or more of the directors of the corporation. The board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members present at
any meeting and not disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another member of the board of
directors to act at the meeting in the place of such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
board, shall have and may exercise the power and authority of the board of
directors in the management of the business and affairs of the corporation;
provided, however, such a committee shall not have the power or authority to:
(a) amend the Certificate of Incorporation (except that a
committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the board of directors
as provided by statute, fix the designations and any of the preferences or
rights of such shares relating to dividends, redemption, dissolution, any
distribution of assets of the corporation or the conversion into, or the
exchange of such shares for, shares of any other class or classes of any other
series of the same or any other class or classes of stock of the corporation or
fix the number of shares of any series of stock or authorize the increase or
decrease of the shares of any series);
(b) adopt an agreement of merger or consolidation as provided
by statute;
(c) recommend to the stockholders the sale, lease or exchange
of all or substantially all of the corporation's properties and assets;
(d) recommend to the stockholders a dissolution or a
revocation of a dissolution; or
(e) amend the Bylaws of the corporation.
Such committee or committees shall have such name or names as may be determined
from time to time by resolution adopted by the board of directors. A committee,
and each member thereof, shall serve at the pleasure of the board.
Section 11. Each committee shall keep regular minutes of its
meetings and report the same to the board of directors when required.
Section 12. By resolution of the board of directors and
irrespective of any personal interest of any director, the board
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<PAGE>
may establish reasonable compensation of directors for services to the
corporation as directors, officers or members of a committee. No such payment
shall preclude any director from serving the corporation in any other capacity
and receiving compensation therefor.
Section 13. A director may resign by written notice to the
corporation. The resignation is effective upon its receipt by the corporation or
a subsequent time as set forth in the notice of resignation.
Section 14. Attendance of a director at a meeting constitutes a
waiver of the meeting except where a director attends a meeting for the express
purpose of objecting to the transaction of any business because the meeting is
not lawfully called or convened.
Section 15. Unless otherwise restricted by the Certificate of
Incorporation or by law, any director or the entire board of directors may be
removed, with or without cause, by the holders of a majority of shares entitled
to vote at an election of directors.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
Certificate of Incorporation or of these Bylaws, written notice is required to
be given to any director, committee member or stockholder, such notice may be
given in writing by mail (registered, certified or other first class mail)
addressed to such director, stockholder or committee member at his address as it
appears on the records of the corporation, with postage thereon prepaid. Such
notice shall be deemed to be given at the time when the same shall be deposited
in a post office or official depository under the exclusive care and custody of
the United States postal service.
Section 2. Whenever any notice is required to be given under the
provision of the statutes or of the Certificate of Incorporation or of these
Bylaws, a waiver thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the stockholders, directors or a
committee, need be specified in any written waiver of notice.
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<PAGE>
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the
board of directors at its first meeting after each annual meeting of
stockholders. There shall be a president, a secretary and a treasurer. The board
of directors may also create and fill the offices of chairman of the board and
vice-chairman of the board, and may choose one or more vice-presidents, one or
more assistant secretaries, and one or more assistant treasurers. Any number of
offices may be held by the same person, but the board by resolution may require
that at least two persons shall be officers for purposes of compliance with
Article VI, Section 1, hereof.
Section 2. The board of directors may from time to time appoint such
other officers and agents as it shall deem necessary who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the board.
Section 3. The salaries of all officers of the corporation shall be
fixed by the board of directors.
Section 4. The officers of the corporation shall hold office at the
pleasure of the board of directors. Any officer elected or appointed by the
board of directors may be removed at any time by the board of directors with or
without cause whenever, in its judgment, the best interests of the corporation
will be served thereby. Any vacancy occurring in any office of the corporation
by death, resignation, removal or otherwise shall be filled by the board of
directors. An officer may resign by written notice to the corporation. The
resignation is effective upon its receipt by the corporation or at a subsequent
time specified in the notice of resignation.
Section 5. Unless otherwise provided by resolution of the board of
directors, the president shall be the chief executive officer of the
corporation, shall, in the absence or non-election of a chairman or
vice-chairman of the board of directors, preside at all meetings of the
stockholders and the board of directors (i) he shall be a member of the board),
shall have general and active management of the business and affairs of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect. He shall execute on behalf of the
corporation, and may affix or cause the seal to be affixed to, all instruments
requiring such execution except to the extent the signing and execution thereof
shall be expressly delegated by the board of directors to some other officer or
agent of the corporation, and he shall have the authority to vote any shares of
stock owned by the corporation.
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Section 6. The vice-presidents shall act under the direction of the
president and in the absence or disability of the president shall perform the
duties and exercise the powers of the president. They shall perform such other
duties and have such other powers as the president or the board of directors may
from time to time prescribe. The board of directors may designate one or more
executive vice-presidents or may otherwise specify the order of seniority of the
vice-presidents. The duties and powers of the president shall descend to the
vice-presidents in such specified order of seniority.
Section 7. The secretary shall act under the direction of the
president. Subject to the direction of the president he shall attend all
meetings of the board of directors and all meetings of the stockholders and
record the proceedings. He shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the president or the board of
directors. He shall keep in safe custody the seal of the corporation and, when
authorized by the president or the board of directors, cause it to be affixed to
any instrument requiring it. He shall be responsible for maintaining the stock
transfer book and minute book of the corporation and shall be responsible for
their updating.
Section 8. The assistant secretaries shall act under the direction
of the president. In the order of their seniority in office, unless otherwise
determined by the president or the board of directors, they shall, in the
absence or disability of the secretary, perform the duties and exercise the
powers of the secretary. They shall perform such other duties and have such
other powers as the president or the board of directors may from time to time
prescribe.
Section 9. The treasurer shall act under the direction of the
president. Subject to the direction of the president he shall have custody of
the corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the board of
directors. He shall disburse the funds of the corporation as may be ordered by
the president or the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation. He may affix or cause to be affixed the seal of the corporation to
documents so requiring the seal.
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Section 10. The assistant treasurers in the order of their seniority
of office, unless otherwise determined by the president or the board of
directors shall, in the absence or disability of the treasurer, perform the
duties and exercise the powers of the treasurer. They shall perform such other
duties and have such other powers as the president or the board of directors may
from time to time prescribe.
Section 11. To the extent the powers and duties of the several
officers are not provided from time to time by resolution or other directive of
the board of directors or by the president (with respect to other officers), the
officers shall have all powers and shall discharge the duties customarily and
usually held and performed by like officers of the corporations similar in
organization and business purposes to this corporation.
ARTICLE VI
CERTIFICATES OF STOCK
AND STOCKHOLDERS OF RECORD
Section 1. The shares of stock of the corporation shall be
represented by certificates signed by, or in the name of the corporation by, the
chairman or vice-chairman of the board of directors or the president or a
vice-president and by the secretary or an assistant secretary or the treasurer
or an assistant treasurer of the corporation. Each holder of stock in the
corporation shall be entitled to have such a certificate certifying the number
of shares owned by him in the corporation.
Section 2. Any of or all the signatures on the certificate may be a
facsimile if the certificate is countersigned by a transfer agent or registered
by a registrar other than the corporation itself or its employee. In case any
officer who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer at the date of issue. The seal of the corporation or a facsimile
thereof may, but need not, be affixed to the certificates of stock.
Section 3. The board of directors may direct a new certificate for
shares to be issued in place of any certificate theretofore issued by the
corporation alleged to have been lost or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate of stock to be
lost or destroyed. When authorizing such issue of a new certificate, the board
of directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost or destroyed certificate, or his legal
representative, to give the corporation a bond in such sum as it may direct as
indemnity against any claim
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that may be made against the corporation with respect to the certificate alleged
to have been lost or destroyed.
Section 4. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its stock
transfer book for shares of the corporation.
Section 5. In order that the corporation may determine the
stockholders entitled to notice of, or to vote at, any meeting of stockholders
or any adjournment thereof, or to express consent to, or to dissent from, a
proposal without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the board of directors may fix, in advance,
a date as a record date, which shall not be more than 60 nor less than 10 days
before the date of such meeting, nor more than 60 days prior to any other
action. The stock transfer books of the corporation shall not be closed.
If no record date is fixed:
(a) the record date for determining the stockholders of record
entitled to notice of, or to vote at, a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given,
or, if no notice is waived, at the close of business on the day next preceding
the day on which the meeting is held;
(b) the record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting, when no prior
action by the board of directors is necessary, shall be the day on which the
first written consent is expressed; and
(c) the record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered upon its stock transfer book for shares
of the corporation as the owner of shares
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<PAGE>
for all purposes, including voting and dividends, and shall not be bound to
recognize any equitable or other claim to interest in such share or shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of Florida.
ARTICLE VII
INDEMNIFICATION
Section 1. The corporation shall indemnify, and advance expenses to,
to the fullest extent authorized or permitted by the provisions of Section 145
of the Delaware General Corporation Law (other than Section 145() or any
amendment or successor provision thereof or any other statutory provision
authorizing or permitting such indemnification or advancement of expenses which
is adopted after the date this Article VII is adopted) any person, and his
heirs, executors, administrators and legal representatives, who was or is a
party or is threatened to be made a party to threatened, pending or completed
action, suit or proceeding (whether civil, criminal, administrative or
investigative other than an action by or in the right of the corporation) by
reason of the fact that such person is or was a director, officer, employee or
agent of the corporation or serves or served any other enterprise at the request
of the corporation in any such capacity.
Section 2. Article VII, Section 1 of these Bylaws shall not be
construed to mean that indemnification and advancement of expenses by the
corporation pursuant to Section 145() of the Delaware General Corporation Law is
not permitted. The corporation may indemnify and advance expenses to any person
pursuant to such Section l45(), or any amended or successor section, to the
extent and in the manner desired by the corporation and permitted by law.
ARTICLE VIII
GENERAL PROVISIONS
Section 1. All checks, drafts or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate. All funds of
the corporation not otherwise employed shall be deposited from time to time to
the credit of the corporation in such banks, trust companies or other
depositories as the board of directors may from time to time designate.
Section 2. The fiscal year of the corporation shall be fixed from
time to time by resolution of the board of directors, but shall end on December
31st of each year is not otherwise fixed by the board.
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<PAGE>
Section 3. The board of directors may adopt a corporate seal for the
corporation. The corporate seal shall have inscribed thereon the name of the
corporation and the words "Corporate Seal; Delaware." The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.
Section 4. The corporation shall keep within or without the State of
Delaware books and records of account and minutes of the proceedings of its
stockholders, board of directors and executive committee, if any. The
corporation shall keep at its registered office or at the office of its transfer
agent within or without the State of Delaware a stock transfer book for shares
of the corporation containing the names and addresses of all stockholders, the
number, class and series of shares held by each and the dates when they
respectively became holders of record thereof. Any of such stock transfer book,
books, records or minutes may be in written form or in any other form capable of
being converted into written form within a reasonable time.
Section 5. These Bylaws shall govern the internal affairs of the
corporation, but only to the extent they are consistent with governing law and
the Certificate of Incorporation. Nothing contained in the Bylaws shall,
however, prevent the imposition by contract of greater voting, notice or other
requirements than those set forth in these Bylaws.
ARTICLE IX
AMENDMENTS
Section 1. The Bylaws may be amended or repealed, or new Bylaws may
be adopted, by action of the stockholders and, if permitted by the Certificate
of Incorporation, the board of directors. The stockholders may from time to time
specify particular provisions of the Bylaws which shall not be altered or
repealed by the board of directors.
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<PAGE>
Exhibit 3.13.1
AGREEMENT OF LIMITED PARTNERSHIP
OF
4MI OPERATING PARTNERS, L.P.
THE UNDERSIGNED are executing this Agreement of Limited Partnership
("Agreement") for the purpose of forming a limited partnership (the
"Partnership") pursuant to the provisions of the Delaware Revised Uniform
Limited Partnership Act, 6 Del. C. ss.ss. 17-101 et seq. (the "Delaware Act"),
and do hereby certify and agree as follows:
1. Name. the name of the Partnership shall be ANI Operating
Partners, L.P., or such other name as the General Partners may from time to time
hereafter designate.
2. Definitions. In addition to terms otherwise defined herein, the
following terms are used herein as defined below:
"Event of withdrawal of a General Partner" means an event that
causes a person or entity to cease to be a General Partner as
provided in Section 17-402 of the Delaware Act.
"General Partner" means Prime-American Realty Corp.
"Initial General Partner" means Prime-American Realty Corp.
"Initial Limited Partner" means Prime Motor Inns Limited
Partnership.
<PAGE>
"Limited Partners" means the Initial Limited Partner and all
other persons or entities admitted as additional or substituted
Limited Partners pursuant to this Agreement, so long as they remain
Limited Partners. Reference to a "Limited Partner" means any one of
the Limited Partners.
"Partners" means those persons or entities who from time to
time are the General Partner and the Limited Partners. Reference to
a "Partner" means any one of the Partners.
3. Purpose. The purpose of the Partnership shall be to engage in any
lawful business which may be engaged in by a limited partnership organized under
the Delaware Act.
4. Offices.
(a) The principal office of the Partnership, and such
additional offices as the General Partners may determine to establish, shall be
located at such place or places inside or outside the State of Delaware as the
General Partners may designate from time to time.
(b) The registered office of the Partnership in the State of
Delaware is located at The Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle County, Delaware, Delaware 19801. The registered agent of
the Partnership for service of process at such address is The Corporation Trust
Company.
5. Partners. The name and business or residence address of each
Partner of the Partnership, the General
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<PAGE>
Partner and the Limited Partners being separately designated, are as set forth
on Schedule I attached hereto.
6. Term. The term of the Partnership commenced on October 17, 1986
and shall continue until termination of the Partnership in accordance with
Section 14 of this Agreement.
7. Management of the Partnership.
(a) The General Partner shall have the exclusive right to
manage the business of the Partnership, and shall have all powers and rights
necessary, appropriate or advisable to effectuate and carry out the purposes and
business of the Partnership and, in general, all powers permitted to be
exercised by a general partner under the laws of the State of Delaware. The
General Partner may appoint, employ, or otherwise contract with any persons or
entities for the transaction of the business of the Partnership or the
performance of services for or on behalf of the Partnership, and the General
Partner may delegate to any such person or entity such authority to act on
behalf of the Partnership as the General Partner may from time to time deem
appropriate.
(b) No Limited Partner, in his status as such, shall have the
right to take part in the management or control of the business of the
Partnership or to set for or bind the Partnership or otherwise to transact any
business on behalf of the Partnership.
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<PAGE>
8. Capital Contributions.
(a) The Initial General Partner and the Initial Limited Partner have
each contributed One Thousand Dollars ($1,000.00) to the capital of the
Partnership. The Initial General Partner and the Initial Limited Partner shall
not be required to make any further contributions to the capital of the
Partnership. Persons or entities hereafter admitted as General Partners or
Limited Partners of the Partnership shall make such contributions of cash,
property or services to the Partnership as shall be determined by the General
Partner at the time of each such admission.
9. Assignments of Partnership Interest.
(a) No Limited Partner may sell, assign, pledge or otherwise
transfer or encumber (collectively "transfer") all or part of his interest in
the Partnership, nor shall any Limited Partner have the power to substitute a
transferee in his place as a substituted Limited Partner, without, in either
event, having obtained the prior written consent of the General Partner.
(b) The General Partner may not transfer all or any part of
his interest in the Partnership, nor shall the General Partner have the power to
substitute a transferee in his place as a substituted General Partner, without,
in either event, having obtained the consent of two-thirds in interest of the
Limited Partners.
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<PAGE>
10. Withdrawal. No Partner shall have the right to withdraw from the
Partnership except with the consent of the General Partner and upon such terms
and conditions as may be specifically agreed upon between the General Partner
and the withdrawing Partner. The provisions hereof with respect to distributions
upon withdrawal are exclusive and no Partner shall be entitled to claim any
further or different distribution upon withdrawal under Section 17-604 of the
Delaware Act or otherwise.
11. Additional Partners. The General Partner shall have the right to
admit additional General Partners and additional Limited Partners upon such
terms and conditions, at such time or times, and for such capital contributions
as shall be determined by the General Partner; and in connection with any such
admission, the General Partner shall have the right to amend Schedule I hereof
to reflect the same, address and capital contribution of the admitted Partner.
12. Distributions. Distributions of Cash or other assets of the
Partnership shall be made at such times and in such amounts as the General
Partner may determine. Distributions shall be made to (and profits and losses
shall be allocated among) Partners pro rata in accordance with the amount of
their contributions to the Partnership as set forth on Schedule I hereto.
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<PAGE>
13. Return of Capital. No Partner has the right to receive, and the
General Partner has absolute discretion to make, any distribution to a Partner
which includes a return of all or any part of such Partner's capital
contribution, provided that upon the dissolution of the Partnership, the assets
of the Partnership shall be distributed as provided in Section 17-804 of the
Delaware Act.
14. Dissolution. Subject to the provisions of Section 13 of this
Agreement, the Partnership shall be dissolved and its affairs wound up and
terminated upon the first to occur of the following:
(a) December 31, 2036;
(b) The determination of the General Partner to dissolve the
Partnership; or
(c) The occurrence of an event of withdrawal of the General
Partner or any other event causing a dissolution of the Partnership under
Section 17-801 of the Delaware Act.
15. Continuation of the Partnership.
Notwithstanding the provisions of Section 14(c) hereof, the occurrence of an
event of withdrawal of the General Partner shall not dissolve the Partnership if
at such time there are one or more remaining General Partners and any one or
more of such remaining General Partners continue the business of the Partnership
(any and all such remaining General Partners being
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<PAGE>
hereby authorized to continue the business of the Partnership without
dissolution). If upon the occurrence of an event of withdrawal of a General
Partner there shall be no remaining General Partner, the Partnership nonetheless
shall not be dissolved and shall not be required to be wound up if, within
ninety (90) days after the occurrence of such event of withdrawal, all remaining
Partners agree in writing to [ILLEGIBLE] the business of the Partnership and to
the appointment, effective as of the date of withdrawal, of one or more
additional General Partners.
16. Amendments. This Agreement may be amended only upon the written
consent of all Partners.
IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement as of October 17, 1986.
PRIME-AMERICAN REALTY CORP.
As General Partner
By: /s/ [ILLEGIBLE]
-----------------------------------
Title: President
--------------------------------
PRIME MOTOR INNS LIMITED PARTNERSHIP
As Limited Partner
By: /s/ [ILLEGIBLE]
-----------------------------------
Title: President
--------------------------------
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<PAGE>
SCHEDULE I
A. General Partners
Name & Address Capital Contribution*
-------------- ---------------------
Prime-American Realty Corp. $1,000.00
700 Route 46 East
Fairfield, New Jersey 07006
B. Limited Partners
Name & Address Capital Contribution*
-------------- ---------------------
Prime Motor Inns $1,000.00
Limited Partnership
700 Route 46 East
Fairfield, New Jersey 07006
- ----------
* Dollar amount of cash, or agreed value of any property or services,
contributed to the Partnership.
<PAGE>
Exhibit 3.14.1
SECOND AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
ALBANY HOTEL, INC.
Pursuant to Sections 607.1006 and 607.1007 of the Florida General
Corporation Act (the "Act"), ALBANY HOTEL, INC., a Florida corporation (the
"Corporation"), hereby executes and submits for filing with the Department of
State, State of Florida, these Second Amended and Restated Articles of
Incorporation (the "Amended Articles"), to read as follows:
ARTICLE I
The name of the Corporation is ALBANY HOTEL, INC. The address of the
principal office and the mailing address of the Corporation is 3445 Peachtree
Road, N.E., Two Live Oak Center, Suite 700, Atlanta, GA 30326.
ARTICLE II
(a) The purpose for which the Corporation is organized is limited to:
(i) acquiring, owning, leasing, operating, using and managing that certain real
property commonly known as the Omni Albany Hotel, located at Ten Eyck Plaza,
Albany, New York 12207 (the "Property"); (ii) entering into and performing its
obligations under the credit agreement, among Lodgian Financing Corp., as
borrower, Lodgian, Inc., its parent, Impac Hotel Group, LLC, Servico, Inc. and
other affiliated entities, as affiliate guarantors, the initial lenders and
initial issuing bank named therein, the collateral agent, the administrative
agent, Morgan Stanley Senior Funding, Inc., as co-lead arranger, joint-book
manager and syndication agent and Lehman Brothers, as co-lead arranger,
joint-book manager and documentation agent relating to the financing or
refinancing of the Property (the "Loan Agreement") which provides the lender
thereunder with a first priority lien on the Property, any promissory-note
evidencing indebtedness incurred pursuant to the Loan Agreement, any mortgage
securing such indebtedness and encumbering the Property (the "Mortgage") and any
other documents securing such indebtedness and any related collateral documents,
each as amended (or pursuant to a consent obtained in accordance with the terms
thereof) (collectively, the "Loan Documents"); (iii) entering into and
performing its obligations under the Indenture (the "Indenture"), among Lodgian
Financing Corp, as issuer, Lodgian, Inc., the Subsidiary Guarantors defined
therein and Bankers Trust Company, as trustee, relating to the issuance of the
12 1/4% Senior Subordinated Notes due 2009 and the Guarantee in favor of the
holders of the Notes and (iv) transacting any and all lawful business that is
incident and necessary or appropriate to the ownership and to the management of
the Property for which a corporation may be incorporated under the laws of the
State of Florida.
(b) Notwithstanding any other provision of these Amended Articles and
any provision of law that otherwise so empowers the Corporation, until such time
as the Property is released from the lien of the Mortgage, the Corporation shall
not, without the unanimous
<PAGE>
affirmative vote of the members of its Board of Directors, (i) amend, alter,
change, repeal or adopt any resolution setting forth a proposed amendment to,
any provision of these Articles of Incorporation, (ii) dissolve or liquidate, in
whole or in part, consolidate or merge with or into any other entity or convey,
sell or transfer its properties and assets substantially as an entirety to any
entity, (iii) file a voluntary petition or otherwise initiate, or consent to,
proceedings for the Corporation to be adjudicated insolvent or seeking an order
for relief as a debtor under the United States Bankruptcy Code, as amended (11
U.S.C. Sections 101 ET SEQ.), or (iv) file any petition, or consent to any
petition, seeking any composition, reorganization, readjustment, liquidation,
dissolution or similar relief under the present or any future federal bankruptcy
laws or any other present or future applicable federal, state or other statute
or law relative to bankruptcy, insolvency or other relief for debtors; or (v)
seek or consent to the appointment of any trustee, receiver, conservator,
assignee, sequestrator, custodian, or liquidator (or other similar official) of
the Corporation or of all or any substantial part of the properties and assets
of the Corporation, or (vi) make any general assignment for the benefit of
creditors, or (vii) admit in writing its inability to pay its debts generally as
they become due, or (viii) declare or effect a moratorium on its debt or take
any corporate action in furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all times until
the Property is released from the lien of the Mortgage, include an independent
director (the "Independent Director"). The Independent Director shall be a
person who is not at the time of appointment and who has not at any time during
the prior five years been and who is not while serving as the Independent
Director (i) a director, stockholder, officer or employee of the Corporation or
any affiliates thereof, other than with respect to such person's service as an
Independent Director of the Corporation and such person's service in similar
"Independent Director" positions for affiliates of the Corporation; (ii) a
creditor, customer, supplier, independent contractor, manager or any other
person who derives more than 10% of its gross revenues from its activities with
the Corporation or any affiliates thereof; (iii) a person controlling any such
stockholder, creditor, customer, supplier, independent contractor, manager or
other person; (iv) the legal or beneficial owner, at any time while serving as
director of the Corporation, of any beneficial interest in the Corporation; or
(v) a member of the immediate family of any such stockholder, officer, employee,
creditor, customer, supplier, director, independent contractor, manager or any
other person of the Corporation. As used herein, the term "affiliate" means any
person controlling, under common control wit, or controlled by the person in
question, and the term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a person, whether through ownership of voting securities, by contact or
otherwise. In the event of the death, incapacity, or resignation of an
Independent Director, or the vacancy of the Independent Director's seat on the
Corporation's Board of Directors for any reason, a successor Independent
Director shall be appointed by the remaining directors.
(d) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all
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<PAGE>
dealings, identify itself, and conduct its own business and hold itself out
under its own name and as a separate and distinct entity and correct any
misunderstandings regarding its status as a separate entity; (vi) independently
make decisions with respect to its business and daily operations; (vii) maintain
an arm's length relationship with its affiliates; (viii) pay the salaries of its
employees and maintain a sufficient number of employees in light of its
contemplated business operations; (ix) allocate fairly and reasonably any
overhead for shared office space; and (x) use separate stationery, invoices and
checks.
(e) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall not (i)
commingle its assets with those of, or pledge its assets for the benefit of, any
other person or entity; (ii) assume, guarantee or become obligated, or hold out
its credit as being available to satisfy, the liabilities or obligations of any
other person or entity; (iii) reduce its capital below an amount which is
adequate in light of its contemplated business operations; (iv) acquire
obligations or securities of, or make loans or advances to, any affiliate; (v)
incur or assume any indebtedness other than (A) the indebtedness underlying the
Loan Agreement (B) the indebtedness underlying the Indenture, and (C)
liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article II and the last sentence of
Article V of these Amended Articles; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in these Amended Articles. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
ARTICLE III
The number of shares the Corporation is authorized to issue is One
Thousand (1,000) each with the par value of Zero Dollars and One Cent ($0.01).
The Board of Directors shall fix the consideration to be received for each
share. Such consideration shall consist of any tangible or intangible property
or benefit to the Corporation, including cash, promissory notes, services
performed or written promises to perform such services and shall have a value,
in the judgment of the directors, equivalent to or greater than the full par
value of the shares.
ARTICLE IV
The Board of Directors of the Corporation is expressly authorized to
adopt, alter, amend or repeal the Bylaws of the Corporation subject to the
limitations set forth in these Amended Articles. Election of directors need not
be by written ballot unless and to the extent provided in the Bylaws of the
Corporation.
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<PAGE>
ARTICLE V
The Corporation shall indemnify any officer or director, or any former
officer or director of the Corporation, to the fullest extent permitted by law.
The foregoing right of indemnification shall not be exclusive of any other
rights to which any director, officer, employee or agent may be entitled as a
matter of law or which he may be lawfully granted. The Corporation's obligation
to indemnify its officers and directors pursuant to this Article shall be
subordinate in all respects to the obligations of the Corporation arising out of
the Loan Documents and shall not constitute a claim against the Corporation to
the extent that the Corporation is unable to pay any amounts it is obligated to
pay under the Loan Documents.
ARTICLE VI
Subject to the limitations set forth in these Amended Articles, the
Corporation reserves to its shareholders the right to amend or repeal any
provisions nor or hereafter contained in these Amended Articles. Subject to the
foregoing, any rights which these Amended Articles may confer upon the
Corporation may be modified or cancelled by a vote of the shareholders to amend
or repeal said Amended Articles.
The foregoing Second Amended and Restated Articles of Incorporation
were duly adopted and approved by the sole shareholder and the Board of
Directors of the Corporation by unanimous written consent in lieu of a meeting,
pursuant to Sections 607.0704 and 607.0821 of the Florida General Corporation
Act, as of July 22nd, 1999. The number of votes cast was sufficient for
approval.
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<PAGE>
IN WITNESS WHEREOF, the undersigned has executed these Second Amended
and Restated Articles of Incorporation this 23rd day of July, 1999.
ALBANY HOTEL, INC.
By: /s/ Thomas S. Gryboski
---------------------------
Name: Tom Gyboski
Title: Assistant Secretary
<PAGE>
Exhibit 3.14.2
BYLAWS
OF
ALBANY HOTEL, INC.,
a Florida corporation
ARTICLE I
OFFICES
Section 1. The location of the registered office of the corporation
shall be as stated in the Articles of Incorporation, which location may be
changed from time to time by the board of directors.
Section 2. The corporation may also have offices or branches at such
other places, both within and without the State of Florida, as the board of
directors may from time to time determine or as the business of the corporation
may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. All meetings of the shareholders shall be held at the
registered office of the corporation, or at such other place either within or
without the State of Florida as shall be designated from time to time by the
board of directors and stated in the notice of the meeting.
Section 2. Annual meetings of shareholders shall be during the third
month of each fiscal year of the corporation, at such date as determined by the
board of directors, or at such other date as the board of directors deems
appropriate, and at such time and place as designated in the notice of the
meeting. At the annual meeting, the shareholders shall elect a board of
directors and transact such other business as may properly be brought before the
meeting. If the annual meeting is not held on the date designated therefor, the
board of directors shall cause the meeting to be held as soon thereafter as
convenient.
Section 3. Special meetings of the shareholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the Articles of
Incorporation, may be called by the chairman of the board or president, and
shall be called by the chairman of the board or president at the request in
writing of a majority of the board of directors or at the request in writing of
the holders of not less than 10% of all the shares entitled to vote at a
meeting. Such request shall state the purpose or purposes of the proposed
meeting.
<PAGE>
Section 4. The officer or agent who has charge of the stock transfer
book for shares of the corporation shall make and certify a complete list of the
shareholders entitled to vote at a shareholders' meeting, or any adjournment
thereof. Such list shall be arranged alphabetically and by voting group and
shall show the address of each shareholder and the number of shares registered
in the name of each shareholder. The list shall also be produced and kept at the
time and place of the meeting during the whole time thereof, and may be
inspected by any shareholder who is present.
Section 5. Except as may be provided by statute, written notice of
an annual or special meeting of shareholders stating the place, date and hour of
the meeting and the purpose or purposes for which the meeting is called, shall
be delivered, either personally or by first-class mail, not less than 10 nor
more than 60 days before the date of the meeting, to each shareholder of record
entitled to vote at such meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail addressed to the shareholder
at his address as it appears on the stock transfer books of the corporation with
postage thereon prepaid.
Section 6. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the shareholders for the
transaction of business except as otherwise expressly required by statute or by
the Articles of Incorporation. All shareholders present in person or represented
by proxy at such meeting may continue to do business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum. If, however, such quorum shall not be initially present at any meeting
of shareholders, a majority of the shareholders entitled to vote thereat shall
nevertheless have power to adjourn the meeting from time to time and to another
place, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting, at which a quorum
shall be present or represented, any business may be transacted which might have
been transacted at the meeting as originally called. If after the adjournment a
new record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each shareholder of record entitled to vote at the
meeting.
Section 7. When an action other than the election of directors is to
be taken by vote of the shareholders, it shall be authorized by the affirmative
vote of a majority of the shares represented at the meeting and entitled to vote
on the subject matter, unless a greater plurality is required by express
requirement of the statutes or of the Articles of Incorporation, in which
case such express provision shall govern and control the decision of such
question. "Shares represented at the meeting" shall be determined as of the time
the existence of the quorum is
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<PAGE>
determined. Except as otherwise expressly required by the Articles of
Incorporation, directors shall be elected by a plurality of the votes cast at an
election.
Section 8. Except as otherwise provided by law, each shareholder
shall at every meeting of the shareholders be entitled to one vote in person or
by proxy for each share of the capital stock having voting power held by such
shareholder except as otherwise expressly required in the Articles of
Incorporation. A vote may be cast either orally or in writing. Each proxy shall
be in writing and signed by the shareholder or his authorized agent or
representative. A proxy is not valid after the expiration of 11 months after its
date unless the person executing it specifies therein the length of time for
which it is to continue in force. Unless prohibited by law, a proxy otherwise
validly granted by telegram shall be deemed to have been signed by the granting
shareholder. All questions regarding the qualification of voters, the validity
of proxies and the acceptance or rejection of votes shall be decided by the
presiding officer of the meeting.
Section 9. Attendance of a person at a meeting of shareholders in
person or by proxy constitutes a waiver of notice of the meeting except where
the shareholder, at the beginning of the meeting, objects to holding the meeting
or transacting business at the meeting.
Section 10. Unless otherwise provided by the Articles of
Incorporation, any action required to be taken at any annual or special meeting
of the shareholders, or any other action which may be taken at any annual or
special meeting of the shareholders may be taken without a meeting, without
prior notice, and without a vote if a consent in writing, setting forth the
action so taken, shall be signed by holders of outstanding stock having not less
than the minimum number of votes that would be necessary to authorize such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Within 10 days after obtaining such authorization by written consent,
notice shall be given to those shareholders who have not consented in writing.
The notice shall fairly summarize the material features of the authorized
action, and, if the action is of a type for which dissenters' rights are
provided for by statute, the notice shall contain a clear statement of the right
of shareholders dissenting therefrom to be paid the fair value of their shares
upon compliance with further provisions of such statute regarding the rights of
dissenting shareholders.
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<PAGE>
ARTICLE III
DIRECTORS
Section 1. The business and affairs of the corporation shall be
managed by or under the direction of its board of directors which may exercise
all such powers of the corporation and do all such lawful acts and things as
are not by statute or by the Articles of Incorporation or by these Bylaws
directed or required to be exercised or done by the shareholders.
Section 2. The number of directors which shall constitute the whole
board shall not be less than one nor more than seven. The number of directors
shall be determined from time to time by resolution of the board of directors.
In the absence of an express determination by the board, the number of
directors, until changed by the board, shall be that number of directors elected
at the most recently held annual meeting of shareholders or, if no such meeting
has been held, the number elected by the incorporator in the initially filed
Articles of Incorporation. The directors shall be elected at the annual meeting
of the shareholders, except as provided in Section 3 of this article, and each
director elected shall hold office until his successor is duly elected and
qualified or until his death, resignation or removal. Directors need not be
shareholders or officers of the corporation.
Section 3. Vacancies and newly created directorships resulting from
any increase in the authorized number of directors may be filled by the
affirmative vote of a majority of the directors then in office, though less than
a quorum, or by a sole remaining director, or by the shareholders, and the
directors so chosen shall hold office until the next annual election of
directors by the shareholders and until their successors are duly elected and
qualified or until their death, resignation or removal. Any director may be
removed, with or without cause, by the shareholders at a meeting of the
shareholders called expressly for that purpose.
Section 4. The board of directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Florida. Unless otherwise restricted by the Articles of Incorporation, members
of the board of directors, or any committee designated by the board, may
participate in a meeting of the board or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant to this section shall constitute presence in person at such meeting.
Section 5. Regular meetings of the board of directors may be held at
such time and at such place as shall from time to time be determined by the
board of directors or by the chairman of
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the board or president. Any notice given of a regular meeting need not specify
the business to be transacted or the purpose of the meeting.
Section 6. Special meetings of the board may be called by the
chairman of the board or president on four days' notice to each director by mail
or 24 hours' notice either personally or by telephone, telegram or facsimile
transmission; special meetings shall be called by the chairman of the board or
president in like manner and on like notice on the written request of two
directors. The notice need not specify the business to be transacted or the
purpose of the special meetings. The notice shall specify the place of the
special meeting.
Section 7. At all meetings of the board, a majority of the number of
directors then serving shall constitute a quorum for the transaction of
business. At all meetings of a committee of the board a majority of the
directors then members of the committee in office shall constitute a quorum for
the transaction of business. The act of a majority of the members present at any
meeting at which there is a quorum shall be the act of the board of directors or
the committee, unless the vote of a larger number is specifically required by
statute, by the Articles of Incorporation, or by these Bylaws. If a quorum shall
not be present at any meeting of the board of directors or a committee, the
members present thereat may adjourn the meeting from time to time and to another
place without notice other than announcement at the meeting, until a quorum
shall be present.
Section 8. Unless otherwise provided by the Articles of
Incorporation, any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting, if, before or after the action, all members of the board or committee
consent thereto in writing. The written consents shall be filed with the minutes
of proceedings of the board or committee. Such consents shall have the same
effect as a vote of the board or committee for all purposes.
Section 9. A majority of the whole board of directors may, by
resolution, designate one or more committees, each committee to consist of one
or more of the directors of the corporation. The board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. Any such committee, to the
extent provided in the resolution of the board, shall have and may exercise the
powers of the board of directors in the management of the business and affairs
of the corporation; provided, however, such a committee shall not have the power
or authority to:
(a) approve or recommend to shareholders actions or proposals
required by statue to be approved by the shareholders,
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(b) fill vacancies on the board of directors or any committee
thereof,
(c) adopt, amend, or repeal the Bylaws of the corporation,
(d) authorize or approve the reacquisition of shares unless
pursuant to a general formula or method specified by the board of directors, or
(e) authorize or approve the issuance or sale or contract for
the sale of shares, or determine the designation and relative rights,
preferences and limitations of a voting group, except that the board of
directors may authorize a committee (or a senior executive officer of the
corporation) to do so within limits specifically prescribed by the board of
directors.
Such committee or committees shall have such name or names as may be determined
from time to time by resolution adopted by the board of directors. A committee,
and each member thereof, shall serve at the pleasure of the board.
Section 10. Each committee shall keep regular minutes of its
meetings and report the same to the board of directors when required.
Section 11. By resolution of the board of directors and irrespective
of any personal interest of any director, the board may establish reasonable
compensation of directors for services to the corporation as directors, officers
or members of a committee. No such payment shall preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor.
Section 12. A director may resign by written notice to the
corporation. The resignation is effective upon its receipt by the corporation or
a subsequent time as set forth in the notice of resignation.
Section 13. Attendance of a director at a meeting constitutes a
waiver of notice of the meeting except where a director states, at the beginning
of the meeting or promptly upon arrival at the meeting, any objection to the
transaction of business because the meeting is not lawfully called or convened.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
Articles of Incorporation or of these Bylaws,
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written notice is required to be given to any director, committee member or
shareholder, such notice may be given in writing by mail (registered, certified
or other first class mail) addressed to such director, shareholder or committee
member at his address as it appears on the records of the corporation, with
postage thereon prepaid. Such notice shall be deemed to be given at the time
when the same shall be deposited in a post office or official depository under
the exclusive care and custody of the United States postal service.
Section 2. Whenever any notice is required to be given under the
provision of the statutes or of the Articles of Incorporation or of these
Bylaws, a waiver thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the shareholders, directors or a
committee, need be specified in any written waiver of notice.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the
board of directors at its first meeting after each annual meeting of
shareholders. There shall be a president, a secretary and a treasurer. The board
of directors may also create and fill the offices of chairman of the board and
vice-chairman of the board, and may choose one or more vice-presidents, one or
more assistant secretaries, and one or more assistant treasurers. Any number of
offices may be held by the same person, but the board by resolution may require
that at least two persons shall be officers for purposes of compliance with
Article VI, Section 1, hereof.
Section 2. The board of directors may from time to time appoint such
other officers and agents as it shall deem necessary who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the board.
Section 3. The salaries of all officers of the corporation shall be
fixed by the board of directors.
Section 4. The officers of the corporation shall hold office at the
pleasure of the board of directors. Any officer elected or appointed by the
board of directors may be removed at any time by the board of directors with or
without cause whenever, in its judgment, the best interests of the corporation
will be served thereby. Any vacancy occurring in any office of the corporation
by death, resignation, removal or otherwise shall be filled by the board of
directors. An officer may resign by written
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notice to the corporation. The resignation is effective upon its receipt by the
corporation or at a subsequent time specified in the notice of resignation.
Section 5. Unless otherwise provided by resolution of the board of
directors, the president shall be the chief executive officer of the
corporation, shall, in the absence or non-election of a chairman or
vice-chairman of the board of directors, preside at all meetings of the
shareholders and the board of directors (if he shall be a member of the board),
shall have general and active management of the business and affairs of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect. He shall execute on behalf of the
corporation, and may affix or cause the corporate seal (if adopted by the board
of directors) to be affixed to, all instruments requiring such execution except
to the extent the signing and execution thereof shall be expressly delegated by
the board of directors to some other officer or agent of the corporation, and he
shall have the authority to vote any shares of stock owned by the corporation.
Section 6. The vice-presidents shall act under the direction of the
president and in the absence or disability of the president shall perform the
duties and exercise the powers of the president. They shall perform such other
duties and have such other powers as the president or the board of directors may
from time to time prescribe. The board of directors may designate one or more
executive vice-presidents or may otherwise specify the order of seniority of the
vice-presidents. The duties and powers of the president shall descend to the
vice-presidents in such specified order of seniority.
Section 7. The secretary shall act under the direction of the
president. Subject to the direction of the president he shall attend all
meetings of the board of directors and all meetings of the shareholders and
record the proceedings. He shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the shareholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the president or the board of
directors. He shall keep in safe custody the seal of the corporation, if a
corporate seal is adopted by the board of directors. When authorized by the
president or the board of directors, he shall cause the seal of the corporation
to be affixed to any instrument requiring it. He shall be responsible for
maintaining the stock transfer book and minute book of the corporation and shall
be responsible for their updating.
Section 8. The assistant secretaries shall act under the direction
of the president. In the order of their seniority in office, unless otherwise
determined by the president or the board of directors, they shall, in the
absence or disability of the
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secretary, perform the duties and exercise the powers of the secretary. They
shall perform such other duties and have such other powers as the president or
the board of directors may from time to time prescribe.
Section 9. The treasurer shall act under the direction of the
president. Subject to the direction of the president he shall have custody of
the corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the board of
directors. He shall disburse the funds of the corporation as may be ordered by
the president or the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation. He may affix or cause to be affixed the seal of the corporation to
documents so requiring the seal, if a corporate seal is adopted by the board of
directors.
Section 10. The assistant treasurers in the order of their seniority
of office, unless otherwise determined by the president or the board of
directors shall, in the absence or disability of the treasurer, perform the
duties and exercise the powers of the treasurer. They shall perform such other
duties and have such other powers as the president or the board of directors may
from time to time prescribe.
Section 11. To the extent the powers and duties of the several
officers are not provided from time to time by resolution or other directive of
the board of directors or by the president (with respect to other officers), the
officers shall have all powers and shall discharge the duties customarily and
usually held and performed by like officers of the corporations similar in
organization and business purposes to this corporation.
ARTICLE VI
CERTIFICATES OF STOCK
AND SHAREHOLDERS OF RECORD
Section 1. The shares of stock of the corporation shall be
represented by certificates signed by, or in the name of the corporation by, the
president or a vice-president and by the secretary or an assistant secretary of
the corporation. Each holder of stock in the corporation shall be entitled to
have such a certificate certifying the number of shares owned by him in the
corporation.
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Section 2. Any of or all the signatures on the certificate may be a
facsimile if the certificate is countersigned by a transfer agent or registered
by a registrar other than the corporation itself or its employee. In case any
officer who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer at the date of issue. The seal of the corporation or a facsimile
thereof may, but need not, be affixed to the certificates of stock.
Section 3. The board of directors may direct a new certificate for
shares to be issued in place of any certificate theretofore issued by the
corporation alleged to have been lost or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate of stock to be
lost or destroyed. When authorizing such issue of a new certificate, the board
of directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost or destroyed certificate, or his legal
representative, to give the corporation a bond in such sum as it may direct as
indemnity against any claim that may be made against the corporation with
respect to the certificate alleged to have been lost or destroyed.
Section 4. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its stock
transfer book for shares of the corporation.
Section 5. In order that the corporation may determine the
shareholders entitled to notice of, or to vote at, any meeting of shareholders
or any adjournment thereof, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or for the purpose of any other
action, the board of directors may fix, in advance, a date as a record date,
which shall not be more than 70 nor less than 10 days before the date of such
meeting, nor more than 70 days prior to any other action. The stock transfer
books of the corporation shall not be closed.
If no record date is fixed:
(a) the record date for determining the shareholders of record
entitled to notice of, or to vote at, a meeting of shareholders shall be at the
close of business on the day on which notice is given, or, if no notice is
given, at the close of business on the day next preceding the day on which the
meeting is held; and
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(b) the record date for determining shareholders for any other
purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
A determination of shareholders of record entitled to notice or to
vote at a meeting of shareholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered upon its stock transfer book for shares
of the corporation as the owner of shares for all purposes, including voting and
dividends, and shall not be bound to recognize any equitable or other claim to
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of Florida.
ARTICLE VII
INDEMNIFICATION
Section 1. The corporation, to the fullest extent authorized or
permitted by the provisions at 607.0850 Fl.Stat. (other than 607.0850(7)),
Florida Business Corporation Act, as amended (or any amendment or successor
provision thereof or any other statutory provision authorizing or permitting
such indemnification or advancement of expenses which is adopted after the date
this Article VII is adopted) any person, and his heirs, executors,
administrators and legal representatives, who is or was a party to any
proceeding by reason of the fact that such person is or was a director, officer,
employee or agent of the corporation or is or was serving as a director,
officer, employee, or agent of another corporation, partnership, joint venture,
trust or other enterprise in advance of a final disposition of the proceeding to
the maximum extent authorized or permitted by the provisions of 607.0850(6)
Fl.Stat. or any amended or successor section.
Section 2. Article VII, Section 1 of these Bylaws shall not be
construed to mean that indemnification and advancement of expenses by the
corporation pursuant to 607.0850(7) Fl.Stat. is not permitted. The corporation
may indemnify and advance expenses to any person pursuant to Section 607.0850(7)
Fl.Stat., or any amended or successor section, to the extent and in the manner
desired by the corporation and permitted by law.
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Section 3. Terms used in this Article VII shall have the meanings
ascribed to them in 607.0850(11) Fl.Stat. or any amended or successor section.
ARTICLE VIII
GENERAL PROVISIONS
Section 1. All checks, drafts or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate. All funds of
the corporation not otherwise employed shall be deposited from time to time to
the credit of the corporation in such banks, trust companies or other
depositories as the board of directors may from time to time designate.
Section 2. The fiscal year of the corporation shall be fixed from
time to time by resolution of the board of directors, but shall end on December
31st of each year is not otherwise fixed by the board.
Section 3. The board of directors may adopt a corporate seal for the
corporation. The corporate seal shall have inscribed thereon the name of the
corporation and the words "Corporate Seal, Florida." The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise. Except as otherwise provided by law, the failure to affix the seal of
the corporation to a document shall not affect the validity thereof.
Section 4. The corporation shall keep within or without the State of
Florida books and records of account and minutes of the proceedings of its
shareholders, board of directors and executive committee, if any. The
corporation shall keep at its registered office or at the office of its transfer
agent within or without the State of Florida a stock transfer book for shares
of the corporation containing the names and addresses of all shareholders, the
number, class and series of shares held by each and the dates when they
respectively became holders of record thereof. Any of such stock transfer book,
books, records or minutes may be in written form or in any other form capable of
being converted into written form within a reasonable time.
Section 5. These Bylaws shall govern the internal affairs of the
corporation, but only to the extent they are consistent with governing law and
the Articles of Incorporation. Nothing contained in the Bylaws shall,
however, prevent the imposition by contract of greater voting, notice or other
requirements than those set forth in these Bylaws.
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ARTICLE IX
AMENDMENTS
Section 1. The Bylaws may be amended or repealed, or new Bylaws may
be adopted, by action of either the shareholders or the the board of directors.
The shareholders may from time to time specify particular provisions of the
Bylaws which may not be altered or repealed by the board of directors.
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Exhibit 3.15.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
SERVICO FLAGSTAFF, INC.
(AN ARIZONA BUSINESS CORPORATION)
Pursuant to Sections 10-061 and 10-064 of the Arizona General
Corporation Law, SERVICO FLAGSTAFF, INC., an Arizona corporation (the
"Corporation"), hereby certifies that these Amended and Restated Articles of
Incorporation (the "Amended Articles"), which contain amendments requiring
shareholder approval, were duly adopted by the Board of Directors of the
Corporation and by the sole shareholder of the Corporation by written consent
without a meeting, pursuant to Sections l0-821 and l0-704 of the Arizona
Business Corporation Act, as of July 23, 1999. The number of outstanding shares
of common stock of the Corporation (and the number of shares entitled to vote
thereon) is 1,000. These Amended Articles correctly set forth the provisions of
the Articles of Incorporation as theretofore amended. These Amended Articles
supercede the original Articles of Incorporation and all amendments thereto.
1. NAME. The name of the Corporation is SERVICO FLAGSTAFF, INC.
2. PURPOSE.
(a) The purpose for which the Corporation is organized is limited to:
(i) acquiring, owning, leasing, operating, using and managing that certain real
property commonly known as the Howard Johnson Flagstaff, located at 2200 East
Butler Avenue, Flagstaff, Arizona 88001 (the "Property"); (ii) entering into and
performing its obligations under the credit agreement, among Lodgian Financing
Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel Group, LLC, Servico,
Inc. and other affiliated entities, as affiliate guarantors, the initial lenders
and initial issuing bank named therein, the collateral agent, the administrative
agent, Morgan Stanley Senior Funding, Inc., as co-lead arranger, joint-book
manager and syndication agent and Lehman Brothers, as co-lead arranger,
joint-book manager and documentation agent relating to the financing or
refinancing of the Property (the "Loan Agreement") which provides the lender
thereunder with a first priority lien on the Property, any promissory-note
evidencing indebtedness incurred pursuant to the Loan Agreement, any mortgage
securing such indebtedness and encumbering the Property (the "Mortgage") and any
other documents securing such indebtedness and any related collateral documents,
each as amended (or pursuant to a consent obtained in accordance with the terms
thereof) (collectively, the "Loan Documents"); (iii) entering into and
performing its obligations under the Indenture (the "Indenture"), among Lodgian
Financing Corp, as issuer, Lodgian, Inc., the Subsidiary Guarantors defined
therein and Bankers Trust Company, as trustee, relating to the issuance of the
12 1/4% Senior Subordinated Notes due 2009 and the Guarantee in favor of the
holders of the Notes and (iv) transacting any and all lawful business that is
incident and necessary or appropriate to the ownership and to the management of
the Property for which a corporation may be incorporated under the laws of the
State of Arizona.
<PAGE>
(b) Notwithstanding any other provision of these Amended Articles
and any provision of law that otherwise so empowers the Corporation, until
such time as the Property is released from the lien of the Mortgage, the
Corporation shall not, without the unanimous affirmative vote of the members
of its Board of Directors, (i) amend, alter, change, repeal or adopt any
resolution setting forth a proposed amendment to, any provision of these
Articles of Incorporation, (ii) dissolve or liquidate, in whole or in part,
consolidate or merge with or into any other entity or convey, sell or
transfer its properties and assets substantially as an entirety to any
entity, (iii) file a voluntary petition or otherwise initiate, or consent to,
proceedings for the Corporation to be adjudicated insolvent or seeking an
order for relief as a debtor under the United States Bankruptcy Code, as
amended (11 U.S.C. ss.ss. 101 ET seq.), or (iv) file any petition, or consent
to any petition, seeking any composition, reorganization, readjustment,
liquidation, dissolution or similar relief under the present or any future
federal bankruptcy laws or any other present or future applicable federal,
state or other statute or law relative to bankruptcy, insolvency or other
relief for debtors; or (v) seek or consent to the appointment of any trustee,
receiver, conservator, assignee, sequestrator, custodian, or liquidator (or
other similar official) of the Corporation or of all or any substantial part
of the properties and assets of the Corporation, or (vi) make any general
assignment for the benefit of creditors, or (vii) admit in writing its
inability to pay its debts generally as they become due, or (viii) declare or
effect a moratorium on its debt or take any corporate action in furtherance
of any such action.
(c) The Board of Directors of the Corporation shall, at all times until
the Property is released from the lien of the Mortgage, include an independent
director (the "Independent Director"). The Independent Director shall be a
person who is not at the time of appointment and who has not at any time during
the prior five years been and who is not while serving as the Independent
Director (i) a director, stockholder, officer or employee of the Corporation or
any affiliates thereof, other than with respect to such person's service as an
Independent Director of the Corporation and such person's service in similar
"Independent Director" positions for affiliates of the Corporation; (ii) a
creditor, customer, supplier, independent contractor, manager or any other
person who derives more than 10% of its gross revenues from its activities wit
the Corporation or any affiliates thereof; (iii) a person controlling any such
stockholder, creditor, customer, supplier, independent contractor, manager or
other person; (iv) the legal or beneficial owner, at any time while serving as
director of the Corporation, of any beneficial interest in the Corporation; or
(v) a member of the immediate family of any such stockholder, officer, employee,
creditor, customer, supplier, director, independent contractor, manager or any
other person of the Corporation. As used herein, the term "affiliate" means any
person controlling, under common control with, or controlled by the person in
question, and the term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a person, whether through ownership of voting securities, by contract or
otherwise. In the event of the death, incapacity, or resignation of an
Independent Director, or the vacancy of the Independent Director's seat on the
Corporation's Board of Directors for any reason, a successor Independent
Director shall be appointed by the remaining directors.
(d) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause
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its financial statements to be prepared in accordance with generally accepted
accounting principles in a manner that indicates the separate existence of the
Corporation and its assets and liabilities from any other person or entity; (iv)
pay all its liabilities out of its own funds; (v) in all dealings, identify
itself, and conduct its own business and hold itself out under its own name and
as a separate and distinct entity and correct any misunderstandings regarding
its status as a separate entity; (vi) independently make decisions with respect
to its business and daily operations; (vii) maintain an arm's length
relationship with its affiliates; (viii) pay the salaries of its employees and
maintain a sufficient number of employees in light of its contemplated business
operations; (ix) allocate fairly and reasonably any overhead for shared office
space; and (x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall not (i)
commingle its assets with those of, or pledge its assets for the benefit of, any
other person or entity; (ii) assume, guarantee or become obligated, or hold out
its credit as being available to satisfy, the liabilities or obligations of any
other person or entity; (iii) reduce its capital below an amount which is
adequate in light of its contemplated business operations; (iv) acquire
obligations or securities of, or make loans or advances to, any affiliate; (v)
incur or assume any indebtedness other than (A) the indebtedness underlying the
Loan Agreement, (B) the indebtedness underlying the Indenture, and (C)
liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article 2 and the last sentence of
Article 11 of these Amended Articles; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in these Amended Articles. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
3. INITIAL BUSINESS. The Corporation initially intended to conduct
and currently conducts the business of owning, operating, using and managing a
hotel in the State of Arizona.
4. AUTHORIZED CAPITAL. The Corporation shall have authority to issue
One Thousand (1,000) shares of common stock, one cent ($0.01) par value per
share.
5. KNOWN PLACE OF BUSINESS. (In Arizona)
The street address of the known place of business of the
Corporation is:
c/o CT Corporation System
3325 North Central Avenue
Phoenix, Maricopa County, AZ 85012
6. STATUTORY AGENT. (In Arizona)
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The name and address of the statutory agent of the Corporation is:
c/o CT Corporation System
3325 North Central Avenue
Phoenix, Maricopa County, AZ 85012
7. BOARD OF DIRECTORS. The Board of Directors of the Corporation
shall consist of at least one (1) director. The number of directors may be
either increased or decreased from time to time as provided for in the Bylaws of
the Corporation, but shall never be less than one. The name and address of the
person who is to serve as the member of the board of directors until the annual
meeting of shareholders or until her successor(s) is (are) elected and qualified
is:
Karyn Marasco 3345 Peachtree Road, N.E.
Two Live Oak Center, Suite 700
Atlanta, GA 30326
8. INCORPORATORS. (Minimum of one)
The name and address of the incorporator was:
David Buddemeyer 1601 Belvedere Road
West Palm Beach, FL 33406
All powers, duties and responsibilities of the incorporator ceased at
the time of delivery of the original Articles of Incorporation to the Arizona
Corporation Commission.
9. BYLAWS; ELECTION OF DIRECTORS. The Board of Directors is expressly
authorized to adopt, alter, amend or repeal the Bylaws of the Corporation
subject to the limitations set forth in these Amended Articles. Election of
directors need not be by written ballot unless and to the extent provided in the
Bylaws of the Corporation.
10. DIRECTORS' LIABILITY. No director of the Corporation shall be
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 10-833 of the
Arizona Business Corporations Act, or (iv) for any transaction from which the
director derived an improper personal benefit. If the Arizona Business
Corporation Act is amended after the date of these Amended Articles to authorize
corporate action further limiting or eliminating the personal liability of
directors, then the liability of each director of the Corporation shall be
limited or eliminated to the fullest extent permitted by the Arizona Business
Corporation Act, as so amended.
The right and authority conferred in this Article 10 shall not be
exclusive of any other rights that any person may have or hereafter acquire
under any statute, provision of these Amended Articles or the Bylaws of the
Corporation, agreement, vote of the stockholders or disinterested directors or
otherwise.
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<PAGE>
11. INDEMNIFICATION. The Corporation shall indemnify any officer or
director, or any former officer or director of the Corporation, to the fullest
extent permitted by law. The foregoing right of indemnification shall not be
exclusive of any other rights to which any director, officer, employee or agent
may be entitled as a matter of law or which he may be lawfully granted. The
Corporation's obligation to indemnify its officers and directors pursuant to
this Article shall be subordinate in all respects to the obligations of the
Corporation arising out of the Loan Documents and shall not constitute a claim
against the Corporation to the extent that the Corporation is unable to pay any
amounts it is obligated to pay under the Loan Documents.
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<PAGE>
IN WITNESS WHEREOF, the undersigned has executed these Second Amended
and Restated Articles of Incorporation this 23rd day of July, 1999.
SERVICO FLAGSTAFF, INC.
By: /s/ Robert M. Flanders
--------------------------------
President
By: /s/ Thomas S. Gryboski
--------------------------------
Assistant Secretary
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Exhibit 3.15.2
SERVICO FLAGSTAFF, INC.
* * * * *
B Y - L A W S
* * * * *
ARTICLE I
OFFICES
Section 1. The registered office shall be located in Phoenix, Maricopa
County, Arizona.
Section 2. The corporation may also have offices at such other places both
within and without the State of Arizona as the board of directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of directors
shall be held within or outside the State of Arizona as may be fixed from time
to time by the board of directors and stated in the notice of the meeting or in
a duly executed waiver of notice thereof.
Section 2. Annual meetings of shareholders, commencing with the year 1997,
shall be held on the Second Monday in January unless that day is a legal
holiday, and if a legal holiday, then on the next secular day following, at
10:00 am., at which they shall elect by a plurality vote a board of directors,
and transact such other business as may properly be brought before the meeting.
<PAGE>
Section 3. Written or printed notice of the annual meeting stating the
place, day and hour of the meeting shall be delivered not less than ten nor more
than fifty days before the date of the meeting, either personally or by mail, by
or at the direction of the president, the secretary, or the officer or persons
calling the meeting, to each shareholder of record entitled to vote at such
meeting.
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. Special meetings of shareholders for any purpose other than the
election of directors may be held at such time and place within or without the
State of Arizona as shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
Section 2. Special meetings of the shareholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the articles of
incorporation, may be called by the president, the board of directors, or the
holders of not less than one-tenth of all the shares entitled to vote at the
meeting.
Section 3. Written or printed notice of a special meeting stating the
place, day and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than fifty days
before the date of the meeting, either personally or by mail, by or at the
direction of the president, or the secretary, or the officer or persons calling
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the meeting, to each shareholder of record entitled to vote at such meeting.
Section 4. The business transacted at any special meeting of shareholders
shall be limited to the purposes stated in the notice.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of stock issued and
outstanding and entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by statute or by the articles of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the shareholders, the shareholders present in person or
represented by proxy shall have power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum shall be
present or represented. At such adjourned meeting at which a quorum shall be
present or represented any business may be transacted which might have been
transacted at the meeting as originally notified. In the case of any meeting
called for the election of directors, those who attend the second of such
adjourned meetings, although less than a quorum as fixed herein, shall
nevertheless constitute a quorum for the purpose of electing directors.
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Section 2. If a quorum is present, the affirmative vote of a majority of
the shares of stock represented at the meeting shall be the act of the
shareholders unless the vote of a greater number of shares of stock is required
by law or the articles of incorporation.
Section 3. Each outstanding share of stock, having voting power, shall be
entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. A shareholder may vote either in person or by proxy executed in
writing by the shareholder or by his duly authorized attorney-in-fact.
Section 4. Any action required to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the shareholders entitled
to vote with respect to the subject matter thereof.
If the articles of incorporation provide that a consent may be signed by
fewer than all of the shareholders having voting power on any question, then the
consent need be signed only by shareholders holding that proportion of the total
voting power on the question which is required by the articles of incorporation
or by law, whichever requirement is higher. The consent, together with a
certificate by the secretary of the corporation to the effect that the
subscribers to the consent constitute all or the required proportion of the
shareholders entitled to vote on the particular question, shall be filed with
the records of proceedings of the shareholders. If the consent is signed by
fewer than all of the
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<PAGE>
shareholders having voting power on the question, prompt notice shall be given
to all of the shareholders of the action taken pursuant to the consent.
ARTICLE V
DIRECTORS
Section 1. The Board of Directors of the Corporation shall consist of one
(1) member. The number of directors may be either increased or decreased from
time to time by resolution of the Board of Directors, but shall never be less
than one (1). Directors need not be residents of the State of Arizona nor
shareholders of the corporation. The directors, other than the first board of
directors, shall be elected at the annual meeting of the shareholders, and each
directors elected shall serve until the next succeeding annual meeting and until
his successor shall have been elected and qualified. The first board of
directors shall hold office until the first annual meeting of shareholders.
Section 2. Vacancies and newly created directorships resulting from any
increase in the number of directors may be filled by election at an annual
meeting or at a special meeting of shareholders called for that purpose. A
director elected to fill a vacancy, or a newly created directorship, shall hold
office until the next succeeding annual meeting of shareholders and until his
successor shall have been elected and qualified.
In addition vacancies and newly created directorships resulting from any
increase in the number of directors may be
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filled by a majority of the directors then in office, though less than a quorum,
and the directors so chosen shall hold office until the next annual election and
until their successors are duly elected and shall qualify.
Section 3. The business affairs of the corporation shall be managed by its
board of directors which may exercise all such powers of the corporation and do
all such lawful acts and things as are not by statute or by the articles of
incorporation or by these by-laws directed or required to be exercised or done
by the shareholders.
Section 4. The directors may keep the books of the corporation, except
such as are required by law to be kept within the state, outside of the State of
Arizona, at such place or places as they may from time to time determine.
Section 5. The board of directors, by the affirmative vote of a majority
of the directors then in office, and irrespective of any personal interest of
any of its members, shall have authority to establish reasonable compensation of
all directors for services to the corporation as directors, officers or
otherwise.
ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular or special, may be
held either within or without the State of Arizona.
Section 2. The first meeting of each newly elected board of directors
shall be held at such time and place as shall be fixed by
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the vote of the shareholders at the annual meeting and no notice of such meeting
shall be necessary to the newly elected directors in order legally to constitute
the meeting, provided a quorum shall be present, or it may convene at such place
and time as shall be fixed by the consent in writing of all the directors.
Section 3. Regular meetings of the board of directors may be held upon
such notice, or without notice, and at such time and at such place as shall from
time to time be determined by the board.
Section 4. Special meetings of the board of directors may be called by the
president on two days' notice to each director, either personally or by mail or
by telegram; special meetings shall be called by the president or secretary in
like manner and on like notice on the written request of two directors.
Section 5. Attendance of a director at any meeting shall constitute a
waiver of notice of such meeting, except where a director attends for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the board
of directors need be specified in the notice or waiver of notice of such
meeting.
Section 6. A majority of the directors shall constitute a quorum for the
transaction of business unless a greater number is required by lay or by the
articles of incorporation. The act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the board of directors,
unless the
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<PAGE>
act of a greater number is required by statute or by the articles of
incorporation. If a quorum shall not be present at any meeting of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 7. Any action required or permitted to be taken at a meeting of
the directors may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the directors entitled to
vote with respect to the subject matter thereof.
Section 8. Unless otherwise restricted by the articles of incorporation or
these by-laws, members of the board of directors may participate in a meeting of
the board of directors, by means of conference telephone or similar
communications equipment provided all persons participating in the meeting can
hear and communicate with each other, and such participation in a meeting shall
constitute presence in person at the meeting, except where a person participates
in the meeting for the express purpose of objecting to the transaction of any
business on the grounds that the meeting is not lawfully called or convened.
ARTICLE VII
EXECUTIVE COMMITTEE
Section 1. The board of directors, by resolution adopted by a majority of
the number of directors fixed by the by-laws or otherwise, may designate two or
more directors to constitute an
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executive committee, which committee, to the extent provided in such resolution,
shall have and exercise all of the authority of the board of directors in the
management of the corporation, except as otherwise required by law. Vacancies in
the membership of the committee shall be filled by the board of directors at a
regular or special meeting of the board of directors. The executive committee
shall keep regular minutes of its proceedings and report the same to the board
when required.
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
articles of incorporation or of these bylaws, notice is required to be given to
any director or shareholder, it shall not be construed to mean personal notice,
but such notice may be given in writing, by mail, addressed to such director or
shareholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telegram.
Section 2. Whenever any notice whatever is required to be given under the
provisions of the statutes or under the provisions of the articles of
incorporation or these by-laws, a waiver thereof
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<PAGE>
in writing signed by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be deemed equivalent to the
giving of such notice.
ARTICLE IX
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board of
directors and shall be a president, a vice-president, a secretary and a
treasurer. The board of directors may also choose additional vice-presidents,
and one or more assistant secretaries and assistant treasurers. Any two or more
offices may be held by the same person except the offices of President and
Secretary.
Section 2. The board of directors at its first meeting after each annual
meeting of shareholders shall choose a president, one or more vice-presidents, a
secretary and a treasurer, none of whom need be a member of the board.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board of directors.
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer
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<PAGE>
elected or appointed by the board of directors may be removed at any time by the
affirmative vote of a majority of the board of directors. Any vacancy occurring
in any office of the corporation shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the shareholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts requiring
a seal, under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the board of directors to some
other officer or agent of the corporation.
THE VICE-PRESIDENTS
Section 8. The vice-president, or if there shall be more than one, the
vice-presidents in the order determined by the board of directors, shall, in the
absence or disability of the president, perform the duties and exercise the
powers of the president and shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
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<PAGE>
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the shareholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the shareholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such assistant
secretary. The board of directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by his
signature.
Section 10. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors, shall,
in the absence or disability of the secretary, perform the duties and exercise
the powers of the secretary and shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
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<PAGE>
Section 11. The treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.
Section 14. The assistant treasurer, or, if there shall be more than one,
the assistant treasurers in the order determined by the board of directors,
shall, in the absence or disability of the treasurer, perform the duties and
exercise the powers of the treasurer and shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
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<PAGE>
ARTICLE X
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by
certificates signed by the president or a vice-president and the secretary or an
assistant secretary of the corporation, and may be sealed with the seal of the
corporation or a facsimile thereof. When the corporation is authorized to issue
shares of more than one class there shall be set forth upon the face or back of
the certificate, or the certificate shall have a statement that the corporation
will furnish to any shareholder upon request and without charge, a full or
summary statement of the designations, preferences, limitations, and relative
rights of the shares of each class authorized to be issued and, if the
corporation is authorized to issue any preferred or special class in series, the
variations in the relative rights and preferences between the shares of each
such series so far as the same have been fixed and determined and the authority
of the board of directors to fix and determine the relative rights and
preferences of subsequent series.
Section 2. The signatures of the officers of the corporation upon a
certificate may be facsimiles if the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the corporation itself or an
employee of the corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be
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issued by the corporation with the same effect as if he were such officer at the
date of its issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate to be
issued in place of any certificate theretofore issued by the corporation alleged
to have been lost or destroyed. When authorizing such issue of a new
certificate, the board of directors, in its discretion and as a condition
precedent to the issuance thereof, may prescribe such terms and conditions as it
deems expedient, and may require such indemnities as it deems adequate, to
protect the corporation from any claim that may be made against it with respect
to any such certificate alleged to have been lost or destroyed.
TRANSFERS OF SHARES
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate representing shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, a new
certificate shall be issued to the person entitled thereto, and the old
certificate cancelled and the transaction recorded upon the books of the
corporation.
FIXING OF RECORD DATE
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<PAGE>
Section 5. For the purpose of determining shareholders entitled to notice
of and to vote at a meeting, or to receive a dividend, or to receive or exercise
subscription or other rights, or to participate in a reclassification of stock,
or in order to make a determination of shareholders for any other proper
purpose, the board of directors may fix in advance a record date for
determination of shareholders for such purpose, such date to be not more than
sixty days and, if fixed for the purpose of determining shareholders entitled to
notice of and to vote at a meeting, not less than ten days, prior to the date on
which the action requiring the determination of shareholders is to be taken.
If no record date is fixed, the record date for determining shareholders
entitled to notice of or to vote at a meeting of shareholders shall be at four
o'clock in the afternoon on the day before the day on which notice is given, or,
if notice is waived, at the commencement of the meeting. If no record date is
fixed, the record date for determining shareholders entitled to express consent
to corporate action in writing without meeting shall be the time of the day on
which the first written consent is served on the corporation as provided by law.
A determination of shareholders of record entitled to notice of or to vote
at a meeting of shareholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting and further provided that the adjournment or adjournments do
not exceed thirty days in the aggregate.
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REGISTERED SHAREHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Arizona.
VOTING RECORD
Section 7. The officer or agent having charge of the stock transfer books
for shares shall make, before each meeting of shareholders, a complete record of
the shareholders entitled to vote at shareholder's meeting or any adjournment
thereof, arranged in alphabetical order, with the address of each and the number
of shares held by each. Such record shall be produced and kept open at the time
and place of the meeting and shall be subject to the inspection of any
shareholder during the whole time of the meeting for the purposes thereof.
ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS
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Section 1. Subject to the provisions of the articles of incorporation
relating thereto, if any, dividends may be declared by the board of directors at
any regular or special meeting, pursuant to law. Dividends may be paid in cash,
in property or in shares of the capital stock, subject to any provisions of the
articles of incorporation. Section 2. Before payment of any dividend, there may
be set aside out of any funds of the corporation available for dividends such
sum or sums as the directors from time to time, in their absolute discretion,
think proper as a reserve fund to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or
for such other purpose as the directors shall think conducive to the interest of
the corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 2. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
FISCAL YEAR
Section 3. The fiscal year of the corporation shall be fixed by resolution
of the board of directors.
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SEAL
Section 4. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words "Corporate Seal,
Arizona". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
ARTICLE XII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new
by-laws may be adopted at any regular or special meeting of shareholders at
which a quorum is present or represented, by the affirmative vote of a majority
of the stock entitled to vote, provided notice of the proposed alteration,
amendment or repeal be contained in the notice of such meeting.
Dated: March 25, 1996
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Exhibit 3.16.1
SECOND AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
SERVICO NORTHWOODS, INC.
Pursuant to Sections 607.1006 and 607.1007 of the Florida General
Corporation Act (the "Act"), SERVICO NORTHWOODS, INC., a Florida corporation
(the "Corporation"), hereby executes and submits for filing with the Department
of State, State of Florida, these Second Amended and Restated Articles of
Incorporation (the "Amended Articles"), to read as follows:
ARTICLE I
The name of the Corporation is SERVICO NORTHWOODS, INC. The address of
the principal office and the mailing address of the Corporation is 3445
Peachtree Road, N.E., Two Live Oak Center, Suite 700, Atlanta, GA 30326.
ARTICLE II
(a) The purpose for which the Corporation is organized is limited to:
(i) acquiring, owning, leasing, operating, using and managing that certain real
property commonly known as the Best Western Airport, located at 7401 Northwoods
Boulevard, North Charleston, South Carolina 29418 (the "Property"); (ii)
entering into and performing its obligations under the credit agreement, among
Lodgian Financing Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel
Group, LLC, Servico, Inc. and other affiliated entities, as affiliate
guarantors, the initial lenders and initial issuing bank named therein, the
collateral agent, the administrative agent, Morgan Stanley Senior Funding, Inc.,
as co-lead arranger, joint-book manager and syndication agent and Lehman
Brothers, as co-lead arranger, joint-book manager and documentation agent
relating to the financing or refinancing of the Property (the "Loan Agreement")
which provides the lender thereunder with a first priority lien on the Property,
any promissory-note evidencing indebtedness incurred pursuant to the Loan
Agreement, any mortgage securing such indebtedness and encumbering the Property
(the "Mortgage") and any other documents securing such indebtedness and any
related collateral documents, each as amended (or pursuant to a consent obtained
in accordance with the terms thereof) (collectively, the "Loan Documents");
(iii) entering into and performing its obligations under the Indenture (the
"Indenture"), among Lodgian Financing Corp, as issuer, Lodgian, Inc., the
Subsidiary Guarantors defined therein and Bankers Trust Company, as trustee,
relating to the issuance of the 12 1/4% Senior Subordinated Notes due 2009 and
the Guarantee in favor of the holders of the Notes and (iv) transacting any and
all lawful business that is incident and necessary or appropriate to the
ownership and to the management of the Property for which a corporation may be
incorporated under the laws of the State of Florida.
(b) Notwithstanding any other provision of these Amended Articles and
any provision of law that otherwise so empowers the Corporation, until such time
as the Property is
<PAGE>
released from the lien of the Mortgage, the Corporation shall not, without the
unanimous affirmative vote of the members of its Board of Directors, (i) amend,
alter, change, repeal or adopt any resolution setting forth a proposed amendment
to, any provision of these Articles of Incorporation, (ii) dissolve or
liquidate, in whole or in part, consolidate or merge with or into any other
entity or convey, sell or transfer its properties and assets substantially as an
entirety to any entity, (iii) file a voluntary petition or otherwise initiate,
or consent to, proceedings for the Corporation to be adjudicated insolvent or
seeking an order for relief as a debtor under the United States Bankruptcy Code,
as amended (11 U.S.C. Sections 101 ET SEQ.), or (iv) file any petition, or
consent to any petition, seeking any composition, reorganization, readjustment,
liquidation, dissolution or similar relief under the present or any future
federal bankruptcy laws or any other present or future applicable federal, state
or other statute or law relative to bankruptcy, insolvency or other relief for
debtors; or (v) seek or consent to the appointment of any trustee, receiver,
conservator, assignee, sequestrator, custodian, or liquidator (or other similar
official) of the Corporation or of all or any substantial part of the properties
and assets of the Corporation, or (vi) make any general assignment for the
benefit of creditors, or (vii) admit in writing its inability to pay its debts
generally as they become due, or (viii) declare or effect a moratorium on its
debt or take any corporate action in furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all times until
the Property is released from the lien of the Mortgage, include an independent
director (the "Independent Director"). The Independent Director shall be a
person who is not at the time of appointment and who has not at any time during
the prior five years been and who is not while serving as the Independent
Director (i) a director, stockholder, officer or employee of the Corporation or
any affiliates thereof, other than with respect to such person's service as an
Independent Director of the Corporation and such person's service in similar
"Independent Director" positions for affiliates of the Corporation; (ii) a
creditor, customer, supplier, independent contractor, manager or any other
person who derives more than 10% of its gross revenues from its activities with
the Corporation or any affiliates thereof; (iii) a person controlling any such
stockholder, creditor, customer, supplier, independent contractor, manager or
other person; (iv) the legal or beneficial owner, at any time while serving as
director of the Corporation, of any beneficial interest in the Corporation; or
(v) a member of the immediate family of any such stockholder, officer, employee,
creditor, customer, supplier, director, independent contractor, manager or any
other person of the Corporation. As used herein, the term "affiliate" means any
person controlling, under common control wit, or controlled by the person in
question, and the term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a person, whether through ownership of voting securities, by contact or
otherwise. In the event of the death, incapacity, or resignation of an
Independent Director, or the vacancy of the Independent Director's seat on the
Corporation's Board of Directors for any reason, a successor Independent
Director shall be appointed by the remaining directors.
(d) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and
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<PAGE>
liabilities from any other person or entity; (iv) pay all its liabilities out of
its own funds; (v) in all dealings, identify itself, and conduct its own
business and hold itself out under its own name and as a separate and distinct
entity and correct any misunderstandings regarding its status as a separate
entity; (vi) independently make decisions with respect to its business and daily
operations; (vii) maintain an arm's length relationship with its affiliates;
(viii) pay the salaries of its employees and maintain a sufficient number of
employees in light of its contemplated business operations; (ix) allocate fairly
and reasonably any overhead for shared office space; and (x) use separate
stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall not (i)
commingle its assets with those of, or pledge its assets for the benefit of, any
other person or entity; (ii) assume, guarantee or become obligated, or hold out
its credit as being available to satisfy, the liabilities or obligations of any
other person or entity; (iii) reduce its capital below an amount which is
adequate in light of its contemplated business operations; (iv) acquire
obligations or securities of, or make loans or advances to, any affiliate; (v)
incur or assume any indebtedness other than (A) the indebtedness underlying the
Loan Agreement (B) the indebtedness underlying the Indenture, and (C)
liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article II and the last sentence of
Article VII of these Amended Articles; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in these Amended Articles. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
ARTICLE III
The number of shares the Corporation is authorized to issue is One
Thousand (1,000) each with the par value of Zero Dollars and One Cent ($0.01).
The Board of Directors shall fix the consideration to be received for each
share. Such consideration shall consist of any tangible or intangible property
or benefit to the Corporation, including cash, promissory notes, services
performed or written promises to perform such services and shall have a value,
in the judgment of the directors, equivalent to or greater than the full par
value of the shares.
ARTICLE IV
The number of directors constituting the board of directors of the
Corporation shall be at least one (1), and the name and address of the person
who is to serve as the sole director until the annual meeting of shareholders
and until his successor is elected and shall qualify is as follows:
Name Address
Robert M. Flanders 3445 Peachtree Road, N.E.,
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Two Live Oak Center, Suite 700,
Atlanta, GA 30326.
ARTICLE V
The Board of Directors of the Corporation is expressly authorized to
adopt, alter, amend or repeal the Bylaws of the Corporation subject to the
limitations set forth in these Amended Articles. Election of directors need not
be by written ballot unless and to the extent provided in the Bylaws of the
Corporation.
ARTICLE VI
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duties as a director, except for liability (I)( for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not on good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 607.144 of the Florida General Corporation
Act, or (iv) for any transaction from which the director derived an improper
personal benefit. If the Florida General Corporation Act is amended after the
date of these Amended Articles to authorize corporate action further eliminating
or limiting the personal liability of directors, then the liability of a
director of the Corporation shall be eliminated or limited to the fullest extent
permitted by the Florida General Corporation Act, as so amended.
The rights and authority conferred in this Article VI shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, provision of these Amended Articles or Bylaws of the
Corporation, agreement, vote of stockholders or disinterested directors, or
otherwise.
ARTICLE VII
The Corporation shall indemnify any officer or director, or any former
officer or director of the Corporation, to the fullest extent permitted by law.
The foregoing right of indemnification shall not be exclusive of any other
rights to which any director, officer, employee or agent may be entitled as a
matter of law or which he may be lawfully granted. The Corporation's obligation
to indemnify its officers and directors pursuant to this Article shall be
subordinate in all respects to the obligations of the Corporation arising out of
the Loan Documents and shall not constitute a claim against the Corporation to
the extent that the Corporation is unable to pay any amounts it is obligated to
pay under the Loan Documents.
ARTICLE VIII
Subject to the provisions of Article II(e)(vi), the Corporation
reserves to its shareholders the right to amend or repeal any provisions nor or
hereafter contained in these Amended Articles. Any rights which these Amended
Articles may confer upon the Corporation may be modified or cancelled by a vote
of the shareholders to amend or repeal said Amended Articles.
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The foregoing Second Amended and Restated Articles of Incorporation
were duly adopted and approved by the sole shareholder and the Board of
Directors of the Corporation by unanimous written consent in lieu of a meeting,
pursuant to Sections 607.0704 and 607.0821 of the Florida General Corporation
Act, as of July 22nd, 1999. The number of votes cast was sufficient for
approval.
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<PAGE>
IN WITNESS WHEREOF, the undersigned has executed these Second Amended
and Restated Articles of Incorporation this 23rd day of July, 1999.
SERVICO NORTHWOODS, INC.
By: /s/ Thomas S. Gryboski
--------------------------------
Name: Tom Gyboski
Title: Assistant Secretary
<PAGE>
Exhibit 3.16.2
BYLAWS
OF
SERVICO NORTHWOODS, INC.,
a Florida corporation
<PAGE>
BYLAWS
OF
SERVICO NORTHWOODS, INC.,
a Florida corporation
ARTICLE I
OFFICES
Section 1. The location of the registered office of the corporation
shall be as stated in the Articles of Incorporation, which location may be
changed from time to time by the board of directors.
Section 2. The corporation may also have offices or branches at such
other places, both within and without the State of Florida, as the board of
directors may from time to time determine or as the business of the corporation
may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. All meetings of the shareholders shall be held at the
registered office of the corporation, or at such other place either within or
without the State of Florida as shall be designated from time to time by the
board of directors and stated in the notice of the meeting.
Section 2. Annual meetings of shareholders shall be during the third
month of each fiscal year of the corporation, at such date as determined by the
board of directors, or at such other date as the board of directors deems
appropriate, and at such time and place as designated in the notice of the
meeting. At the annual meeting, the shareholders shall elect a board of
directors and transact such other business as may properly be brought before the
meeting. If the annual meeting is not held on the date designated therefor, the
board of directors shall cause the meeting to be held as soon thereafter as
convenient.
Section 3. Special meetings of the shareholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the Articles of
Incorporation, may be called by the chairman of the board or president, and
shall be called by the chairman of the board or president at the request in
writing of a majority of the board of directors or at the request in writing of
the holders of not less than 10% of all the shares entitled to vote at a
meeting. Such request shall state the purpose or purposes of the proposed
meeting.
<PAGE>
Section 4. The officer or agent who has charge of the stock transfer
book for shares of the corporation shall make and certify a complete list of the
shareholders entitled to vote at a shareholders' meeting, or any adjournment
thereof. Such list shall be arranged alphabetically and by voting group and
shall show the address of each shareholder and the number of shares registered
in the name of each shareholder. The list shall also be produced and kept at the
time and place of the meeting during the whole time thereof, and may be
inspected by any shareholder who is present.
Section 5. Except as may be provided by statute, written notice of
an annual or special meeting of shareholders stating the place, date and hour of
the meeting and the purpose or purposes for which the meeting is called, shall
be delivered, either personally or by first-class mail, not less than 10 nor
more than 60 days before the date of the meeting, to each shareholder of record
entitled to vote at such meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail addressed to the shareholder
at his address as it appears on the stock transfer books of the corporation with
postage thereon prepaid.
Section 6. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the shareholders for the
transaction of business except as otherwise expressly required by statute or by
the Articles of Incorporation. All shareholders present in person or represented
by proxy at such meeting may continue to do business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum. If, however, such quorum shall not be initially present at any meeting
of shareholders, a majority of the shareholders entitled to vote thereat shall
nevertheless have power to adjourn the meeting from time to time and to another
place, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting, at which a quorum
shall be present or represented, any business may be transacted which might have
been transacted at the meeting as originally called. If after the adjournment a
new record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each shareholder of record entitled to vote at the
meeting.
Section 7. When an action other than the election of directors is to
be taken by vote of the shareholders, it shall be authorized by the affirmative
vote of a majority of the shares represented at the meeting and entitled to vote
on the subject matter, unless a greater plurality is required by express
requirement of the statutes or of the Articles of Incorporation, in which case
such express provision shall govern and control the decision of such question.
"Shares represented at the meeting" shall be determined as of the time the
existence of the quorum is deter-
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mined. Except as otherwise expressly required by the Articles of Incorporation,
directors shall be elected by a plurality of the votes cast at an election.
Section 8. Except as otherwise provided by law, each shareholder
shall at every meeting of the shareholders be entitled to one vote in person or
by proxy for each share of the capital stock having voting power held by such
shareholder except as otherwise expressly required in the Articles of
Incorporation. A vote may be cast either orally or in writing. Each proxy shall
be in writing and signed by the shareholder or his authorized agent or
representative. A proxy is not valid after the expiration of 11 months after its
date unless the person executing it specifies therein the length of time for
which it is to continue in force. Unless prohibited by law, a proxy otherwise
validly granted by telegram shall be deemed to have been signed by the granting
shareholder. All questions regarding the qualification of voters, the validity
of proxies and the acceptance or rejection of votes shall be decided by the
presiding officer of the meeting.
Section 9. Attendance of a person at a meeting of shareholders in
person or by proxy constitutes a waiver of notice of the meeting except where
the shareholder, at the beginning of the meeting, objects to holding the meeting
or transacting business at the meeting.
Section 10. Unless otherwise provided by the Articles of
Incorporation, any action required to be taken at any annual or special meeting
of the shareholders, or any other action which may be taken at any annual or
special meeting of the shareholders may be taken without a meeting, without
prior notice, and without a vote if a consent in writing, setting forth the
action so taken, shall be signed by holders of outstanding stock having not less
than the minimum number of votes that would be necessary to authorize such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Within 10 days after obtaining such authorization by written consent,
notice shall be given to those shareholders who have not consented in writing.
The notice shall fairly summarize the material features of the authorized action
and, if the action is of a type for which dissenters' rights are provided for by
statute, the notice shall contain a clear statement of the right of shareholders
dissenting therefrom to be paid the fair value of their shares upon compliance
with further provisions of such statute regarding the rights of dissenting
shareholders.
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<PAGE>
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole
board shall be not less than one nor more than seven. The number of directors
shall be determined from time to time by resolution of the board of directors.
In the absence of an express determination by the board, the number of
directors, until changed by the board, shall be that number of directors elected
at the most recently held annual meeting of shareholders or, if no such meeting
has been held, the number elected by the incorporator in the initially filed
Articles of Incorporation. The directors shall be elected at the annual meeting
of the shareholders, except as provided in Section 3 of this article, and each
director elected shall hold office until his successor is duly elected and
qualified or until his death, resignation or removal. Directors need not be
shareholders or officers of the corporation.
Section 2. Vacancies and newly created directorships resulting from
any increase in the authorized number of directors may be filled by the
affirmative vote of a majority of the directors then in office, though less than
a quorum, or by a sole remaining director, or by the shareholders, and the
directors so chosen shall hold office until the next annual election of
directors by the shareholders and until their successors are duly elected and
qualified or until their death, resignation or removal. Any director may be
removed, with or without cause, by the shareholders at a meeting of the
shareholders called expressly for that purpose.
Section 3. The board of directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Florida. Unless otherwise restricted by the Articles of Incorporation, members
of the board of directors, or any committee designated by the board, may
participate in a meeting of the board or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant to this section shall constitute presence in person at such meeting.
Section 4. Regular meetings of the board of directors may be held at
such time and at such place as shall from time to time be determined by the
board of directors or by the chairman of the board or president. Any notice
given of a regular meeting need not specify the business to be transacted or the
purpose of the meeting.
Section 5. Special meetings of the board may be called by the
chairman of the board or president on four days' notice to each director by mail
or 24 hours' notice either personally or by
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telephone, telegram or facsimile transmission; special meetings shall be called
by the chairman of the board or president in like manner and on like notice on
the written request of two directors. The notice need not specify the business
to be transacted or the purpose of the special meetings. The notice shall
specify the place of the special meeting.
Section 6. At all meetings of the board, a majority of the number of
directors then serving shall constitute a quorum for the transaction of
business. At all meetings of a committee of the board a majority of the
directors then members of the committee in office shall constitute a quorum for
the transaction of business. The act of a majority of the members present at any
meeting at which there is a quorum shall be the act of the board of directors or
the committee, unless the vote of a larger number is specifically required by
statute, by the Articles of Incorporation, or by these Bylaws. If a quorum shall
not be present at any meeting of the board of directors or a committee, the
members present thereat may adjourn the meeting from time to time and to another
place without notice other than announcement at the meeting, until a quorum
shall be present.
Section 7. Unless otherwise provided by the Articles of
Incorporation, any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting, if, before or after the action, all members of the board or committee
consent thereto in writing. The written consents shall be filed with the minutes
of proceedings of the board or committee. Such consents shall have the same
effect as a vote of the board or committee for all purposes.
Section 8. A majority of the full board of directors may, by
resolution, designate one or more committees, each committee to consist of one
or more of the directors of the corporation. The board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. Any such committee, to the
extent provided in the resolution of the board, shall have and may exercise the
powers of the board of directors in the management of the business and affairs
of the corporation; provided, however, such a committee shall not have the power
or authority to:
(a) approve or recommend to shareholders actions or proposals
required by statute to be approved by the shareholders,
(b) fill vacancies on the board of directors or any committee
thereof,
(c) adopt, amend or repeal the Bylaws of the corporation,
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(d) authorize or approve the reacquisition of shares unless pursuant
to a general formula or method specified by the board of directors, or
(e) authorize or approve the issuance or sale or contract for the
sale of shares, or determine the designation and relative rights, preferences
and limitations of a voting group, except that the board of directors may
authorize a committee (or a senior executive officer of the corporation) to do
so within limits specifically prescribed by the board of directors.
Such committee or committees shall have such name or names as may be determined
from time to time by resolution adopted by the board of directors. A committee,
and each member thereof, shall serve at the pleasure of the board.
Section 9. Each committee shall keep regular minutes of its meetings
and report the same to the board of directors when required.
Section 10. By resolution of the board of directors and irrespective
of any personal interest of any director, the board may establish reasonable
compensation of directors for services to the corporation as directors, officers
or members of a committee. No such payment shall preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor.
Section 11. A director may resign by written notice to the
corporation. The resignation is effective upon its delivery to the corporation
or a subsequent time as set forth in the notice of resignation.
Section 12. Attendance of a director at a meeting constitutes a
waiver of notice of the meeting except where a director states, at the beginning
of the meeting or promptly upon arrival at the meeting, any objection to the
transaction of business because the meeting is not lawfully called or convened.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
Articles of Incorporation or of these Bylaws, written notice is required to be
given to any director, committee member or shareholder, such notice may be (but
is not required to be) given in writing by mail (registered, certified or other
first class mail) addressed to such director, shareholder or committee member at
his address as it appears on the records of the corporation, with postage
thereon prepaid. Such notice shall be deemed to
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<PAGE>
be given at the time when the same shall be deposited in a post office or
official depository under the exclusive care and custody of the United States
postal service.
Section 2. Whenever any notice is required to be given under the
provision of the statutes or of the Articles of Incorporation or of these
Bylaws, a waiver thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the shareholders, directors or a
committee, need be specified in any written waiver of notice.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the
board of directors at its first meeting after each annual meeting of
shareholders. There shall be a president, a secretary and a treasurer. The board
of directors may also create and fill the offices of chairman of the board and
vice-chairman of the board, and may choose one or more vice-presidents, one or
more assistant secretaries, and one or more assistant treasurers. Any number of
offices may be held by the same person, but the board by resolution may require
that at least two persons shall be officers for purposes of compliance with
Article VI, Section 1, hereof.
Section 2. The business and affairs of the corporation shall be
managed by or under the direction of its chairman of the board who shall act as
Chief Executive Officer of the Corporation.
Section 3. The board of directors may from time to time appoint such
other officers and agents as it shall deem necessary who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the board.
Section 4. The salaries of all officers of the corporation shall be
fixed by the board of directors.
Section 5. The officers of the corporation shall hold office at the
pleasure of the board of directors. Any officer elected or appointed by the
board of directors may be removed at any time by the board of directors with or
without cause whenever, in its judgment, the best interests of the corporation
will be served thereby. Any vacancy occurring in any office of the corporation
by death, resignation, removal or otherwise shall be filled by the board of
directors. An officer may resign by written notice to the corporation. The
resignation is effective upon its
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<PAGE>
delivery to the corporation or at a subsequent time specified in the notice of
resignation.
Section 6. Unless otherwise provided by resolution of the board of
directors, the president shall be the chief executive officer of the
corporation, shall, in the absence or non-election of a chairman or vice
chairman of the board of directors, preside at all meetings of the shareholders
and the board of directors (if he shall be a member of the board), shall have
general and active management of the business and affairs of the corporation and
shall see that all orders and resolutions of the board of directors are carried
into effect. He shall execute on behalf of the corporation, and may affix or
cause the corporate seal (if adopted by the board of directors) to be affixed
to, all instruments requiring such execution except to the extent the signing
and execution thereof shall be expressly delegated by the board of directors to
some other officer or agent of the corporation, and he shall have the authority
to vote any shares of stock owned by the corporation.
Section 7. The vice-presidents shall act under the direction of the
president and in the absence or disability of the president shall perform the
duties and exercise the powers of the president. They shall perform such other
duties and have such other powers as the president or the board of directors may
from time to time prescribe. The board of directors may designate one or more
executive vice-presidents or may otherwise specify the order of seniority of
the vice-presidents. The duties and powers of the president shall descend to
the vice-presidents in such specified order of seniority.
Section 8. The secretary shall act under the direction of the
president. Subject to the direction of the president he shall attend all
meetings of the board of directors and all meetings of the shareholders and
record the proceedings. He shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the shareholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the president or the board of
directors. He shall keep in safe custody the seal of the corporation, if a
corporate seal is adopted by the board of directors. When authorized by the
president or the board of directors, he shall cause the seal of the corporation
to be affixed to any instrument requiring it. He shall be responsible for
maintaining the stock transfer book and minute book of the corporation and shall
be responsible for their updating.
Section 9. The assistant secretaries shall act under the direction
of the president. In the order of their seniority in office, unless otherwise
determined by the president or the board of directors, they shall, in the
absence or disability of the secretary, perform the duties and exercise the
powers of the secretary. They shall perform such other duties and have such
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other powers as the president or the board of directors may from time to time
prescribe.
Section 10. The treasurer shall act under the direction of the
president. Subject to the direction of the president he shall have custody of
the corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the board of
directors. He shall disburse the funds of the corporation as may be ordered by
the president or the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation. He may affix or cause to be affixed the seal of the corporation to
documents so requiring the seal, if a corporate seal is adopted by the board of
directors.
Section 11. The assistant treasurers in the order of their seniority
of office, unless otherwise determined by the president or the board of
directors shall, in the absence or disability of the treasurer, perform the
duties and exercise the powers of the treasurer. They shall perform such other
duties and have such other powers as the president or the board of directors may
from time to time prescribe.
Section 12. To the extent the powers and duties of the several
officers are not provided from time to time by resolution or other directive of
the board of directors or by the president (with respect to other officers), the
officers shall have all powers and shall discharge the duties customarily and
usually held and performed by like officers of the corporations similar in
organization and business purposes to this corporation.
ARTICLE VI
CERTIFICATES OF STOCK
AND SHAREHOLDERS OF RECORD
Section 1. The shares of stock of the corporation shall be
represented by certificates signed by, or in the name of the corporation by, the
president or a vice-president and by the secretary or an assistant secretary of
the corporation. Each holder of stock in the corporation shall be entitled to
have such a certificate certifying the number of shares owned by him in the
corporation.
Section 2. Any of or all the signatures on the certificate may be a
facsimile if the certificate is countersigned by a
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transfer agent or registered by a registrar other than the corporation itself or
its employee. In case any officer who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer before
such certificate is issued, it may be issued by the corporation with the same
effect as if he were such officer at the date of issue. The seal of the
corporation or a facsimile thereof may, but need not, be affixed to the
certificates of stock.
Section 3. The board of directors may direct a new certificate for
shares to be issued in place of any certificate theretofore issued by the
corporation alleged to have been lost or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate of stock to be
lost or destroyed. When authorizing such issue of a new certificate, the board
of directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost or destroyed certificate, or his legal
representative, to give the corporation a bond in such sum as it may direct as
indemnity against any claim that may be made against the corporation with
respect to the certificate alleged to have been lost or destroyed.
Section 4. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its stock
transfer book for shares of the corporation.
Section 5. In order that the corporation may determine the
shareholders entitled to notice of, or to vote at, any meeting of shareholders
or any adjournment thereof, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or for the purpose of any other
action, the board of directors may fix, in advance, a date as a record date,
which shall not be more than 70 nor less than 10 days before the date of such
meeting, nor more than 70 days prior to any other action. The stock transfer
books of the corporation shall not be closed.
If no record date is fixed:
(a) The record date for determining the shareholders of record
entitled to notice of, or to vote at, a meeting of shareholders shall be at the
close of business on the day on which notice is given, or, if no notice is
given, at the close of business on the day next preceding the day on which the
meeting is held; and
(b) the record date for determining shareholders for any other
purpose shall be at the close of business on the day
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on which the board of directors adopts the resolution relating thereto.
A determination of shareholders of record entitled to notice or to
vote at a meeting of shareholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered upon its stock transfer book for shares
of the corporation as the owner of shares for all purposes, including voting and
dividends, and shall not be bound to recognize any equitable or other claim to
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of Florida.
ARTICLE VII
INDEMNIFICATION
Section 1. The corporation, to the fullest extent authorized or
permitted by the provisions at 607.0850 Fl.Stat. (other than 607.0850(7)),
Florida Business Corporation Act, as amended (or any amendment or successor
provision thereof or any other statutory provision authorizing or permitting
such indemnification or advancement of expenses which is adopted after the date
this Article VII is adopted), shall indemnify against liability, and advance
expenses to, any person, and his heirs, executors, administrators and legal
representatives, who is or was a party to any proceeding by reason of the fact
that such person is or was a director, officer, employee or agent of the
corporation or is or was serving as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust or other enterprise at
the request of the corporation. Officers and directors who are so entitled to be
indemnified shall be paid their expenses in advance of a final disposition of
the proceeding to the maximum extent authorized or permitted by the provisions
of 607.0850(6) Fl.Stat. or any amended or successor section.
Section 2. Article VII, Section 1 of these Bylaws shall not be
construed to mean that indemnification and advancement of expenses by the
corporation pursuant to 607.0850(7) Fl.Stat. is not permitted. The corporation
may indemnify and advance expenses to any person pursuant to Section 607.0850(7)
Fl.Stat., or any amended or successor section, to the extent and in the manner
desired by the corporation and permitted by law.
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<PAGE>
Section 3. Terms used in this Article VII shall have the meanings
ascribed to them in 607.0850(11) Fl.Stat. or any amended or successor section.
ARTICLE VIII
GENERAL PROVISIONS
Section 1. All checks, drafts or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate. All funds of
the corporation not otherwise employed shall be deposited from time to time to
the credit of the corporation in such banks, trust companies or other
depositories as the board of directors may from time to time designate.
Section 2. The fiscal year of the corporation shall be fixed from
time to time by resolution of the board of directors, but shall end on December
31st of each year if not otherwise fixed by the board.
Section 3. The board of directors may adopt a corporate seal for the
corporation. The corporate seal shall have inscribed thereon the name of the
corporation and the words "Corporate Seal, Florida." The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise. Except as otherwise provided by law, the failure to affix the seal of
the corporation to a document shall not affect the validity thereof.
Section 4. The corporation shall keep within or without the State of
Florida books and records of account and minutes of the proceedings of its
shareholders, board of directors and executive committee, if any. The
corporation shall keep at its registered office or at the office of its transfer
agent within or without the State of Florida a stock transfer book for shares of
the corporation containing the names and addresses of all shareholders, the
number, class and series of shares held by each and the dates when they
respectively became holders of record thereof. Any of such stock transfer book,
books, records or minutes may be in written form or in any other form capable of
being converted into written form within a reasonable time.
Section 5. These Bylaws shall govern the internal affairs of the
corporation, but only to the extent they are consistent with law and the
Articles of Incorporation. Nothing contained in the Bylaws shall, however,
prevent the imposition by contract of greater voting, notice or other
requirements than those set forth in these Bylaws.
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<PAGE>
ARTICLE IX
AMENDMENTS
Section 1. The Bylaws may be amended or repealed, or new Bylaws may
be adopted, by action of either the shareholders or the board of directors. The
shareholders may from time to time specify particular provisions of the Bylaws
which may not be altered or repealed by the board of directors.
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<PAGE>
Exhibit 3.17.1
SECOND AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
SERVICO SILVER SPRING, INC.
Pursuant to Sections 607.1006 and 607.1007 of the Florida General
Corporation Act (the "Act"), SERVICO SILVER SPRING, INC., a Florida corporation
(the "Corporation"), hereby executes and submits for filing with the Department
of State, State of Florida, these Second Amended and Restated Articles of
Incorporation (the "Amended Articles"), to read as follows:
ARTICLE I
The corporate name that satisfied the requirements of Section 607.0401
is SERVICO SILVER SPRING, INC.
ARTICLE II
The street address of the principal office of the Corporation and its
mailing address is 3445 Peachtree Road, N.E., Two Live Oak Center, Suite 700,
Atlanta, GA 30326.
ARTICLE III
(a) The purpose for which the Corporation is organized is limited to:
(i) acquiring, owning, leasing, operating, using and managing that certain real
property commonly known as the Days Inn Silver Spring, located at 8040 13th
Street, Silver Spring, Maryland 20910 (the "Property"); (ii) entering into and
performing its obligations under the credit agreement, among Lodgian Financing
Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel Group, LLC, Servico,
Inc. and other affiliated entities, as affiliate guarantors, the initial lenders
and initial issuing bank named therein, the collateral agent, the administrative
agent, Morgan Stanley Senior Funding, Inc., as co-lead arranger, joint-book
manager and syndication agent and Lehman Brothers, as co-lead arranger,
joint-book manager and documentation agent relating to the financing or
refinancing of the Property (the "Loan Agreement") which provides the lender
thereunder with a first priority lien on the Property, any promissory-note
evidencing indebtedness incurred pursuant to the Loan Agreement, any mortgage
securing such indebtedness and encumbering the Property (the "Mortgage") and any
other documents securing such indebtedness and any related collateral documents,
each as amended (or pursuant to a consent obtained in accordance with the terms
thereof) (collectively, the "Loan Documents"); (iii) entering into and
performing its obligations under the Indenture (the "Indenture"), among Lodgian
Financing Corp, as issuer, Lodgian, Inc., the Subsidiary Guarantors defined
therein and Bankers Trust Company, as trustee, relating to the issuance of the
12 1/4% Senior Subordinated Notes due 2009 and the Guarantee in favor of the
holders of the Notes and (iv) transacting any and all lawful business that is
incident and necessary or appropriate to the ownership and to the
<PAGE>
management of the Property for which a corporation may be incorporated under the
laws of the State of Florida.
(b) Notwithstanding any other provision of these Amended Articles and
any provision of law that otherwise so empowers the Corporation, until such time
as the Property is released from the lien of the Mortgage, the Corporation shall
not, without the unanimous affirmative vote of the members of its Board of
Directors, (i) amend, alter, change, repeal or adopt any resolution setting
forth a proposed amendment to, any provision of these Articles of Incorporation,
(ii) dissolve or liquidate, in whole or in part, consolidate or merge with or
into any other entity or convey, sell or transfer its properties and assets
substantially as an entirety to any entity, (iii) file a voluntary petition or
otherwise initiate, or consent to, proceedings for the Corporation to be
adjudicated insolvent or seeking an order for relief as a debtor under the
United States Bankruptcy Code, as amended (11 U.S.C. Sections 101 et seq.), or
(iv) file any petition, or consent to any petition, seeking any composition,
reorganization, readjustment, liquidation, dissolution or similar relief under
the present or any future federal bankruptcy laws or any other present or future
applicable federal, state or other statute or law relative to bankruptcy,
insolvency or other relief for debtors; or (v) seek or consent to the
appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, or liquidator (or other similar official) of the Corporation or of
all or any substantial part of the properties and assets of the Corporation, or
(vi) make any general assignment for the benefit of creditors, or (vii) admit in
writing its inability to pay its debts generally as they become due, or (viii)
declare or effect a moratorium on its debt or take any corporate action in
furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all times until
the Property is released from the lien of the Mortgage, include an independent
director (the "Independent Director"). The Independent Director shall be a
person who is not at the time of appointment and who has not at any time during
the prior five years been and who is not while serving as the Independent
Director (i) a director, stockholder, officer or employee of the Corporation or
any affiliates thereof, other than with respect to such person's service as an
Independent Director of the Corporation and such person's service in similar
"Independent Director" positions for affiliates of the Corporation; (ii) a
creditor, customer, supplier, independent contractor, manager or any other
person who derives more than 10% of its gross revenues from its activities with
the Corporation or any affiliates thereof; (iii) a person controlling any such
stockholder, creditor, customer, supplier, independent contractor, manager or
other person; (iv) the legal or beneficial owner, at any time while serving as
director of the Corporation, of any beneficial interest in the Corporation; or
(v) a member of the immediate family of any such stockholder, officer, employee,
creditor, customer, supplier, director, independent contractor, manager or any
other person of the Corporation. As used herein, the term "affiliate" means any
person controlling, under common control wit, or controlled by the person in
question, and the term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a person, whether through ownership of voting securities, by contact or
otherwise. In the event of the death, incapacity, or resignation of an
Independent Director, or the vacancy of the Independent Director's seat on the
Corporation's Board of Directors for any reason, a successor Independent
Director shall be appointed by the remaining directors.
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<PAGE>
(d) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(ix) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall not (i)
commingle its assets with those of, or pledge its assets for the benefit of, any
other person or entity; (ii) assume, guarantee or become obligated, or hold out
its credit as being available to satisfy, the liabilities or obligations of any
other person or entity; (iii) reduce its capital below an amount which is
adequate in light of its contemplated business operations; (iv) acquire
obligations or securities of, or make loans or advances to, any affiliate; (v)
incur or assume any indebtedness other than (A) the indebtedness underlying the
Loan Agreement (B) the indebtedness underlying the Indenture, and (C)
liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article III and the last sentence of
Article VIII of these Amended Articles; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in these Amended Articles. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
ARTICLE IV
The number of shares the Corporation is authorized to issue is One
Thousand (1,000) each with the par value of Zero Dollars and One Cent ($0.01).
The Board of Directors shall fix the consideration to be received for each
share. Such consideration shall consist of any tangible or intangible property
or benefit to the Corporation, including cash, promissory notes, services
performed or written promises to perform such services and shall have a value,
in the judgment of the directors, equivalent to or greater than the full par
value of the shares.
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<PAGE>
ARTICLE V
The number of directors of the Corporation my be fixed by the Bylaws of
the Corporation. The number of directors constituting the Board of Directors
shall be at least one (1), and the name and address of the director of the
Corporation to serve until the next annual meeting of the shareholders or until
a successor is elected or qualified is:
Name Address
Robert M. Flanders 3445 Peachtree Road, NE, Suite 700
Atlanta, GA 30326
ARTICLE VI
The Board of Directors is expressly authorized to adopt, alter, amend
or repeal the Bylaws of the Corporation subject to the limitations set forth in
these Amended Articles. Election of directors need not be by written ballot
unless and to the extent provided in the Bylaws of the Corporation.
ARTICLE VII
The business and affairs of the Corporation shall be managed and
regulated by the board of directors of the Corporation. No director of the
Corporation shall be personally liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duties as a director, except for
liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not on good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 607.144 of the Florida General Corporation Act or (iv) for any
transaction from which the director derived an improper personal benefit. If the
Florida General Corporation Act is amended after the date of these Amended
Articles to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Florida General Corporation Act, as so amended.
The rights and authority conferred in this Article VII shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, provision of these Amended Articles or Bylaws of the
Corporation, agreement, vote of stockholders or disinterested directors, or
otherwise.
ARTICLE VIII
The Corporation shall indemnify any officer or director, or any former
officer or director of the Corporation, to the fullest extent permitted by law.
The foregoing right of indemnification shall not be exclusive of any other
rights to which any director, officer, employee or agent may be entitled as a
matter of law or which he may be lawfully granted. The Corporation's obligation
to indemnify its officers and directors pursuant to this Article shall be
subordinate in all respects to the obligations of the Corporation arising out of
the Loan
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<PAGE>
Documents and shall not constitute a claim against the Corporation to the extent
that the Corporation is unable to pay any amounts it is obligated to pay under
the Loan Documents.
ARTICLE IX
Subject to the provisions of Article III(e)(vi), the Corporation
reserves to its shareholders the right to amend or repeal any provisions now or
hereafter contained in these Amended Articles. Any rights which these Amended
Articles may confer upon the Corporation may be modified or canceled by a vote
of the shareholders to amend or repeal said Amended Articles.
The foregoing Second Amended and Restated Articles of Incorporation
were duly adopted and approved by the sole shareholder and the Board of
Directors of the Corporation by unanimous written consent in lieu of a meeting,
pursuant to Sections 607.0704 and 607.0821 of the Florida General Corporation
Act, as of July 22nd, 1999. The number of votes cast was sufficient for
approval.
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<PAGE>
IN WITNESS WHEREOF, the undersigned has executed these Second Amended
and Restated Articles of Incorporation this 23rd day of July, 1999.
SERVICO SILVER SPRING, INC.
By: /s/ Thomas S. Gryboski
--------------------------
Name: Tom Gyboski
Title: Assistant Secretary
<PAGE>
Exhibit 3.17.2
BYLAWS
OF
SERVICO SILVER SPRING, INC.,
a Florida corporation
ARTICLE I
OFFICES
Section 1. The location of the registered office of the corporation
shall be as stated in the Articles of Incorporation, which location may be
changed from time to time by the board of directors.
Section 2. The corporation may also have offices or branches at such
other places, both within and without the State of Florida, as the board of
directors may from time to time determine or as the business of the corporation
may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. All meetings of the shareholders shall be held at the
registered office of the corporation, or at such other place either within or
without the State of Florida as shall be designated from time to time by the
board of directors and stated in the notice of the meeting.
Section 2. Annual meetings of shareholders shall be during the third
month of each fiscal year of the corporation, at such date as determined by the
board of directors, or at such other date as the board of directors deems
appropriate, and at such time and place as designated in the notice of the
meeting. At the annual meeting, the shareholders shall elect a board of
directors and transact such other business as may properly be brought before the
meeting. If the annual meeting is not held on the date designated therefor, the
board of directors shall cause the meeting to be held as soon thereafter as
convenient.
Section 3. Special meetings of the shareholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the Articles of
Incorporation, may be called by the chairman of the board or president, and
shall be called by the chairman of the board or president at the request in
writing of a majority of the board of directors or at the request in writing of
the holders of not less than 10% of all the shares entitled to vote at a
meeting. Such request shall state the purpose or purposes of the proposed
meeting.
<PAGE>
Section 4. The officer or agent who has charge of the stock transfer
book for shares of the corporation shall make and certify a complete list of the
shareholders entitled to vote at a shareholders' meeting, or any adjournment
thereof. Such list shall be arranged alphabetically and by voting group and
shall show the address of each shareholder and the number of shares registered
in the name of each shareholder. The list shall also be produced and kept at the
time and place of the meeting during the whole time thereof, and may be
inspected by any shareholder who is present.
Section 5. Except as may be provided by statute, written notice of
an annual or special meeting of shareholders stating the place, date and hour of
the meeting and the purpose or purposes for which the meeting is called, shall
be delivered, either personally or by first-class mail, not less than 10 nor
more than 60 days before the date of the meeting, to each shareholder of record
entitled to vote at such meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail addressed to the shareholder
at his address as it appears on the stock transfer books of the corporation with
postage thereon prepaid.
Section 6. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the shareholders for the
transaction of business except as otherwise expressly required by statute or by
the Articles of Incorporation. All shareholders present in person or represented
by proxy at such meeting may continue to do business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum. If, however, such quorum shall not be initially present at any meeting
of shareholders, a majority of the shareholders entitled to vote thereat shall
nevertheless have power to adjourn the meeting from time to time and to another
place, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting, at which a quorum
shall be present or represented, any business may be transacted which might have
been transacted at the meeting as originally called. If after the adjournment a
new record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each shareholder of record entitled to vote at the
meeting.
Section 7. When an action other than the election of directors is to
be taken by vote of the shareholders, it shall be authorized by the affirmative
vote of a majority of the shares represented at the meeting and entitled to vote
on the subject matter, unless a greater plurality is required by express
requirement of the statutes or of the Articles of Incorporation, in which case
such express provision shall govern and control the decision of such question.
"Shares represented at the meeting" shall be determined as of the time the
existence of the quorum is deter-
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<PAGE>
mined. Except as otherwise expressly required by the Articles of Incorporation,
directors shall be elected by a plurality of the votes cast at an election.
Section 8. Except as otherwise provided by law, each shareholder
shall at every meeting of the shareholders be entitled to one vote in person or
by proxy for each share of the capital stock having voting power held by such
shareholder except as otherwise expressly required in the Articles of
Incorporation. A vote may be cast either orally or in writing. Each proxy shall
be in writing and signed by the shareholder or his authorized agent or
representative. A proxy is not valid after the expiration of 11 months after its
date unless the person executing it specifies therein the length of time for
which it is to continue in force. Unless prohibited by law, a proxy otherwise
validly granted by telegram shall be deemed to have been signed by the granting
shareholder. All questions regarding the qualification of voters, the validity
of proxies and the acceptance or rejection of votes shall be decided by the
presiding officer of the meeting.
Section 9. Attendance of a person at a meeting of shareholders in
person or by proxy constitutes a waiver of notice of the meeting except where
the shareholder, at the beginning of the meeting, objects to holding the meeting
or transacting business at the meeting.
Section 10. Unless otherwise provided by the Articles of
Incorporation, any action required to be taken at any annual or special meeting
of the shareholders, or any other action which may be taken at any annual or
special meeting of the shareholders may be taken without a meeting, without
prior notice, and without a vote if a consent in writing, setting forth the
action so taken, shall be signed by holders of outstanding stock having not less
than the minimum number of votes that would be necessary to authorize such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Within 10 days after obtaining such authorization by written consent,
notice shall be given to those shareholders who have not consented in writing.
The notice shall fairly summarize the material features of the authorized action
and, if the action is of a type for which dissenters' rights are provided for by
statute, the notice shall contain a clear statement of the right of shareholders
dissenting therefrom to be paid the fair value of their shares upon compliance
with further provisions of such statute regarding the rights of dissenting
shareholders.
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<PAGE>
ARTICLE III
DIRECTORS
Section 1. The business and affairs of the corporation shall be
managed by or under the direction of its board of directors which may exercise
all such powers of the corporation and do all such lawful acts and things as are
not by statute or by the Articles of Incorporation or by these Bylaws directed
or required to be exercised or done by the shareholders.
Section 2. The number of directors which shall constitute the whole
board shall be not less than one nor more than seven. The number of directors
shall be determined from time to time by resolution of the board of directors.
In the absence of an express determination by the board, the number of
directors, until changed by the board, shall be that number of directors elected
at the most recently held annual meeting of shareholders or, if no such meeting
has been held, the number elected by the incorporator in the initially filed
Articles of Incorporation. The directors shall be elected at the annual meeting
of the shareholders, except as provided in Section 3 of this article, and each
director elected shall hold office until his successor is duly elected and
qualified or until his death, resignation or removal. Directors need not be
shareholders or officers of the corporation.
Section 3. Vacancies and newly created directorships resulting from
any increase in the authorized number of directors may be filled by the
affirmative vote of a majority of the directors then in office, though less than
a quorum, or by a sole remaining director, or by the shareholders, and the
directors so chosen shall hold office until the next annual election of
directors by the shareholders and until their successors are duly elected and
qualified or until their death, resignation or removal. Any director may be
removed, with or without cause, by the shareholders at a meeting of the
shareholders called expressly for that purpose.
Section 4. The board of directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Florida. Unless otherwise restricted by the Articles of Incorporation, members
of the board of directors, or any committee designated by the board, may
participate in a meeting of the board or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant to this section shall constitute presence in person at such meeting.
Section 5. Regular meetings of the board of directors may be held at
such time and at such place as shall from time to time be determined by the
board of directors or by the chairman of
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<PAGE>
the board or president. Any notice given of a regular meeting need not specify
the business to be transacted or the purpose of the meeting.
Section 6. Special meetings of the board may be called by the
chairman of the board or president on four days' notice to each director by mail
or 24 hours' notice either personally or by telephone, telegram or facsimile
transmission; special meetings shall be called by the chairman of the board or
president in like manner and on like notice on the written request of two
directors. The notice need not specify the business to be transacted or the
purpose of the special meetings. The notice shall specify the place of the
special meeting.
Section 7. At all meetings of the board, a majority of the number of
directors then serving shall constitute a quorum for the transaction of
business. At all meetings of a committee of the board a majority of the
directors then members of the committee in office shall constitute a quorum for
the transaction of business. The act of a majority of the members present at any
meeting at which there is a quorum shall be the act of the board of directors or
the committee, unless the vote of a larger number is specifically required by
statute, by the Articles of Incorporation, or by these Bylaws. If a quorum shall
not be present at any meeting of the board of directors or a committee, the
members present thereat may adjourn the meeting from time to time and to another
place without notice other than announcement at the meeting, until a quorum
shall be present.
Section 8. Unless otherwise provided by the Articles of
Incorporation, any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting, if, before or after the action, all members of the board or committee
consent thereto in writing. The written consents shall be filed with the minutes
of proceedings of the board or committee. Such consents shall have the same
effect as a vote of the board or committee for all purposes.
Section 9. A majority of the full board of directors may, by
resolution, designate one or more committees, each committee to consist of one
or more of the directors of the corporation. The board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. Any such committee, to the
extent provided in the resolution of the board, shall have and may exercise the
powers of the board of directors in the management of the business and affairs
of the corporation; provided, however, such a committee shall not have the power
or authority to:
(a) approve or recommend to shareholders actions or proposals
required by statute to be approved by the shareholders,
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<PAGE>
(b) fill vacancies on the board of directors or any committee
thereof,
(c) adopt, amend or repeal the Bylaws of the corporation,
(d) authorize or approve the reacquisition of shares unless pursuant
to a general formula or method specified by the board of directors, or
(e) authorize or approve the issuance or sale or contract for the
sale of shares, or determine the designation and relative rights, preferences
and limitations of a voting group, except that the board of directors may
authorize a committee (or a senior executive officer of the corporation) to do
so within limits specifically prescribed by the board of directors.
Such committee or committees shall have such name or names as may be determined
from time to time by resolution adopted by the board of directors. A committee,
and each member thereof, shall serve at the pleasure of the board.
Section 10. Each committee shall keep regular minutes of its
meetings and report the same to the board of directors when required.
Section 11. By resolution of the board of directors and irrespective
of any personal interest of any director, the board may establish reasonable
compensation of directors for services to the corporation as directors, officers
or members of a committee. No such payment shall preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor.
Section 12. A director may resign by written notice to the
corporation. The resignation is effective upon its delivery to the corporation
or a subsequent time as set forth in the notice of resignation.
Section 13. Attendance of a director at a meeting constitutes a
waiver of notice of the meeting except where a director states, at the beginning
of the meeting or promptly upon arrival at the meeting, any objection to the
transaction of business because the meeting is not lawfully called or convened.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
Articles of Incorporation or of these Bylaws,
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<PAGE>
written notice is required to be given to any director, committee member or
shareholder, such notice may be (but is not required to be) given in writing by
mail (registered, certified or other first class mail) addressed to such
director, shareholder or committee member at his address as it appears on the
records of the corporation, with postage thereon prepaid. Such notice shall be
deemed to be given at the time when the same shall be deposited in a post office
or official depository under the exclusive care and custody of the United States
postal service.
Section 2. Whenever any notice is required to be given under the
provision of the statutes or of the Articles of Incorporation or of these
Bylaws, a waiver thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the shareholders, directors or a
committee, need be specified in any written waiver of notice.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the
board of directors at its first meeting after each annual meeting of
shareholders. There shall be a president, a secretary and a treasurer. The board
of directors may also create and fill the offices of chairman of the board and
vice-chairman of the board, and may choose one or more vice-presidents, one or
more assistant secretaries, and one or more assistant treasurers. Any number of
offices may be held by the same person, but the board by resolution may require
that at least two persons shall be officers for purposes of compliance with
Article VI, Section 1, hereof.
Section 2. The board of directors may from time to time appoint such
other officers and agents as it shall deem necessary who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the board.
Section 3. The salaries of all officers of the corporation shall be
fixed by the board of directors.
Section 4. The officers of the corporation shall hold office at the
pleasure of the board of directors. Any officer elected or appointed by the
board of directors may be removed at any time by the board of directors with or
without cause whenever, in its judgment, the best interests of the corporation
will be served thereby. Any vacancy occurring in any office of the corporation
by death, resignation, removal or otherwise shall be filled by the board of
directors. An officer may resign by written
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<PAGE>
notice to the corporation. The resignation is effective upon its delivery to the
corporation or at a subsequent time specified in the notice of resignation.
Section 5. Unless otherwise provided by resolution of the board of
directors, the president shall be the chief executive officer of the
corporation, shall, in the absence or non-election of a chairman or vice
chairman of the board of directors, preside at all meetings of the shareholders
and the board of directors (if he shall be a member of the board), shall have
general and active management of the business and affairs of the corporation and
shall see that all orders and resolutions of the board of directors are carried
into effect. He shall execute on behalf of the corporation, and may affix or
cause the corporate seal (if adopted by the board of directors) to be affixed
to, all instruments requiring such execution except to the extent the signing
and execution thereof shall be expressly delegated by the board of directors to
some other officer or agent of the corporation, and he shall have the authority
to vote any shares of stock owned by the corporation.
Section 6. The vice-presidents shall act under the direction of the
president and in the absence or disability of the president shall perform the
duties and exercise the powers of the president. They shall perform such other
duties and have such other powers as the president or the board of directors may
from time to time prescribe. The board of directors may designate one or more
executive vice-presidents or may otherwise specify the order of seniority of
the vice-presidents. The duties and powers of the president shall descend to
the vice-presidents in such specified order of seniority.
Section 7. The secretary shall act under the direction of the
president. Subject to the direction of the president he shall attend all
meetings of the board of directors and all meetings of the shareholders and
record the proceedings. He shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the shareholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the president or the board of
directors. He shall keep in safe custody the seal of the corporation, if a
corporate seal is adopted by the board of directors. When authorized by the
president or the board of directors, he shall cause the seal of the corporation
to be affixed to any instrument requiring it. He shall be responsible for
maintaining the stock transfer book and minute book of the corporation and shall
be responsible for their updating.
Section 8. The assistant secretaries shall act under the direction
of the president. In the order of their seniority in office, unless otherwise
determined by the president or the board of directors, they shall, in the
absence or disability of the secretary, perform the duties and exercise the
powers of the
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<PAGE>
secretary. They shall perform such other duties and have such other powers as
the president or the board of directors may from time to time prescribe.
Section 9. The treasurer shall act under the direction of the
president. Subject to the direction of the president he shall have custody of
the corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the board of
directors. He shall disburse the funds of the corporation as may be ordered by
the president or the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation. He may affix or cause to be affixed the seal of the corporation to
documents so requiring the seal, if a corporate seal is adopted by the board of
directors.
Section 10. The assistant treasurers in the order of their seniority
of office, unless otherwise determined by the president or the board of
directors shall, in the absence or disability of the treasurer, perform the
duties and exercise the powers of the treasurer. They shall perform such other
duties and have such other powers as the president or the board of directors may
from time to time prescribe.
Section 11. To the extent the powers and duties of the several
officers are not provided from time to time by resolution or other directive of
the board of directors or by the president (with respect to other officers), the
officers shall have all powers and shall discharge the duties customarily and
usually held and performed by like officers of the corporations similar in
organization and business purposes to this corporation.
ARTICLE VI
CERTIFICATES OF STOCK
AND SHAREHOLDERS OF RECORD
Section 1. The shares of stock of the corporation shall be
represented by certificates signed by, or in the name of the corporation by, the
president or a vice-president and by the secretary or an assistant secretary of
the corporation. Each holder of stock in the corporation shall be entitled to
have such a certificate certifying the number of shares owned by him in the
corporation.
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<PAGE>
Section 2. Any of or all the signatures on the certificate may be a
facsimile if the certificate is countersigned by a transfer agent or registered
by a registrar other than the corporation itself or its employee. In case any
officer who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer at the date of issue. The seal of the corporation or a facsimile
thereof may, but need not, be affixed to the certificates of stock.
Section 3. The board of directors may direct a new certificate for
shares to be issued in place of any certificate theretofore issued by the
corporation alleged to have been lost or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate of stock to be
lost or destroyed. When authorizing such issue of a new certificate, the board
of directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost or destroyed certificate, or his legal
representative, to give the corporation a bond in such sum as it may direct as
indemnity against any claim that may be made against the corporation with
respect to the certificate alleged to have been lost or destroyed.
Section 4. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its stock
transfer book for shares of the corporation.
Section 5. In order that the corporation may determine the
shareholders entitled to notice of, or to vote at, any meeting of shareholders
or any adjournment thereof, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or for the purpose of any other
action, the board of directors may fix, in advance, a date as a record date,
which shall not be more than 70 nor less than 10 days before the date of such
meeting, nor more than 70 days prior to any other action. The stock transfer
books of the corporation shall not be closed.
If no record date is fixed:
(a) The record date for determining the shareholders of record
entitled to notice of, or to vote at, a meeting of shareholders shall be at the
close of business on the day on which notice is given, or, if no notice is
given, at the close of business on the day next preceding the day on which the
meeting is held; and
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<PAGE>
(b) the record date for determining shareholders for any other
purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
A determination of shareholders of record entitled to notice or to
vote at a meeting of shareholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered upon its stock transfer book for shares
of the corporation as the owner of shares for all purposes, including voting and
dividends, and shall not be bound to recognize any equitable or other claim to
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of Florida.
ARTICLE VII
INDEMNIFICATION
Section 1. The corporation, to the fullest extent authorized or
permitted by the provisions at 607.0850 Fl.Stat. (other than 607.0850(7)),
Florida Business Corporation Act, as amended (or any amendment or successor
provision thereof or any other statutory provision authorizing or permitting
such indemnification or advancement of expenses which is adopted after the date
this Article VII is adopted), shall indemnify against liability, and advance
expenses to, any person, and his heirs, executors, administrators and legal
representatives, who is or was a party to any proceeding by reason of the fact
that such person is or was a director, officer, employee or agent of the
corporation or is or was serving as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust or other enterprise at
the request of the corporation. Officers and directors who are so entitled to be
indemnified shall be paid their expenses in advance of a final disposition of
the proceeding to the maximum extent authorized or permitted by the provisions
of 607.0850(6) Fl.Stat. or any amended or successor section.
Section 2. Article VII, Section 1 of these Bylaws shall not be
construed to mean that indemnification and advancement of expenses by the
corporation pursuant to 607.0850(7) Fl.Stat. is not permitted. The corporation
may indemnify and advance expenses to any person pursuant to Section 607.0850(7)
Fl.Stat., or any amended or successor section, to the extent and in the manner
desired by the corporation and permitted by law.
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<PAGE>
Section 3. Terms used in this Article VII shall have the meanings
ascribed to them in 607.0850(11) Fl.Stat. or any amended or successor section.
ARTICLE VIII
GENERAL PROVISIONS
Section 1. All checks, drafts or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate. All funds of
the corporation not otherwise employed shall be deposited from time to time to
the credit of the corporation in such banks, trust companies or other
depositories as the board of directors may from time to time designate.
Section 2. The fiscal year of the corporation shall be fixed from
time to time by resolution of the board of directors, but shall end on December
31st of each year if not otherwise fixed by the board.
Section 3. The board of directors may adopt a corporate seal for the
corporation. The corporate seal shall have inscribed thereon the name of the
corporation and the words "Corporate Seal, Florida." The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise. Except as otherwise provided by law, the failure to affix the seal of
the corporation to a document shall not affect the validity thereof.
Section 4. The corporation shall keep within or without the State of
Florida books and records of account and minutes of the proceedings of its
shareholders, board of directors and executive committee, if any. The
corporation shall keep at its registered office or at the office of its transfer
agent within or without the State of Florida a stock transfer book for shares of
the corporation containing the names and addresses of all shareholders, the
number, class and series of shares held by each and the dates when they
respectively became holders of record thereof. Any of such stock transfer book,
books, records or minutes may be in written form or in any other form capable of
being converted into written form within a reasonable time.
Section 5. These Bylaws shall govern the internal affairs of the
corporation, but only to the extent they are consistent with law and the
Articles of Incorporation. Nothing contained in the Bylaws shall, however,
prevent the imposition by contract of greater voting, notice or other
requirements than those set forth in these Bylaws.
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ARTICLE IX
AMENDMENTS
Section 1. The Bylaws may be amended or repealed, or new Bylaws may
be adopted, by action of either the shareholders or the board of directors. The
shareholders may from time to time specify particular provisions of the Bylaws
which may not be altered or repealed by the board of directors.
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Exhibit 3.18.1
SECOND AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
SERVICO WEST PALM BEACH, INC.
Pursuant to Sections 607.1006 and 607.1007 of the Florida General
Corporation Act (the "Act"), SERVICO WEST PALM BEACH, INC., a Florida
corporation (the "Corporation"), hereby executes and submits for filing with the
Department of State, State of Florida, these Second Amended and Restated
Articles of Incorporation (the "Amended Articles"), to read as follows:
ARTICLE I
The corporate name that satisfied the requirements of Section 607.0401
is SERVICO WEST PALM BEACH, INC.
ARTICLE II
The street address of the principal office of the Corporation and its
mailing address is 3445 Peachtree Road, N.E., Two Live Oak Center, Suite 700,
Atlanta, GA 30326.
ARTICLE III
(a) The purpose for which the Corporation is organized is limited to:
(i) acquiring, owning, leasing, operating, using and managing that certain real
property commonly known as the Sheraton West Palm Beach, located at 630
Clearwater Park Road, West Palm Beach, Florida 33401 (the "Property"); (ii)
entering into and performing its obligations under the credit agreement, among
Lodgian Financing Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel
Group, LLC, Servico, Inc. and other affiliated entities, as affiliate
guarantors, the initial lenders and initial issuing bank named therein, the
collateral agent, the administrative agent, Morgan Stanley Senior Funding, Inc.,
as co-lead arranger, joint-book manager and syndication agent and Lehman
Brothers, as co-lead arranger, joint-book manager and documentation agent
relating to the financing or refinancing of the Property (the "Loan Agreement")
which provides the lender thereunder with a first priority lien on the Property,
any promissory-note evidencing indebtedness incurred pursuant to the Loan
Agreement, any mortgage securing such indebtedness and encumbering the Property
(the "Mortgage") and any other documents securing such indebtedness and any
related collateral documents, each as amended (or pursuant to a consent obtained
in accordance with the terms thereof) (collectively, the "Loan Documents");
(iii) entering into and performing its obligations under the Indenture (the
"Indenture"), among Lodgian Financing Corp, as issuer, Lodgian, Inc., the
Subsidiary Guarantors defined therein and Bankers Trust Company, as trustee,
relating to the issuance of the 12 1/4% Senior Subordinated Notes due 2009 and
the Guarantee in favor of the holders of the Notes and (iv) transacting any and
all lawful business that is incident and necessary or appropriate to the
ownership and to the
<PAGE>
management of the Property for which a corporation may be incorporated under the
laws of the State of Florida.
(b) Notwithstanding any other provision of these Amended Articles and
any provision of law that otherwise so empowers the Corporation, until such time
as the Property is released from the lien of the Mortgage, the Corporation shall
not, without the unanimous affirmative vote of the members of its Board of
Directors, (i) amend, alter, change, repeal or adopt any resolution setting
forth a proposed amendment to, any provision of these Articles of Incorporation,
(ii) dissolve or liquidate, in whole or in part, consolidate or merge with or
into any other entity or convey, sell or transfer its properties and assets
substantially as an entirety to any entity, (iii) file a voluntary petition or
otherwise initiate, or consent to, proceedings for the Corporation to be
adjudicated insolvent or seeking an order for relief as a debtor under the
United States Bankruptcy Code, as amended (11 U.S.C. Section 101 ET SEQ.), or
(iv) file any petition, or consent to any petition, seeking any composition,
reorganization, readjustment, liquidation, dissolution or similar relief under
the present or any future federal bankruptcy laws or any other present or future
applicable federal, state or other statute or law relative to bankruptcy,
insolvency or other relief for debtors; or (v) seek or consent to the
appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, or liquidator (or other similar official) of the Corporation or of
all or any substantial part of the properties and assets of the Corporation, or
(vi) make any general assignment for the benefit of creditors, or (vii) admit in
writing its inability to pay its debts generally as they become due, or (viii)
declare or effect a moratorium on its debt or take any corporate action in
furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all times until
the Property is released from the lien of the Mortgage, include an independent
director (the "Independent Director"). The Independent Director shall be a
person who is not at the time of appointment and who has not at any time during
the prior five years been and who is not while serving as the Independent
Director (i) a director, stockholder, officer or employee of the Corporation or
any affiliates thereof, other than with respect to such person's service as an
Independent Director of the Corporation and such person's service in similar
"Independent Director" positions for affiliates of the Corporation; (ii) a
creditor, customer, supplier, independent contractor, manager or any other
person who derives more than 10% of its gross revenues from its activities with
the Corporation or any affiliates thereof; (iii) a person controlling any such
stockholder, creditor, customer, supplier, independent contractor, manager or
other person; (iv) the legal or beneficial owner, at any time while serving as
director of the Corporation, of any beneficial interest in the Corporation; or
(v) a member of the immediate family of any such stockholder, officer, employee,
creditor, customer, supplier, director, independent contractor, manager or any
other person of the Corporation. As used herein, the term "affiliate" means any
person controlling, under common control with, or controlled by the person in
question, and the term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a person, whether through ownership of voting securities, by contact or
otherwise. In the event of the death, incapacity, or resignation of an
Independent Director, or the vacancy of the Independent Director's seat on the
Corporation's Board of Directors for any reason, a successor Independent
Director shall be appointed by the remaining directors.
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(d) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(ix) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall not (i)
commingle its assets with those of, or pledge its assets for the benefit of, any
other person or entity; (ii) assume, guarantee or become obligated, or hold out
its credit as being available to satisfy, the liabilities or obligations of any
other person or entity; (iii) reduce its capital below an amount which is
adequate in light of its contemplated business operations; (iv) acquire
obligations or securities of, or make loans or advances to, any affiliate; (v)
incur or assume any indebtedness other than (A) the indebtedness underlying the
Loan Agreement (B) the indebtedness underlying the Indenture, and (C)
liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article III and the last sentence of
Article VI of these Amended Articles; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in these Amended Articles. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
ARTICLE IV
The number of shares the Corporation is authorized to issue is One
Thousand (1,000) each with the par value of Zero Dollars and One Cent ($0.01).
ARTICLE V
The street address of the registered office of the Corporation is c/o
CT Corporation System, 1200 S. Pine Island Road, Suite 250, Plantation, Florida
33324, and the name of the registered agent at such address is C T Corporation
System.
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ARTICLE VI
The Corporation shall indemnify any officer or director, or any former
officer or director of the Corporation, to the fullest extent permitted by law.
The foregoing right of indemnification shall not be exclusive of any other
rights to which any director, officer, employee or agent may be entitled as a
matter of law or which he may be lawfully granted. The Corporation's obligation
to indemnify its officers and directors pursuant to this Article shall be
subordinate in all respects to the obligations of the Corporation arising out of
the Loan Documents and shall not constitute a claim against the Corporation to
the extent that the Corporation is unable to pay any amounts it is obligated to
pay under the Loan Documents.
The foregoing Second Amended and Restated Articles of Incorporation
were duly adopted and approved by the sole shareholder and the Board of
Directors of the Corporation by unanimous written consent in lieu of a meeting,
pursuant to Sections 607.0704 and 607.0821 of the Florida General Corporation
Act, as of July 22nd, 1999. The number of votes cast was sufficient for
approval.
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<PAGE>
IN WITNESS WHEREOF, the undersigned has executed these Second Amended
and Restated Articles of Incorporation this 23rd day of July, 1999.
SERVICO WEST PALM BEACH, INC.
By: /s/ Thomas S. Gryboski
--------------------------
Name: Tom Gyboski
Title: Assistant Secretary
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<PAGE>
Exhibit 3.18.2
SERVICO WEST PALM BEACH, INC.
* * * * *
BY-LAWS
* * * * *
ARTICLE I
OFFICES
Section 1. The registered office shall be located at 1601 BELVEDERE
ROAD, SUITE 501S, WEST PALM BEACH, FLORIDA 33406. The registered agent is Robert
D. Ruffin.
Section 2. The corporation may also have offices at such other
places both within and without the State of Florida as the board of directors
may from time to time determine or the business of the corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of
directors shall be held on such day and at such hour as may be fixed from time
to time by the board of directors. Said meetings may also be held at such other
place either within or without the State of Florida as shall be designated from
time to time by the board of directors and stated in the notice of the meeting.
Section 2. Annual meetings of shareholders, commencing with the year
1998, shall be held on the Second Monday in January unless that day is a legal
holiday, and if a legal holiday, then on the next secular day following, at
10:00 am., at which they shall elect by a plurality vote a board of directors,
and transact such other business as may properly be brought before the meeting.
Section 3. Written or printed notice of the annual meeting stating
the place, day and hour of the meeting shall be delivered not less than ten nor
more than fifty days before the date of the meeting, either personally or by
mail, by or at the direction of the president, the secretary, or the officer or
persons calling the meeting, to each shareholder of record entitled to vote at
such meeting.
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. Special meetings of shareholders for any purpose other
than the election of directors may be held at such time and place within or
without the state of Florida as shall be stated in the notice of the meeting or
in a duly executed waiver of notice thereof.
Section 2. Special meetings of the shareholders, for any purposes,
unless otherwise prescribed by statute or by the articles of incorporation, may
be called by the president, the board of
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directors, or the holders of not less than one-tenth of all the shares entitled
to vote at the meeting.
Section 3. Written or printed notice of a special meeting stating
the place, day and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than fifty days
before the date of the meeting, either personally or by mail, by or at the
direction of the president, the secretary, or the officer or persons calling the
meeting, to each shareholder of record entitled to vote at such meeting.
Section 4. The business transacted at any special meeting of
shareholders shall be limited to the purposes stated in the notice.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of stock issued
and outstanding and entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by statute or by the articles of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the shareholders, the shareholders present in person or
represented by proxy shall have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented any business may be transacted which might have
been transacted at the meeting as originally notified.
Section 2. If a quorum is present, the affirmative vote of a
majority of the shares of stock represented at the meeting shall be the act of
the shareholders unless the vote of a greater number of shares of stock is
required by law or the articles of incorporation.
Section 3. Each outstanding share of stock, having voting power,
shall be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. A shareholder may vote either in person or by proxy executed in
writing by the shareholder or by his duly authorized attorney-in-fact.
Section 4. Any action required to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the shareholders entitled
to vote with respect to the subject matter thereof.
ARTICLE V
DIRECTORS
Section 1. The Board of Directors of the Corporation shall consist
of one (1) member. The number of directors may be either increased or decreased
from time to time by
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resolution of the Board of Directors, but shall never be less than one (1).
Directors need not be residents of the State of Florida nor shareholders of the
corporation. The directors, other than the first board of directors, shall be
elected at the annual meeting of the shareholders, and each directors elected
shall serve until the next succeeding annual meeting and until his successor
shall have been elected and qualified. The first board of directors shall hold
office until the first annual meeting of shareholders.
Section 2. Any vacancy occurring in the board of directors may be
filled by the shareholders at an annual or a special meeting or by the
affirmative vote of a majority of the remaining directors though less than a
quorum of the board of directors. A director elected to fill a vacancy shall be
elected for the unexpired portion of the terms of his predecessor in office.
Any directorship to be filled by reason of an increase in the number
of directors may be filled by election at an annual meeting or at a special
meeting of shareholders called for that purpose. A director elected to fill a
newly created directorship shall serve until the next succeeding annual meeting
of shareholders and until his successor shall have been elected and qualified.
Any directorship to filled by reason of an increase in the number of directors
may also be filled by the board of directors for a term of office until the next
election of directors by shareholders; provide no more than two directorships
may be so filled during a period between any two successive annual meetings of
shareholders.
Whenever the holders of any class or series of shares are entitled
to elect one or more directors by the provisions of the articles of
incorporation, any vacancies in such directorships and any newly created
directorships of such class of series to be filled by reason of an increase in
the number of such directors may be filled by the affirmative vote of a majority
of the directors elected by such class or series then in office or by a sole
remaining director so elected, or by the vote of the holders of the outstanding
shares of such class or series, and such directorships shall not in any case be
filled by the vote of the remaining directors or the holders of the outstanding
shares as a whole unless otherwise provided in the articles of incorporation.
Section 3. The business affairs of the corporation shall be managed
by its board of directors which may exercise all such powers of the corporation
and do all such lawful acts and things as are not by statute or by the articles
of incorporation or by these by-laws directed or required to be exercised or
done by the shareholders.
Section 4. The directors may keep the books of the corporation,
except such as are required by law to be kept within the state, outside of the
State of Florida, at such place or places as they may from time to time
determine.
Section 5. The board of directors, by the affirmative vote of a
majority of the directors then in office, and irrespective of any personal
interest to any of its members, shall have authority to establish reasonable
compensation of all directors for services to the corporation as directors,
officers or otherwise.
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ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular or special,
may be held either within or without the State of Florida.
Section 2. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the vote of
the shareholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting provided a quorum shall be present, or it may convene at such place and
time as shall be fixed by the consent in writing of all the directors.
Section 3. Regular meetings of the board of directors may be held
upon such notice, or without notice, and at such time and at such place as shall
from time to time be determined by the board.
Section 4. Special meetings of the board of directors may be called
by the president on two days' notice to each director, either personally or by
mail or by telegram; special meeting shall be called by the president or
secretary in like manner and on like notice on the written request of two
directors.
Section 5. Attendance of a director at any meeting shall constitute
a waiver of notice of such meeting, except where a director attends for the
express purpose of objecting to the transaction of any business because the
meeting as not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the board
of directors need be specified in the notice or waiver of notice of such
meeting.
Section 6. A majority of the directors shall constitute a quorum for
the transaction of business unless greater number is required by law or by the
articles of incorporation. The act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the board of directors,
unless the act of a greater number is required by statute or by the articles of
incorporation. If a quorum shall not be present at any meeting of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 7. Unless otherwise restricted by the articles of
incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting, if all members of the board of committee, as the case may be,
consent thereto in writing which shall set forth the action taken ad be signed
by all members of the board of directors or of the committee as the case may be.
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ARTICLE VII
COMMITTEES OF DIRECTORS
Section 1. The board of directors, by resolution adopted by a
majority of the full board of directors, may designate from among its members an
executive committee and one or more other committees, each of which shall be
comprised of one or more members and, to the extent provided in the resolution,
shall have and may exercise all of the authority of the board of directors,
except that no such committee shall have the authority of the board of directors
in reference to amending the articles of incorporation, approving a plan of
merger or consolidation, recommending to the shareholders the sale, lease, or
exchange of all or substantially all of the property and assets of the
corporation otherwise than in the usual and regular course of its business,
recommending to the shareholders a voluntary dissolution of the corporation or a
revocation thereof, amending, altering, or repealing the by-laws of the
corporation or adopting new by-laws for the corporation, filling vacancies in
the board of directors to be filled by reason of an increase in the number of
directors, electing or removing officers or members of an committee, fixing the
compensation of any member of a committee, or altering or repealing any
resolution of the board of directors which by its terms provides that it shall
not be so amendable or repealable; and, unless the resolution expressly so
provides, no committee shall have the power of authority to declare a dividend
or to authorize the issuance of shares of the corporation.
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes of the
articles of incorporation or of these by-laws, notice is required to be given to
any director or shareholder, it shall not be construed to mean personal notice,
but such notice may be given in writing, by mail, addressed to such director or
shareholder, at his address as it appears an the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telegram.
Section 2. Whenever any notice whatever is required to be given
under the provisions of the statutes or under the provisions of the articles of
incorporation or these by-laws, a waiver thereof in writing signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
ARTICLE IX
OFFICERS
Section 1. The offices of the corporation shall be chosen by the
board of directors and shall be a president and a secretary. The board of
directors may also elect or appoint such other officers, including assistant
officers and agents as may be deemed necessary.
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Section 2. The board of directors at its first meeting after each
annual meeting of shareholders shall choose a president and a secretary neither
of whom need be a member of the board.
Section 3. The board of directors may also appoint such other
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall
exercise such powers and perform such duties as shall be determined from time to
time by the board of directors.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officers elected or appointed by
the board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the shareholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
THE VICE PRESIDENTS
Section 8. The vice-president, if there is one, or if there shall be
more than one, the vice-presidents in the order determined by the board of
directors, shall, in the absence of disability of the president, perform the
duties and exercise the powers of the president and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the shareholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the shareholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He
6
<PAGE>
shall have custody of the corporate seal of the corporation and he, or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature or by the
signature of such assistance secretary. The board of directors may give general
authority to any other officer to affect the affixing by his signature.
Section 10. The assistant secretary, if there is one, or if there be
more than one, the assistant secretaries in the order determined by the board of
directors, shall, in the absence or disability of the secretary, perform the
duties and exercise the powers of the secretary and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer, if there is one, shall have the custody
of the corporate funds and securities and shall keep full and accurate accounts
of receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the board of
directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind of his possession or under
his control belonging to the corporation.
Section 14. The assistant treasurer, if there is one, or, if there
shall be more than one, the assistant treasurers in the order determined by the
board of directors, shall, in the absence or disability of the treasurer,
perform the duties and exercise the powers of the treasurer and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
ARTICLE X
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by
certificates signed by the president and secretary or such other officers as may
be elected or appointed, and may be sealed with the seal of the corporation or a
facsimile thereof.
When the corporation is authorized to issue shares of more than one
class there shall
7
<PAGE>
be set forth upon the face or back of the certificate, or the certificate shall
have a statement that the corporation will furnish to any shareholder upon
request and without charge, a full statement of the designations, preferences,
limitations and relative rights of the shares of each class authorized to be
issued and, if the corporation is authorized to issue any preferred or special
class in series, the variations in the relative rights and preferences between
the shares of each such series so far as the same have been fixed and determined
and the relative rights and preferences of subsequent series. When the
corporation is authorized to issue shares of more than one class, every
certificate shall also set forth upon the face or the back of such certificate a
statement that there is set forth in the articles of incorporation on file in
the office of the Secretary of State a full statement of all the designations,
preferences, limitations and relative rights, including voting rights, or the
shares of each class authorized to be issued and the corporation at its
principal place of business or registered office. Every certificate shall have
noted thereon any information required to be set forth by the Florida Business
Corporation Act and such information shall be set forth in the manner provided
in said Act.
Section 2. The signatures of the officers of the corporation upon a
certificate may be facsimiles of the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the corporation itself or an
employee of the corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of its
issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate to be
issued in place of any certificate therefore issued by the corporation alleged
to have been lost or destroyed. When authorizing such issue of a new
certificate, the board of directors, in its discretion and as a condition
precedent to the issuance thereof, may prescribe such terms and conditions as
its deems expedient, and may require such indemnities as its deems adequate, to
protect the corporation from any claim that may be made against it with respect
to any such certificate alleged to have been lost or destroyed
TRANSFERS OF SHARES
Section 4. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate representing shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, a new certificate shall be issued to the person entitled thereto, and
the old certificate canceled and the transaction recorded upon the books of the
corporation.
CLOSING OF TRANSFER BOOKS
Section 5. For the purpose of determining shareholders entitled to
notice of or to vote at any meeting of shareholders, or any adjournment thereof
or entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose the board of
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<PAGE>
directors may provide that the stock transfer books shall be closed for a stated
period but not to exceed, in any case, fifty days. If the stock transfer books
shall be closed for the purpose of determining shareholders entitled to notice
of or to vote at a meeting of shareholders, such books shall be closed for at
least ten days immediately preceding such meeting. In lieu of closing the stock
transfer books, the board of directors may fix in advance a date as the record
date for any such determination of shareholder, such date in any case to be not
more than fifty days and, incase of a meeting of shareholders, not less than ten
days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of shareholders, or
shareholders entitled to receive payment of a dividend, the date on which notice
of the meeting is mailed or the date on which the resolution of the board of
directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof.
REGISTERED SHAREHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize and equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Florida.
LIST OF SHAREHOLDERS
Section 7. The officer or agent having charge of the transfer books
for shares shall make, at least ten days before each meeting of shareholders, a
complete list of the shareholders entitled to vote at such meeting, arranged in
alphabetical order, with the address of each and the number of shares held by
each, which list, for a period of ten days prior to such meeting, shall be kept
on file at the registered office of the corporation and shall be subject to
inspection by any shareholder at any time during usual business hours. Such list
shall also be produced and kept open at the time and place of the meeting and
shall be subject to the inspection of any shareholders during the whole time of
the meeting. The original share ledger or transfer book, or a duplicate thereof,
shall be prima facie evidence as to who are the shareholders entitled to examine
such list or share ledger or transfer book or to vote at any meeting of the
shareholders.
ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the articles of
incorporation relating thereto, if any, dividends may be declared by the board
of directors at any regular or special meeting, pursuant
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<PAGE>
to law. Dividends may be paid in cash, in property or in shares of the capital
stock, subject to any provisions of the articles or incorporation.
Section 2. Before payment of any dividend, there may be set aside
out of any funds of the corporation available for dividends such sum or sums as
the directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time delegate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its organization and the words "Corporate Seal,
Florida." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
ARTICLE XII
AMENDMENTS
Section 1. These by-laws may be altered, amended, or repealed or new
by-laws may be adopted by the affirmative vote of a majority of the board of
directors at any regular or special meeting of the board subject to repeal or
change at any regular or special meeting of shareholders at which a quorum is
present or represented, by the affirmative vote of a majority of the stock
entitled to vote, provided notice of the proposed repeal or change be contained
in the notice of such meeting.
ARTICLE XIII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new
by-laws may be adopted at any regular or special meeting of shareholders at
which a quorum is present or represented, by the affirmative vote of a majority
of the stock entitled to vote, provided notice of the proposed alteration,
amendment or repeal be contained in the notice of such meeting.
Dated: July __, 1997
10
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Exhibit 3.19.1
SECOND AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
SERVICO WINDSOR, INC.
Pursuant to Sections 607.1006 and 607.1007 of the Florida General
Corporation Act (the "Act"), SERVICO WINDSOR, INC., a Florida corporation (the
"Corporation"), hereby executes and submits for filing with the Department of
State, State of Florida, these Second Amended and Restated Articles of
Incorporation (the "Amended Articles"), to read as follows:
ARTICLE I
The name of the Corporation is SERVICO WINDSOR, INC.
ARTICLE II
The address of the principal office and the mailing address of the
Corporation is 3445 Peachtree Road, N.E., Two Live Oak Center, Suite 700,
Atlanta, GA 30326. The name and address of the registered agent is CT
Corporation System, 1200 S. Pine Island Road, Suite 250, Plantation, Florida
33324.
ARTICLE III
(a) The purpose for which the Corporation is organized is limited to:
(i) acquiring, owning, leasing, operating, using and managing that certain real
property commonly known as the Holiday Inn Select Windsor, located at 1855 Huron
Church Road, Windsor, Ontario, Canada N9C2L6 (the "Property"); (ii) entering
into and performing its obligations under the credit agreement, among Lodgian
Financing Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel Group, LLC,
Servico, Inc. and other affiliated entities, as affiliate guarantors, the
initial lenders and initial issuing bank named therein, the collateral agent,
the administrative agent, Morgan Stanley Senior Funding, Inc., as co-lead
arranger, joint-book manager and syndication agent and Lehman Brothers, as
co-lead arranger, joint-book manager and documentation agent relating to the
financing or refinancing of the Property (the "Loan Agreement") which provides
the lender thereunder with a first priority lien on the Property, any
promissory-note evidencing indebtedness incurred pursuant to the Loan Agreement,
any mortgage securing such indebtedness and encumbering the Property (the
"Mortgage") and any other documents securing such indebtedness and any related
collateral documents, each as amended (or pursuant to a consent obtained in
accordance with the terms thereof) (collectively, the "Loan Documents"); (iii)
entering into and performing its obligations under the Indenture (the
"Indenture"), among Lodgian Financing Corp, as issuer, Lodgian, Inc., the
Subsidiary Guarantors defined therein and Bankers Trust Company, as trustee,
relating to the issuance of the 12 1/4% Senior Subordinated Notes due 2009 and
the Guarantee in favor of the holders of the Notes and (iv) transacting any and
all lawful business that is incident and necessary or
<PAGE>
appropriate to the ownership and to the management of the Property for which a
corporation may be incorporated under the laws of the State of Florida.
(b) Notwithstanding any other provision of these Amended Articles and
any provision of law that otherwise so empowers the Corporation, until such time
as the Property is released from the lien of the Mortgage, the Corporation shall
not, without the unanimous affirmative vote of the members of its Board of
Directors, (i) amend, alter, change, repeal or adopt any resolution setting
forth a proposed amendment to, any provision of these Articles of Incorporation,
(ii) dissolve or liquidate, in whole or in part, consolidate or merge with or
into any other entity or convey, sell or transfer its properties and assets
substantially as an entirety to any entity, (iii) file a voluntary petition or
otherwise initiate, or consent to, proceedings for the Corporation to be
adjudicated insolvent or seeking an order for relief as a debtor under the
United States Bankruptcy Code, as amended (11 U.S.C. ss.ss. 101 ET SEQ.), or
(iv) file any petition, or consent to any petition, seeking any composition,
reorganization, readjustment, liquidation, dissolution or similar relief under
the present or any future federal bankruptcy laws or any other present or future
applicable federal, state or other statute or law relative to bankruptcy,
insolvency or other relief for debtors; or (v) seek or consent to the
appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, or liquidator (or other similar official) of the Corporation or of
all or any substantial part of the properties and assets of the Corporation, or
(vi) make any general assignment for the benefit of creditors, or (vii) admit in
writing its inability to pay its debts generally as they become due, or (viii)
declare or effect a moratorium on its debt or take any corporate action in
furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all times until
the Property is released from the lien of the Mortgage, include an independent
director (the "Independent Director"). The Independent Director shall be a
person who is not at the time of appointment and who has not at any time during
the prior five years been and who is not while serving as the Independent
Director (i) a director, stockholder, officer or employee of the Corporation or
any affiliates thereof, other than with respect to such person's service as an
Independent Director of the Corporation and such person's service in similar
"Independent Director" positions for affiliates of the Corporation; (ii) a
creditor, customer, supplier, independent contractor, manager or any other
person who derives more than 10% of its gross revenues from its activities with
the Corporation or any affiliates thereof; (iii) a person controlling any such
stockholder, creditor, customer, supplier, independent contractor, manager or
other person; (iv) the legal or beneficial owner, at any time while serving as
director of the Corporation, of any beneficial interest in the Corporation; or
(v) a member of the immediate family of any such stockholder, officer, employee,
creditor, customer, supplier, director, independent contractor, manager or any
other person of the Corporation. As used herein, the term "affiliate" means any
person controlling, under common control wit, or controlled by the person in
question, and the term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a person, whether through ownership of voting securities, by contact or
otherwise. In the event of the death, incapacity, or resignation of an
Independent Director, or the vacancy of the Independent Director's seat on the
Corporation's Board of Directors for any reason, a successor Independent
Director shall be appointed by the remaining directors.
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<PAGE>
(d) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(ix) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall not (i)
commingle its assets with those of, or pledge its assets for the benefit of, any
other person or entity; (ii) assume, guarantee or become obligated, or hold out
its credit as being available to satisfy, the liabilities or obligations of any
other person or entity; (iii) reduce its capital below an amount which is
adequate in light of its contemplated business operations; (iv) acquire
obligations or securities of, or make loans or advances to, any affiliate; (v)
incur or assume any indebtedness other than (A) the indebtedness underlying the
Loan Agreement (B) the indebtedness underlying the Indenture, and (C)
liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article III and the last sentence of
Article VIII of these Amended Articles; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in these Amended Articles. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
ARTICLE IV
The total number of shares of stock which the Corporation shall have
authority to issue is One Thousand (1,000) shares of common stock, One Cent
($0.01) par value per share.
ARTICLE V
The number of directors constituting the board of directors of the
Corporation shall be at least one (1), and the name and address of the person
who is to serve as the sole director until the annual meeting of shareholders
and until his successor is elected and shall qualify is as follows:
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<PAGE>
<TABLE>
<CAPTION>
Name Address
<S> <C>
Robert M. Flanders 3445 Peachtree Road, N.E.,
Two Live Oak Center, Suite 700,
Atlanta, GA 30326.
</TABLE>
ARTICLE VI
The Board of Directors of the Corporation is expressly authorized to
adopt, alter, amend or repeal the Bylaws of the Corporation subject to the
limitations set forth in these Amended Articles. Election of directors need not
be by written ballot unless and to the extent provided in the Bylaws of the
Corporation.
ARTICLE VII
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duties as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not on good faith or which involve intentional misconduct or a knowing
violation of law, or (iii) for any transaction from which the director derived
an improper personal benefit. If the Florida General Corporation Law is amended
after the date of these Amended Articles to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability
of a director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the Pennsylvania Business Corporation Law, as so amended.
The rights and authority conferred in this Article VII shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, provision of these Amended Articles or Bylaws of the
Corporation, agreement, vote of stockholders or disinterested directors, or
otherwise.
ARTICLE VIII
The Corporation shall indemnify any officer or director, or any former
officer or director of the Corporation, to the fullest extent permitted by law.
The foregoing right of indemnification shall not be exclusive of any other
rights to which any director, officer, employee or agent may be entitled as a
matter of law or which he may be lawfully granted. The Corporation's obligation
to indemnify its officers and directors pursuant to this Article shall be
subordinate in all respects to the obligations of the Corporation arising out of
the Loan Documents and shall not constitute a claim against the Corporation to
the extent that the Corporation is unable to pay any amounts it is obligated to
pay under the Loan Documents.
The foregoing Second Amended and Restated Articles of
Incorporation were duly adopted and approved by the sole shareholder and the
Board of Directors of the Corporation by
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<PAGE>
unanimous written consent in lieu of a meeting, pursuant to Sections 607.0704
and 607.0821 of the Florida General Corporation Act, as of July 22nd, 1999. The
number of votes cast was sufficient for approval.
-5-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed these Second Amended
and Restated Articles of Incorporation this 23rd day of July, 1999.
SERVICO WINDSOR, INC.
By: /s/ Thomas S. Gryboski
--------------------------
Name: Tom Gyboski
Title: Assistant Secretary
<PAGE>
Exhibit 3.19.2
SERVICO WINDSOR, INC.
* * * * *
BY-LAWS
* * * * *
ARTICLE I
OFFICES
Section 1. The registered office shall be located at 1601 Belvedere
Road, West Palm Beach, FL 33406.
Section 2. The corporation may also have offices at such other
places both within and without the State of Florida as the board of directors
may from time to time determine or the business of the corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of
directors shall be held on such day and at such hour as may be fixed from time
to time by the board of directors. Said meetings may also be held at such other
place either within or without the State of Florida as shall be designated from
time to time by the board of directors and stated in the notice of the meeting.
Section 2. Annual meetings of shareholders, commencing with the year
1998, shall be held on the Second Monday in January unless that day is a legal
holiday, and if a legal holiday, then on the next secular day following, at
10:00 am., at which they shall elect by a plurality vote a board of directors,
and transact such other business as may properly be brought before the meeting.
Section 3. Written or printed notice of the annual meeting stating
the place, day and hour of the meeting shall be delivered not less than ten nor
more than fifty days before the date of the meeting, either personally or by
mail, by or at the direction of the president, the secretary, or the officer or
persons calling the meeting, to each shareholder of record entitled to vote at
such meeting.
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. Special meetings of shareholders for any purpose other
than the election of directors may be held at such time and place within or
without the State of Florida as shall be stated in the notice of the meeting or
in a duly executed waiver of notice thereof.
Section 2. Special meetings of the shareholders, for any purposes,
unless otherwise prescribed by statute or by the articles of incorporation, may
be called by the president, the board of
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directors, or the holders of not less than one-tenth of all the shares entitled
to vote at the meeting.
Section 3. Written or printed notice of a special meeting stating
the place, day and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than fifty days
before the date of the meeting, either personally or by mail, by or at the
direction of the president, the secretary, or the officer or persons calling the
meeting, to each shareholder of record entitled to vote at such meeting.
Section 4. The business transacted at any special meeting of
shareholders shall be limited to the purposes stated in the notice.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of stock issued
and outstanding and entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by statute or by the articles of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the shareholders, the shareholders present in person or
represented by proxy shall have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented any business may be transacted which might have
been transacted at the meeting as originally notified.
Section 2. If a quorum is present, the affirmative vote of a
majority of the shares of stock represented at the meeting shall be the act of
the shareholders unless the vote of a greater number of shares of stock is
required by law or the articles of incorporation.
Section 3. Each outstanding share of stock, having voting power,
shall be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. A shareholder may vote either in person or by proxy executed in
writing by the shareholder or by his duly authorized attorney-in-fact.
Section 4. Any action required to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the shareholders entitled
to vote with respect to the subject matter thereof.
ARTICLE V
DIRECTORS
Section 1. The Board of Directors of the Corporation shall consist
of one (1) member. The number of directors may be either increased or decreased
from time to time by
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resolution of the Board of Directors, but shall never be less than one (1).
Directors need not be residents of the State of Florida nor shareholders of the
corporation. The directors, other than the first board of directors, shall be
elected at the annual meeting of the shareholders, and each directors elected
shall serve until the next succeeding annual meeting and until his successor
shall have been elected and qualified. The first board of directors shall hold
office until the first annual meeting of shareholders.
Section 2. Any vacancy occurring in the board of directors may be
filled by the shareholders at an annual or a special meeting or by the
affirmative vote of a majority of the remaining directors though less than a
quorum of the board of directors. A director elected to fill a vacancy shall be
elected for the unexpired portion of the terms of his predecessor in office.
Any directorship to be filled by reason of an increase in the number
of directors may be filled by election at an annual meeting or at a special
meeting of shareholders called for that purpose. A director elected to fill a
newly created directorship shall serve until the next succeeding annual meeting
of shareholders and until his successor shall have been elected and qualified.
Any directorship to filled by reason of an increase in the number of directors
may also be filled by the board of directors for a term of office until the next
election of directors by shareholders, provide no more than two directorships
may be so filled during a period between any two successive annual meetings of
shareholders.
Whenever the holders of any class or series of shares are entitled
to elect one or more directors by the provisions of the articles of
incorporation, any vacancies in such directorships and any newly created
directorships of such class of series to be filled by reason of an increase in
the number of such directors may be filled by the affirmative vote of a majority
of the directors elected by such class or series then in office or by a sole
remaining director so elected, or by the vote of the holders of the outstanding
shares of such class or series, and such directorships shall not in any case be
filled by the vote of the remaining directors or the holders of the outstanding
shares as a whole unless otherwise provided in the articles of incorporation.
Section 3. The business affairs of the corporation shall be managed
by its board of directors which may exercise all such powers of the corporation
and do all such lawful acts and things as are not by statute or by the articles
of incorporation or by these by-laws directed or required to be exercised or
done by the shareholders.
Section 4. The directors may keep the books of the corporation,
except such as are required by law to be kept within the state, outside of the
State of Florida, at such place or places as they may from time to time
determine.
Section 5. The board of directors, by the affirmative vote of a
majority of the directors then in office, and irrespective of any personal
interest to any of its members, shall have authority to establish reasonable
compensation of all directors for services to the corporation as directors,
officers or otherwise.
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ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular or special,
may be held either within or without the State of Florida.
Section 2. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the vote of
the shareholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting provided a quorum shall be present, or it may convene at such place and
time as shall be fixed by the consent in writing of all the directors.
Section 3. Regular meetings of the board of directors may be held
upon such notice, or without notice, and at such time and at such place as shall
from time to time be determined by the board.
Section 4. Special meetings of the board of directors may be called
by the president on two days' notice to each director, either personally or by
mail or by telegram; special meeting shall be called by the president or
secretary in like manner and on like notice on the written request of two
directors.
Section 5. Attendance of a director at any meeting shall constitute
a waiver of notice of such meeting, except where a director attends for the
express purpose of objecting to the transaction of any business because the
meeting as not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the board
of directors need be specified in the notice or waiver of notice of such
meeting.
Section 6. A majority of the directors shall constitute a quorum for
the transaction of business unless greater number is required by law or by the
articles of incorporation. The act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the board of directors,
unless the act of a greater number is required by statute or by the articles of
incorporation. If a quorum shall not be present at any meeting of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 7. Unless otherwise restricted by the articles of
incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting, if all members of the board of committee, as the case may be,
consent thereto in writing which shall set forth the action taken ad be signed
by all members of the board of directors or of the committee as the case may be.
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ARTICLE VII
COMMITTEES OF DIRECTORS
Section 1. The board of directors, by resolution adopted by a
majority of the full board of directors, may designate from among its members an
executive committee and one or more other committees, each of which shall be
comprised of one or more members and, to the extent provided in the resolution,
shall have and may exercise all of the authority of the board of directors,
except that no such committee shall have the authority of the board of directors
in reference to amending the articles of incorporation, approving a plan of
merger or consolidation, recommending to the shareholders the sale, lease, or
exchange of all or substantially all of the property and assets of the
corporation otherwise than in the usual and regular course of its business,
recommending to the shareholders a voluntary dissolution of the corporation or a
revocation thereof, amending, altering, or repealing the by-laws of the
corporation or adopting new by-laws for the corporation, filling vacancies in
the board of directors to be filled by reason of an increase in the number of
directors, electing or removing officers or members of an committee, fixing the
compensation of any member of a committee, or altering or repealing any
resolution of the board of directors which by its terms provides that it shall
not be so amendable or repealable; and, unless the resolution expressly so
provides, no committee shall have the power of authority to declare a dividend
or to authorize the issuance of shares of the corporation.
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes of the
articles of incorporation or of these by-laws, notice is required to be given to
any director or shareholder, it shall not be construed to mean personal notice,
but such notice may be given in writing, by mail, addressed to such director or
shareholder, at his address as it appears an the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telegram.
Section 2. Whenever any notice whatever is required to be given
under the provisions of the statutes or under the provisions of the articles of
incorporation or these by-laws, a waiver thereof in writing signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
ARTICLE IX
OFFICERS
Section 1. The offices of the corporation shall be chosen by the
board of directors and shall be a president and a secretary. The board of
directors may also elect or appoint such other officers, including assistant
officers and agents as may be deemed necessary.
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Section 2. The board of directors at its first meeting after each
annual meeting of shareholders shall choose a president and a secretary neither
of whom need be a member of the board.
Section 3. The board of directors may also appoint such other
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall
exercise such powers and perform such duties as shall be determined from time to
time by the board of directors.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officers elected or appointed by
the board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the shareholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
THE VICE PRESIDENTS
Section 8. The vice-president, if there is one, or if there shall be
more than one, the vice-presidents in the order determined by the board of
directors, shall, in the absence of disability of the president, perform the
duties and exercise the powers of the president and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the shareholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the shareholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He
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shall have custody of the corporate seal of the corporation and he, or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature or by the
signature of such assistance secretary. The board of directors may give general
authority to any other officer to affect the affixing by his signature.
Section 10. The assistant secretary, if there is one, or if there be
more than one, the assistant secretaries in the order determined by the board of
directors, shall, in the absence or disability of the secretary, perform the
duties and exercise the powers of the secretary and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer, if there is one, shall have the custody
of the corporate funds and securities and shall keep full and accurate accounts
of receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the board of
directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind of his possession or under
his control belonging to the corporation.
Section 14. The assistant treasurer, if there is one, or, if there
shall be more than one, the assistant treasurers in the order determined by the
board of directors, shall, in the absence or disability of the treasurer,
perform the duties and exercise the powers of the treasurer and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
ARTICLE X
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by
certificates signed by the president and secretary or such other officers as may
be elected or appointed, and may be sealed with the seal of the corporation or a
facsimile thereof.
When the corporation is authorized to issue shares of more than one
class there shall
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be set forth upon the face or back of the certificate, or the certificate shall
have a statement that the corporation will furnish to any shareholder upon
request and without charge, a full statement of the designations, preferences,
limitations and relative rights of the shares of each class authorized to be
issued and, if the corporation is authorized to issue any preferred or special
class in series, the variations in the relative rights and preferences between
the shares of each such series so far as the same have been fixed and determined
and the relative rights and preferences of subsequent series. When the
corporation is authorized to issue shares of more than one class, every
certificate shall also set forth upon the face or the back of such certificate a
statement that there is set forth in the articles of incorporation on file in
the office of the Secretary of State a full statement of all the designations,
preferences, limitations and relative rights, including voting rights, or the
shares of each class authorized to be issued and the corporation at its
principal place of business or registered office. Every certificate shall have
noted thereon any information required to be set forth by the Florida Business
Corporation Act and such information shall be set forth in the manner provided
in said Act.
Section 2. The signatures of the officers of the corporation upon a
certificate may be facsimiles of the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the corporation itself or an
employee of the corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of its
issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate to be
issued in place of any certificate therefore issued by the corporation alleged
to have been lost or destroyed. When authorizing such issue of a new
certificate, the board of directors, in its discretion and as a condition
precedent to the issuance thereof, may prescribe such terms and conditions as
its deems expedient, and may require such indemnities as its deems adequate, to
protect the corporation from any claim that may be made against it with respect
to any such certificate alleged to have been lost or destroyed.
TRANSFERS OF SHARES
Section 4. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate representing shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, a new certificate shall be issued to the person entitled thereto, and
the old certificate canceled and the transaction recorded upon the books of the
corporation.
CLOSING OF TRANSFER BOOKS
Section 5. For the purpose of determining shareholders entitled to
notice of or to vote at any meeting of shareholders, or any adjournment thereof
or entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose the board of
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directors may provide that the stock transfer books shall be closed for a stated
period but not to exceed, in any case, fifty days. If the stock transfer books
shall be closed for the purpose of determining shareholders entitled to notice
of or to vote at a meeting of shareholders, such books shall be closed for at
least ten days immediately preceding such meeting. In lieu of closing the stock
transfer books, the board of directors may fix in advance a date as the record
date for any such determination of shareholder, such date in any case to be not
more than fifty days and, incase of a meeting of shareholders, not less than ten
days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of shareholders, or
shareholders entitled to receive payment of a dividend, the date on which notice
of the meeting is mailed or the date on which the resolution of the board of
directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof.
REGISTERED SHAREHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize and equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Florida.
LIST OF SHAREHOLDERS
Section 7. The officer or agent having charge of the transfer books
for shares shall make, at least ten days before each meeting of shareholders, a
complete list of the shareholders entitled to vote at such meeting, arranged in
alphabetical order, with the address of each and the number of shares held by
each, which list, for a period of ten days prior to such meeting, shall be kept
on file at the registered office of the corporation and shall be subject to
inspection by any shareholder at any time during usual business hours. Such list
shall also be produced and kept open at the time and place of the meeting and
shall be subject to the inspection of any shareholders during the whole time of
the meeting. The original share ledger or transfer book, or a duplicate thereof,
shall be prima facie evidence as to who are the shareholders entitled to examine
such list or share ledger or transfer book or to vote at any meeting of the
shareholders.
ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the articles of
incorporation relating thereto, if any, dividends may be declared by the board
of directors at any regular or special meeting, pursuant
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to law. Dividends may be paid in cash, in property or in shares of the capital
stock, subject to any provisions of the articles or incorporation.
Section 2. Before payment of any dividend, there may be set aside
out of any funds of the corporation available for dividends such sum or sums as
the directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time delegate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its organization and the words "Corporate Seal,
Florida." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
ARTICLE XII
AMENDMENTS
Section 1. These by-laws may be altered, amended, or repealed or new
by-laws may be adopted by the affirmative vote of a majority of the board of
directors at any regular or special meeting of the board subject to repeal or
change at any regular or special meeting of shareholders at which a quorum is
present or represented, by the affirmative vote of a majority of the stock
entitled to vote, provided notice of the proposed repeal or change be contained
in the notice of such meeting.
ARTICLE XIII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new
by-laws may be adopted at any regular or special meeting of shareholders at
which a quorum is present or represented, by the affirmative vote of a majority
of the stock entitled to vote, provided notice of the proposed alteration,
amendment or repeal be contained in the notice of such meeting.
Dated: September 11, 1997
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Exhibit 3.20.1
SECOND AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
SERVICO WINTER HAVEN, INC.
Pursuant to Sections 607.1006 and 607.1007 of the Florida General
Corporation Act (the "Act"), SERVICO WINTER HAVEN, INC., a Florida corporation
(the "Corporation"), hereby executes and submits for filing with the Department
of State, State of Florida, these Second Amended and Restated Articles of
Incorporation (the "Amended Articles"), to read as follows:
ARTICLE I
The corporate name that satisfied the requirements of Section 607.0401
is SERVICO WINTER HAVEN, INC.
ARTICLE II
The street address of the principal office of the Corporation and its
mailing address is 3445 Peachtree Road, N.E., Two Live Oak Center, Suite 700,
Atlanta, GA 30326.
ARTICLE III
(a) The purpose for which the Corporation is organized is limited to:
(i) acquiring, owning, leasing, operating, using and managing that certain real
property commonly known as the Holiday Inn Winter Haven, located at 1150 3rd
Street S.W., Winter Haven, Florida 33880 (the "Property"); (ii) entering into
and performing its obligations under the credit agreement, among Lodgian
Financing Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel Group, LLC,
Servico, Inc. and other affiliated entities, as affiliate guarantors, the
initial lenders and initial issuing bank named therein, the collateral agent,
the administrative agent, Morgan Stanley Senior Funding, Inc., as co-lead
arranger, joint-book manager and syndication agent and Lehman Brothers, as
co-lead arranger, joint-book manager and documentation agent relating to the
financing or refinancing of the Property (the "Loan Agreement") which provides
the lender thereunder with a first priority lien on the Property, any
promissory-note evidencing indebtedness incurred pursuant to the Loan Agreement,
any mortgage securing such indebtedness and encumbering the Property (the
"Mortgage") and any other documents securing such indebtedness and any related
collateral documents, each as amended (or pursuant to a consent obtained in
accordance with the terms thereof) (collectively, the "Loan Documents"); (iii)
entering into and performing its obligations under the Indenture (the
"Indenture"), among Lodgian Financing Corp, as issuer, Lodgian, Inc., the
Subsidiary Guarantors defined therein and Bankers Trust Company, as trustee,
relating to the issuance of the 12 1/4% Senior Subordinated Notes due 2009 and
the Guarantee in favor of the holders of the Notes and (iv) transacting any and
all lawful business that is incident and necessary or appropriate to the
ownership and to the
<PAGE>
management of the Property for which a corporation may be incorporated under the
laws of the State of Florida.
(b) Notwithstanding any other provision of these Amended Articles and
any provision of law that otherwise so empowers the Corporation, until such time
as the Property is released from the lien of the Mortgage, the Corporation shall
not, without the unanimous affirmative vote of the members of its Board of
Directors, (i) amend, alter, change, repeal or adopt any resolution setting
forth a proposed amendment to, any provision of these Articles of Incorporation,
(ii) dissolve or liquidate, in whole or in part, consolidate or merge with or
into any other entity or convey, sell or transfer its properties and assets
substantially as an entirety to any entity, (iii) file a voluntary petition or
otherwise initiate, or consent to, proceedings for the Corporation to be
adjudicated insolvent or seeking an order for relief as a debtor under the
United States Bankruptcy Code, as amended (11 U.S.C. Sections 101 ET SEQ.), or
(iv) file any petition, or consent to any petition, seeking any composition,
reorganization, readjustment, liquidation, dissolution or similar relief under
the present or any future federal bankruptcy laws or any other present or future
applicable federal, state or other statute or law relative to bankruptcy,
insolvency or other relief for debtors; or (v) seek or consent to the
appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, or liquidator (or other similar official) of the Corporation or of
all or any substantial part of the properties and assets of the Corporation, or
(vi) make any general assignment for the benefit of creditors, or (vii) admit in
writing its inability to pay its debts generally as they become due, or (viii)
declare or effect a moratorium on its debt or take any corporate action in
furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all times until
the Property is released from the lien of the Mortgage, include an independent
director (the "Independent Director"). The Independent Director shall be a
person who is not at the time of appointment and who has not at any time during
the prior five years been and who is not while serving as the Independent
Director (i) a director, stockholder, officer or employee of the Corporation or
any affiliates thereof, other than with respect to such person's service as an
Independent Director of the Corporation and such person's service in similar
"Independent Director" positions for affiliates of the Corporation; (ii) a
creditor, customer, supplier, independent contractor, manager or any other
person who derives more than 10% of its gross revenues from its activities with
the Corporation or any affiliates thereof; (iii) a person controlling any such
stockholder, creditor, customer, supplier, independent contractor, manager or
other person; (iv) the legal or beneficial owner, at any time while serving as
director of the Corporation, of any beneficial interest in the Corporation; or
(v) a member of the immediate family of any such stockholder, officer, employee,
creditor, customer, supplier, director, independent contractor, manager or any
other person of the Corporation. As used herein, the term "affiliate" means any
person controlling, under common control wit, or controlled by the person in
question, and the term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a person, whether through ownership of voting securities, by contact or
otherwise. In the event of the death, incapacity, or resignation of an
Independent Director, or the vacancy of the Independent Director's seat on the
Corporation's Board of Directors for any reason, a successor Independent
Director shall be appointed by the remaining directors.
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(d) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(ix) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall not (i)
commingle its assets with those of, or pledge its assets for the benefit of, any
other person or entity; (ii) assume, guarantee or become obligated, or hold out
its credit as being available to satisfy, the liabilities or obligations of any
other person or entity; (iii) reduce its capital below an amount which is
adequate in light of its contemplated business operations; (iv) acquire
obligations or securities of, or make loans or advances to, any affiliate; (v)
incur or assume any indebtedness other than (A) the indebtedness underlying the
Loan Agreement (B) the indebtedness underlying the Indenture, and (C)
liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article III and the last sentence of
Article VI of these Amended Articles; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in these Amended Articles. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
ARTICLE IV
The number of shares the Corporation is authorized to issue is One
Thousand (1,000) each with the par value of Zero Dollars and One Cent ($0.01).
ARTICLE V
The street address of the registered office of the Corporation is c/o
CT Corporation System, 1200 S. Pine Island Road, Suite 250, Plantation, Florida
33324, and the name of the registered agent at such address is C T Corporation
System.
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ARTICLE VI
The Corporation shall indemnify any officer or director, or any former
officer or director of the Corporation, to the fullest extent permitted by law.
The foregoing right of indemnification shall not be exclusive of any other
rights to which any director, officer, employee or agent may be entitled as a
matter of law or which he may be lawfully granted. The Corporation's obligation
to indemnify its officers and directors pursuant to this Article shall be
subordinate in all respects to the obligations of the Corporation arising out of
the Loan Documents and shall not constitute a claim against the Corporation to
the extent that the Corporation is unable to pay any amounts it is obligated to
pay under the Loan Documents.
The foregoing Second Amended and Restated Articles of Incorporation
were duly adopted and approved by the sole shareholder and the Board of
Directors of the Corporation by unanimous written consent in lieu of a meeting,
pursuant to Sections 607.0704 and 607.0821 of the Florida General Corporation
Act, as of July 22nd, 1999. The number of votes cast was sufficient for
approval.
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IN WITNESS WHEREOF, the undersigned has executed these Second Amended
and Restated Articles of Incorporation this 23rd day of July, 1999.
SERVICO WINTER HAVEN, INC.
By: /s/ Thomas S. Gryboski
--------------------------
Name: Tom Gyboski
Title: Assistant Secretary
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<PAGE>
Exhibit 3.20.2
SERVICO WINTER HAVEN, INC.
* * * * *
BY-LAWS
* * * * *
ARTICLE I
OFFICES
Section 1. The registered office shall be located at 1601 BELVEDERE
ROAD, SUITE 501S, WEST PALM BEACH, FLORIDA 33406. The registered agent is Robert
D. Ruffin.
Section 2. The corporation may also have offices at such other
places both within and without the State of Florida as the board of directors
may from time to time determine or the business of the corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of
directors shall be held on such day and at such hour as may be fixed from time
to time by the board of directors. Said meetings may also be held at such other
place either within or without the State of Florida as shall be designated from
time to time by the board of directors and stated in the notice of the meeting.
Section 2. Annual meetings of shareholders, commencing with the year
1998, shall be held on the Second Monday in January unless that day is a legal
holiday, and if a legal holiday, then on the next secular day following, at
10:00 am., at which they shall elect by a plurality vote a board of directors,
and transact such other business as may properly be brought before the meeting.
Section 3. Written or printed notice of the annual meeting stating
the place, day and hour of the meeting shall be delivered not less than ten nor
more than fifty days before the date of the meeting, either personally or by
mail, by or at the direction of the president, the secretary, or the officer or
persons calling the meeting, to each shareholder of record entitled to vote at
such meeting.
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. Special meetings of shareholders for any purpose other
than the election of directors may be held at such time and place within or
without the State of Florida as shall be stated in the notice of the meeting or
in a duly executed waiver of notice thereof.
Section 2. Special meetings of the shareholders, for any purposes,
unless otherwise prescribed by statute or by the articles of incorporation, may
be called by the president, the board of
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directors, or the holders of not less than one-tenth of all the shares entitled
to vote at the meeting.
Section 3. Written or printed notice of a special meeting stating
the place, day and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than fifty days
before the date of the meeting, either personally or by mail, by or at the
direction of the president, the secretary, or the officer or persons calling the
meeting, to each shareholder of record entitled to vote at such meeting.
Section 4. The business transacted at any special meeting of
shareholders shall be limited to the purposes stated in the notice.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of stock issued
and outstanding and entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by statute or by the articles of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the shareholders, the shareholders present in person or
represented by proxy shall have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented any business may be transacted which might have
been transacted at the meeting as originally notified.
Section 2. If a quorum is present, the affirmative vote of a
majority of the shares of stock represented at the meeting shall be the act of
the shareholders unless the vote of a greater number of shares of stock is
required by law or the articles of incorporation.
Section 3. Each outstanding share of stock, having voting power,
shall be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. A shareholder may vote either in person or by proxy executed in
writing by the shareholder or by his duly authorized attorney-in-fact.
Section 4. Any action required to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the shareholders entitled
to vote with respect to the subject matter thereof.
ARTICLE V
DIRECTORS
Section 1. The Board of Directors of the Corporation shall consist
of one (1) member. The number of directors may be either increased or decreased
from time to time by
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resolution of the Board of Directors, but shall never be less than one (1).
Directors need not be residents of the State of Florida nor shareholders of the
corporation. The directors, other than the first board of directors, shall be
elected at the annual meeting of the shareholders, and each directors elected
shall serve until the next succeeding annual meeting and until his successor
shall have been elected and qualified. The first board of directors shall hold
office until the first annual meeting of shareholders.
Section 2. Any vacancy occurring in the board of directors may be
filled by the shareholders at an annual or a special meeting or by the
affirmative vote of a majority of the remaining directors though less than a
quorum of the board of directors. A director elected to fill a vacancy shall be
elected for the unexpired portion of the terms of his predecessor in office.
Any directorship to be filled by reason of an increase in the number
of directors may be filled by election at an annual meeting or at a special
meeting of shareholders called for that purpose. A director elected to fill a
newly created directorship shall serve until the next succeeding annual meeting
of shareholders and until his successor shall have been elected and qualified.
Any directorship to filled by reason of an increase in the number of directors
may also be filled by the board of directors for a term of office until the next
election of directors by shareholders; provide no more than two directorships
may be so filled during a period between any two successive annual meetings of
shareholders.
Whenever the holders of any class or series of shares are entitled
to elect one or more directors by the provisions of the articles of
incorporation, any vacancies in such directorships and any newly created
directorships of such class of series to be filled by reason of an increase in
the number of such directors may be filled by the affirmative vote of a majority
of the directors elected by such class or series then in office or by a sole
remaining director so elected, or by the vote of the holders of the outstanding
shares of such class or series, and such directorships shall not in any case be
filled by the vote of the remaining directors or the holders of the outstanding
shares as a whole unless otherwise provided in the articles of incorporation.
Section 3. The business affairs of the corporation shall be managed
by its board of directors which may exercise all such powers of the corporation
and do all such lawful acts and things as are not by statute or by the articles
of incorporation or by these by-laws directed or required to be exercised or
done by the shareholders.
Section 4. The directors may keep the books of the corporation,
except such as are required by law to be kept within the state, outside of the
State of Florida, at such place or places as they may from time to time
determine.
Section 5. The board of directors, by the affirmative vote of a
majority of the directors then in office, and irrespective of any personal
interest to any of its members, shall have authority to establish reasonable
compensation of all directors for services to the corporation as directors,
officers or otherwise.
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ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular or special,
may be held either within or without the State of Florida.
Section 2. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the vote of
the shareholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting provided a quorum shall be present, or it may convene at such place and
time as shall be fixed by the consent in writing of all the directors.
Section 3. Regular meetings of the board of directors may be held
upon such notice, or without notice, and at such time and at such place as shall
from time to time be determined by the board.
Section 4. Special meetings of the board of directors may be called
by the president on two days' notice to each director, either personally or by
mail or by telegram; special meeting shall be called by the president or
secretary in like manner and on like notice on the written request of two
directors.
Section 5. Attendance of a director at any meeting shall constitute
a waiver of notice of such meeting, except where a director attends for the
express purpose of objecting to the transaction of any business because the
meeting as not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the board
of directors need be specified in the notice or waiver of notice of such
meeting.
Section 6. A majority of the directors shall constitute a quorum for
the transaction of business unless greater number is required by law or by the
articles of incorporation. The act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the board of directors,
unless the act of a greater number is required by statute or by the articles of
incorporation. If a quorum shall not be present at any meeting of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 7. Unless otherwise restricted by the articles of
incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting, if all members of the board of committee, as the case may be,
consent thereto in writing which shall set forth the action taken ad be signed
by all members of the board of directors or of the committee as the case may be.
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ARTICLE VII
COMMITTEES OF DIRECTORS
Section 1. The board of directors, by resolution adopted by a
majority of the full board of directors, may designate from among its members an
executive committee and one or more other committees, each of which shall be
comprised of one or more members and, to the extent provided in the resolution,
shall have and may exercise all of the authority of the board of directors,
except that no such committee shall have the authority of the board of directors
in reference to amending the articles of incorporation, approving a plan of
merger or consolidation, recommending to the shareholders the sale, lease, or
exchange of all or substantially all of the property and assets of the
corporation otherwise than in the usual and regular course of its business,
recommending to the shareholders a voluntary dissolution of the corporation or a
revocation thereof, amending, altering, or repealing the by-laws of the
corporation or adopting new by-laws for the corporation, filling vacancies in
the board of directors to be filled by reason of an increase in the number of
directors, electing or removing officers or members of an committee, fixing the
compensation of any member of a committee, or altering or repealing any
resolution of the board of directors which by its terms provides that it shall
not be so amendable or repealable; and, unless the resolution expressly so
provides, no committee shall have the power of authority to declare a dividend
or to authorize the issuance of shares of the corporation.
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes of the
articles of incorporation or of these by-laws, notice is required to be given to
any director or shareholder, it shall not be construed to mean personal notice,
but such notice may be given in writing, by mail, addressed to such director or
shareholder, at his address as it appears an the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telegram.
Section 2. Whenever any notice whatever is required to be given
under the provisions of the statutes or under the provisions of the articles of
incorporation or these by-laws, a waiver thereof in writing signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
ARTICLE IX
OFFICERS
Section 1. The offices of the corporation shall be chosen by the
board of directors and shall be a president and a secretary. The board of
directors may also elect or appoint such other officers, including assistant
officers and agents as may be deemed necessary.
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Section 2. The board of directors at its first meeting after each
annual meeting of shareholders shall choose a president and a secretary neither
of whom need be a member of the board.
Section 3. The board of directors may also appoint such other
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall
exercise such powers and perform such duties as shall be determined from time to
time by the board of directors.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officers elected or appointed by
the board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the shareholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
THE VICE PRESIDENTS
Section 8. The vice-president, if there is one, or if there shall be
more than one, the vice-presidents in the order determined by the board of
directors, shall, in the absence of disability of the president, perform the
duties and exercise the powers of the president and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the shareholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the shareholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He
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shall have custody of the corporate seal of the corporation and he, or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature or by the
signature of such assistance secretary. The board of directors may give general
authority to any other officer to affect the affixing by his signature.
Section 10. The assistant secretary, if there is one, or if there be
more than one, the assistant secretaries in the order determined by the board of
directors, shall, in the absence or disability of the secretary, perform the
duties and exercise the powers of the secretary and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer, if there is one, shall have the custody
of the corporate funds and securities and shall keep full and accurate accounts
of receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the board of
directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind of his possession or under
his control belonging to the corporation.
Section 14. The assistant treasurer, if there is one, or, if there
shall be more than one, the assistant treasurers in the order determined by the
board of directors, shall, in the absence or disability of the treasurer,
perform the duties and exercise the powers of the treasurer and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
ARTICLE X
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by
certificates signed by the president and secretary or such other officers as may
be elected or appointed, and may be sealed with the seal of the corporation or a
facsimile thereof.
When the corporation is authorized to issue shares of more than one
class there shall
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be set forth upon the face or back of the certificate, or the certificate shall
have a statement that the corporation will furnish to any shareholder upon
request and without charge, a full statement of the designations, preferences,
limitations and relative rights of the shares of each class authorized to be
issued and, if the corporation is authorized to issue any preferred or special
class in series, the variations in the relative rights and preferences between
the shares of each such series so far as the same have been fixed and determined
and the relative rights and preferences of subsequent series. When the
corporation is authorized to issue shares of more than one class, every
certificate shall also set forth upon the face or the back of such certificate a
statement that there is set forth in the articles of incorporation on file in
the office of the Secretary of State a full statement of all the designations,
preferences, limitations and relative rights, including voting rights, or the
shares of each class authorized to be issued and the corporation at its
principal place of business or registered office. Every certificate shall have
noted thereon any information required to be set forth by the Florida Business
Corporation Act and such information shall be set forth in the manner provided
in said Act.
Section 2. The signatures of the officers of the corporation upon a
certificate may be facsimiles of the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the corporation itself or an
employee of the corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of its
issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate to be
issued in place of any certificate therefore issued by the corporation alleged
to have been lost or destroyed. When authorizing such issue of a new
certificate, the board of directors, in its discretion and as a condition
precedent to the issuance thereof, may prescribe such terms and conditions as
it deems expedient, and may require such indemnities as its deems adequate, to
protect the corporation from any claim that may be made against it with respect
to any such certificate alleged to have been lost or destroyed.
TRANSFERS OF SHARES
Section 4. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate representing shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, a new certificate shall be issued to the person entitled thereto, and
the old certificate canceled and the transaction recorded upon the books of the
corporation.
CLOSING OF TRANSFER BOOKS
Section 5. For the purpose of determining shareholders entitled to
notice of or to vote at any meeting of shareholders, or any adjournment thereof
or entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose the board of
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directors may provide that the stock transfer books shall be closed for a stated
period but not to exceed, in any case, fifty days. If the stock transfer books
shall be closed for the purpose of determining shareholders entitled to notice
of or to vote at a meeting of shareholders, such books shall be closed for at
least ten days immediately preceding such meeting. In lieu of closing the stock
transfer books, the board of directors may fix in advance a date as the record
date for any such determination of shareholder, such date in any case to be not
more than fifty days and, incase of a meeting of shareholders, not less than ten
days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of shareholders, or
shareholders entitled to receive payment of a dividend, the date on which notice
of the meeting is mailed or the date on which the resolution of the board of
directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof.
REGISTERED SHAREHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize and equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Florida.
LIST OF SHAREHOLDERS
Section 7. The officer or agent having charge of the transfer books
for shares shall make, at least ten days before each meeting of shareholders, a
complete list of the shareholders entitled to vote at such meeting, arranged in
alphabetical order, with the address of each and the number of shares held by
each, which list, for a period of ten days prior to such meeting, shall be kept
on file at the registered office of the corporation and shall be subject to
inspection by any shareholder at any time during usual business hours. Such list
shall also be produced and kept open at the time and place of the meeting and
shall be subject to the inspection of any shareholders during the whole time of
the meeting. The original share ledger or transfer book, or a duplicate thereof,
shall be prima facie evidence as to who are the shareholders entitled to examine
such list or share ledger or transfer book or to vote at any meeting of the
shareholders.
ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the articles of
incorporation relating thereto, if any, dividends may be declared by the board
of directors at any regular or special meeting, pursuant
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to law. Dividends may be paid in cash, in property or in shares of the capital
stock, subject to any provisions of the articles or incorporation.
Section 2. Before payment of any dividend, there may be set aside
out of any funds of the corporation available for dividends such sum or sums as
the directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time delegate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its organization and the words "Corporate Seal,
Florida." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
ARTICLE XII
AMENDMENTS
Section 1. These by-laws may be altered, amended, or repealed or new
by-laws may be adopted by the affirmative vote of a majority of the board of
directors at any regular or special meeting of the board subject to repeal or
change at any regular or special meeting of shareholders at which a quorum is
present or represented, by the affirmative vote of a majority of the stock
entitled to vote, provided notice of the proposed repeal or change be contained
in the notice of such meeting.
ARTICLE XIII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new
by-laws may be adopted at any regular or special meeting of shareholders at
which a quorum is present or represented, by the affirmative vote of a majority
of the stock entitled to vote, provided notice of the proposed alteration,
amendment or repeal be contained in the notice of such meeting.
Dated: July __, 1997
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Exhibit 3.21.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
BRUNSWICK MOTEL ENTERPRISES, INC.
Pursuant to Sections 14-2-1006 and 14-2-1007 of the Georgia Business
Corporation Code (the "Code"), BRUNSWICK MOTEL ENTERPRISES, INC., a Georgia
corporation (the "Corporation"), hereby certifies that these Amended and
Restated Articles of Incorporation (the "Amended Articles"), which contain
amendments requiring shareholder approval, were duly adopted by the Board of
Directors of the Corporation and by the sole shareholder of the Corporation by
written consent without a meeting, pursuant to Sections l4-2-821 and 14-2-704 of
the Code, as of July 22, 1999. These Amended Articles correctly set forth the
provisions of the Articles of Incorporation as theretofore amended. These
Amended Articles supercede the original Articles of Incorporation and all
amendments thereto.
ARTICLE I
The name of the Corporation is BRUNSWICK MOTEL ENTERPRISES, INC.
ARTICLE II
The registered office of the Corporation is located at 1201 Peachtree
Street, N.E., Atlanta, Georgia 30361. The name of its registered agent at that
address is CT Corporation System.
ARTICLE III
(a) The purpose for which the Corporation is organized is limited to:
(i) acquiring, owning, leasing, operating, using and managing that certain real
property commonly known as the Holiday Inn, located at 5252 New Jesup Highway,
Brunswick, Georgia 31525 (the "Property"); (ii) entering into and performing its
obligations under the credit agreement, among Lodgian Financing Corp., as
borrower, Lodgian, Inc., its parent, Impac Hotel Group, LLC, Servico, Inc. and
other affiliated entities, as affiliate guarantors, the initial lenders and
initial issuing bank named therein, the collateral agent, the administrative
agent, Morgan Stanley Senior Funding, Inc., as co-lead arranger, joint-book
manager and syndication agent and Lehman Brothers, as co-lead arranger,
joint-book manager and documentation agent relating to the financing or
refinancing of the Property (the "Loan Agreement") which provides the lender
thereunder with a first priority lien on the Property, any promissory-note
evidencing indebtedness incurred pursuant to the Loan Agreement, any mortgage
securing such indebtedness and encumbering the Property (the "Mortgage") and any
other documents securing such indebtedness and any related collateral documents,
each as amended (or pursuant to a consent obtained in accordance with the terms
thereof) (collectively, the "Loan Documents"); (iii) entering into and
performing its obligations under the Indenture (the "Indenture"), among Lodgian
Financing Corp, as issuer, Lodgian, Inc., the Subsidiary Guarantors defined
therein and
<PAGE>
Bankers Trust Company, as trustee, relating to the issuance of the 12 1/4%
Senior Subordinated Notes due 2009 and the Guarantee in favor of the holders of
the Notes and (iv) transacting any and all lawful business that is incident and
necessary or appropriate to the ownership and to the management of the Property
for which a corporation may be incorporated under the laws of the State of
Georgia.
(b) Notwithstanding any other provision of these Amended Articles and
any provision of law that otherwise so empowers the Corporation, until such time
as the Property is released from the lien of the Mortgage, the Corporation shall
not, without the unanimous affirmative vote of the members of its Board of
Directors, (i) amend, alter, change, repeal or adopt any resolution setting
forth a proposed amendment to, any provision of these Articles of Incorporation,
(ii) dissolve or liquidate, in whole or in part, consolidate or merge with or
into any other entity or convey, sell or transfer its properties and assets
substantially as an entirety to any entity, (iii) file a voluntary petition or
otherwise initiate, or consent to, proceedings for the Corporation to be
adjudicated insolvent or seeking an order for relief as a debtor under the
United States Bankruptcy Code, as amended (11 U.S.C. Section 101 ET SEQ.), or
(iv) file any petition, or consent to any petition, seeking any composition,
reorganization, readjustment, liquidation, dissolution or similar relief under
the present or any future federal bankruptcy laws or any other present or future
applicable federal, state or other statute or law relative to bankruptcy,
insolvency or other relief for debtors; or (v) seek or consent to the
appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, or liquidator (or other similar official) of the Corporation or of
all or any substantial part of the properties and assets of the Corporation, or
(vi) make any general assignment for the benefit of creditors, or (vii) admit in
writing its inability to pay its debts generally as they become due, or (viii)
declare or effect a moratorium on its debt or take any corporate action in
furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all times until
the Property is released from the lien of the Mortgage, include an independent
director (the "Independent Director"). The Independent Director shall be a
person who is not at the time of appointment and who has not at any time during
the prior five years been and who is not while serving as the Independent
Director (i) a director, stockholder, officer or employee of the Corporation or
any affiliates thereof, other than with respect to such person's service as an
Independent Director of the Corporation and such person's service in similar
"Independent Director" positions for affiliates of the Corporation; (ii) a
creditor, customer, supplier, independent contractor, manager or any other
person who derives more than 10% of its gross revenues from its activities wit
the Corporation or any affiliates thereof; (iii) a person controlling any such
stockholder, creditor, customer, supplier, independent contractor, manager or
other person; (iv) the legal or beneficial owner, at any time while serving as
director of the Corporation, of any beneficial interest in the Corporation; or
(v) a member of the immediate family of any such stockholder, officer, employee,
creditor, customer, supplier, director, independent contractor, manager or any
other person of the Corporation. As used herein, the term "affiliate" means any
person controlling, under common control with, or controlled by the person in
question, and the term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a person, whether through ownership of voting securities, by contract or
otherwise. In the event of the death, incapacity, or resignation of an
Independent Director, or the vacancy of the Independent
-2-
<PAGE>
Director's seat on the Corporation's Board of Directors for any reason, a
successor Independent Director shall be appointed by the remaining directors.
(d) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(ix) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall not (i)
commingle its assets with those of, or pledge its assets for the benefit of, any
other person or entity; (ii) assume, guarantee or become obligated, or hold out
its credit as being available to satisfy, the liabilities or obligations of any
other person or entity; (iii) reduce its capital below an amount which is
adequate in light of its contemplated business operations; (iv) acquire
obligations or securities of, or make loans or advances to, any affiliate; (v)
incur or assume any indebtedness other than (A) the indebtedness underlying the
Loan Agreement, (B) the indebtedness underlying the Indenture, and (C)
liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article Three and the last sentence of
Article Seven of these Amended Articles; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in these Amended Articles. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
ARTICLE IV
The total number of shares of stock which the Corporation
shall have the authority to issue is Two Hundred (200) shares of common stock,
without par value.
ARTICLE V
The Board of Directors is expressly authorized to adopt,
alter, amend or repeal the Bylaws of the Corporation subject to the limitations
set forth in these Amended Articles.
-3-
<PAGE>
Election of directors need not be by written ballot unless and to the extent
provided in the Bylaws of the Corporation.
ARTICLE VI
No director of the Corporation shall be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Sections 14-2-830 and 14-2-832 of the Code, or
(iv) for any transaction from which the director derived an improper personal
benefit. If the Code is amended after the date of these Amended Articles to
authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of each director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the Code, as
so amended.
The right and authority conferred in this Article Six shall
not be exclusive of any other rights that any person may have or hereafter
acquire under any statute, provision of these Amended Articles or the Bylaws of
the Corporation, agreement, vote of the stockholders or disinterested directors
or otherwise.
ARTICLE VII
The Corporation shall indemnify any officer or director, or
any former officer or director of the Corporation, to the fullest extent
permitted by law. The foregoing right of indemnification shall not be exclusive
of any other rights to which any director, officer, employee or agent may be
entitled as a matter of law or which he may be lawfully granted. The
Corporation's obligation to indemnify its officers and directors pursuant to
this Article shall be subordinate in all respects to the obligations of the
Corporation arising out of the Loan Documents and shall not constitute a claim
against the Corporation to the extent that the Corporation is unable to pay any
amounts it is obligated to pay under the Loan Documents.
ARTICLE VIII
The mailing address and principal place of business of the
Corporation is:
3345 Peachtree Road, N.E.
Two Live Oak Center, Suite
700 Atlanta, GA 30326.
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<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Second
Amended and Restated Articles of Incorporation this 23 day of July, 1999.
BRUNSWICK MOTEL ENTERPRISES, INC.
By: /s/ Thomas S. Gryboski
-----------------------------
Name: Thomas S. Gryboski
Title: Assistant Secretary
-5-
<PAGE>
Exhibit 3.21.2
BRUNSWICK MOTEL ENTERPRISES, INC.
* * * * *
BY-LAWS
* * * * *
ARTICLE I
OFFICES
Section 1. The registered office shall be located at 1601 BELVEDERE
ROAD, SUITE 501 S., WEST PALM BEACH, FLORIDA 33406.
Section 2. The corporation may also have offices at such other
places both within and without the State of Georgia as the board of directors
may from time to time determine or the business of the corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of
directors shall be held in Memphis, State of Tennessee, at such place as may be
fixed from time to time by the board of directors.
Section 2. Annual meetings of shareholders, commencing with the year
1977, shall be held on the last day of July of each year.
<PAGE>
by the Board of Directors and set forth in the notice of the meeting if not a
legal holiday, and if a legal holiday, then on the next secular day following,
at which they shall elect by a plurality vote a board of directors, and transact
such other business as may properly be brought before the meeting.
Section 3. Written or printed notice of the annual meeting stating
the place, day and hour of the meeting shall be delivered not less than ten nor
more than fifty days before the date of the meeting, either personally or by
mail, by or at the direction of the president, the secretary, or the officer or
persons calling the meeting, to each shareholder of record entitled to vote at
such meeting.
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. Special meetings of shareholders for any purpose other
than the election of directors may be held at such time and place within or
without the State of Georgia as shall be stated in the notice of the meeting or
in a duly executed waiver of notice thereof.
Section 2. Special meetings of the shareholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the articles of
incorporation, may be called by the president, chairman of the board of
directors, the board of directors, or such other officers or persons as provided
in the Articles of Incorporation, or in the event there are no officers or
directors, then by any shareholders.
<PAGE>
Section 3. Written or printed notice of a special meeting stating
the place, day and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than fifty days
before the date of the meeting, either personally or by mail, by or at the
direction of the president, the secretary, or the officer or persons calling the
meeting, to each shareholder of record entitled to vote at such meeting.
Section 4. The business transacted at any special meeting of
shareholders shall be limited to the purposes stated in the notice.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of stock issued
and outstanding and entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by statute or by the articles of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the shareholders, the shareholders present in person or
represented by proxy shall have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented any business may be transacted which might have
been transacted at the meeting as originally notified.
<PAGE>
Section 2. If a quorum is present, the affirmative vote of a
majority of the shares of stock represented at the meeting shall be the act of
the shareholders unless the vote of a greater number of shares of stock is
required by law or the articles of incorporation.
Section 3. Each outstanding share of stock, having voting power,
shall be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. A shareholder may vote either in person or by proxy executed in
writing by the shareholder or by his duly authorized attorney-in-fact.
Section 4. Any action required to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the shareholders entitled
to vote with respect to the subject matter thereof.
ARTICLE V
DIRECTORS
Section 1. The number of directors shall be three. Directors need
not be residents of the State of Georgia nor shareholders of the corporation.
The directors, other than the first board of directors, shall be elected at the
annual meeting of the shareholders, and each director elected shall serve until
the next succeeding annual meeting and until his successor shall have been
elected and qualified. The first board of directors shall hold office until the
first annual meeting of shareholders.
<PAGE>
Section 2. Any vacancy occurring in the board of directors may be
filled by the affirmative vote of a majority of the remaining directors though
less than a quorum of the board of directors. A director elected to fill a
vacancy shall be elected for the unexpired portion of the term of his
predecessor in office.
Any directorship to be filled by reason of an increase in the number
of directors may be filled by the affirmative vote of a majority of the
remaining directors present at a meeting though less than a quorum of the board
of directors is present. A director elected to fill a newly created directorship
shall serve until the next election of directors by the shareholders and the
election and qualification of his successor.
Section 3. The business affairs of the corporation shall be managed
by its board of directors which may exercise all such powers of the corporation
and do all such lawful acts and things as are not by statute or by the articles
of incorporation or by these by-laws directed or required to be exercised or
done by the shareholders.
Section 4. The directors may keep the books of the corporation,
except such as are required by law to be kept within the state, outside of the
State of Georgia, at such place or places as they may from time to time
determine.
Section 5. The board of directors, by the affirmative vote of a
majority of the directors then in office, and irrespective of any personal
interest to any of its members,
<PAGE>
shall have authority to establish reasonable compensation of all directors for
services to the corporation as directors, officers or otherwise.
ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular or special,
may be held either within or without the State of Georgia.
Section 2. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the vote of
the shareholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting provided a quorum shall be present, or it may convene at such place and
time as shall be fixed by the consent in writing of all the directors.
Section 3. Regular meetings of the board of directors may be held
upon such notice, or without notice, and at such time and at such place as shall
from time to time be determined by the board.
Section 4. Special meetings of the board of directors may be called
by the chairman of the board, by the president, or by any two directors on any
two days' notice to each director, either personally or by mail, telegram or
cablegram.
Section 5. Notice of a meeting need not be given to any director who
submits a signed waiver of notice whether
<PAGE>
before or after the meeting, or who attends the meeting without protesting,
prior thereto or at its commencement, the lack of notice. Neither the business
to be transacted at, nor the purpose of, any regular or special meeting of the
board of directors need be specified in the notice or waiver of notice of such
meeting.
Section 6. A majority of the directors shall constitute a quorum for
the transaction of business unless greater number is required by law or by the
articles of incorporation. The act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the board of directors,
unless the act of a greater number is required by statute or by the articles of
incorporation, If a quorum shall not be present at any meeting of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 7. Any action required or permitted to be taken at any
meeting of the board of directors may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
directors entitled to vote with respect to the subject matter thereof.
ARTICLE VII
EXECUTIVE COMMITTEE
Section 1. The board of directors, by resolution adopted by a
majority of the number of directors fixed by the
<PAGE>
by-laws or otherwise, may designate two or more directors to constitute an
executive committee, which committee, to the extent provided in such resolution,
shall have and exercise all of the authority of the board of directors in
management of the corporation, except as otherwise required by law. Vacancies in
the membership of the committee shall be filled by the board of directors at a
regular or special meeting of the board of directors. The executive committee
shall keep regular minutes of its proceedings and report the same to the board
when required.
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes of the
articles of incorporation or of these by-laws, notice is required to be given to
any director or shareholder, it shall not be construed to mean personal notice,
but such notice may be given in writing, by mail, addressed to such director or
shareholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telegram.
Section 2. Whenever any notice whatever is required to be given
under the provisions of the statutes or under the provisions of the articles of
incorporation or these by-
<PAGE>
laws, a waiver thereof in writing signed by the person or persons entitled to
such notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice.
ARTICLE IX
OFFICERS
Section 1. The offices of the corporation shall be chosen by the
board of directors and shall be a president, a vice-president, a secretary and a
treasurer. The board of directors may also choose additional vice-presidents,
and one or more assistant secretaries and assistant treasurers.
Section 2. The board of directors at its first meeting after each
annual meeting of shareholders shall choose a president, one or more
vice-presidents, a secretary and a treasurer, none of whom need be a member of
the board.
Section 3. The board of directors may appoint such other officers
and agents as it shall deem necessary who shall hold their offices for such
terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board of directors.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by
the board of directors
<PAGE>
may be removed at any time by the affirmative vote of a majority of the board of
directors. Any vacancy occurring in any office of the corporation shall be
filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the shareholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
THE VICE PRESIDENTS
Section 8. The vice-president, or if there shall be more than one,
the vice-presidents in the order determined by the board of directors, shall, in
the absence or disability of the president, perform the duties and exercise the
powers of the president and shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
<PAGE>
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the shareholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the shareholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he, or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such assistant
secretary. The board of directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by his
signature.
Section 10. The assistant secretary, or if there be more than one,
the assistant secretaries in the order determined by the board of directors,
shall, in the absence or disability of the secretary, perform the duties and
exercise the powers of the secretary and shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
<PAGE>
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.
Section 14. The assistant treasurer, or, if there shall be more than
one, the assistant treasurers in the order determined by the board of directors,
shall, in the absence
<PAGE>
or disability of the treasurer, perform the duties and exercise the powers of
the treasurer and shall perform such other duties and have such other powers as
the board of directors may from time to time prescribe.
ARTICLE X
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by
certificates signed by the president or other chief executive officer, or a
vice-president and the secretary or an assistant secretary of the corporation,
and may be sealed with the seal of the corporation or a facsimile thereof.
Each certificate representing shares issued by a corporation which
are subordinate to authorized shares of any other class or series with respect
to dividends or amounts payable on liquidation shall contain upon the face or
back of the certificate a clear and concise statement to that effect.
When the corporation is authorized to issue shares of more than one
class there shall be set forth upon the face or back of the certificate, or the
certificate shall have a statement that the corporation will furnish to any
shareholder upon request and without charge, a full statement of the
designations, preferences, limitations and relative rights of the shares of each
class authorized to be issued and, if the corporation is authorized to issue any
preferred or special class in series, the variations in the relative rights and
preferences between the shares of each
<PAGE>
such series so far as the same have been fixed and determined and the authority
of the board of directors or shareholders to fix and determine the relative
rights and preferences of subsequent series.
Section 2. The signatures of the officers of the corporation upon a
certificate may be facsimiles of the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the corporation itself or an
employee of the corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of its
issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate to be
issued in place of any certificate therefore issued by the corporation alleged
to have been lost or destroyed. When authorizing such issue of a new
certificate, the board of directors, in its discretion and as a condition
precedent to the issuance thereof, may prescribe such terms and conditions as
it deems expedient, and may require such indemnities as its deems adequate, to
protect the corporation from any claim that may be made against it with respect
to any such certificate alleged to have been lost or destroyed.
<PAGE>
TRANSFERS OF SHARES
Section 4. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate representing shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, a new certificate shall be issued to the person entitled thereto, and
the old certificate cancelled and the transaction recorded upon the books of the
corporation.
CLOSING OF TRANSFER BOOKS
Section 5. For the purpose of determining shareholders entitled to
notice of or to vote at any meeting of shareholders, or any adjournment thereof
or entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose the board of
directors may provide that the stack transfer books shall be closed for a stated
period but not to exceed, in any case, fifty days. If the stock transfer books
shall be closed for the purpose of determining shareholders entitled to notice
of or to vote at a meeting of shareholders, such books shall be closed for at
least ten days immediately preceding such meeting. In lieu of closing the stock
transfer books, the board of directors may fix in advance a date as the record
date for any such determination of shareholders, such date in any case to be not
more than fifty days and, in case of a meeting of shareholders, not less than
ten days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If the stock transfer
<PAGE>
books are not closed and no record date is fixed for the determination of
shareholders entitled to notice of or to vote at a meeting of shareholders, or
shareholders entitled to receive payment of a dividend, the date on which notice
of the meeting is mailed or the date on which the resolution of the board of
directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof, unless the Board of Directors fixes a new record date for the adjourned
meeting.
REGISTERED SHAREHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Georgia.
LIST OF SHAREHOLDERS
Section 7. The officer or agent having charge of the stock transfer
books for shares of a corporation shall make
<PAGE>
a complete list of the shareholders entitled to vote at a meeting of
shareholders or any adjournment thereof, arranged in alphabetical order, with
the address of and the number and class and series, if any, of shares held by
each. Such list shall be produced and kept open at the time and place of the
meeting and shall be subject to the inspection of any shareholder during the
whole time of the meeting for the purposes thereof. Such list shall be prima
facie evidence of who is a shareholder of record.
ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the articles of
incorporation relating thereto, if any, dividends may be declared by the board
of directors at any regular or special meeting, pursuant to law. Dividends may
be paid in cash, in property or in shares of the capital stock, subject to any
provisions of the articles or incorporation.
Section 2. Before payment of any dividend, there may be set aside
out of any funds of the corporation available for dividends such sum or sums as
the directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall
<PAGE>
think conducive to the interest of the corporation, and the directors may modify
or abolish any such reserve in the manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall begin on the
first day of January of each year.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its organization and the words "Corporate Seal,
Georgia." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
ARTICLE XII
AMENDMENTS
Section 1. These by-laws may be altered, amended, or repealed or new
by-laws may be adopted by the affirmative vote of a majority of the board of
directors at any regular or special meeting of the board, but any by-laws
adopted by the board of directors may be altered, amended, or repealed, and new
by-laws adopted by the shareholders.
<PAGE>
Exhibit 3.22.1
OPERATING AGREEMENT
OF
ATLANTA-HILLSBORO LODGING, L.L.C.
ANY SECURITIES CREATED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE
GEORGIA SECURITIES ACT OF 1973, AS AMENDED, IN RELIANCE UPON THE EXEMPTION FROM
REGISTRATION SET FORTH IN SECTION 10-5-9(13) OF SUCH ACT. IN ADDITION, THE
SECURITIES CREATED BY THIS AGREEMENT, IF ANY, HAVE NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION SET FORTH IN THE SECURITIES ACT OF 1933 PROVIDED BY SECTION 4(2)
THEREOF, NOR HAVE THEY BEEN REGISTERED WITH THE SECURITIES COMMISSIONS OF
CERTAIN STATES IN RELIANCE UPON CERTAIN EXEMPTIONS FROM REGISTRATION. THE EQUITY
INTERESTS CREATED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY
NOT BE PLEDGED, HYPOTHECATED, SOLD, OR TRANSFERRED, EXCEPT IN COMPLIANCE WITH
THE TERMS AND CONDITIONS OF THIS AGREEMENT AND IN A TRANSACTION WHICH IS EITHER
EXEMPT FROM REGISTRATION UNDER SUCH ACTS OR PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACTS.
<PAGE>
OPERATING AGREEMENT
OF
ATLANTA-HILLSBORO LODGING, L.L.C.
This Operating Agreement is entered into and shall be effective as of this
___ day of May, 1998, by and among the signatory hereto which is the sole member
(together with any other or successor members hereafter admitted to the Company,
the "Members") of Atlanta-Hillsboro Lodging, L.L.C., a Georgia limited liability
company (the "Company").
WHEREAS, the parties hereto desire to organize and operate a limited
liability company under the provisions of the Georgia Limited Liability Company
Act (the "Act"), O.C.G.A. Section 14-11-100 et seq. and in accordance with the
terms and subject to the conditions set forth in this Agreement;
AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual promises, covenants
and agreements contained herein, and for other good and valuable consideration,
the parties hereto, intending to be legally bound, agree as follows:
SECTION I
FORMATION, NAME, ARTICLES, PURPOSE, ETC.
1.1 Formation and Name.
The sole member hereof does hereby agree to the formation and organization
of a Georgia limited liability company, to be known as "Atlanta-Hillsboro
Lodging, L.L.C.," pursuant to O.C.G.A. Section 14-11-100 et seq. on the terms
and conditions hereinafter set forth. The Company shall be managed by Robert S.
Cole, an individual, resident of the State of Georgia. Additional Managers may
be appointed in accordance with Section VIII herein, and any Manager or
Additional Manager may resign or be removed as provided in said Section. The
Articles of Organization of the Company shall expressly provide that management
of the Company is vested in one or more managers, as permitted by O.C.G.A.
Section 14-11-204(b)(1) of the Act, and is not vested in any of the Company's
Members.
1.2 Articles.
The Manager has caused to be executed and filed with the Secretary of
State of Georgia
<PAGE>
on May 14, 1998, the Articles of the Company.
1.3 Membership Interests.
The Company is authorized to issue One Hundred (100) Ordinary Membership
Interests (individually, an "Ordinary Unit" and collectively, the "Ordinary
Units"). No other classes or categories of Membership Interest may be issued by
the Company except as may otherwise be permitted by this Agreement. The Company
will not issue certificates evidencing ownership of such Membership Interests to
the Members. The Company shall maintain records setting forth, among other
things, the name of the person who is the registered owner of a Membership
Interest, the number of units of Membership Interest owned by such person, the
type of Membership Interest owned by such Member, and the date such Membership
Interest was acquired by such Member, and the date, if applicable, such
Membership Interest was transferred by such Member and to whom such Membership
Interest was transferred by such Member.
1.4 Registered and Principal Office.
The registered office of the Company in the State of Georgia shall be at
c/o CT Corporation System, 1201 Peachtree Street, N.E., Atlanta, Georgia 30361,
and the principal office and principal place of business of the Company shall be
at 1601 Belvedere Road, West Palm Beach, Florida 33406, but substitute or
additional places of business may be established at such other locations as may,
from time to time, be determined by the Manager(s). The Company, through its
Manager may qualify the Company to do business in the State of Oregon and take
such steps and actions as required to effect such qualification. The Manager(s)
shall promptly give notice to the Members of any change in the principal office
or place of business.
1.5 Name and Address or Place of Residence of Manager(s) and Registered
Agent:
(a) The name and address of the Person who has, initially, been
appointed as the Manager of the Company are as follows:
Robert S. Cole
c/o Impac Hotel Group, L.L.C.
Two Live Oak Center, Suite 700
3445 Peachtree Road, N.E.
Atlanta, Georgia 30326
(b) The name and place of legal residence of each of the Members are
set forth in Exhibit "A" attached hereto and made a part hereof. The Members,
who are so identified on the date hereof, are hereby admitted as Members. Any
change in interests shall be reflected in an amendment to Exhibit "A". All
references in this Agreement to Exhibit "A" mean Exhibit "A" as in effect at the
relevant time, including any amendments thereto.
(c) The name and address of the registered agent for service of
process in the State of Georgia are as follows:
<PAGE>
CT Corporation System
1201 Peachtree Street, N.E.
Atlanta, Georgia 30361
1.6 Term.
The Company became effective upon the execution of the Articles and the
accomplishment of all filings required for a limited liability company under the
laws of the State of Georgia, and shall terminate on December 31, 2030, unless
the Company is sooner dissolved in accordance with other provisions of this
Agreement.
1.7 Purpose.
The purpose of the Company is: (i) to acquire, develop, construct, own,
operate and lease, directly or indirectly, a full-service hotel in the City of
Hillsboro, Washington County, Oregon (the "Project"), and all assets related to
the operations of the Project; and (ii) for all such other purposes permitted
under Georgia law as may be necessary or appropriate in furtherance of the
purposes identified in item (i). The Company is organized for no other purpose
than as set forth in this Article 1.7.
1.8 Authority.
In order to carry out its purpose, the Company is authorized, subject to
other provisions of this Agreement, to do any and all acts and things directly
or indirectly, through it Manager(s), necessary, advisable or incidental to or
convenient for the furtherance and accomplishment of its purpose, and for the
protection and benefit of the Company, including, but not limited to, the
following:
(a) To acquire, own, maintain, operate, and lease, directly or
indirectly, the Project or any other property, or to sell all or any part
thereof;
(b) To, directly or indirectly, borrow money and issue evidence of
indebtedness in furtherance of the Company business and secure any such
indebtedness by mortgage, pledge, or lien on the Project or other
property;
(c) To, directly or indirectly, operate and maintain the Project or
other property of the Company, including entering into agreements (either
directly or through an Affiliate) with managing agents for the management
of the Project, including, without limitation, a property management
agreement with Impac Hotel Management, L.L.C., a Georgia limited liability
company ("IHM"), or with an Affiliate of any Member of the Company, to
manage the day-to-day operations of the Project; the management fee with
respect to the Project under such agreement shall not exceed four (4%)
percent of gross income ("Management Fee");
<PAGE>
(d) To, directly or indirectly, negotiate for and conclude
agreements for the sale, exchange, lease, or other disposition of all,
substantially all, or any portion of the Project, or other property of the
Company, or for the refinancing of any mortgage loan on the property of
the Company;
(e) To, directly or indirectly, prepay, in whole or in part,
refinance, recast, increase, modify or extend any mortgage, and in
connection therewith to execute any extensions, renewals or modifications
thereof;
(f) To enter into any other kind of activity and to, perform and
carry out contracts of any kind, including contracts with Affiliates,
necessary to, or in conjunction with or incidental to, the accomplishment
of the business and any of the purposes of the Company; or
(g) To enter into an indemnification agreement with Cole or any
other person appointed a Manager of the Company in accordance with the
provisions of Section VIII.
1.9 Books and Records.
The Manager(s) shall maintain at the Company's principal office the
following records: (a) a current, alphabetical, and separate listing of all
Members of the Company, including their full names and last known business
addresses; (b) copies of the Company's Articles and any amendments thereto; (c)
copies of the Company's four most recent years' federal, state and local income
tax returns; (d) copies of the current written Company Agreement; (e) any merger
agreement in which the Company is the surviving entity; and (f) financial
statements for the Company's four most recent Fiscal Years. The Company's
Members may inspect and copy, at the Member's expense, these records at the
Company's principal office during normal business hours.
1.10 Definitions.
Capitalized terms used in this Agreement shall have the meanings ascribed
to them in Schedule 1.10, which is incorporated herein by this reference.
SECTION II
CAPITAL CONTRIBUTIONS AND CAPITAL ACCOUNTS
2.1 Contributions of the Members.
Subject to the conditions hereinafter set forth in Section 2.4 below, each
Member shall pay or contribute to the Company the amount of money or other
property set forth opposite his name on Exhibit "A." A Member shall not be
required to make any additional Capital Contributions to the Company other than
the Capital Contributions set forth on Exhibit "A" unless such Member otherwise
agrees to make additional Capital Contributions in accordance
<PAGE>
with the provisions of Sections 2.7.
2.2 Capital Accounts.
A Capital Account shall be maintained for each Member. Capital Accounts
shall be increased by:
(a) The amount of money and the Asset Value of property (net of
liabilities that the Company assumes or takes subject to under Section 752
of the Code) contributed by the Member; and
(b) The amount of any Company Profit allocated to the Member; and
shall be decreased by:
(c) The amount of money and the Asset Value of property (net of
liabilities that the member assumes or takes subject to under Section 752
of the Code) distributed to the Member by the Company;
(d) Allocations to the Member of Company expenditures that are not
deductible in computing Company Profit or Company Loss and that are not
capital expenditures; and
(e) Allocations to the Member of Company Loss.
2.3 Compliance with Treasury Regulation 1.704-1(b)(2)(iv).
The manner in which Capital Accounts are to be maintained pursuant to this
Agreement are intended to comply with the requirements of Treasury Regulation
1.704-1(b)(2)(iv) and shall be interpreted and applied in a manner consistent
with such regulation throughout the full term of this Agreement. The following
special allocations shall be made in the following order:
(a) Minimum Gain Chargeback. If there is a net decrease in Company
minimum gain during the year, each Member shall be specially allocated
items of Company income and gain for the year (and, if applicable,
subsequent years) equal to such Member's share of the net decrease in
Company minimum gain. This allocation shall be defined, interpreted and
determined in accordance with applicable Treasury Regulations.
(b) Member Minimum Gain Chargeback. If there is net decrease in
Member minimum gain attributable to a Member non-recourse debt during the
year, each Member with a share of the Member minimum gain shall be
specially allocated items of Company income and gain for the year equal to
such Member's share of the decrease in Member minimum gain attributable to
such Member. This allocation shall be defined, interpreted, and determined
in accordance with applicable Treasury Regulations.
<PAGE>
(c) Qualified Income Off-Set. If a Member unexpectedly receives any
adjustments, allocations, or distributions described in Treasury
Regulations Sections 1.704-1(b)(2)(ii)(d)(4)-(6), items of Company income
and gain shall be specially allocated to each Member in an amount and
manner sufficient to eliminate, to the extent required by Treasury
Regulations, the negative Capital Account balance of such Member as
quickly as possible. This allocation shall be made only if a Member would
have a negative Capital Account balance after all other allocations in
this Section II are made.
2.4 Limited Liability of Members.
No Member shall be liable for any of the losses, debts, liabilities, or
obligations of the Company or be required (except as provided in Section 2.7
hereof) to contribute any capital beyond his required Capital Contribution or to
lend any funds to the Company except that a Member may be required by law
pursuant to the Act to return all or a portion of his Capital Contribution which
has been distributed to him.
2.5 Withdrawal of Capital.
No Member shall be entitled, without the consent of the Manager(s), to
withdraw any part of his Capital Contribution prior to the dissolution and
liquidation of the Company, except that distributions made in accordance with
Section III may represent in whole or in part a return of capital. Neither the
Company nor its Manager(s) guarantees that the Company's assets will be
sufficient to repay in whole or in part each Member's Capital Contributions. No
interest shall be paid on any capital contributed to the Company.
2.6 Member Loans.
Loans by any Member shall not be considered a part of a Member's Capital
Contributions and the repayment of any loan from a Member shall not be subject
to the restrictions on repayment of Capital Contributions set forth in this
Agreement.
2.7 Additions to Company Capital.
The Manager(s) may from time to time determine that additional capital is
required in order to improve or continue the ownership and operation of the
Project, or to improve, or rehabilitate, directly or indirectly, the Project or
any portion of the Project. Upon such a determination, additional funds may be
obtained at the option of the Manager(s), in its (their) sole discretion, in the
following manner, directly or indirectly, from the following sources, without
any authorization from the Members, and such sources may be utilized as
necessary, in any order or priority by borrowing from:
(a) commercial banks;
(b) other prime lenders;
<PAGE>
(c) other Members; or
(d) lenders other than prime lenders (including loans secured by
secondary financing against the property).
In the event that the Manager(s), in its (their) sole discretion,
determine(s) that the most desirable source for additional capital is additional
Capital Contributions from existing Members or from the admission of new
Members, the Manager(s) shall raise such additional Capital Contributions
through the issuance of additional Membership Interests in accordance with the
provisions of Section 9.1 of this Agreement; provided, however, before any
additional Capital Contributions are obtained through the admission of new
Members, the Company, through its Manager(s), shall offer the opportunity to
make such additional Capital Contributions and to receive additional Units of
the Company, to the existing Members pro rata based upon the number of Units
held by each Member. The existing Members shall have fifteen (15) days after the
receipt of information regarding the proposal regarding the use of the
additional Capital Contributions and the Units to be issued ("Notice Period"),
to agree to make such additional Capital Contributions and shall be obligated to
fully fund such additional Capital Contributions within seven (7) days following
the Notice Period. If one or more of the existing Members do not decide to make
his or their additional Capital Contribution(s), or fail to fully fund his or
their additional Capital Contribution(s) in the time period set forth in the
preceding sentence, the Company may admit new Members in order to raise the
required amount of additional Capital Contributions.
2.8 No Rights in Third Parties.
The provisions of this Agreement are for the benefit of the Company and
the Members, and are not intended to be for the benefit of any person to whom
any debts, liabilities or obligations are owed by, or who otherwise has any
claim against, the Company or any Member, and no creditor or other person shall
obtain any rights under such provisions or solely by reason of such provisions.
SECTION III
DISTRIBUTIONS TO MEMBERS
3.1 General Rules.
Any distribution to be made under this Section III shall be made to the
registered holder of the Membership Interest, at such holder's last reported
address, as recorded on the Company's books and records, as of the date of such
distribution, unless such distribution is otherwise required by law to be made
to a third-party. The determination of the amount of any distribution that a
Member may otherwise be entitled to under this Section III shall be based upon
the class and number of units recorded as owned, as reported on the Company's
books and records, as of the date of such distribution. The Manager(s) and the
Company shall incur no liability for
<PAGE>
making distributions in accordance with the provisions of the preceding
sentences, whether or not the Manager(s) or the Company has knowledge or notice
of any Transfer of ownership of a Membership Interest.
3.2 Distributions With Respect to Ordinary Units.
It is the intention of the Company that the Manager(s) will distribute to
the Company's (Members holding Ordinary Units, on a quarterly basis, the net
cash flow of the Company and within thirty (30) days after any sale, exchange,
assignment, transfer, or other disposition by the Company of the Project or any
other property of the Company (each event being referred to herein as a
"Conveyance Event"), the net proceeds realized by the Company as a result of a
Conveyance Event, after reduction for any debt service due with respect to
indebtedness of the Company and/or for reserves the Manager(s) may reasonably
determine is necessary for the operation of the Company. Accordingly, any
distributions made by the Company's Manager(s), shall be at his (their)
discretion as to timing, amount, and source of the funds, pro rata based upon
the number of Ordinary Units owned by each Member.
3.3 Restrictions on Distributions.
Notwithstanding anything to the contrary in this Section III, the
Manager(s) may not make any distribution with respect to the Company's
Membership Interests if such distribution is otherwise prohibited by, or in
contravention of, any of the terms of any deed to secure debt, loan agreement or
similar document to which the Company is a party.
3.4 No Interest on Distributions.
If any Member shall not withdraw (because the Company is unable to deliver
such distribution in accordance with Section 3.1 or otherwise) the whole or any
part of his share of any distribution to which such Member is entitled under
this Section III, such Member shall not be entitled to receive any interest
thereon; nor shall any such sum(s) not withdrawn be deemed an increase in such
Member's share of the capital of the Company without the express written consent
of all other Members.
SECTION IV
ALLOCATION OF PROFITS AND LOSSES
4.1 Ordinary Units.
(a) The Company Profits and Company Losses shall be determined and
allocated with respect to each Fiscal Year of the Company as of the end of
such year.
(b) After giving effect to the special allocations in Section
4.1(b)(i), (ii) and
<PAGE>
(iii) below, all Company Profits and Company Losses for each Fiscal Year
shall be allocated to the Members owning Ordinary Units pro rata based
upon the number of Ordinary Units owned by each Member.
(i) Section 754 Adjustments. To the extent an adjustment to
the adjusted tax basis of any Company asset pursuant to Code Section
734(b) or Code Section 743(b) is required pursuant to Treasury
Regulation Section 1.704-1(b)(2)(iv)(m) to be taken into account in
determining Capital Accounts, the amount of such adjustment to the
Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis), and such gain or loss shall be
specially allocated to the Member in a manner consistent with the
manner in which their Capital Accounts are required to be adjusted
pursuant to such section of the Regulation.
(ii) Section 704(c) of the Code. Notwithstanding the
foregoing, in the event Section 704(c) of the Code or Section 704(c)
principles applicable under any Treasury Regulation promulgated
under Section 704(b) of the Code, require allocations of Company
Profit or Company Loss in a manner different than set forth above,
the provisions of Section 704(c) and any applicable Treasury
Regulation promulgated under Section 704(c) of the Code shall
control such allocations. Allocations pursuant to Section 704(c)
shall be made for tax purposes only and shall not affect any
Member's Capital Account. The Manager(s) shall select any method for
making allocations under Code Section 704(c) as described in
Treasury Regulation Section 1.704-3(b) or any successor regulatory
provision thereto.
(iii) Regulatory Allocations. It is the intention of the
Company that the allocations hereunder comply with the provisions of
Section 704(b) of the Code and the Treasury Regulations promulgated
from time to time thereunder so that the allocations made hereunder
will be deemed to have "substantial economic effect" as provided
therein. To the extent special allocations of Company Profit or Loss
are required to be made to comply with the requirements thereof, and
which are not otherwise provided for herein, such special
allocations shall be made in the manner set forth in the Code and
Regulations, as determined in good faith by the Manager(s). To the
extent any such special allocations are made, subsequent allocations
of Company Profit and Company Loss shall be made to offset any
economic distortion caused by such special allocations, as
determined by the Manager(s) in good faith.
4.2 Allocations Among Members.
Whenever a proportionate part of the Company Profit or Company Loss is
credited or charged to a Member's Capital Account, every item of income, gain,
loss, deduction or credit entering into the computation of such Company Profit
or Company Loss, or applicable to the
<PAGE>
period during which such Company Profit or Company Loss is realized, shall be
considered credited or charged, as the case may be, to such account in the same
proportion. As between a Member and his transferee, unless otherwise agreed by
them, Company Profits and Company Losses for any Fiscal Year shall be allocated
on a daily basis, and the transferee shall be allocated Company Profits and
Company Losses with respect to the period commencing with the day of transfer.
SECTION V
RIGHTS, POWERS, AND DUTIES OF MANAGER(S)
5.1 Rights and Powers of Manager(s).
Except as may be expressly limited by other provisions of this Agreement,
the Manager(s) shall have complete authority over and exclusive control and
management of the business and affairs of the Company and shall devote such time
to the Company as may be reasonably required for the achievement of its
purposes. If not otherwise specifically stated, and except as specifically
authorized in Section 1.7, the references to action by the Manager(s) or by the
Company shall mean only action as provided in this Section 5.1. In connection
with the management of the business and affairs of the Company, the Manager(s)
may employ on behalf of the Company any other persons to perform services for
the Company, including persons employed by, affiliated with, or related to any
Manager. The Manager(s), in his (their) sole discretion, shall have the fullest
power and authority permitted by law, and without limiting its authority and
powers, the Manager(s), shall have the right, if, as and when he (they) deem(s)
necessary or appropriate, on behalf of the Company, subject only to the terms
and conditions of this Agreement:
(a) To acquire, operate, maintain, and improve (including capital
expenditures of, any type) the Project or any other property in such
manner and on such terms and conditions as the Manager(s) shall deem
necessary or appropriate;
(b) To exercise for the Company any and all rights, privileges, and
powers available to the Company as holder of any Company property
including, without limitation, the refinancing, replacement, renewal,
consolidation, extension, modification and creation of encumbrances,
mortgages, deeds of trust, deeds to secure debt, security agreements and
other secured indebtedness on the Company property or any part thereof,
and the modification, cancellation, extension or waiver of instruments,
rights, options, and obligations pertaining to or affecting the Company
property or any part thereof, all upon such terms and conditions as it
deems proper;
(c) To borrow money for Company purposes, and in connection with
such borrowing to execute promissory notes on behalf of the Company; to
mortgage, pledge or otherwise encumber the property and assets held by the
Company to secure the
<PAGE>
obligations of the Company, and in connection with any such mortgage, to
grant a confession of judgment on the part of Company and include in such
mortgage, pledge or other instrument of security, such provisions as may
be required by any Lender;
(d) To consent to the initial execution, modification, renewal or
extension of any obligations, whether or not secured, or of any
guarantees, or of any terms or provisions of any such guaranty, or to the
release of any obligor under any such guaranty; to institute or refrain
from instituting suits or actions against such obligor; and to pay or to
abstain from the payment of taxes, water rents, sewer charges,
assessments, mortgage payments, insurance premiums, and maintenance
expenses, all at such time or times and upon such terms and conditions and
under such circumstances as the Manager(s), in its (their) sole
discretion, shall deem proper;
(e) To adjust, compromise, settle or refer to arbitration any claims
in favor of or against the Company or any nominee of the Company or any
property held by the Company or its nominee, and to institute, prosecute
and defend any legal proceedings or arbitration proceedings as the
Manager(s) shall deem advisable;
(f) To perform or cause to be performed all of the Company's
obligations under any agreement to which the Company is a party;
(g) To execute, acknowledge and deliver any and all instruments in
connection with any or all of the foregoing;
(h) To expend the capital and revenues of the Company in furtherance
of the Company's business;
(i) To sell, transfer, assign, convey, trade, exchange, or otherwise
dispose of all or any portion of the Project or any other real or personal
property of the Company upon such terms and conditions and for such
consideration as the Manager(s) deem(s) appropriate;
(j) To enter into any agreement for the merger, reorganization, or
consolidation of the Company with any other legal entity as may be
permitted by law, to consummate, in accordance with the terms of such an
agreement, the merger, reorganization, or consolidation of the Company,
and through its Manager(s) and Officers, who are hereby authorized and so
directed, to take all acts and file all documents necessary or required to
effectuate such merger, reorganization, or consolidation;
(k) To delegate all or any of its duties hereunder and in
furtherance of any such delegation to appoint, employ, or contract with
any person the Manager(s) may in his (their) sole discretion deem
necessary, including entities owned or controlled by the Manager(s)
(including Affiliates of the Manager(s)), or desirable for the transaction
of the
<PAGE>
business of the Company, which persons may, under the supervision of the
Manager(s), perform any of the following or other acts or services for the
Company as the Manager(s) may approve, provided, however, that the
Manager(s) shall continue to be primarily responsible for the performance
of all such obligations; serve as the Company's advisor and consultant in
connection with policy decisions made by the Manager(s); act as
consultants, accountants, correspondents, attorneys, brokers, escrow
agents, or in any other capacity deemed by the Manager(s) necessary or
desirable; investigate, select and, on behalf of the Company, conduct
relations with persons acting in such capacities and pay appropriate fees
to, and enter into appropriate contracts with, or employ, or retain
services performed or to be performed by, any of them in connection with
any of the Company's properties; and perform or assist in the performance
of administrative or managerial functions necessary in the management of
the Company;
(l) To terminate, modify, enforce, continue or otherwise deal with
any note and mortgages, to refinance or sell the Project or other Company
property, and to take any other action with respect to agreements made
between the Company and a lender or any Affiliate thereof;
(m) To exercise all decision-making authority and other powers on
behalf of the Company in its capacity as a member, partner, or shareholder
of any Affiliate; and
(n) To, generally possess and exercise any and all of the rights,
powers and privileges of a Manager(s) under the laws of the State of
Georgia.
5.2 Duties.
The Manager(s) shall manage and control the Company, its business and
affairs, in order to carry out the business of the Company as set forth herein.
The Manager(s) shall devote itself (themselves) to the business of the Company
to the extent it deems necessary to conduct it and shall render to the Members,
whenever reasonably requested by any of them, a just and faithful account of all
dealings and transactions in relation to the business of the Company. The
Manager(s) shall execute such further documents and take such further action as
shall be appropriate to comply with the requirements of the Act or other laws by
which the Company is bound. The Manager(s) shall not be required to devote full
time to such duties.
5.3 Officers.
In order to more efficiently perform his (their) duties and obligations
under this Agreement, the Manager(s) and the other Members hereby consent to the
appointment, upon execution of this Agreement, of Robert S. Cole to serve as
President of the Company and Robert M. Flanders to serve as Vice-President,
Secretary, and Treasurer of the Company. The President shall have the authority,
to the full and same extent as, that which has been conferred on the Manager(s)
by this Agreement, and shall be subject to the same limitations that are
otherwise
<PAGE>
imposed under this Agreement on the Manager(s). The Vice-President shall have
the authority to exercise the powers of the President in the absence or
unavailability of the President, and shall have such other powers and authority
as the President or the Manager(s) shall delegate to him from time to time. The
Secretary shall keep minutes of all meetings of the Members, and have charge of
the minute books and all other records (other than financial records) of the
Company, and shall perform such other duties and have such other powers as may
be delegated to him or her by the President from time to time. The Treasurer
shall be charged with the management of the financial affairs of the Company,
including the maintenance of the Company's bank accounts and other financial
books and records and shall perform such other duties and have such other powers
as may be delegated to him or her by the President from time to time. The
President of the Company shall be permitted to appoint Officers of the Company
at such time as the President determines that the appointment of such Officer(s)
is necessary, otherwise helpful, or expedient in running the affairs of the
Company. Such appointment shall be evidenced by written consent action of the
President which sets forth the title(s) of such Officer(s), the authority and
responsibilities of such Officer(s), and the compensation of such Officer(s).
Once appointed, an officer of the Company shall serve until such time as he or
she is removed from such office by the President of the Company. The President
shall serve until such time as he or she is removed from such office by the
Manager(s) of the Company.
5.4 Dealings with Third Parties.
(a) All rights and powers of the Company generally and as
specifically enumerated above, may be exercised by the Manager(s) or the
Company's Officers, and any party dealing with the Company may rely upon the
actions of the Manager(s) or the Company's Officers exercising the rights and
powers authorized by this Agreement. No party dealing with the Manager(s) or any
officer of the Company shall be obliged to see to the application of any money
or property loaned, paid, or transferred to the Manager(s) or any officer to see
that the terms of this Agreement are complied with, or to determine whether any
action or failure to act on the part of the Manager(s) or Officer is in
accordance with or authorized by the terms of this Company. Every instrument
executed by the Manager(s) or Officer shall be conclusively interpreted in favor
of every person acting thereon that (i) at the time of the delivery of such
instrument this Company was in full force and effect; (ii) said instrument was
issued in accordance with the terms and provisions of this Company; (iii) the
Manager(s) was duly authorized and empowered to execute such instrument. The
receipt given by it shall discharge said party or parties, and they shall not be
bound to see to the application of any such money or property or be answerable
for the loss or misapplication thereof.
(b) Should anyone ever question the authority of the Manager(s) or
an Officer of the Company to do any of the things provided in this Section, and
thereby bind the Members, and specifically including the Manager'(s') or
President's authority to borrow money on behalf of the Company or to mortgage,
pledge, or otherwise encumber the property and assets of the Company, except as
provided in Section 5.4 herein, then and in that event, the Members do by these
presents hereby name, constitute and appoint the Manager(s), as their agent and
attorney-
<PAGE>
in-fact, with full and complete authority to do any and all of the things
specified in this Section, including, but not limited to, authority to confess
judgment and waive appraisement, insofar as the same affects said constituent,
or the said Company, or any rights or interests that it may have in any
property, real, personal or mixed, to the same extent as though said constituent
personally executed the said instrument, and for the further purposes and to the
same extent as hereinafter set forth in Section XIV.
5.5 Restrictions on Authority of Manager(s) and the Company.
Each Member executing this Agreement hereby specifically waives any right
that may be provided under the Act to such Member to approve, to vote on, or to
consent to any action that may be taken by the Company, through its Manager(s)
and/or Officer(s) in furtherance of any Company matter and specifically agrees
that such rights of such Member (other than a Member who also is a Manager or an
Officer) with respect to approval, the right to vote on, or consent to any
action the Company may take, through its Manager(s) or Officers, on any matter
arising in connection with the business and affairs of the Company shall be
limited specifically to only the following actions and Company matters:
(a) Notwithstanding any other provision to the contrary in this
Agreement, the Manager(s) and Officers may not take any of the following
actions:
(i) do any act in contravention of this Agreement or the
Company's Articles;
(ii) do any act which would make it impossible to carry on the
ordinary business of the Company, except as contemplated in this
Agreement;
(iii) file any voluntary bankruptcy petition on behalf of the
Company, consent to the appointment of any receiver, custodian, or
trustee, or execute or deliver any assignment for the benefit of the
creditors of the Company;
(iv) possess Company property or assign the rights of the
Company in specific property for other than a Company purpose; or
(v) admit a person as a Member except as otherwise provided in
this Agreement; or
(vi) knowingly or willingly consent to any act (except an act
expressly permitted by this Agreement) which would cause the Company
to become an association taxable as a corporation.
(b) Notwithstanding the provisions of Section 5.1 through 5.3, the
Company, through its Manager(s) and Officers, may only take any of the
following actions if the written consent of all the Members is first
obtained:
<PAGE>
(i) participate in any merger, reorganization, or
consolidation with any other legal entity as may be permitted by
law; provided, however, that if such consent is required and
obtained, the Company's Manager(s) and Officers may take all
actions, on behalf of the Company, in furtherance of such merger,
reorganization, or consolidation as may be permitted under Section
5.1(j);
(ii) sell, exchange, assign, transfer, lease, or otherwise
dispose of all or substantially all of the assets and property of
the Company;
(iii) offer any Membership Interest of the Company, or any
successor security thereto, for sale to the public in an
underwritten offering; or
(iv) offer additional Membership Interests in the Company or
admit additional Members, except as otherwise provided for in
Section IX.
(v) change the franchisor of the Property;
(vi) materially modify the franchise agreement relating to the
Property;
(vii) materially modify or amend the property management
agreement for the Property with IHM, or an affiliate thereof or any
affiliate of any Member of the Company, except as may be required by
a franchisor or lender related to the Property;
(viii) increase, materially modify or recast the provisions of
any loan secured by the Project; and
(ix) materially amend the Articles of the Company or this
Operating Agreement except as set forth in Section 15.1 hereof.
5.6 Compensation of Manager(s).
Except as expressly provided in this Agreement, the Manager(s) shall not
receive any compensation for serving as Manager(s).
5.7 Tax Matters Partner.
Robert S. Cole is hereby designated as the "Tax Matters Partner" in
accordance with Section 6231(a)(7) of the Code and, in connection therewith and
in addition to all other powers given thereunder, shall have all other powers
needed to fully perform hereunder, including, without limitation, the power to
retain all attorneys and accountants of his choice and the right to settle any
audits without the consent of the Members. The designation made in this
paragraph is hereby expressly consented to by each Member as an express
condition to becoming a Member.
<PAGE>
In the event that Robert Cole no longer is an officer or the initial Manager of
the Company, he shall no longer serve as the "Tax Matters Partner" of the
Company and a new "Tax Matters Partner" shall be appointed by a Majority of the
Members.
SECTION VI
LIABILITY AND INDEMNIFICATION OF
MANAGER(S) AND OFFICERS
6.1 Return of Capital Contribution.
Notwithstanding anything in this Agreement to the contrary, neither the
Manager(s) nor the Company's Officers shall be personally liable for the return
of the Capital Contributions of the Members, or any portion thereof, it being
expressly understood that any such return shall be made solely from Company
assets.
6.2 Liability for Actions or Omissions.
Neither the Manager(s) nor the Company's Officers shall be liable,
responsible or accountable in damages or otherwise to any of the Members or the
Company for any act or omission of the Manager(s), or Company's Officer, or any
of them, in good faith on behalf of the Company and in a manner reasonably
believed by the Manager(s) and/or Company's Officers to be within the scope of
the authority granted to the Manager(s) and/or Company Officer by this
Agreement. The foregoing shall not relieve the Manager(s) or Company Officer of
liability for fraud, gross negligence or willful misfeasance.
6.3 Indemnification by Company.
(a) The Company shall and hereby does indemnify, defend and save
harmless the Manager(s) and the Company's Officers from and against any claim,
loss, expense, liability, action or demand incurred by the Manager(s) or the
Company's Officers in respect of any omission to act or of any act performed by
the Manager(s) or the Company's Officers, in the good faith belief that he
(they) was acting or refraining from acting within the scope of his (their)
authority under this Agreement, on behalf of the Company or in furtherance of
the Company's interests, including, without limitation, reasonable fees and
expenses of litigation and appeal (including, without limitation, reasonable
fees and expenses of attorneys engaged by the Manager(s) and/or the Company's
Officers in defense of such act or omission).
(b) Neither the Manager(s) nor the Company's Officers shall be
entitled to any indemnity for any loss sustained or fees or expenses incurred by
a Manager(s) or by Company Officer by reason of the fraud, gross negligence or
willful misfeasance of a Manager(s) or by the Company Officer.
<PAGE>
SECTION VII
RIGHTS AND OBLIGATIONS OF MEMBERS
7.1 Negative Covenants.
No Member, other than a Manager or Officer who is also a Member, shall:
(a) Be allowed to take part in the management or control of the
Company affairs, or to sign for or bind the Company, such power to vest
solely and exclusively in the Manager(s) and the Company's Officers;
(b) Be entitled to be paid any salary or to have a Company drawing
account in his capacity as a Member;
(c) Withdraw or reduce his Capital Contribution except as a result
of the dissolution of the Company or as otherwise provided by law;
notwithstanding the foregoing, distributions made in accordance with
Section III which represent in whole or in part a return of capital shall
not be considered to be a withdrawal or reduction of a Member's Capital
Contribution under this Section 7.1(c);
(d) Cause the termination or dissolution of the Company by consent
or otherwise such right being specifically waived by the Members; or
(e) Demand or receive property other than cash in return for his
Capital Contribution.
7.2 [OMITTED]
7.3 Voting Rights.
Each Member executing this Operating Agreement hereby specifically waives
any rights to consent to, vote upon, or approve of any actions that may be taken
by the Company, through its Manager(s) and Officer(s), that may be provided to
such Member by or under the Act, and hereby specifically acknowledges that, in
lieu of any such rights to consent to, vote upon, or approve of any actions that
may be taken by the Company, the Member's rights shall be limited to the rights
that are otherwise provided to such Member under the terms of this Agreement.
7.4 Representations and Warranties.
(a) Each Member executing this Agreement represents to the Company,
as of the date of such execution, that such Member has the full right, power and
authority to enter into and perform the transactions described and obligations
set forth in this Agreement, and the entry
<PAGE>
into this Agreement by such Member does not, and the performance of his
obligations under this Agreement will not, violate any law or material agreement
with any third party to which such Member or his property or assets are bound.
(b) Each Member warrants and represents that (i) he is acquiring his
Membership Interest in the Company for investment purposes only and exclusively
for his own account, and that he has no agreement, understanding, arrangement or
intention to divide or share ownership of his Membership Interest with anyone
else or to resell, transfer or dispose of all or any portion of such Interest to
any other person, and that (ii) he is an "accredited investor" as defined in
Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act")
and Regulation D promulgated thereunder.
(c) Each Member acknowledges:
(i) that he and/or his purchaser representative (if any) have
such knowledge and experience in financial and business matters that he is
or they are capable of evaluating the merits and risks of the investment
involved in the purchase of a Membership Interest in the Company and has
so evaluated same;
(ii) that he is aware that this investment is speculative and
represents a substantial risk of loss;
(iii) that he is able to bear the economic risk of such
investment, even if it involves a complete loss of this investment;
(iv) that in connection with his purchase of Membership
Interests in the Company, he has been fully informed as to the
circumstances under which he is required to take and hold such Membership
Interests pursuant to the requirements of the Securities Act, and
applicable state securities or "Blue Sky" laws; and
(v) that the Manager(s) has informed him that his Membership
Interests are not registered under the Securities Act or any Blue Sky law
and may not be transferred, assigned or otherwise disposed of unless such
Membership Interests are subsequently registered under the Securities Act
and any applicable Blue Sky laws, or exemptions from such registration
requirement are then available.
(d) Each Member understands:
(i) that the Company and the Manager(s) is under no obligation
to register such Membership Interests under the Securities Act or under
any Blue Sky law or to comply with any applicable exemption under the
Securities Act or under the Blue Sky law with respect to such Membership
Interests; and
(ii) that the Company will not be required to supply him with
any information necessary to enable him to make a sale of such Membership
Interests
<PAGE>
pursuant to Rule 144 under the Securities Act (assuming such Rule is
applicable and is otherwise available to him with respect to such
Membership Interests).
SECTION VIII
APPOINTMENT AND REMOVAL OF MANAGER(S)
8.1 Appointment of Initial Manager(s).
By executing this Agreement, the Members hereby affirm the appointment of
Robert S. Cole as the initial Manager of the Company with all the rights,
duties, responsibilities and obligations set forth herein.
8.2 Appointment of Additional or Successor Manager(s).
The Members shall have the authority to appoint such additional persons as
additional or successor Managers of the Company; provided, however, that, during
any period in which Robert S. Cole is a Manager of the Company, Robert S. Cole
shall hold ultimate decision-making authority vis-a-vis the other Manager(s) and
none of the other Manager(s) shall possess any of the voting, approval, or
consent rights.
8.3 Voluntary Withdrawal of a Manager.
A Manager may Voluntarily Withdraw from the position of Manager upon
thirty (30) days written notice to the Company. If a Manager Voluntarily
Withdraws as a Manager and there are no other Managers of the Company, the
Members owning a Majority of the Ordinary Units shall elect one or more new
Managers.
8.4 Involuntary Withdrawal of a Manager.
A Manager of the Company can be removed at any time with the consent of a
majority of the Members owning Ordinary Units.
SECTION IX
ISSUANCE AND TRANSFER OF MEMBERSHIP INTERESTS
9.1 Issuance of Ordinary Units.
The Company, through its Manager(s), is authorized to issue the number of
Ordinary Units to the Members as set forth on Exhibit "A" in connection with and
upon consummation of the organization of the Company and the acquisition of the
Project. When, in the discretion of the Company's Manager(s), the Manager(s)
determine(s) that additional capital is required for
<PAGE>
one of the purposes set forth in Sections 1.7 and 2.7 of the Agreement, the
Company, in its discretion may issue additional Ordinary Units in the manner set
forth in Section 2.7.
9.2 Effect of a Transfer of a Member's Interest in the Company.
The Withdrawal of a Member, the admission of a Member, or the assignment
by a Member of all or a portion of his Membership Interest shall not cause a
dissolution or termination of the Company.
9.3 Effect of Death, Etc. of a Member on the Company.
The death, bankruptcy, or adjudication of incompetence of a Member, the
Voluntary Withdrawal of a Member, Involuntary Withdrawal of a Member, or any
other event of disassociation under the Act shall not cause a dissolution or
termination of the Company.
9.4 Transfer of Membership Interests.
(a) Requirement for Transfer. Except as otherwise provided in this
Agreement, a Member or the transferee of a Member may Transfer all or part of
his Membership Interest only with the consent of the other Members, provided
that, unless otherwise consented to by the Manager(s), (i) the transferee, if an
individual, is at least 21 years of age, (ii) the transferee executes an
instrument reasonably satisfactory to the Manager(s) accepting and adopting the
provisions and agreements set forth herein, and (iii) the Manager(s) shall
consent to such Transfer, which consent may be given or withheld in the
Manager(s)'s sole discretion; provided, further, that such consent shall be
withheld if the transferor Member does not obtain a legal opinion, acceptable to
counsel for the Company, that (1) such Transfer would not result in the close of
the Company's taxable year with respect to all Members, impair the ability of
the Company to be taxed as a partnership, cause the termination of the Company
within the meaning of Section 708(b) of the Code, or cause the termination of
its status as a partnership under the Code, and (2) such Transfer does not
violate any provision of any Federal or state securities law. The foregoing
transfer restrictions shall not apply to the assignment and transfer of all of
the issued and outstanding Membership Interests in the Company to Impac or an
Affiliate thereof pursuant to the Buyout Agreement.
(b) Requirement for Substitution. No transferee of the whole or a
portion of a Member's Membership Interest shall have the right to become a
Substituted Member in place of his assignor unless and until all of the
following conditions are satisfied:
(i) A duly executed and acknowledged written instrument of
transfer approved by the Manager(s) has been filed with the Company
setting forth the intention of the transferor that the transferee become a
Substituted Member in his place.
(ii) The transferor and transferee execute and acknowledge
such other instruments as the Manager(s) may reasonably deem necessary or
desirable to effect such
<PAGE>
substitution, including the written acceptance and adoption by the
transferee of the provisions of this Agreement.
(iii) The written consent of the Manager(s) to such
substitution shall be obtained, the granting or denial of which shall be
within the sole and absolute discretion of the Manager(s).
(iv) A reasonable transfer fee has been paid to the Company
sufficient to cover all reasonable expenses connected with the transfer
and substitution.
(v) If required, an appropriate amendment of the Articles has
been duly filed and recorded. The Manager(s) agree to file such amendment
and cause it to be recorded promptly after the conditions specified in
subparagraphs (i) through (iv) above have been satisfied.
(vi) The Company has received an opinion of counsel, at the
request of the Manager(s), satisfactory to the Company and its counsel
that such transfer can be made without registration under federal or state
Securities Laws together with a written representation and warranty
identical to the representation and warranty contained in Section 7.4 in
its entirety.
(c) The Company shall make an appropriate notation on any
certificates issued evidencing a Member's Membership Interest in the Company and
in the records of the Company describing the limitations on resale contained in
this Section 9.4.
(d) Any Transfer of the Membership Units made or attempted in
contravention of the restrictions of this Section 9.4 is void.
9.5 Effectiveness of Transfer.
(a) The Transfer by a Member or a transferee of a Member, with the
consent of the Manager(s), of all or part of his Membership Interest shall
become effective on the first day of the month following receipt by the
Manager(s) of evidence of such Transfer in form and substance reasonably
satisfactory to the Manager(s) and a transfer fee sufficient to cover all
reasonable expenses of the Company connected with such Transfer; provided that,
the Manager(s) have consented, if required, to such Transfer in accordance with
Section 9.5; provided further that the Manager(s) may, in their sole discretion,
establish an earlier effective date for the Transfer if requested to do so by
the transferor or transferee.
(b) No Transfer of Membership Interests or any part thereof which is
in violation of this Section IX shall be valid or effective, and the Company
shall not recognize the same for the purposes of allocating Company Profits and
Company Losses or making distributions of cash with respect to the units
representing such Membership Interests, or part thereof. The Company may enforce
the provisions of this Section either directly, or indirectly or through its
agents by refusing to register or transfer, or permit the registration or
transfer, on its
<PAGE>
books of any proposed Transfers not in accordance with this Section IX.
(c) The Company shall, from such time as a Membership Interest is
registered in the name of the transferee on the Company's books in accordance
with the above provisions and other applicable provisions of this Agreement, pay
to the transferee all further distributions or other compensation by way of
income or return of capital, on account of the units representing the Membership
Interest that has been transferred. Until the registration or Transfer on the
Company's books, the Manager(s) may proceed as if no Transfer has occurred.
9.6 Purchase of Membership Units by a Manager.
If a Manager acquires a Membership Unit as a Member, said Manager shall,
with respect to such Membership Unit, enjoy all of the rights and, except as
provided in Section 7.1, be subject to all of the obligations and duties of a
Member.
SECTION X
DISSOLUTION OF THE COMPANY
10.1 Dissolution of The Company.
(a) The Company shall dissolve on December 31, 2030, or upon the
earlier occurrence of any of the following events:
(i) provided that the requirements, if any, set forth in the
Company's Articles are satisfied, upon the mutual written agreement of all
the Members setting forth their determination that the Company should be
dissolved; or
(ii) otherwise by operation of law.
SECTION XI
LIQUIDATION OF COMPANY
11.1 Procedure.
Upon the dissolution of the Company, the Manager(s) or the person required
by law to wind up the Company's affairs shall cause the cancellation of this
Agreement and take the following steps and actions:
(a) a statement of dissolution which complies with the requirements
of O.C.G.A. Section 14-11-606 shall be filed with the State of Georgia,
and such other
<PAGE>
filings, notices, and other actions shall be taken as required by Article
6 of the Act;
(b) a statement setting forth the assets and liabilities of the
Company as at the date of dissolution shall be prepared by the Company's
accountant or firm of accountants and such statement shall be furnished to
all of the Members;
(c) the assets of the Company shall be liquidated as promptly as
possible, but in an orderly and businesslike manner so as not to involve
undue sacrifice; and
(d) any gain or loss realized by the Company upon the sale or other
disposition of its property and assets shall be allocated among the
Members in accordance with the provisions of Section IV.
11.2 Distributions Upon Dissolution.
The proceeds of sale and all other assets of the Company shall be applied
and distributed as follows, and in the following order of priority:
(a) First, to the creditors of the Company (including the Manager(s)
and its (their) affiliates) in payment of the unpaid liabilities of the
Company to the extent required under agreements with such creditors and
the reasonable expenses of liquidation;
(b) Second, to the setting up of any reserves which the Manager(s)
or the person required by law to wind up the Company's affairs may deem
reasonably necessary for any contingent or unforeseen liabilities or
obligations of the Company arising out of or in connection with the
Company's business. Said reserves may, in the discretion of the Manager(s)
or the person required by law to wind up the Company's affairs, be paid
over to an escrow agent selected by them to be held by it as escrowee for
the purpose of disbursing such reserves in payment of any of the
aforementioned contingencies, to the expiration of such period as the
Manager(s) shall deem advisable, to distribute the balance thereafter
remaining as hereinafter provided in this section; and
(c) Third, to the Members owning Ordinary Units, pro rata based on
the number of Ordinary Units owned by each Member.
SECTION XII
MEMBER AND MANAGER ACTIVITIES
The provisions of Section 14-11-307 of the Act, addressing "conflicting
interest transactions," shall not apply to any Member, Manager, or Officer, or
any Affiliate of any Member, Manager or Officer and the activities of any
Member, Manager, or Officer with respect to any activities shall be subject to
the limitations and obligations set forth in this Agreement.
<PAGE>
Any Member, Manager, or Officer, and any Affiliate of such Member, Manager, or
Officer, including any shareholder, officer, director or employee thereof may,
notwithstanding the existence of this Agreement, engage in or possess an
interest in any other business or venture of every nature and description,
independently or with others including, but not limited to, the ownership,
financing, leasing, operation, management, brokerage and development of real
property, whether the same be competitive with the Company or otherwise, without
having or incurring any obligation to offer any interest in such activities to
the Company or any party hereto. Neither this Agreement nor any activity
undertaken pursuant hereto shall prevent the Manager(s), Officer, Affiliate, or
any Member from engaging in such activities, or require the Manager(s) to permit
the Company or any Member to participate in any such activities and as a
material part of the consideration for a Manager's employment hereunder and
admission of each Member, each Member hereby waives, relinquishes, and renounces
any such right or claim of participation. Neither the Company nor any Manager(s)
or Member shall have the right to the income of proceeds derived from any
party's other business interest, even if that business interest is competitive
with the Company business and such business interest shall not be deemed
wrongful or improper. Notwithstanding the foregoing, any transaction with any
affiliate shall be at arms-length and require the payment of consideration at
fair value for any property exchanged or services provided.
SECTION XIII
RECORDS AND ACCOUNTING
13.1 Books of Account.
The Manager(s) shall keep or cause to be kept complete and true books of
account of the Company in accordance with the accounting method followed by the
Company for federal income tax purposes and otherwise in accordance with sound
accounting principles and procedures applied on a consistent basis, which shall
reflect all Company transactions and shall be appropriate and adequate for the
Company's business. Such books of account, records and documents of the Company
shall be kept at the principal place of business of the Company and each Member
and his authorized representatives shall have at all times, during normal
business hours and upon reasonable notice, free access to and the right to
inspect and copy, at his expense, such books of account.
13.2 Financial Reports.
(a) As soon as practicable after the close of each fiscal year, but
in no event later than 75 days after the close of any such year, the Manager(s)
shall deliver to each Member an annual financial unaudited report of the Company
for such Fiscal Year, including a balance sheet, a profit and loss statement and
a statement showing distributions to the Members and allocations to the Members
of Company Profits or Company Losses, and such other information as is
reasonably available to the Company which may be helpful in determining the
amount of taxable income to be included by each Member in his federal, state and
local income tax returns
<PAGE>
for such year. Such annual statement shall also be provided to any person who
was a Member at any time during the year covered by such annual statements.
(b) The Manager(s) shall cause the Company's accountants to prepare
or review the federal, state and local tax returns of the Company for each
fiscal year and shall timely file such returns and such returns shall be
completed on the method of tax accounting deemed appropriate by the Manager(s)
in accordance with Section 13.5.
(c) Manager shall provide to the Members on a monthly basis, copies
of all monthly financial and operating statements produced by Manager or any
entity providing property management services to the Company, together with a
copy of any management reports from time to time provided by such management
company in connection with the business of the Company. The Manager shall, in
addition, cause to be provided to the Members copies of all reports, including,
but without limitation, any and all financial reports provided by the Company to
any lender holding any security interest in the Property. Manager shall consult
with the Members regarding annual budgets, capital improvement plans and
marketing plans. Such consultation shall not provide the Members any rights to
modify or amend such matters.
13.3 Fiscal Year.
The fiscal year of the Company for both reporting and federal income tax
purposes shall begin with the 1st day of January and end on the 31st day of
December in each calendar year.
13.4 Banking.
The funds of the Company shall be deposited in such bank or banks as the
Manager(s) shall deem appropriate. Such funds shall be withdrawn only by the
Manager(s) or his (their) duly authorized agents. All deposits and other funds
not needed in the operations of the business of the Company may be deposited in
interest-bearing accounts or invested in short-term United States Government or
other governmental (state or local) obligations or in certificates of deposit,
master notes or other evidences of indebtedness or "Money-Market" Funds.
13.5 Accounting Decisions and Tax Elections.
All decisions as to accounting matters and tax elections, except as
specifically provided to the contrary herein, required or permitted to be made
by the Company shall be made by the Manager(s) in his (their) sole discretion.
Such decisions may be based on the advice of the Company's accountants, upon
which the Manager(s) may rely.
SECTION XIV
POWER OF ATTORNEY
14.1 Appointment.
<PAGE>
(a) Each Member hereby makes, constitutes and appoints the
Manager(s), and any successor Manager(s), and the Officers, with full power of
substitution and re-substitution, his or its true and lawful attorney-in-fact
for him and in his name, place and stead and for his use and benefit, from time
to time:
(i) To amend this Agreement in order to bring the Agreement in
compliance with or to conform to any of the requirements of any lender to
the Company;
(ii) To file and record this Agreement and any separate
Articles or amended Articles which is required to be filed or which the
Manager(s) deems it advisable to file;
(iii) To make, file and record, all agreements amending this
Agreement, as now or hereafter amended, that may be appropriate to reflect
or effect, as the case may be,
(A) a change of the name or the location of the
principal place of business of the Company;
(B) a transfer or acquisition of any Interest by a
Member in any manner permitted by this Agreement;
(C) a person becoming a substituted Member of the
Company as permitted by this Agreement;
(D) a change in any provision of this Agreement effected
by the exercise by any person of any right or rights
hereunder; or
(E) a dissolution of the Company pursuant to this
Agreement;
(iv) To make such certificates, instruments and documents as
may be required by, or may be appropriate under Georgia or Oregon law in
connection with the use of the name of the Company by the Company;
(v) To make such certificates, instruments and documents as
such Member may be required, or as may be appropriate for such Member to
make, by Georgia or Oregon law to reflect:
(A) a change of name or address of such Member;
(B) any changes in or amendments of this Agreement, or
pertaining to the Company, of any kind referred to in this
Section; or
(C) any other changes in or amendments of this Agreement
in
<PAGE>
accordance with Section 15.1 hereof;
(vi) To make, file and record amendments of this Agreement to
comply with any requirements of the Act, or the regulations promulgated
thereunder, provided the same does not materially adversely affect the
rights of the Members;
(vii) To make, file and record any documents which may be
required in connection with borrowings by the Company, including, without
limitation, documents required by financial institutions, and including
correction of or insertions to any document executed by a Member;
(viii) To make, file and record any documents which may be
required in connection with any filings with federal or state securities
commissions or other federal or state authorities; and
(ix) To make, file and record any instrument which the
Manager(s) deems to be in the best interests of the Company to file and
which is not inconsistent with the provisions of this Agreement.
(b) Each of the agreements, certificates, instruments and documents
made pursuant to Section 14.1(a) shall be in such form as the Manager(s) and
counsel for the Company shall deem appropriate. The powers conferred by this
Section to make agreements, certificates, instruments and documents, shall be
deemed to include without limitation the powers to sign, execute, acknowledge,
swear to, verify, deliver, file, record or publish the same.
(c) Each Member authorizes the Manager(s) as such attorney-in-fact
to take any further action which such Manager(s) shall consider necessary or
advisable in connection with any action taken pursuant to this Section 14.1
hereby giving such Manager(s) as such attorney-in-fact full power and authority
to do and perform each and every act or thing whatsoever requisite or advisable
to be done in and about any action taken pursuant to this Section 14.1 as fully
as such Member might or could do if personally present, and hereby ratifying and
confirming all that the Manager(s) as such attorney-in-fact shall lawfully do or
cause to be done by virtue of this Section 14.1, provided, however, that the
power and authority granted in this Section XIV shall not include the power or
authority to vote on behalf of a Member if it is granted by this Agreement or by
the Act and is not otherwise precluded by this Agreement. Notwithstanding any
provision contained in Section XIV, the Manager(s) shall not exercise the power
of attorney in any manner inconsistent with the provisions of this Agreement.
14.2 Irrevocability and Manner of Exercise.
The power of attorney granted pursuant to Section 14.1:
(a) is a special power of attorney coupled with an interest and is
irrevocable;
(b) may be exercised by a Manager(s) as such attorney-in-fact, by
listing all of
<PAGE>
the Members executing any agreement, certificate, instrument or document
with the single signature of such Manager(s) acting as attorney-in-fact
for all of them;
(c) shall survive the transfer by a Member of the whole or a portion
of his Interest, except that where the purchaser, transferee, or assignee
thereof with the consent of the Manager(s) is admitted as a substituted
Member, the power of attorney shall survive the transfer for the sole
purpose of enabling such attorney-in-fact to execute, acknowledge and
swear to and file any such agreement, certificate, instrument or document
necessary to effect such substitution; and
(d) shall, to the extent permitted under the laws of the domicile of
such Member, survive the death, incapacity or incompetency of the Member.
SECTION XV
GENERAL PROVISIONS
15.1 Amendments.
(a) Amendments may be made to this Agreement from time to time by
the Manager(s) without the consent of the Members:
(i) to add to the representations, duties, or obligations of
the Manager(s);
(ii) to cure or supplement any provision hereunder which may
be inconsistent with any other provision hereunder;
(iii) to delete or add any provision to this Agreement
required or requested to be so deleted or added by the Internal Revenue
Service, staff of the Securities and Exchange Commission, or any other
Federal Agency or by any state "Blue Sky" Commissioner or similar such
official, or any lender (other than the Manager(s) or an Affiliate
thereof) or surety even though such deletion or addition may adversely
affect rights of Members (but no change in the rights of Members to
profits, losses or cash distributions or to make Capital Contributions
shall be made without the consent of all Members);
(iv) to modify the allocation provisions in Sections II and IV
to comply with Final Regulations subsequently issued by the Treasury
Department. The intent of such change will be to conform as closely as
practical with the present provisions Sections II and IV;
(b) Notwithstanding any provisions of the preceding paragraphs to
the
<PAGE>
contrary (and except as is expressly permitted by Section 14.1(a)(i) and Section
15.1 (a)), this Agreement may not be amended or modified without the prior
written consent of all the Members.
(c) If this Agreement shall be amended as a result of adding or
substituting a Member, the amendment to this Agreement shall be signed by all
Manager(s) and by the person to be substituted or added (or his
attorney-in-fact) and, if a Member is to be substituted, by the assigning Member
or his attorney-in-fact. If this Agreement shall be amended to reflect the
designation of an additional or successor Manager(s), such amendment shall be
signed by all Manager(s) and by such additional or successor Manager(s). If this
Agreement shall be amended to reflect the withdrawal of a Manager(s) and the
business of the Company is continued, such amendment shall be signed by the
remaining or successor Manager(s).
(d) In making any amendments, the Manager(s) shall prepare all
required documentation and make all official filings and publications as are
required by his (their) undertakings and the other persons affected by such
amendment shall cooperate with the Manager(s) to the extent reasonably necessary
to enable the Manager(s) to meet his (their) obligations.
15.2 Complete Agreement.
This Agreement sets forth all of the promises, agreements, conditions,
understandings, warranties and representations among the parties hereto with
respect to the Company, the Company business and the property of the Company,
and there are no promises, agreements, conditions, understandings, warranties or
representations, oral or written, express or implied, among them other than as
set forth in this Agreement.
15.3 Meetings and Voting.
All decisions and actions of the Company may be taken by the Members
entitled to participate therein by submitting notices to the Members entitled to
participate in such decisions or actions and obtaining the written consent of
the requisite number of percentage of Members. There shall be no meetings of the
Company, except pursuant to Section 15.3 hereof.
15.4 Notices.
Any notice, payment, demand, or communication required or permitted to be
given by any provision of this Agreement shall be in writing and shall be deemed
to have been delivered and given for all purposes (a) if delivered personally to
the party or to an officer of the party to whom the same is directed, or (b)
whether or not the same is actually received, if sent by registered or certified
mail, postage and charges prepaid, addressed: (i) if to a Manager(s), to his
address set forth in Section 1.5 or to such other address as the Manager(s) may
from time to time specify by written notice to the Members, and (ii) if to a
Member, at such Member's address set forth on the signature pages hereto, or to
such other address as such Member may from time to
<PAGE>
time specify by written notice to the Manager(s). Any such notice shall be
deemed to be given as of the date so delivered, if delivered personally, or on
the date that is three (3) business days after the same was deposited in a
regularly maintained receptacle for the deposit of United States mail,
addressed, and sent as aforesaid. Any such notice may at any time be waived by
the person entitled to receive such notice.
15.5 Counterparts.
This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original copy and all of which together shall
constitute one agreement binding on all parties hereto, notwithstanding that all
the parties shall not have signed the same counterpart, except that no
counterpart shall be binding unless signed by all Manager(s).
15.6 Section Headings.
The headings in this Agreement are inserted for convenience and
identification only and are in no way intended to describe, interpret, define,
or limit the scope, extent or intent of this Agreement or any provisions hereof.
15.7 Pronouns and Plurals.
All pronouns used herein shall be deemed to refer to the masculine,
feminine, neuter, singular or plural as the identity of the person or persons,
or entity or entities, may require in the context, and the singular form of
nouns, pronouns and verbs shall include the plural, and vice versa, whichever
the context may require.
15.8 Successors.
Subject to the limits on transferability and assignability contained in
this Agreement, each and all of the covenants, terms, provisions and agreements
contained in this Agreement shall be binding upon and inure to the benefit of
the successors, heirs, and assigns of the respective parties hereto.
15.9 Applicable Law.
This Agreement shall be construed and enforced in accordance with the laws
of the State of Georgia and the Act, without regard to the choice of law
principles thereof.
15.10 Time of Essence and Number of Days.
Time is of the essence in this Agreement. In computing the number of days
(other than business days) for purposes of this Agreement, all days shall be
counted, including Saturdays, Sundays, and holidays; provided, however, that if
the final day of any time period falls on a Saturday, Sunday, or holiday, then
the final day shall be deemed to be the next day which is not a
<PAGE>
Saturday, Sunday or holiday.
15.11 Severability.
Every provision of this Agreement is intended to be severable. If any term
or provision hereof is illegal or invalid for any reason whatsoever, such
illegality or invalidity shall not affect the validity of the remainder of this
Agreement.
15.12 Waiver of Action for Partition.
Each of the Members irrevocably waives during the Term of the Company and
during the period of its liquidation following any dissolution, any right that
such Member may have to maintain any action for partition with respect to any of
the assets of the Company.
15.13 Interpretation.
No provision of this Agreement is to be interpreted for or against any
party because that party or that party's legal representative drafted such
provision.
IN WITNESS WHEREOF, the undersigned, being the sole initial Member of the
Company, has executed this Operating Agreement effective this 14th day of May,
1998.
ORDINARY MEMBERSHIP INTERESTS:
SERVICO, INC., a Florida corporation
By: /s/David Buddemeyer
-------------------------------------
David A. Buddemeyer
President and Chief Executive Officer
<PAGE>
EXHIBIT "A"
ORDINARY MEMBERS CAPITAL CONTRIBUTION NO. OF UNITS
- ---------------- -------------------- ------------
Servico, Inc. $_______ 100
1601 Belvedere Road
West Palm Beach, FL 33406
<PAGE>
SCHEDULE 1.10
DEFINITIONS
Defined terms used in this Agreement and not set forth in this Schedule
1.10 shall have the meanings set forth elsewhere in this Agreement, and all of
such defined terms, wherever set forth, shall be equally applicable to both the
singular and plural forms of the terms defined.
* * * * * * * *
"Affiliate" means with respect to a specified person, any person who,
directly or indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with the person specified.
"Agreement" means this Operating Agreement, as the same may be amended
from time to time.
"Articles" means the Articles of Organization of the Company, as duly
filed, and as amended and restated or as otherwise amended from time to time as
herein required, in accordance with the laws of the State of Georgia.
"Asset Value" means (i) the fair market value of any asset contributed to
the Company by any Member determined as of the time of contribution; (ii) the
fair market value on the date of distribution of any asset distributed by the
Company to any Member with respect to such Member's interest in the Company; and
(ii) the fair market value of all Company Property at the happening of any of
the following events: (A) the admission of a Member to, or the increase of an
interest of an existing Member in, the Company in exchange for a Capital
Contribution; or (B) the liquidation of the Company pursuant to Treasury
Regulation Section 1.704-1(b)(2)(ii)(g).
"Buyout Agreement" means that certain Purchase and Sale Agreement for
Membership Interests of Atlanta-Hillsboro Lodging, L.L.C. dated as of May 15,
1998, between Servico and Impac, pursuant to which Servico agrees to sell, and
Impac agrees to purchase, all of the issued and outstanding Membership Interests
in the Company in the event the Merger Agreement is terminated or the mergers
contemplated therein are not consummated by September 1, 1999.
"Capital Account" means, in respect to any Member, the Capital
Contribution of such Member as set forth in this Agreement, adjusted as set
forth in Section II.
"Capital Contribution" means, in respect to any Member, the money or the
fair market value of property contributed or agreed to be contributed to the
Company by such Member as shown in Exhibit "A" and shall include any additional
Capital Contribution made pursuant to Sections 2.7.
"Cause" means, (a) any act of fraud, misappropriation, dishonesty,
embezzlement or
<PAGE>
similar conduct against the Company or an Affiliate, or (b) conviction for a
felony or any other crime involving moral turpitude.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or corresponding provisions of subsequent laws.
"Company" means the limited liability company known as "Atlanta-Hillsboro
Lodging, L.L.C." formed pursuant to this Agreement and the Articles.
"Company Profit" and "Company Loss" shall mean, for each Fiscal Year or
other period, an amount equal to the Company's taxable income or loss for such
year or period, determined in accordance with Section 703(a) of the Code (for
this purpose, all items of income, gain, loss, or deduction required to be
stated separately shall be included in taxable income or loss); provided,
however, that (a) income exempt from federal income tax shall be treated as
taxable income, (b) expenditures described in Section 705(a)(2)(B) of the Code
or treated as such expenditures under Treasury Regulation Section
1.704-1(b)(2)(iv)(i) shall be subtracted from taxable income, (c) the difference
between the adjusted basis for federal income tax purposes and Asset Value of
Company property shall be treated as gain or loss upon the happening of an event
described in clause (iii) of the definition of "Asset Value" herein, (d) gain or
loss resulting from the disposition of Company property with respect to which
gain or loss is recognized for federal income tax purposes shall be computed by
reference to the Asset Value of such Company property, (e) items specially
allocated under Sections 2.3(a), 2.3(b) and 2.3(c), and 4.1(b)(i) and (iii)
shall not be taken into account.
"Fiscal Year" means the calendar year.
"Impac" means Impac Hotel Group, L.L.C., a Georgia limited liability
company.
"Invested Capital" means, in respect to any Member, the amount of such
Member's Capital Contribution less distributions of such Member's Capital
Contribution made to such Member under Section 3.2(c) or (d), as the case may
be.
"Involuntary Withdrawal" or "Involuntarily Withdraws" means the removal of
a Member or the removal and/or replacement of a Manager in accordance with the
terms of this Agreement.
"Majority" means 51%, by number, of the units or members, as the case may
be, in connection with any vote or consent action required in connection with
this Agreement.
"Manager(s)" means, initially, Robert S. Cole, an individual, resident of
the State of Georgia, and any substituted or additional Manager(s) appointed as
such in accordance with the terms of this Agreement, who has not been so removed
as a Manager(s) in accordance with such terms.
"Members" means the persons executing this Agreement as Members and any
persons
<PAGE>
subsequently admitted to the Company as substituted or additional Members;
collectively, the Manager(s) and the Members, and, individually, any one of the
Manager(s) and Members.
"Membership Interest" means the interest of a Member in the capital, the
profits, and/or the rights, along with the obligations, that are possessed by
such Member as defined by the class and category of such interest, as defined by
the terms of this Agreement. The Company may issue certificate representing the
Membership Interests in the Company.
"Merger Agreement" means that certain Agreement and Plan of Merger dated
as of March 20, 1998, by and among Servico, Lodgian, Inc. (formerly known as
Servico Hotel Group, Inc.), Impac, SHG-S Sub, Inc. and SHG-I Sub, L.L.C., as
amended from time to time.
"Nonrecourse Debt" means a Company liability with respect to which none of
the Members has any personal liability as determined under Treasury Regulation
ss. 1.752-1.
"Officers" means Robert S. Cole, as President, Robert M. Flanders as Vice
President, Secretary and Treasurer, and any other individual who is designated
an officer of the Company by the Manager(s) or the President, and who is
delegated authority to act on behalf of the Company in accordance with Section
5.3 of the Agreement.
"Person" means any individual, partnership, corporation, limited liability
company, trust, or other entity.
"Project" means the full service hotel to be constructed in the City of
Hillsboro, Washington County, Oregon, including the land, building, furniture,
fixtures, equipment, and other tangible and intangible property used in or
relating to the ownership and operation of the hotel.
"Representative" means the executor, administrator, guardian, trustee, or
other personal representative of a Member.
"Servico" means Servico, Inc., a Florida corporation.
"Substituted Member" means any person admitted to the Membership as a
Member pursuant to Section 9.6.
"Term" means the period of time between the date the Company becomes
effective and the date it ceases to be effective, unless earlier dissolved in
accordance with the terms of this Agreement.
"Transfer" means any sale, assignment, gift, pledge, or other disposition,
whether voluntary or by operation of law, of a Membership Interest.
"Voluntary Withdrawal" or "Voluntarily Withdraws" means the resignation or
withdrawal
<PAGE>
of a Member or a Manager other than an Involuntary Withdrawal.
<PAGE>
Exhibit 3.23.1
OPERATING AGREEMENT
OF
LODGIAN RICHMOND, LLC
ANY SECURITIES CREATED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE
GEORGIA SECURITIES ACT OF 1973, AS AMENDED, IN RELIANCE UPON THE EXEMPTION FROM
REGISTRATION SET FORTH IN SECTION 10-5-9(13) OF SUCH ACT. IN ADDITION, THE
SECURITIES CREATED BY THIS AGREEMENT, IF ANY, HAVE NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION SET FORTH IN THE SECURITIES ACT OF 1933 PROVIDED BY SECTION 4(2)
THEREOF, NOR HAVE THEY BEEN REGISTERED WITH THE SECURITIES COMMISSIONS OF
CERTAIN STATES IN RELIANCE UPON CERTAIN EXEMPTIONS FROM REGISTRATION. THE EQUITY
INTERESTS CREATED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY
NOT BE PLEDGED, HYPOTHECATED, SOLD, OR TRANSFERRED, EXCEPT IN COMPLIANCE WITH
THE TERMS AND CONDITIONS OF THIS AGREEMENT AND IN A TRANSACTION WHICH IS EITHER
EXEMPT FROM REGISTRATION UNDER SUCH ACTS OR PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACTS.
<PAGE>
OPERATING AGREEMENT
OF
LODGIAN RICHMOND, LLC
This Operating Agreement is entered into and shall be effective as of this
___ day of March, 1999, by and among the signatories hereto who, collectively,
are the "Members" of Lodgian Richmond, LLC, a Georgia limited liability company
(the "Company").
WHEREAS, the parties hereto desire to organize and operate a limited
liability company under the provisions of the Georgia Limited Liability Company
Act, O.C.G.A. Sections 14-11-100, et. seq. and in accordance with the terms and
subject to the conditions set forth in this Agreement;
AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual promises, covenants
and agreements contained herein, and for other good and valuable consideration,
the parties hereto, intending to be legally bound, agree as follows:
SECTION I
FORMATION, NAME, ARTICLES, PURPOSE, ETC.
1.1 Definitions.
Capitalized terms used in this Agreement shall have the meanings ascribed
to them in Schedule 1.1, which is incorporated herein by this reference.
1.2 Formation and Name.
The parties hereto do hereby agree to the formation and organization of a
Georgia limited liability company, to be known as "Lodgian Richmond, LLC,"
pursuant to O.C.G.A. Sections 14-11-100 et. seq., on the terms and conditions
hereinafter set forth. Pursuant to the Articles of Organization of the Company,
management of the Company is vested in one or more Managers. Persons currently
serving as Managers of the Company are hereby removed, and as of the date
hereof, the Company shall be managed by Lodgian Richmond SPE, Inc., a Georgia
corporation ("SPE"). Additional Managers may be appointed in accordance with
Section VIII hereof.
<PAGE>
1.3 Articles.
The Manager has caused the Articles of Organization of the Company to be
executed and filed with the Secretary of State of Georgia on February 23, 1999,
and has executed and filed with the Secretary of State of Georgia on March __,
1999, Amended and Restated Articles of Organization of the Company (as further
amended or restated from time to time, the "Articles").
1.4 Membership Interests.
The Company is authorized to issue an unlimited number of Class A Ordinary
Membership Interests (individually, an "Ordinary Unit" and collectively, the
"Ordinary Units"). No other classes or categories of Membership Interest may be
issued by the Company except as may otherwise be permitted by this Agreement.
Any issuance of Ordinary Units shall otherwise comply with any provisions
regarding such issuance that are otherwise set forth in this Agreement. The
Company will not issue certificates evidencing ownership of such Membership
Interests to the Members. Instead, the Company shall maintain records setting
forth, among other things, the name of the person who is the registered owner of
a Membership Interest, the number of units of Membership Interest owned by such
person, and the date such Membership Interest was acquired by such Member, and
the date, if applicable, such Membership Interest was transferred by such Member
and to whom such Membership Interest was transferred by such Member.
1.5 Registered and Principal Office.
The registered office, principal office, and principal place of business
of the Company shall be at Two Live Oak Center, 3445 Peachtree Road, NE, Suite
700, Atlanta, GA 30326, but, in compliance with the Act, substitute or
additional places of business may be established at such other locations as may,
from time to time, be determined by the Manager. The Manager shall promptly give
notice to the Members of any change in the principal office or place of
business.
1.6 Name and Address or Place of Residence of Manager and Registered
Agent:
(a) The name and address of Member who has initially been appointed
as the Manager of the Company are as follows:
Lodgian Richmond SPE, Inc.
Two Live Oak Center
3445 Peachtree Road, NE, Suite 700
Atlanta, Georgia 30326
Attn: Robert S. Cole
<PAGE>
(b) The name and place of legal residence of each of the Members are
set forth in Exhibit "A" attached hereto and made a part hereof. The Members,
who are so identified on the date hereof, are hereby admitted as Members. Any
change in interests shall be reflected in an amendment to Exhibit "A". All
references in this Agreement to Exhibit "A" mean Exhibit "A" as in effect at the
relevant time, including any amendments thereto.
(c) The name and address of the registered agent for service of
process are as follows:
Robert S. Cole
c/o Lodgian, Inc.
Two Live Oak Center
3445 Peachtree Road, NE, Suite 700
Atlanta, Georgia 30326
1.7 Term.
The Company became effective upon the execution of the Articles and the
accomplishment of all filings required for a limited liability company under the
laws of the State of Georgia, and shall terminate in accordance with the
provisions of this Agreement.
1.8 Purpose.
The principal purpose of the Company is: (i) to acquire and own the
Property and certain other related assets; (ii) to, directly or indirectly,
operate, manage, improve, lease, use or sell (in whole or in part) the Property;
and (iii) for all such other purposes as may be necessary or appropriate in
furtherance of the purposes identified in items (i) and (ii).
1.9 Authority.
In order to carry out its purpose, the Company is authorized, subject to
the Act and the other provisions of this Agreement, to do any and all acts and
things directly, or indirectly, necessary, advisable or incidental to or
convenient for the furtherance and accomplishment of its purpose, and for the
protection and benefit of the Company, including, but not limited to, the
following:
(a) To acquire, own, maintain, operate, use and lease, directly or
indirectly, the Property, or any other related assets, or to sell all or
any part thereof;
(b) To, directly or indirectly, borrow money and issue evidence of
indebtedness in furtherance of the Company business and secure any such
indebtedness by mortgage, pledge, or lien on the Property and other assets
of the Company;
<PAGE>
(c) To, directly or indirectly, operate and maintain the Property,
including entering into agreements (either directly or through an
Affiliate) with managing agents for the management of the Property;
(d) To, directly or indirectly, organize or cause to be organized
any new legal entity, and/or to acquire and own all or a portion of the
ownership interest in such entity as permitted under the terms of the Loan
Documents and Articles;
(e) To, directly or indirectly, negotiate for and conclude
agreements for the sale, exchange, lease, or other disposition of all,
substantially all, or any portion of the Property or other assets of the
Company, or for the refinancing of any mortgage loan on the property of
the Company;
(f) To, directly or indirectly, prepay, in whole or in part,
refinance, recast, increase, modify or extend any mortgage, and in
connection therewith to execute any extensions, renewals or modifications
thereof;
(g) To enter into any other kind of activity and to, perform and
carry out contracts of any kind, including contracts with Affiliates,
necessary to or in conjunction with or incidental to, the accomplishment
of the business and any of the purposes of the Company;
(h) To the extent permitted under the Articles, to enter into
guarantees of any indebtedness arising from the borrowing of money by
Affiliates of the Company; and
(i) To enter into an indemnification agreement with SPE or any other
person appointed a Manager of the Company in accordance with the
provisions of Section VIII.
1.10 Books and Records.
The Manager shall maintain at the Company's principal office the following
records: (a) a current, alphabetical, and separate listing of all Members of the
Company, including their full names and last known business addresses; (b)
copies of the Company's Articles and any amendments thereto; (c) copies of the
Company's four most recent years' federal, state and local income tax returns;
(d) copies of this Agreement; (e) any merger agreement in which the Company is
the surviving entity; and (f) financial statements for the Company's four most
recent Fiscal Years. The Members may inspect and copy, at the Member's expense,
these records at the Company's principal office during normal business hours.
SECTION II
<PAGE>
CAPITAL CONTRIBUTIONS AND CAPITAL ACCOUNTS
2.1 Contributions of the Members.
Subject to the conditions hereinafter set forth in Section 2.4
below, each Member shall pay or contribute to the Company the amount of money or
other property set forth opposite his name on Exhibit "A." A Member shall not be
required, to make any additional Capital Contributions to the Company other than
the Capital Contributions set forth on Exhibit "A" unless such Member otherwise
agrees to make additional Capital Contributions in accordance with the
provisions of Sections 2.7.
2.2 Capital Accounts. A Capital Account shall be maintained for each
Member. Capital Accounts shall be increased by:
(a) The amount of money and the Asset Value of property (net of
liabilities that the Company assumes or takes subject to under Section 752
of the Code) contributed by the Member; and
(b) The amount of any Company Profit allocated to the Member;
and shall be decreased by:
(c) The amount of money and the Asset Value of property (net of
liabilities that the member assumes or takes subject to under Section 752
of the Code) distributed to the Member by the Company;
(d) Allocations to the Member of Company expenditures that are not
deductible in computing Company Profit or Company Loss and that are not
capital expenditures; and
(e) Allocations to the Member of Company Loss.
2.3 Compliance with Treasury Regulation 1.704-1(b)(2)(iv).
The manner in which Capital Accounts are to be maintained pursuant to this
Agreement are intended to comply with the requirements of Treasury Regulation
1.704-1(b)(2)(iv) and shall be interpreted and applied in a manner consistent
with such regulation throughout the full term of this Agreement. The following
special allocations shall be made in the following order:
(a) Minimum Gain Chargeback. If there is a net decrease in Company
minimum gain during the year, each Member shall be specially allocated
items of
<PAGE>
Company income and gain for the year (and, if applicable, subsequent
years) equal to such Member's share of the net decrease in Company minimum
gain. This allocation shall be defined, interpreted and determined in
accordance with applicable Treasury Regulations.
(b) Member Minimum Gain Chargeback. If there is net decrease in
Member minimum gain attributable to a Member non-recourse debt during the
year, each Member with a share of the Member minimum gain shall be
specially allocated items of Company income and gain for the year equal to
such Member's share of the decrease in Member minimum gain attributable to
such Member. This allocation shall be defined, interpreted, and determined
in accordance with applicable Treasury Regulations.
(c) Qualified Income Off-Set. If a Member unexpectedly receives any
adjustments, allocations, or distributions described in Treasury
Regulations Sections 1.704-1(b)(2)(ii)(d)(4)-(6), items of Company income
and gain shall be specially allocated to each Member in an amount and
manner sufficient to eliminate, to the extent required by Treasury
Regulations, the negative Capital Account balance of such Member as
quickly as possible. This allocation shall be made only if a Member would
have a negative Capital Account balance after all other allocations in
this Section II are made.
2.4 Limited Liability of Members.
No Member shall be liable for any of the losses, debts, liabilities, or
obligations of the Company or be required (except as provided in Section 2.7
hereof) to contribute any capital beyond his required Capital Contribution or to
lend any funds to the Company except that a Member may be required by law
pursuant to the Act to return all or a portion of his Capital Contribution which
has been distributed to him.
2.5 Withdrawal of Capital.
No Member shall be entitled, without the consent of the Manager, to
withdraw any part of his Capital Contribution prior to the dissolution and
liquidation of the Company, except that distributions made in accordance with
Section III may represent in whole or in part a return of capital. Neither the
Company nor its Manager guarantees that the Company's assets will be sufficient
to repay in whole or in part each Member's Capital Contributions. No interest
shall be paid on any capital contributed to the Company.
2.6 Member Loans.
Loans by any Member shall not be considered a part of a Member's Capital
<PAGE>
Contributions and the repayment of any loan from a Member shall not be subject
to the restrictions on repayment of Capital Contributions set forth in this
Agreement.
2.7 Additions to Company Capital.
The Manager may from time to time determine that additional capital is
required in order to acquire, improve or continue the ownership and operation of
the Property. Upon such a determination, additional funds may be obtained at the
option of the Manager, in its sole discretion, in the following manner, directly
or indirectly, from the following sources, without any authorization from the
Members, and such sources may be utilized as necessary, in any order or priority
by borrowing from:
(a) commercial banks;
(b) other prime lenders;
(c) other Members; or
(d) lenders other than prime lenders (including loans secured by
secondary financing against the property).
In the event that the Manager, in its sole discretion, determines that the
most desirable source for additional capital is from existing Members and the
Members so agree, the Members may make such additional Capital Contributions to
the Company. Notwithstanding the foregoing, the Members shall be permitted to
make additional Capital Contributions in connection with the acquisition of the
Property.
2.8 No Rights in Third Parties.
The provisions of this Agreement are for the benefit of the Company and
the Members, and are not intended to be for the benefit of any person to whom
any debts, liabilities or obligations are owed by, or who otherwise has any
claim against, the Company or any Member, and no creditor or other person shall
obtain any rights under such provisions or solely by reason of such provisions.
SECTION III
DISTRIBUTIONS TO MEMBERS
3.1 General Rules.
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Any distribution to be made under this Section III shall be made to the
registered holder of the Membership Interest, at such holder's last reported
address, as recorded on the Company's books and records, as of the date of such
distribution, unless such distribution is otherwise required by law to be made
to a third-party. The determination of the amount of any distribution that a
Member may otherwise be entitled to under this Section III shall be based upon
the class and number of units recorded as owned, as reported on the Company's
books and records, as of the date of such distribution. The Manager and the
Company shall incur no liability for making distributions in accordance with the
provisions of the preceding sentences, whether or not the Manager or the Company
has knowledge or notice of any Transfer of ownership of a Membership Interest.
3.2 Distributions With Respect to Ordinary Units.
It is the intention of the Company that the Manager will distribute to the
Company's Members on a quarterly basis the net cash flow of the Company and
within thirty (30) days after any sale, exchange, assignment, transfer, or other
disposition by the Company of the Property, or any other assets, the net
proceeds realized by the Company as a result of the sale, exchange, assignment,
transfer, or other disposition, after reduction for any debt service due with
respect to indebtedness of the Company and/or for reserves the Manager may
reasonably determine is necessary for the operation of the Company. Accordingly,
the Manager, inits discretion as to both timing, amount, and source of the
funds, may make distributions to the Members holding Ordinary Units, pro rata
based upon the number of Ordinary Units owned by each Member.
3.3 Restrictions on Distributions.
Notwithstanding anything to the contrary in this Section III, the Manager
may not make any distribution with respect to the Company's Membership Interests
if such distribution is otherwise prohibited by, or in contravention of, the
Articles or the Act, NACC Loan Agreement or the Note.
3.4 No Interest on Distributions.
If any Member shall receive (because the Company is unable to deliver such
distribution in accordance with Section 3.1 or otherwise) the whole or any part
of his share of any distribution to which such Member is entitled under this
Section III, such Member shall not be entitled to receive any interest thereon;
nor shall any such sum not withdrawn be deemed an increase in such Member's
share of the capital of the Company without the express written consent of all
other Members.
SECTION IV
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ALLOCATION OF PROFITS AND LOSSES
4.1 Ordinary Units.
(a) The Company Profits and Company Losses shall be determined and
allocated with respect to each Fiscal Year of the Company as of the end of such
year.
(b) After giving effect to the special allocations in Section
4.1(b)(i), (ii) and (iii) below, all Company Profits and Company Losses shall be
allocated to the Members owning Ordinary Units pro rata based upon the number of
Ordinary Units owned by each Member.
(i) Section 754 Adjustments. To the extent an adjustment to
the adjusted tax basis of any Company asset pursuant to Code Section
734(b) or Code Section 743(b) is required pursuant to Treasury Regulation
Section 1.704-1(b)(2)(iv)(m) to be taken into account in determining
Capital Accounts, the amount of such adjustment to the Capital Accounts
shall be treated as an item of gain (if the adjustment increases the basis
of the asset) or loss (if the adjustment decreases such basis), and such
gain or loss shall be specially allocated to the Member in a manner
consistent with the manner in which their Capital Accounts are required to
be adjusted pursuant to such section of the Regulation.
(ii) Section 704(c) of the Code. Notwithstanding the
foregoing, (i) in the event Section 704(c) of the Code or Section 704(c)
principles applicable under any Treasury Regulation promulgated under
Section 704(b) of the Code, require allocations of Company Profit or
Company Loss in a manner different than set forth above, the provisions of
Section 704(c) and any applicable Treasury Regulation promulgated under
Section 704(c) of the Code shall control such allocations. Allocations
pursuant to Section 704(c) shall be made for tax purposes only and shall
not affect any Member's Capital Account. The Manager shall select any
method for making allocations under Code Section 704(c) as described in
Treasury Regulation Section 1.704-3(b) or any successor regulatory
provision thereto.
(iii) Regulatory Allocations. It is the intention of the
Company that the allocations hereunder comply with the provisions of
Section 704(b) of the Code and the Treasury Regulations promulgated from
time to time thereunder so that the allocations made hereunder will be
deemed to have "substantial economic effect" as provided therein. To the
extent special allocations of Company Profit or Loss are required to be
made to comply with the requirements thereof, and which are not otherwise
provided for herein, such special allocations shall be made in the manner
set forth in the Code and Regulations, as determined in good faith by the
Manager. To the extent any such special allocations are made, subsequent
allocations of Company Profit and Company Loss shall be made to offset any
economic distortion caused by such
<PAGE>
special allocations, as determined by the Manager in good faith.
4.2 Allocations Among Members.
Whenever a proportionate part of the Company Profit or Company Loss is
credited or charged to a Member's Capital Account, every item of income, gain,
loss, deduction or credit entering into the computation of such Company Profit
or Company Loss, or applicable to the period during which such Company Profit or
Company Loss is realized, shall be considered credited or charged, as the case
may be, to such account in the same proportion. As between a Member and his
transferee, unless otherwise agreed by them, Company Profits and Company Losses
for any Fiscal Year shall be allocated on a daily basis, and the transferee
shall be allocated Company Profits and Company Losses with respect to the period
commencing with the day of transfer.
SECTION V
RIGHTS, POWERS, AND DUTIES OF MANAGER
5.1 Rights and Powers of Manager.
Except as may be expressly limited by other provisions of this Agreement,
the Manager shall have complete authority over and exclusive control and
management of the business and affairs of the Company and shall devote such time
to the Company as may be reasonably required for the achievement of its
purposes. If not otherwise specifically stated, and except as specifically
authorized in Section 1.8, the references to action by the Manager or by the
Company shall mean only action as provided in this Section 5.1. In connection
with the management of the business and affairs of the Company, the Manager may
employ on behalf of the Company any other persons to perform services for the
Company, including persons employed by, affiliated with, or related to any
Manager. The Manager, inits sole discretion, shall have the fullest power and
authority permitted by law, and without limiting its authority and powers, the
Manager, shall have the right, if, as and when he deems necessary or
appropriate, on behalf of the Company, subject only to the terms and conditions
of this Agreement:
(a) To acquire, improve, operate, maintain, lease, use and improve
(including capital expenditures of, any type) the Property or any other
related assets, in such manner and on such terms and conditions as the
Manager shall deem necessary or appropriate;
(b) To exercise for the Company any and all rights, privileges, and
powers available to the Company as holder of any Company property
including, without
<PAGE>
limitation, the refinancing, replacement, renewal, consolidation,
extension, modification and creation of encumbrances, mortgages, deeds of
trust, deeds to secure debt, security agreements and other secured
indebtedness on the Company property or any part thereof, and the
modification, cancellation, extension or waiver of instruments, rights,
options, and obligations pertaining to or affecting the Company property
or any part thereof, all upon such terms and conditions as it deems
proper;
(c) To borrow money for Company purposes, and in connection with
such borrowing to execute promissory notes on behalf of the Company; to
mortgage, pledge or otherwise encumber the property and assets held by the
Company to secure the obligations of the Company, and in connection with
any such mortgage, to grant a confession of judgment on the part of
Company and include in such mortgage, pledge or other instrument of
security, such provisions as may be required by any lender;
(d) To consent to the initial execution, modification, renewal or
extension of any obligations, whether or not secured, or of any
guarantees, or of any terms or provisions of any such guaranty, or to the
release of any obligor under any such guaranty; to institute or refrain
from instituting suits or actions against such obligor; and to pay or to
abstain from the payment of taxes, water rents, sewer charges,
assessments, mortgage payments, insurance premiums, and maintenance
expenses, all at such time or times and upon such terms and conditions and
under such circumstances as the Manager, in its (their) sole discretion,
shall deem proper;
(e) To adjust, compromise, settle or refer to arbitration any claims
in favor of or against the Company or any nominee of the Company or any
property held by the Company or its nominee, and to institute, prosecute
and defend any legal proceedings or arbitration proceedings as the Manager
shall deem advisable;
(f) To perform or cause to be performed all of the Company's
obligations under any agreement to which the Company is a party;
(g) To execute, acknowledge and deliver any and all instruments in
connection with any or all of the foregoing;
(h) To expend the capital and revenues of the Company in furtherance
of the Company's business;
(i) To lease, sell, transfer, assign, convey, trade, exchange, or
otherwise dispose of all or any portion of the Property, or any other real
or personal property of the Company upon such terms and conditions and for
such consideration as the Manager deems appropriate;
<PAGE>
(j) To enter into any agreement for the merger, reorganization, or
consolidation of the Company with any other legal entity as may be
permitted by law, to consummate, in accordance with the terms of such an
agreement, the merger, reorganization, or consolidation of the Company,
and through its Manager and Officers, who are hereby authorized and so
directed, to take all acts and file all documents necessary or required to
effectuate such merger, reorganization, or consolidation;
(k) To delegate all or any of its duties hereunder and in
furtherance of any such delegation to appoint, employ, or contract with
any person the Manager may in its sole discretion deem necessary,
including entities owned or controlled by the Manager (including
Affiliates of the Manager), or desirable for the transaction of the
business of the Company, which persons may, under the supervision of the
Manager, perform any of the following or other acts or services for the
Company as the Manager may approve, provided, however, that the Manager
shall continue to be primarily responsible for the performance of all such
obligations; serve as the Company's advisor and consultant in connection
with policy decisions made by the Manager; act as consultants,
accountants, correspondents, attorneys, brokers, escrow agents, or in any
other capacity deemed by the Manager necessary or desirable; investigate,
select and, on behalf of the Company, conduct relations with persons
acting in such capacities and pay appropriate fees to, and enter into
appropriate contracts with, or employ, or retain services performed or to
be performed by, any of them in connection with any of the Company's
properties; and perform or assist in the performance of administrative or
managerial functions necessary in the management of the Company;
(l) To terminate, modify, enforce, continue or otherwise deal with
any note and mortgages, to refinance or sell the Property or other Company
property, and to take any other action with respect to agreements made
between the Company and a lender or any Affiliate thereof;
(m) To exercise all decision-making authority and other powers on
behalf of the Company in its capacity as a member, partner, or shareholder
of any Affiliate; and
(n) To, generally possess and exercise any and all of the rights,
powers and privileges of a Manager under the laws of the State of Georgia.
5.2 Duties.
The Manager shall manage and control the Company, its business and
affairs, in order to carry out the business of the Company as set forth herein.
The Manager shall devote himself to the business of the Company to the extent it
deems necessary to conduct it and shall render to the Members, whenever
reasonably requested by any of them, a just and faithful account of all dealings
and transactions in relation to the business of the Company. The
<PAGE>
Manager shall execute such further documents and take such further action as
shall be appropriate to comply with the requirements of the Act or other laws by
which the Company is bound. The Manager shall not be required to devote full
time to such duties.
5.3 Officers.
In order to more efficiently perform their duties and obligations under
this Agreement, the Manager and the other Members hereby consent to the
appointment, upon execution of this Agreement, of Robert M. Cole to serve as
President of the Company, Robert M. Flanders, to serve as Vice President of the
Company and Toni Jones to serve as Secretary, and Treasurer of the Company. The
President shall have the authority, to the full and same extent as, that which
has been conferred on the Manager by this Agreement, and shall be subject to the
same limitations that are otherwise imposed under this Agreement on the Manager.
The Vice-President shall have the authority to exercise the powers of the
President in the absence or unavailability of the President, and shall have such
other powers and authority as the President or the Manager shall delegate to him
from time to time. The Secretary shall keep minutes of all meetings of the
Members, and have charge of the minute books and all other records (other than
financial records) of the Company, and shall perform such other duties and have
such other powers as may be delegated to him or her by the President from time
to time. The Treasurer shall be charged with the management of the financial
affairs of the Company, including the maintenance of the Company's bank accounts
and other financial books and records and shall perform such other duties and
have such other powers as may be delegated to him or her by the President from
time to time. The President of the Company shall be permitted to appoint
Officers of the Company at such time as the President determines that the
appointment of such Officer is necessary, otherwise helpful, or expedient in
running the affairs of the Company. Such appointment shall be evidenced by
written consent action of the President which sets forth the title of such
Officer, the authority and responsibilities of such Officer, and the
compensation of such Officer. Once appointed, an officer of the Company shall
serve until such time as he or she is removed from such office by the President
of the Company. The President shall serve until such time as he or she is
removed from such office by the Manager of the Company.
5.4 Dealings with Third Parties.
(a) All rights and powers of the Company generally and as specifically
enumerated above, may be exercised by the Manager or the Company's Officers, and
any party dealing with the Company may rely upon the actions of the Manager or
the Company's Officers exercising the rights and powers authorized by this
Agreement. No party dealing with the Manager or any officer of the Company shall
be obliged to see to the application of any money or property loaned, paid, or
transferred to the Manager or any officer to see that the terms of this
Agreement are complied with, or to determine whether any action or failure to
act on the part of the Manager or Officer is in accordance with or authorized by
the terms of this
<PAGE>
Company. Every instrument executed by the Manager or Officer shall be
conclusively interpreted in favor of every person acting thereon that (i) at the
time of the delivery of such instrument this Company was in full force and
effect; (ii) said instrument was issued in accordance with the terms and
provisions of this Company; (iii) the Manager was duly authorized and empowered
to execute such instrument. The receipt given by it shall discharge said party
or parties, and they shall not be bound to see to the application of any such
money or property or be answerable for the loss or misapplication thereof.
(b) Should anyone ever question the authority of the Manager or an
Officer of the Company to do any of the things provided in this Section, and
thereby bind the Members, and specifically including the Manager's or
President's authority to borrow money on behalf of the Company or to mortgage,
pledge, or otherwise encumber the property and assets of the Company, except as
provided in Section 5.4 herein, then and in that event, the Members do by these
presents hereby name, constitute and appoint the Manager, as their agent and
attorney-in-fact, with full and complete authority to do any and all of the
things specified in this Section, including, but not limited to, authority to
confess judgment and waive appraisement, insofar as the same affects said
constituent, or the said Company, or any rights or interests that it may have in
any property, real, personal or mixed, to the same extent as though said
constituent personally executed the said instrument, and for the further
purposes and to the same extent as hereinafter set forth in Section XIV.
5.5 Restrictions on Authority of Manager and the Company.
Each Member executing this Agreement hereby specifically waives any right
that may be provided under the Act to such Member to approve, to vote on, or to
consent to any action that may be taken by the Company, through its Manager
and/or Officers in furtherance of any Company matter, including, without
limitation, the approval rights set forth in Section 14-11-308(b) of the Act,
and specifically agrees that, in lieu of such rights under the Act, such rights
of such Member (other than a Member who also is a Manager or an Officer) with
respect to approval, the right to vote on, or consent to any action the Company
may take, through its Manager or Officers, on any matter arising in connection
with the business and affairs of the Company shall be limited specifically to
only the following actions and Company matters:
(a) Notwithstanding any other provision to the contrary in this
Agreement, the Manager and Officers may not take any of the following
actions:
(i) do any act in contravention of this Agreement or the
Company's Articles;
(ii) do any act which would make it impossible to carry on the
ordinary business of the Company, except as contemplated in this
Agreement;
<PAGE>
(iii) file any voluntary bankruptcy petition on behalf of the
Company, consent to the appointment of any receiver, custodian, or
trustee, or execute or deliver any assignment for the benefit of the
creditors of the Company, except to the extent permitted under the
Articles;
(iv) possess Company property or assign the rights of the
Company in specific property for other than a Company purpose; or
(v) admit a person as a Member except as otherwise provided in
this Agreement;
(vi) knowingly or willingly consent to any act (except an act
expressly permitted by this Agreement) which would cause the Company
to become an association taxable as a corporation; or
(vii) except as permitted by the Articles, amend, alter,
change, or repeal any provision contained in the Articles;
(b) Notwithstanding the provisions of Section 5.1 through 5.3, the
Company, through its Manager and Officers, may only take any of the
following actions if the written consent of all the Members is first
obtained:
(i) participate in any merger, reorganization, or
consolidation with any other legal entity as may be permitted by
law; provided, however, that if such consent is required and
obtained, the Company's Manager and Officers may take all actions,
on behalf of the Company, in furtherance of such merger,
reorganization, or consolidation as may be permitted under Section
5.1(j);
(ii) sell, exchange, assign, transfer, lease, or otherwise
dispose of substantially all of the assets and property of the
Company;
(iii) offer any Membership Interest of the Company, or any
successor security thereto, for sale to the public in an
underwritten offering;
(iv) offer additional Membership Interests in the Company or
admit additional Members, except as otherwise provided for in
Section IX; or
(v) transfer the Property to any entity other than an
Affiliate.
5.6 Compensation of Manager.
Except as expressly provided in this Agreement, the Manager shall not
receive any compensation for serving as Manager. Notwithstanding the foregoing,
any Manager who also
<PAGE>
serves as an officer or employee of the Company or, any Affiliate thereof may be
paid reasonable compensation for such services.
5.7 Tax Matters Partner.
Lodgian Richmond SPE, Inc. is hereby designated as the "Tax Matters
Partner" in accordance with Section 6231(a)(7) of the Code and, in connection
therewith and in addition to all other powers given thereunder, shall have all
other powers needed to fully perform hereunder, including, without limitation,
the power to retain all attorneys and accountants ofits choice and the right to
settle any audits without the consent of the Members. The designation made in
this paragraph is hereby expressly consented to by each Member as an express
condition to becoming a Member. In the event that Lodgian Richmond SPE, Inc. no
longer is a Manager of the Company, Lodgian Richmond SPE, Inc. shall no longer
serve as the "Tax Matters Partner" of the Company and a new "Tax Matters
Partner" shall be appointed by a Majority of the Members.
<PAGE>
SECTION VI
LIABILITY AND INDEMNIFICATION OF
MANAGER AND OFFICERS
6.1 Return of Capital Contribution.
Notwithstanding anything in this Agreement to the contrary, neither the
Manager nor the Company's Officers shall be personally liable for the return of
the Capital Contributions of the Members, or any portion thereof, it being
expressly understood that any such return shall be made solely from Company
assets.
6.2 Liability for Actions or Omissions.
Neither the Manager nor the Company's Officers shall be liable,
responsible or accountable in damages or otherwise to any of the Members or the
Company for any act or omission of the Manager, or Company's Officer, or any of
them, in good faith on behalf of the Company and in a manner reasonably believed
by the Manager and/or Company's Officers to be within the scope of the authority
granted to the Manager and/or Company Officer by this Agreement. The foregoing
shall not relieve the Manager or Company Officer of liability for fraud, gross
negligence or willful misfeasance or where such relief would be prohibited by
the Act
6.3 Indemnification by Company.
(a) The Company shall and hereby does indemnify, defend and save
harmless the Manager and the Company's Officers from and against any claim,
loss, expense, liability, action or demand incurred by the Manager or the
Company's Officers in respect of any omission to act or of any act performed by
the Manager or the Company's Officers, in the good faith belief that he was
acting or refraining from acting within the scope ofits authority under this
Agreement, on behalf of the Company or in furtherance of the Company's
interests, including, without limitation, reasonable fees and expenses of
litigation and appeal (including, without limitation, reasonable fees and
expenses of attorneys engaged by the Manager and/or the Company's Officers in
defense of such act or omission).
(b) Neither the Manager nor the Company's Officers shall be entitled
to any indemnity for any loss sustained or fees or expenses incurred by a
Manager or by Company Officer by reason of the fraud, gross negligence or
willful misfeasance of a Manager or by the Company Officer, or where such
indemnification would be prohibited by the Act.
<PAGE>
SECTION VII
RIGHTS AND OBLIGATIONS OF MEMBERS
7.1 Negative Covenants.
No Member, other than a Manager or Officer who is also a Member, shall:
(a) Be allowed to take part in the management or control of the
Company affairs, or to sign for or bind the Company, such power to vest
solely and exclusively in the Manager and the Company's Officers;
(b) Be entitled to be paid any salary or to have a Company drawing
account in his capacity as a Member;
(c) Withdraw or reduce his Capital Contribution except as a result
of the dissolution of the Company or as otherwise provided by law;
notwithstanding the foregoing, distributions made in accordance with
Section III which represent in whole or in part a return of capital shall
not be considered to be a withdrawal or reduction of a Member's Capital
Contribution under this Section 7.1(c);
(d) Cause the termination or dissolution of the Company by consent
or otherwise (including by consent under Section 14-11-603 of the Act, as
may be amended from time to time) such right being specifically waived by
the Members; or
(e) Demand or receive property other than cash in return for his
Capital Contribution.
7.2 Dissenter's Rights.
Each Member executing this Operating Agreement hereby specifically waives
his or her right to exercise the right to dissent to any of the actions, if
taken by the Company, set forth in Section 14-11-1002(a)(1)-(4) of the Act and
be paid the fair value of his or her Membership Interest, unless the action
taken is one of the actions set forth in Section 14-11-1002(a)(1) or (2) of the
Act and such action is taken without the consent of the Members owning a
Majority of the Ordinary Units as required by Section 5.5(b) of this Agreement.
7.3 Voting Rights.
Each Member executing this Operating Agreement hereby specifically waives
any rights to consent to, vote upon, or approve of any actions that may be taken
by the Company, through its Manager and Officer, that may be provided to such
Member by or under the Act, and hereby specifically acknowledges that, in lieu
of any such rights to consent to, vote upon,
<PAGE>
or approve of any actions that may be taken by the Company, the Member's rights
shall be limited to the rights that are otherwise provided to such Member under
the terms of this Agreement.
7.4 Representations and Warranties.
(a) Each Member executing this Agreement represents to the Company,
as of the date of such execution, that such Member has the full right, power and
authority to enter into and perform the transactions described and obligations
set forth in this Agreement, and the entry into this Agreement by such Member
does not, and the performance of his obligations under this Agreement will not,
violate any law or material agreement with any third party to which such Member
or his property or assets are bound.
(b) Each Member warrants and represents that (i) he is acquiring his
Membership Interest in the Company for investment purposes only and exclusively
for his own account, and that he has no agreement, understanding, arrangement or
intention to divide or share ownership of his Membership Interest with anyone
else or to resell, transfer or dispose of all or any portion of such Interest to
any other person, and that (ii) he is an "accredited investor" as defined in
Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act")
and Regulation D promulgated thereunder.
(c) Each Member acknowledges:
(i) that he and/or his purchaser representative (if any) have
such knowledge and experience in financial and business matters that he is
or they are capable of evaluating the merits and risks of the investment
involved in the purchase of a Membership Interest in the Company and has
so evaluated same;
(ii) that he is aware that this investment is speculative and
represents a substantial risk of loss;
(iii) that he is able to bear the economic risk of such
investment, even if it involves a complete loss of this investment;
(iv) that in connection with his purchase of Membership
Interests in the Company, he has been fully informed as to the
circumstances under which he is required to take and hold such Membership
Interests pursuant to the requirements of the Securities Act, and
applicable state securities or "Blue Sky" laws; and
(v) that the Manager has informed him that his Membership
Interests are not registered under the Securities Act or any Blue Sky law
and may not be transferred, assigned or otherwise disposed of unless such
Membership Interests are subsequently registered under the Securities Act
and any applicable Blue Sky laws, or
<PAGE>
exemptions from such registration requirement are then available.
(d) Each Member understands:
(i) that the Company and the Manager is under no obligation to
register such Membership Interests under the Securities Act or under any
Blue Sky law or to comply with any applicable exemption under the
Securities Act or under the Blue Sky law with respect to such Membership
Interests; and
(ii) that the Company will not be required to supply him with
any information necessary to enable him to make a sale of such Membership
Interests pursuant to Rule 144 under the Securities Act (assuming such
Rule is applicable and is otherwise available to him with respect to such
Membership Interests).
SECTION VIII
APPOINTMENT AND REMOVAL OF MANAGER
8.1 Appointment of Initial Manager.
By executing this Agreement, the Members hereby appoint SPE as the initial
Manager of the Company with all the rights, duties, responsibilities and
obligations set forth herein.
8.2 Appointment of Additional or Successor Manager.
The Members shall have the authority to appoint such additional persons as
Managers; provided, however, that, during any period in which SPE is a Manager,
SPE, shall hold ultimate decision-making authority vis-a-vis the other
Manager(s) and none of the other Manager shall possess any of the voting,
approval, or consent rights set forth in Section 14-11-308(a)(2) of the Act.
8.3 Voluntary Withdrawal of a Manager.
A Manager may Voluntarily Withdraw from the position of Manager upon
thirty (30) days written notice to the Company. If a Manager Voluntarily
Withdraws as a Manager and there are no other Managers of the Company, the
Members owning a Majority of the Ordinary Units shall elect one or more new
Managers.
8.4 Involuntary Withdrawal of a Manager.
A Manager of the Company can be removed at any time with the consent of
all the
<PAGE>
Members owning Ordinary Units.
SECTION IX
ISSUANCE AND TRANSFER OF MEMBERSHIP INTERESTS
9.1 [Reserved]
9.2 [Reserved]
9.3 Issuance of Ordinary Units.
The Company, through its Manager, is authorized to issue its Ordinary
Units in connection with the acquisition of the Property by the Company. When,
in the discretion of the Company's Manager, the Manager determine that
additional capital is required for one of the purposes set forth in Sections 1.8
and 2.7 of the Agreement, the Company, in its discretion may issue additional
Ordinary Units, but only to the Members currently owning the Company's Ordinary
Units.
9.4 Effect of a Transfer of a Member's Interest in the Company.
The Withdrawal of a Member, the admission of a Member, or the assignment
by a Member of all or a portion of his Membership Interest shall not cause a
dissolution or termination of the Company.
9.5 Effect of Death, Etc. of a Member on the Company.
The death, bankruptcy, or adjudication of incompetence of a Member, the
Voluntary Withdrawal of a Member, Involuntary Withdrawal of a Member, or any
other event of disassociation under the Act shall not cause a dissolution or
termination of the Company.
9.6 Transfer of Membership Interests.
(a) Requirement for Transfer. Except as otherwise provided in this
Agreement, a Member or the transferee of a Member may Transfer all or part of
his Membership Interest only with the consent of the other Members, provided
that, unless otherwise consented to by the Manager, (i) the transferee, if an
individual, is at least 21 years of age, (ii) the transferee executes an
instrument reasonably satisfactory to the Manager accepting and adopting the
provisions and agreements set forth herein, and (iii) the Manager shall consent
to such Transfer, which consent may be given or withheld in the Manager's sole
discretion; provided, further, that such consent shall be withheld if the
transferor Member does not obtain a legal opinion, acceptable to counsel for the
Company, that (1) such Transfer would not result in the close of the Company's
taxable year with respect to all Members,
<PAGE>
impair the ability of the Company to be taxed as a partnership, cause the
termination of the Company within the meaning of Section 708(b) of the Code, or
cause the termination of its status as a partnership under the Code, and (2)
such Transfer does not violate any provision of any Federal or state securities
law.
(b) Requirement for Substitution. No transferee of the whole or a
portion of a Member's Membership Interest shall have the right to become a
Substituted Member in place of his assignor unless and until all of the
following conditions are satisfied:
(i) A duly executed and acknowledged written instrument of
transfer approved by the Manager has been filed with the Company setting
forth the intention of the transferor that the transferee become a
Substituted Member in his place;
(ii) The transferor and transferee execute and acknowledge
such other instruments as the Manager may reasonably deem necessary or
desirable to effect such substitution, including the written acceptance
and adoption by the transferee of the provisions of this Agreement;
(iii) The written consent of the Manager to such substitution
shall be obtained, the granting or denial of which shall be within the
sole and absolute discretion of the Manager;
(iv) A reasonable transfer fee has been paid to the Company
sufficient to cover all reasonable expenses connected with the transfer
and substitution;
(v) If required, an appropriate amendment of the Articles has
been duly filed and recorded. The Manager agree to file such amendment and
cause it to be recorded promptly after the conditions specified in
subparagraphs (i) through (iv) above have been satisfied; and
(vi) The Company has received an opinion of counsel, at the
request of the Manager, satisfactory to the Company and its counsel that
such transfer can be made without registration under federal or state
securities laws together with a written representation and warranty
identical to the representation and warranty contained in Section 7.4 in
its entirety.
(c) The Company shall make an appropriate notation in the records of
the Company describing the limitations on resale contained in this Section 9.6.
(d) Any Transfer of the Membership Units made or attempted in
contravention of the restrictions of this Section 9.6 is void.
9.7 Effectiveness of Transfer.
<PAGE>
(a) The Transfer by a Member or a transferee of a Member, with the
consent of the Manager, of all or part of his Membership Interest shall become
effective on the first day of the month following receipt by the Manager of
evidence of such Transfer in form and substance reasonably satisfactory to the
Manager and a transfer fee sufficient to cover all reasonable expenses of the
Company connected with such Transfer; provided that, the Manager have consented,
if required, to such Transfer in accordance with Section 9.7; provided further
that the Manager may, in their sole discretion, establish an earlier effective
date for the Transfer if requested to do so by the transferor or transferee.
(b) No Transfer of Membership Interests or any part thereof which is
in violation of this Section IX shall be valid or effective, and the Company
shall not recognize the same for the purposes of allocating Company Profits and
Company Losses or making distributions of cash with respect to the units
representing such Membership Interests, or part thereof. The Company may enforce
the provisions of this Section either directly, or indirectly or through its
agents by refusing to register or transfer, or permit the registration or
transfer, on its books of any proposed Transfers not in accordance with this
Section IX.
(c) The Company shall, from such time as a Membership Interest is
registered in the name of the transferee on the Company's books in accordance
with the above provisions and other applicable provisions of this Agreement, pay
to the transferee all further distributions or other compensation by way of
income or return of capital, on account of the units representing the Membership
Interest that has been transferred. Until the registration or Transfer on the
Company's books, the Manager may proceed as if no Transfer has occurred.
9.8 Purchase of Membership Units by a Manager.
If a Manager acquires a Membership Unit as a Member, said Manager shall,
with respect to such Membership Unit, enjoy all of the rights and, except as
provided in Section 7.1, be subject to all of the obligations and duties, of a
Member.
SECTION X
DISSOLUTION OF THE COMPANY
10.1 Dissolution of The Company.
(a) The Company shall dissolve upon the earlier occurrence of any of
the following events:
(i) provided that the requirements, if any, set forth in the
Company's Articles are satisfied, upon the mutual written agreement of all
the Members setting
<PAGE>
forth their determination that the Company should be dissolved; or
(ii) otherwise by operation of law.
SECTION XI
LIQUIDATION OF COMPANY
11.1 Procedure.
Upon the dissolution of the Company, the Manager or the person required by
law to wind up the Company's affairs shall cause the cancellation of this
Agreement and take the following steps and actions:
(a) a statement of dissolution which complies with the requirements
of Section 14-11-606 of the Act shall be filed with the Secretary of State
of Georgia, and such other filings, notices, and other actions shall be
taken as required by Article 6 of the Act;
(b) a statement setting forth the assets and liabilities of the
Company as at the date of dissolution shall be prepared by the Company's
accountant or firm of accountants and such statement shall be furnished to
all of the Members;
(c) the assets of the Company shall be liquidated as promptly as
possible, but in an orderly and businesslike manner so as not to involve
undue sacrifice; and
(d) any gain or loss realized by the Company upon the sale or other
disposition of its property and assets shall be allocated among the
Members in accordance with the provisions of Section IV.
11.2 Distributions Upon Dissolution.
The proceeds of sale and all other assets of the Company shall be applied
and distributed as follows, and in the following order of priority:
(a) First, to the creditors of the Company (including the Manager
and its Affiliates) in payment of the unpaid liabilities of the Company to
the extent required under agreements with such creditors and the
reasonable expenses of liquidation;
(b) Second, to the setting up of any reserves which the Manager or
the person required by law to wind up the Company's affairs may deem
reasonably
<PAGE>
necessary for any contingent or unforeseen liabilities or obligations of
the Company arising out of or in connection with the Company's business.
Said reserves may, in the discretion of the Manager or the person required
by law to wind up the Company's affairs, be paid over to an escrow agent
selected by them to be held by it as escrowee for the purpose of
disbursing such reserves in payment of any of the aforementioned
contingencies, to the expiration of such period as the Manager shall deem
advisable, to distribute the balance thereafter remaining as hereinafter
provided in this section; and
(c) Third, to the Members owning Ordinary Units, pro rata based upon
the number of Ordinary Units outstanding.
SECTION XII
MEMBER AND MANAGER ACTIVITIES
The provisions of Section 14-11-307 of the Act, addressing "conflicting
interest transactions," shall not apply to any Member, Manager, or Officer, or
any Affiliate of any Member, Manager, or Officer, and the activities of any
Member, Manager, Officer, or their Affiliates with respect to any activities
shall be subject to the limitations and obligations set forth in this Agreement.
Any Member, Manager, or Officer, and any Affiliate of such Member, Manager, or
Officer, including any shareholder, officer, director or employee thereof may,
notwithstanding the existence of this Agreement, engage in or possess an
interest in any other business or venture of every nature and description,
independently or with others including, but not limited to, the ownership,
financing, leasing, operation, management, brokerage and development of real
property, whether the same be competitive with the Company or otherwise, without
having or incurring any obligation to offer any interest in such activities to
the Company or any party hereto. Neither this Agreement nor any activity
undertaken pursuant hereto shall prevent the Manager, Officer, Affiliate, or any
Member from engaging in such activities, or require the Manager to permit the
Company or any Member to participate in any such activities and as a material
part of the consideration for a Manager's employment hereunder and admission of
each Member, each Member hereby waives, relinquishes, and renounces any such
right or claim of participation. Neither the Company nor any Manager or Member
shall have the right to the income of proceeds derived from any party's other
business interest, even if that business interest is competitive with the
Company business and such business interest shall not be deemed wrongful or
improper. Notwithstanding the foregoing, any transaction with any affiliate
shall be at arms-length and require the payment of consideration at fair value
for any property exchanged or services provided.
SECTION XIII
<PAGE>
RECORDS AND ACCOUNTING
13.1 Books of Account.
The Manager shall keep or cause to be kept complete and true books of
account of the Company in accordance with the accounting method followed by the
Company for federal income tax purposes and otherwise in accordance with sound
accounting principles and procedures applied on a consistent basis, which shall
reflect all Company transactions and shall be appropriate and adequate for the
Company's business. Such books of account, records and documents of the Company
shall be kept at the principal place of business of the Company and each Member
and his authorized representatives shall have at all times, during normal
business hours and upon reasonable notice, free access to and the right to
inspect and copy, at his expense, such books of account.
13.2 Financial Reports.
(a) As soon as practicable after the close of each fiscal year, but
in no event later than 75 days after the close of any such year, the Manager
shall deliver to each Member an annual financial unaudited report of the Company
for such Fiscal Year, including a balance sheet, a profit and loss statement and
a statement showing distributions to the Members and allocations to the Members
of Company Profits or Company Losses, and such other information as is
reasonably available to the Company which may be helpful in determining the
amount of taxable income to be included by each Member in his federal, state and
local income tax returns for such year. Such annual statement shall also be
provided to any person who was a Member at any time during the year covered by
such annual statements.
(b) The Manager shall cause the Company's accountants to prepare or
review the federal, state and local tax returns of the Company for each fiscal
year and shall timely file such returns and such returns shall be completed on
the method of tax accounting deemed appropriate by the Manager in accordance
with Section 13.5.
13.3 Fiscal Year.
The fiscal year of the Company for both reporting and federal income tax
purposes shall begin with the 1st day of January and end on the 31st day of
December in each calendar year.
13.4 Banking.
The funds of the Company shall be deposited in such bank or banks as the
Manager shall deem appropriate. Such funds shall be withdrawn only by the
Manager or his (their) duly authorized agents. All deposits and other funds not
needed in the operations of the business of the Company may be deposited in
interest-bearing accounts or invested in short-
<PAGE>
term United States Government or other governmental (state or local) obligations
or in certificates of deposit, master notes or other evidences of indebtedness
or "Money-Market" Funds.
13.5 Accounting Decisions and Tax Elections.
All decisions as to accounting matters and tax elections, except as
specifically provided to the contrary herein, required or permitted to be made
by the Company shall be made by the Manager in its sole discretion. Such
decisions may be based on the advice of the Company's accountants, upon which
the Manager may rely.
SECTION XIV
POWER OF ATTORNEY
14.1 Appointment.
(a) Each Member hereby makes, constitutes and appoints the Manager,
and any successor Manager, and the Officers, with full power of substitution and
re-substitution, his or its true and lawful attorney-in-fact for him and in his
name, place and stead and for his use and benefit, from time to time:
(i) To amend this Agreement in order to bring the Agreement in
compliance with or to conform to any of the requirements set forth under
the terms of the Loan Documents;
(ii) To file and record this Agreement and any separate
Articles or amended Articles which is required to be filed or which the
Manager deems it advisable to file, and which are not expressly prohibited
hereby or by the terms of the Articles;
(iii) To make, file and record, all agreements amending this
Agreement, as now or hereafter amended, that may be appropriate to reflect
or effect, as the case may be;
(A) a change of the name or the location of the
principal place of business of the Company;
(B) a transfer or acquisition of any Interest by a
Member in any manner permitted by this Agreement;
(C) a person becoming a substituted Member of the
Company
<PAGE>
as permitted by this Agreement;
(D) a change in any provision of this Agreement effected
by the exercise by any person of any right or rights
hereunder; or
(E) a dissolution of the Company pursuant to this
Agreement;
(iv) To make such certificates, instruments and documents as
may be required by, or may be appropriate under Georgia law in connection
with the use of the name of the Company by the Company;
(v) To make such certificates, instruments and documents as
such Member may be required, or as may be appropriate for such Member to
make, by Georgia law to reflect:
(A) a change of name or address of such Member;
(B) any changes in or amendments of this Agreement, or
pertaining to the Company, of any kind referred to in this
Section; or
(C) any other changes in or amendments of this Agreement
in accordance with Section 15.1 hereof;
(vi) To make, file and record amendments of this Agreement to
comply with any requirements of the Act, or the regulations promulgated
thereunder, provided the same does not materially adversely affect the
rights of the Members;
(vii) To make, file and record any documents which may be
required in connection with borrowings by the Company, including, without
limitation, documents required by financial institutions, and including
correction of or insertions to any document executed by a Member;
(viii) To make, file and record any documents which may be
required in connection with any filings with federal or state securities
commissions or other federal or state authorities; and
(ix) To make, file and record any instrument which the Manager
deems to be in the best interests of the Company to file and which is not
inconsistent with the provisions of this Agreement.
(b) Each of the agreements, certificates, instruments and documents
made pursuant to Section 14.1(a) shall be in such form as the Manager and
counsel for the Company shall deem appropriate. The powers conferred by this
Section to make agreements,
<PAGE>
certificates, instruments and documents, shall be deemed to include without
limitation the powers to sign, execute, acknowledge, swear to, verify, deliver,
file, record or publish the same.
(c) Each Member authorizes the Manager as such attorney-in-fact to
take any further action which such Manager shall consider necessary or advisable
in connection with any action taken pursuant to this Section 14.1 hereby giving
such Manager as such attorney-in-fact full power and authority to do and perform
each and every act or thing whatsoever requisite or advisable to be done in and
about any action taken pursuant to this Section 14.1 as fully as such Member
might or could do if personally present, and hereby ratifying and confirming all
that the Manager as such attorney-in-fact shall lawfully do or cause to be done
by virtue of this Section 14.1, provided, however, that the power and authority
granted in this Section XIV shall not include the power or authority to vote on
behalf of a Member if it is granted by this Agreement or by the Act and is not
otherwise precluded by this Agreement.
14.2 Irrevocability and Manner of Exercise.
The power of attorney granted pursuant to Section 14.1:
(a) is a special power of attorney coupled with an interest and is
irrevocable;
(b) may be exercised by a Manager as such attorney-in-fact, by
listing all of the Members executing any agreement, certificate,
instrument or document with the single signature of such Manager acting as
attorney-in-fact for all of them;
(c) shall survive the transfer by a Member of the whole or a portion
of his Interest, except that where the purchaser, transferee, or assignee
thereof with the consent of the Manager is admitted as a substituted
Member, the power of attorney shall survive the transfer for the sole
purpose of enabling such attorney-in-fact to execute, acknowledge and
swear to and file any such agreement, certificate, instrument or document
necessary to effect such substitution; and
(d) shall, to the extent permitted under the laws of the domicile of
such Member, survive the death, incapacity or incompetency of the Member.
SECTION XV
GENERAL PROVISIONS
<PAGE>
15.1 Amendments.
(a) Amendments may be made to this Agreement from time to time by
the Manager without the consent of the Members:
(i) to add to the representations, duties, or obligations of
the Manager;
(ii) to cure any ambiguity or correct or supplement any
provision hereunder which may be inconsistent with any other provision
hereunder;
(iii) to delete or add any provision to this Agreement
required or requested to be so deleted or added by the Internal Revenue
Service, staff of the Securities and Exchange Commission, or any other
Federal Agency or by any state "Blue Sky" Commissioner or similar such
official, or any lender (other than the Manager or an Affiliate thereof)
or surety even though such deletion or addition may adversely affect
rights of Members (but no change in the rights of Members to profits,
losses or cash distributions or to make Capital Contributions shall be
made without the consent of all Members); or
(iv) to modify the allocation provisions in Sections II and IV
to comply with Final Regulations subsequently issued by the Treasury
Department. The intent of such change will be to conform as closely as
practical with the present provisions Sections II and IV.
(b) Notwithstanding any provisions of the preceding paragraphs to
the contrary (and except as is expressly permitted by Section 14.1(a)(i) and
Section 15.1 (a)), this Agreement may not be amended or modified without the
prior written consent of all the Members.
(c) If this Agreement shall be amended as a result of adding or
substituting a Member, the amendment to this Agreement shall be signed by all
Manager and by the person to be substituted or added (or his attorney-in-fact)
and, if a Member is to be substituted, by the assigning Member or his
attorney-in-fact. If this Agreement shall be amended to reflect the designation
of an additional or successor Manager, such amendment shall be signed by all
Manager and by such additional or successor Manager. If this Agreement shall be
amended to reflect the withdrawal of a Manager and the business of the Company
is continued, such amendment shall be signed by the remaining or successor
Manager.
(d) In making any amendments, the Manager shall prepare all required
documentation and make all official filings and publications as are required by
its undertakings and the other persons affected by such amendment shall
cooperate with the Manager to the extent reasonably necessary to enable the
Manager to meet its obligations.
<PAGE>
(e) Notwithstanding any provision to the contrary in this Agreement,
the Company may not amend, alter, change, or repeal any provision contained in
the Articles except to the extent permitted thereunder.
15.2 Complete Agreement.
This Agreement sets forth all of the promises, agreements, conditions,
understandings, warranties and representations among the parties hereto with
respect to the Company, the Company business and the property of the Company,
and there are no promises, agreements, conditions, understandings, warranties or
representations, oral or written, express or implied, among them other than as
set forth in this Agreement.
15.3 Meetings and Voting.
All decisions and actions of the Company may be taken by the Members
entitled to participate therein by submitting notices to the Members entitled to
participate in such decisions or actions and obtaining the written consent of
the requisite number of percentage of Members. There shall be no meetings of the
Company.
15.4 Notices.
Any notice, payment, demand, or communication required or permitted to be
given by any provision of this Agreement shall be in writing and shall be deemed
to have been delivered and given for all purposes (a) if delivered personally to
the party or to an officer of the party to whom the same is directed, or (b)
whether or not the same is actually received, if sent by registered or certified
mail, postage and charges prepaid, addressed: (i) if to a Manager, to his
address set forth in Section 1.5 or to such other address as the Manager may
from time to time specify by written notice to the Members, and (ii) if to a
Member, at such Member's address set forth on the signature pages hereto, or to
such other address as such Member may from time to time specify by written
notice to the Manager. Any such notice shall be deemed to be given as of the
date so delivered, if delivered personally, or on the date that is three (3)
business days after the same was deposited in a regularly maintained receptacle
for the deposit of United States mail, addressed, and sent as aforesaid. Any
such notice may at any time be waived by the person entitled to receive such
notice.
15.5 Counterparts.
This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original copy and all of which together shall
constitute one agreement binding on all parties hereto, notwithstanding that all
the parties shall not have signed the same counterpart, except that no
counterpart shall be binding unless signed by all Manager.
<PAGE>
15.6 Section Headings.
The headings in this Agreement are inserted for convenience and
identification only and are in no way intended to describe, interpret, define,
or limit the scope, extent or intent of this Agreement or any provisions hereof.
15.7 Pronouns and Plurals.
All pronouns used herein shall be deemed to refer to the masculine,
feminine, neuter, singular or plural as the identity of the person or persons,
or entity or entities, may require in the context, and the singular form of
nouns, pronouns and verbs shall include the plural, and vice versa, whichever
the context may require.
15.8 Successors.
Subject to the limits on transferability and assignability contained in
this Agreement, each and all of the covenants, terms, provisions and agreements
contained in this Agreement shall be binding upon and inure to the benefit of
the successors, heirs, and assigns of the respective parties hereto.
15.9 Applicable Law.
This Agreement shall be construed and enforced in accordance with the laws
of the State of Georgia and the Act, without regard to the choice of law
principle thereof.
15.10 Time of Essence and Number of Days.
Time is of the essence in this Agreement. In computing the number of days
(other than business days) for purposes of this Agreement, all days shall be
counted, including Saturdays, Sundays, and holidays; provided, however, that if
the final day of any time period falls on a Saturday, Sunday, or holiday, then
the final day shall be deemed to be the next day which is not a Saturday, Sunday
or holiday.
15.11 Severability.
Every provision of this Agreement is intended to be severable. If any term
or provision hereof is illegal or invalid for any reason whatsoever, such
illegality or invalidity shall not affect the validity of the remainder of this
Agreement.
15.12 Waiver of Action for Partition.
Each of the Members irrevocably waives any right that such Member may have
to maintain any action for partition with respect to any of the assets of the
Company.
<PAGE>
15.13 Interpretation.
No provision of this Agreement is to be interpreted for or against any
party because that party or that party's legal representative drafted such
provision.
[THE REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the undersigned, being all the Members of the Company,
have executed this Operating Agreement effective this 24th day of March, 1999.
MEMBERS:
SERVICO, INC.
By: /s/ Robert M. Flanders
----------------------------------------------
Robert M. Flanders, President
Attested: /s/ Toni Jones
----------------------------------------
Toni Jones, Secretary
LODGIAN RICHMOND SPE, INC.
By: /s/ Robert M. Flanders
----------------------------------------------
Robert M. Flanders, President
Attested: /s/ Toni Jones
----------------------------------------
Toni Jones, Secretary
<PAGE>
EXHIBIT "A"
Members Capital Contribution No. of Class A
------- -------------------- Ordinary
Membership Units
Held
----------------
Servico, Inc. $990 990
Lodgian Richmond SPE, Inc. $10 10
<PAGE>
SCHEDULE 1.1
DEFINITIONS
Defined terms used in this Agreement and not set forth in this Schedule
1.10 shall have the meanings set forth elsewhere in this Agreement, and all of
such defined terms, wherever set forth, shall be equally applicable to both the
singular and plural forms of the terms defined.
* * * * * * * *
"Affiliate" means any person controlling, under common control with, or
controlled by the person in question, and the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through ownership
of voting securities, by contract or otherwise.
"Agreement" means this Operating Agreement, as the same may be amended
from time to time.
"Asset Value" means (i) the fair market value of any asset contributed to
the Company by any Member determined as of the time of contribution; (ii) the
fair market value on the date of distribution of any asset distributed by the
Company to any Member with respect to such Member's interest in the Company; and
(ii) the fair market value of all Company Property at the happening of any of
the following events: (A) the admission of a Member to, or the increase of an
interest of an existing Member in, the Company in exchange for a Capital
Contribution; or (B) the liquidation of the Company pursuant to Treasury
Regulation Section 1.704-1(b)(2)(ii)(g).
"Capital Account" means, in respect to any Member, the Capital
Contribution of such Member as set forth in this Agreement, adjusted as set
forth in Section II.
"Capital Contribution" means, in respect to any Member, the money or the
fair market value of property contributed or agreed to be contributed to the
Company by such Member as shown in Exhibit "A" and shall include any additional
Capital Contribution made pursuant to Sections 2.7.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or corresponding provisions of subsequent laws.
"Company Profit" and "Company Loss" shall mean, for each Fiscal Year or
other period, an amount equal to the Company's taxable income or loss for such
year or period, determined in accordance with Section 703(a) of the Code (for
this purpose, all items of income, gain, loss, or deduction required to be
stated separately shall be included in taxable income or loss); provided,
however, that (a) income exempt from federal income tax shall be
<PAGE>
treated as taxable income, (b) expenditures described in Section 705(a)(2)(B) of
the Code or treated as such expenditures under Treasury Regulation Section
1.704-1(b)(2)(iv)(i) shall be subtracted from taxable income, (c) the difference
between the adjusted basis for federal income tax purposes and Asset Value of
Company property shall be treated as gain or loss upon the happening of an event
described in clause (iii) of the definition of "Asset Value" herein, (d) gain or
loss resulting from the disposition of Company property with respect to which
gain or loss is recognized for federal income tax purposes shall be computed by
reference to the Asset Value of such Company property, (e) items specially
allocated under Sections 2.3(a), 2.3(b) and 2.3(c), and 4.1(b)(i) and (iii)
shall not be taken into account.
"Fiscal Year" means the calendar year.
"Involuntary Withdrawal" or "Involuntarily Withdraws" means the removal of
a Member or the removal and/or replacement of a Manager in accordance with the
terms of this Agreement.
"Majority" means 51%, by number, of the units or members, as the case may
be, in connection with any vote or consent action required in connection with
this Agreement.
"Manager" means, initially, Lodgian Richmond SPE, Inc., a Georgia
corporation, and any substituted or additional Manager appointed as such in
accordance with the terms of this Agreement, who has not been so removed as a
Manager in accordance with such terms.
"Members" means the persons executing this Agreement as Members and any
persons subsequently admitted to the Company as substituted or additional
Members; collectively, the Manager and the Members, and, individually, any one
of the Manager and Members.
"Membership Interest" means the interest of a Member in the capital, the
profits, and/or the rights, along with the obligations, that are possessed by
such Member as defined by the class and category of such interest, as defined by
the terms of this Agreement. The Company may issue certificate representing the
Membership Interests in the Company.
"Nonrecourse Debt" means a Company liability with respect to which none of
the Members has any personal liability as determined under Treasury Regulation
ss. 1.752-1.
"Officers" means, initially, Robert S. Cole, as President, Robert M.
Flanders, as Vice President, and Toni Jones, as Secretary and Treasurer, and any
other individual who is designated an officer of the Company by the Manager or
the President of the Company who is delegated authority to act on behalf of the
Company in accordance with Section 5.3 of the Agreement.
"Person" means any individual, partnership, corporation, limited liability
company,
<PAGE>
trust, or other entity.
"Property" means the real property more particularly described on Schedule
1.1(A) hereto, and all improvements, fixtures, furnishings and equipment now or
hereafter situated thereon or used in connection therewith.
"Representative" means the executor, administrator, guardian, trustee, or
other personal representative of a Member.
"Substituted Member" means any person admitted to the Membership as a
Member pursuant to Section 9.6.
"Transfer" means any sale, assignment, gift, pledge, or other disposition,
whether voluntary or by operation of law, of a Membership Interest.
"Voluntary Withdrawal" or "Voluntarily Withdraws" means the resignation or
withdrawal of a Member or a Manager other than an Involuntary Withdrawal.
<PAGE>
Exhibit 3.25.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION OF
SERVICO CEDAR RAPIDS, INC.
Pursuant to Sections 490.1006 and 490.1007 of the Iowa Business
Corporation Act (the "Act"), SERVICO CEDAR RAPIDS, INC., an Iowa corporation
(the "Corporation"), hereby certifies that these Amended and Restated Articles
of Incorporation (the "Amended Articles"), which contain amendments requiring
shareholder approval, were duly adopted by the Board of Directors of the
Corporation and by the sole shareholder of the Corporation by written consent
without a meeting, pursuant to Sections 490.704 and 490.821 of the Act, as of
July 23, 1999. The number of outstanding shares of common stock of the
Corporation (and the number entitled to vote thereon) is 1,000. The number of
votes cast was sufficient for approval. The Articles shall be amended and
restated to read as herein set forth in full:
ARTICLE I
The name of the Corporation is SERVICO CEDAR RAPIDS, INC.
ARTICLE II
The number of shares the Corporation is authorized to issue is One
Thousand (1,000) shares of common stock, $0.01 par value.
ARTICLE III
The registered office of the Corporation is located at c/o CT Corporation
System, 2222 Grand Avenue, Des Moines, Iowa 50312. The name of its registered
agent at that address is CT Corporation System.
ARTICLE IV
(a) The purpose for which the Corporation is organized is limited
to: (i) acquiring, owning, leasing, operating, using and managing that certain
real property commonly known as the Five Season Hotel, located at 350 First
Avenue, N.E. Cedar Rapids, Iowa 52401 (the "Property"); (ii) entering into and
performing its obligations under the credit agreement, among Lodgian Financing
Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel Group, LLC, Servico,
Inc. and other affiliated entities, as affiliate guarantors, the initial lenders
and initial issuing bank named therein, the collateral agent, the administrative
agent, Morgan Stanley Senior Funding, Inc., as co-lead arranger, joint-book
manager and syndication agent and Lehman Brothers, as co-lead arranger,
joint-book manager and documentation agent relating to the financing or
refinancing of the Property (the "Loan Agreement") which provides the lender
thereunder with a first priority lien on the Property, any promissory-note
evidencing indebtedness incurred pursuant to the Loan Agreement, any mortgage
securing such indebtedness
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and encumbering the Property (the "Mortgage") and any other documents securing
such indebtedness and any related collateral documents, each as amended (or
pursuant to a consent obtained in accordance with the terms thereof)
(collectively, the "Loan Documents"); (iii) entering into and performing its
obligations under the Indenture (the "Indenture"), among Lodgian Financing Corp,
as issuer, Lodgian, Inc., the Subsidiary Guarantors defined therein and Bankers
Trust Company, as trustee, relating to the issuance of the 12 1/4% Senior
Subordinated Notes due 2009 and the Guarantee in favor of the holders of the
Notes and (iv) transacting any and all lawful business that is incident and
necessary or appropriate to the ownership and to the management of the Property
for which a corporation may be incorporated under the laws of the State of Iowa.
(b) Notwithstanding any other provision of these Amended Articles
and any provision of law that otherwise so empowers the Corporation, until such
time as the Property is released from the lien of the Mortgage, the Corporation
shall not, without the unanimous affirmative vote of the members of its Board of
Directors, (i) amend, alter, change, repeal or adopt any resolution setting
forth a proposed amendment to, any provision of these Articles of Incorporation,
(ii) dissolve or liquidate, in whole or in part, consolidate or merge with or
into any other entity or convey, sell or transfer its properties and assets
substantially as an entirety to any entity, (iii) file a voluntary petition or
otherwise initiate, or consent to, proceedings for the Corporation to be
adjudicated insolvent or seeking an order for relief as a debtor under the
United States Bankruptcy Code, as amended (11 U.S.C. ss.ss. 101 et seq.), or
(iv) file any petition, or consent to any petition, seeking any composition,
reorganization, readjustment, liquidation, dissolution or similar relief under
the present or any future federal bankruptcy laws or any other present or future
applicable federal, state or other statute or law relative to bankruptcy,
insolvency or other relief for debtors; or (v) seek or consent to the
appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, or liquidator (or other similar official) of the Corporation or of
all or any substantial part of the properties and assets of the Corporation, or
(vi) make any general assignment for the benefit of creditors, or (vii) admit in
writing its inability to pay its debts generally as they become due, or (viii)
declare or effect a moratorium on its debt or take any corporate action in
furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all times
until the Property is released from the lien of the Mortgage, include an
independent director (the "Independent Director"). The Independent Director
shall be a person who is not at the time of appointment and who has not at any
time during the prior five years been and who is not while serving as the
Independent Director (i) a director, stockholder, officer or employee of the
Corporation or any affiliates thereof, other than with respect to such person's
service as an Independent Director of the Corporation and such person's service
in similar "Independent Director" positions for affiliates of the Corporation;
(ii) a creditor, customer, supplier, independent contractor, manager or any
other person who derives more than 10% of its gross revenues from its activities
wit the Corporation or any affiliates thereof; (iii) a person controlling any
such stockholder, creditor, customer, supplier, independent contractor, manager
or other person; (iv) the legal or beneficial owner, at any time while serving
as director of the Corporation, of any beneficial interest in the Corporation;
or (v) a member of the immediate family of any such stockholder, officer,
employee, creditor, customer, supplier, director, independent contractor,
manager or any other
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person of the Corporation. As used herein, the term "affiliate" means any person
controlling, under common control with, or controlled by the person in question,
and the term "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
person, whether through ownership of voting securities, by contract or
otherwise. In the event of the death, incapacity, or resignation of an
Independent Director, or the vacancy of the Independent Director's seat on the
Corporation's Board of Directors for any reason, a successor Independent
Director shall be appointed by the remaining directors.
(d) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(ix) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall not
(i) commingle its assets with those of, or pledge its assets for the benefit of,
any other person or entity; (ii) assume, guarantee or become obligated, or hold
out its credit as being available to satisfy, the liabilities or obligations of
any other person or entity; (iii) reduce its capital below an amount which is
adequate in light of its contemplated business operations; (iv) acquire
obligations or securities of, or make loans or advances to, any affiliate; (v)
incur or assume any indebtedness other than (A) the indebtedness underlying the
Loan Agreement, (B) the indebtedness underlying the Indenture, and (C)
liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article IV and the last sentence of
Article VII of these Amended Articles; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in these Amended Articles. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
ARTICLE V
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The board of directors shall consist of at least one (1) person. The
number of directors may be either increased or decreased from time to time as
provided in the Bylaws of the Corporation, but shall never be less than one. The
name and address of the member of the Board of Directors of the Corporation is:
Karyn Marasco 3445 Peachtree Road, N.E.
Two Live Oak Center, Suite 700
Atlanta, Georgia 30326
ARTICLE VI
The Board of Directors is expressly authorized to adopt, alter,
amend or repeal the Bylaws of the Corporation subject to the limitations set
forth in these Amended Articles. Election of directors need not be by written
ballot unless and to the extent provided in the Bylaws of the Corporation
ARTICLE VII
The Corporation shall indemnify any officer or director, or any
former officer or director of the Corporation, to the fullest extent permitted
by law. The foregoing right of indemnification shall not be exclusive of any
other rights to which any director, officer, employee or agent may be entitled
as a matter of law or which he may be lawfully granted. The Corporation's
obligation to indemnify its officers and directors pursuant to this Article
shall be subordinate in all respects to the obligations of the Corporation
arising out of the Loan Documents and shall not constitute a claim against the
Corporation to the extent that the Corporation is unable to pay any amounts it
is obligated to pay under the Loan Documents.
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IN WITNESS WHEREOF, the undersigned has executed these Amended and
Restated Articles of Incorporation this 23rd day of July, 1999.
SERVICO CEDAR RAPIDS, INC.
By: /s/ Thomas S. Gryboski
------------------------------------
Name: Thomas S. Gryboski
Title: Assistant Secretary
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Exhibit 3.25.2
SERVICO CEDAR RAPIDS, INC.
BY-LAWS
ARTICLE I
OFFICES
Section 1. The registered office shall be located in Des Moines, Iowa.
Section 2. The corporation may also have offices at such other places both
within and without the State of Iowa as the board of directors may from time to
time determine or the business of the corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of directors
shall be held within or outside the State of Iowa as may be fixed from time to
time by the board of directors and stated in the notice of the meeting or in a
duly executed waiver of notice thereof.
Section 2. Annual meetings of shareholders, commencing with the year 1998,
shall be held on the second Monday in January unless that day is a legal
holiday, and if a legal holiday, then on the next secular day following, at
10:00 a.m., at which they shall elect by a plurality vote a board of directors,
and transact such other business as may properly be brought before the meeting.
Section 3. Written or printed notice of the annual meeting stating the
place, day and hour of the meeting shall be delivered not less than ten nor more
than fifty days before the date of the meeting, either personally or by mail, by
or at the direction of the president, the secretary, or the officer or persons
calling the meeting, to each shareholder of record entitled to vote at such
meeting.
EXHIBIT C
<PAGE>
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. Special meetings of shareholders for any purpose other than the
election of directors may be held at such time and place within or without the
State of Iowa as shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
Section 2. Special meetings of the shareholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the articles of
incorporation, may be called by the president, the board of directors, or the
holders of not less than one-tenth of all the shares entitled to vote at the
meeting.
Section 3. Written or printed notice of a special meeting stating the
place, day and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than fifty days
before the date of the meeting, either personally or by mail, by or at the
direction of the president, or the secretary, or the officer or persons calling
the meeting, to each shareholder of record entitled to vote at such meeting.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of stock issued and
outstanding and entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by statute or by the articles of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the shareholders, the shareholders present in person or
represented by proxy shall have power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum shall be
present or represented. At such adjourned meeting at which a quorum shall be
present or represented any business may be transacted which might have been
transacted at the meeting as originally notified.
Section 2. If a quorum is present, the affirmative vote of a majority of
the shares of stock represented at the meeting shall be the act of the
shareholders unless the vote of a greater number of shares of stock is required
by law or the articles of incorporation.
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Section 3. Each outstanding share of stock, having voting power, shall be
entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. A shareholder may vote either in person or by proxy executed in
writing by the shareholder or by his duly authorized attorney-in-fact.
Unless the articles of incorporation otherwise provide, every shareholder
entitled to vote has the right to cumulate his vote in an election for directors
Section 4. Any action required to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the shareholders entitled
to vote with respect to the subject matter thereof.
If the articles of incorporation provide that a consent may be signed by
fewer than all of the shareholders having voting power on any question, then the
consent need be signed only by shareholders holding that proportion of the total
voting power on the question which is required by the articles of incorporation
or by law, whichever requirement is higher. The consent, together with a
certificate by the secretary of the corporation to the effect that the
subscribers to the consent constitute all or the required proportion of the
shareholders entitled to vote on the particular question, shall be filed with
the records of proceedings of the shareholders. If the consent is signed by
fewer than all of the shareholders having voting power on the question, prompt
notice shall be given to all of the shareholders of the action taken pursuant to
the consent.
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ARTICLE V
DIRECTORS
Section 1. The Board of Directors of the Corporation shall consist of one
(1) member. The number of directors may be either increased or decreased from
time to time by resolution of the Board of Directors, but shall never be less
than one (1). Directors need not be residents of the State of Iowa nor
shareholders of the corporation. The directors, other than the first board of
directors, shall be elected at the annual meeting of the shareholders, and each
directors elected shall serve until the next succeeding annual meeting and until
his successor shall have been elected and qualified. The first board of
directors shall hold office until the first annual meeting of shareholders.
Section 2. Vacancies and newly created directorships resulting from any
increase in the number of directors may be filled by election at an annual
meeting or at a special meeting of shareholders called for that purpose. A
director elected to fill a vacancy, or a newly created directorship, shall hold
office until the next succeeding annual meeting of shareholders and until his
successor shall have been elected and qualified.
In addition vacancies and newly created directorships resulting from any
increase in the number of directors may be filled by a majority of the directors
then in office, though less than a quorum, and the directors so chosen shall
hold office until the next annual election and until their successors are duly
elected and shall qualify.
Section 3. The business affairs of the corporation shall be managed by its
board of directors which may exercise all such powers of the corporation and do
all such lawful acts and things as are not by statute or by the articles of
incorporation or by these by-laws directed or required to be exercised or done
by the shareholders.
Section 4. The directors may keep the books of the corporation, except
such as are required by law to be kept within the state, outside of the State of
Iowa, at such place or places as they may from time to time determine.
Section 5. The board of directors, by the affirmative vote of a majority
of the directors then in office and irrespective of any personal interest of any
of its members, shall have
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authority to establish reasonable compensation of all directors for services to
the corporation as directors, officers or otherwise.
ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular or special, may be
held either within or without the State of Iowa.
Section 2. The first meeting of each newly elected board of directors
shall be held at such time and place as shall be fixed by the vote of the
shareholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present, or it may convene at such place and
time as shall be fixed by the consent in writing of all the directors.
Section 3. Regular meetings of the board of directors may be held upon
such notice, or without notice, and at such time and at such place as shall from
time to time be determined by the board.
Section 4. Special meetings of the board of directors may be called by the
president on two days' notice to each director, either personally or by mail or
by telegram; special meetings shall be called by the president or secretary in
like manner and on like notice on the written request of two directors.
Section 5. Attendance of a director at any meeting shall constitute a
waiver of notice of such meeting, except where a director attends for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the board
of directors need be specified in the notice or waiver of notice of such
meeting.
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Section 6. A majority of the directors shall constitute a quorum for the
transaction of business unless a greater number is required by law or by the
articles of incorporation. The act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the board of directors,
unless the act of a greater number is required by statute or by the articles of
incorporation. If a quorum shall not be present at any meeting of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 7. Any action required or permitted to be taken at a meeting of
the directors may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the directors entitled to
vote with respect to the subject matter thereof.
Section 8. Unless otherwise restricted by the articles of incorporation or
these by-laws, members of the board of directors may participate in a meeting of
the board of directors, by means of conference telephone or similar
communications equipment provided all persons participating in the meeting can
hear and communicate with each other, and such participation in a meeting shall
constitute presence in person at the meeting, except where a person participates
in the meeting for the express purpose of objecting to the transaction of any
business on the grounds that the meeting is not lawfully called or convened.
ARTICLE VII
EXECUTIVE COMMITTEE
Section 1. The board of directors, by resolution adopted by a majority of
the number of directors fixed by the by-laws or otherwise, may designate two or
more directors to constitute an executive committee, which committee, to the
extent provided in such resolution, shall have and exercise all of the authority
of the board of directors in the management of the corporation, except as
otherwise required by law. Vacancies in the membership of the committee shall be
filled by the board of directors at a regular or special meeting of the board of
directors. The executive committee shall keep regular minutes of its proceedings
and report the same to the board when required.
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ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
articles of incorporation or of these by-laws, notice is required to be given to
any director or shareholder, it shall not be construed to mean personal notice,
but such notice may be given in writing, by mail, addressed to such director or
shareholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telegram.
Section 2. Whenever any notice whatever is required to be given under the
provisions of the statutes or under the provisions of the articles of
incorporation or these by-laws, a waiver thereof in writing signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
ARTICLE IX
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board of
directors and shall be a president, a vice-president, a secretary and a
treasurer. The board of directors may also choose additional vice-presidents,
and one or more assistant secretaries and assistant treasurers. Any two or more
officers may be held by the same person except the offices of President and
Secretary.
Section 2. The board of directors at its first meeting after each annual
meeting of shareholders shall choose a president, one or more vice-presidents, a
secretary and a treasurer, none of whom need be a member of the board.
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Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board of directors.
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the board
of directors may be removed at any time by the affirmative vote of a majority of
the board of directors. Any vacancy occurring in any office of the corporation
shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the shareholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts requiring
a seal, under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the board of directors to some
other officer or agent of the corporation.
THE VICE PRESIDENTS
Section 8. The vice-president, or if there shall be more than one, the
vice-presidents in the order determined by the board of directors, shall, in the
absence or disability of the president, perform the duties and exercise the
powers of the president and shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the shareholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings
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of the shareholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such assistant
secretary. The board of directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by his
signature.
Section 10. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors, shall,
in the absence or disability of the secretary, perform the duties and exercise
the powers of the secretary and shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.
Section 14. The assistant treasurer, or, if there shall be more than one,
the assistant
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treasurers in the order determined by the board of directors, shall, in the
absence or disability of the treasurer, perform the duties and exercise the
powers of the treasurer and shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
ARTICLE X
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by
certificates signed by the president or a vice-president and the secretary or an
assistant secretary of the corporation, and may be sealed with the seal of the
corporation or a facsimile thereof. When the corporation is authorized to issue
shares of more than one class there shall be set forth upon the face or back of
the certificate, or the certificate shall have a statement that the corporation
will furnish to any shareholder upon request and without charge, a full or
summary statement of the designations, preferences, limitations, and relative
rights of the shares of each class authorized to be issued and, if the
corporation is authorized to issue any preferred or special class in series, the
variations in the relative rights and preferences between the shares of each
such series so far as the same have been fixed and determined and the authority
of the board of directors to fix and determine the relative rights and
preferences of subsequent series.
Section 2. The signatures of the officers of the corporation upon a
certificate may be facsimiles if the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the corporation itself or an
employee of the corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of its
issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate to be
issued in place of any certificate theretofore issued by the corporation alleged
to have been lost or destroyed. When authorizing such issue of a new
certificate, the board of directors, in its discretion and as a condition
precedent to the issuance thereof, may prescribe such terms and conditions as it
deems
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expedient, and may require such indemnities as it deems adequate, to protect the
corporation from any claim that may be made against it with respect to any such
certificate alleged to have been lost or destroyed.
TRANSFERS OF SHARES
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate representing shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, a new
certificate shall be issued to the person entitled thereto, and the old
certificate cancelled and the transaction recorded upon the books of the
corporation.
FIXING OF RECORD DATE
Section 5. For the purpose of determining shareholders entitled to notice
of and to vote at a meeting, or to receive a dividend, or to receive or exercise
subscription or other rights, or to participate in a reclassification of stock,
or in order to make a determination of shareholders for such purpose, such date
to be not more than seventy days and, if fixed for the purpose of determining
shareholders entitled to notice of and to vote at a meeting, not less than ten
days, prior to the date on which the action requiring the determination of
shareholders is to be taken.
If not record date is fixed, the record date for determining shareholders
entitled to notice of or to vote at a meeting of shareholders shall be at four
o'clock in the afternoon on the day before the day on which notice is given, or,
if notice is waived, at the commencement of the meeting. If no record date is
fixed, the record date for determining shareholders entitled to express consent
to corporate action in writing without meeting shall be the time of the day on
which the first written consent is served on the corporation as provided by law.
A determination of shareholders of record entitled to notice of or to vote
at a meeting of shareholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting and further provide that the adjournment or adjournments do
not exceed thirty days in the aggregate.
REGISTERED SHAREHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such
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owner, and to hold liable for calls and assessments a person registered on its
books as the owner of shares, and shall not be bound to recognize any equitable
or other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Iowa.
LIST OF SHAREHOLDERS
Section 7. the officer or agent having charge of the transfer books for
shares shall make a complete list of the shareholders entitled to vote at such
meeting, arrange in alphabetical order, with the address of each and the number
of shares held by each, which list shall be kept on file at the principal office
of the corporation and shall be subject to inspection by any shareholder at any
time during usual business hours. Such list shall also be produced and kept open
at the time and place of the meeting and shall be subject to the inspection of
any shareholder during the whole time of the meeting.
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VOTING RECORD
Section 8. The officer or agent having charge of the stock transfer books
for shares shall make, before each meeting of shareholders, a complete record of
the shareholders entitled to vote at shareholder's meeting or any adjournment
thereof, arrange in alphabetical order, with the address of each and the number
of shares held by each. Such record shall produced and kept open at the time and
place of the meeting and shall be subject to the inspection of any shareholders
during the whole time of the meeting for the purposes thereof.
ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the articles of incorporation
relating thereto, if any, dividends may be declared by the board of directors at
any regular or special meeting, pursuant to law. Dividends may be paid in cash,
in property or in shares of the capital stock, subject to any provisions of the
articles of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
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FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by resolution
of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words "Corporate Seal,
Iowa". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
ARTICLE XII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new
by-laws may be adopted at any regular or special meeting of shareholders at
which a quorum is present or represented, by the affirmative vote of a majority
of the stock entitled to vote, provided notice of the proposed alteration,
amendment or repeal be contained in the notice of such meeting.
Dated: March 21, 1997
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Exhibit 3.26.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION OF
SERVICO ROLLING MEADOWS, INC.
Pursuant to Sections 5/10.30 of the Illinois Business Corporation Act (the
"Act"), SERVICO ROLLING MEADOWS, INC., an Illinois corporation (the
"Corporation"), hereby certifies that these Amended and Restated Articles of
Incorporation (the "Amended Articles"), which contain amendments requiring
shareholder approval, were duly adopted by the Board of Directors of the
Corporation and by the sole shareholder of the Corporation by written consent
without a meeting, pursuant to Sections 5/7.10 and 5/8.45 of the Act, as of July
23, 1999. The number of votes cast was sufficient for approval. The original
Articles of Incorporation (the "Articles") were filed with the Secretary of
State of the State of Illinois on October 14, 1997. The Articles shall be
amended and restated to read as herein set forth in full:
ARTICLE I
The name of the Corporation is SERVICO ROLLING MEADOWS, INC.
ARTICLE II
The registered office of the Corporation is located at 208 LaSalle Street,
City of Chicago, County of Cook, Illinois 60604. The name of its registered
agent at that address is CT Corporation System.
ARTICLE III
(a) The purpose for which the Corporation is organized is limited
to: (i) acquiring, owning, leasing, operating, using and managing that certain
real property commonly known as the Holiday Inn Rolling Meadows, located at 3405
Algonquin Road, Rolling Meadows, Illinois 60008 (the "Property"); (ii) entering
into and performing its obligations under the credit agreement, among Lodgian
Financing Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel Group, LLC,
Servico, Inc. and other affiliated entities, as affiliate guarantors, the
initial lenders and initial issuing bank named therein, the collateral agent,
the administrative agent, Morgan Stanley Senior Funding, Inc., as co-lead
arranger, joint-book manager and syndication agent and Lehman Brothers, as
co-lead arranger, joint-book manager and documentation agent relating to the
financing or refinancing of the Property (the "Loan Agreement") which provides
the lender thereunder with a first priority lien on the Property, any
promissory-note evidencing indebtedness incurred pursuant to the Loan Agreement,
any mortgage securing such indebtedness and encumbering the Property (the
"Mortgage") and any other documents securing such indebtedness and any related
collateral documents, each as amended (or pursuant to a consent obtained in
accordance with the terms thereof) (collectively, the "Loan Documents"); (iii)
entering into and performing its obligations under the Indenture (the
"Indenture"), among Lodgian Financing Corp, as issuer, Lodgian, Inc., the
Subsidiary Guarantors defined therein and
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Bankers Trust Company, as trustee, relating to the issuance of the 12 1/4%
Senior Subordinated Notes due 2009 and the Guarantee in favor of the holders of
the Notes and (iv) transacting any and all lawful business that is incident and
necessary or appropriate to the ownership and to the management of the Property
for which a corporation may be incorporated under the laws of the State of
Illinois.
(b) Notwithstanding any other provision of these Amended Articles
and any provision of law that otherwise so empowers the Corporation, until such
time as the Property is released from the lien of the Mortgage, the Corporation
shall not, without the unanimous affirmative vote of the members of its Board of
Directors, (i) amend, alter, change, repeal or adopt any resolution setting
forth a proposed amendment to, any provision of these Articles of Incorporation,
(ii) dissolve or liquidate, in whole or in part, consolidate or merge with or
into any other entity or convey, sell or transfer its properties and assets
substantially as an entirety to any entity, (iii) file a voluntary petition or
otherwise initiate, or consent to, proceedings for the Corporation to be
adjudicated insolvent or seeking an order for relief as a debtor under the
United States Bankruptcy Code, as amended (11 U.S.C. ss.ss. 101 et seq.), or
(iv) file any petition, or consent to any petition, seeking any composition,
reorganization, readjustment, liquidation, dissolution or similar relief under
the present or any future federal bankruptcy laws or any other present or future
applicable federal, state or other statute or law relative to bankruptcy,
insolvency or other relief for debtors; or (v) seek or consent to the
appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, or liquidator (or other similar official) of the Corporation or of
all or any substantial part of the properties and assets of the Corporation, or
(vi) make any general assignment for the benefit of creditors, or (vii) admit in
writing its inability to pay its debts generally as they become due, or (viii)
declare or effect a moratorium on its debt or take any corporate action in
furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all times
until the Property is released from the lien of the Mortgage, include an
independent director (the "Independent Director"). The Independent Director
shall be a person who is not at the time of appointment and who has not at any
time during the prior five years been and who is not while serving as the
Independent Director (i) a director, stockholder, officer or employee of the
Corporation or any affiliates thereof, other than with respect to such person's
service as an Independent Director of the Corporation and such person's service
in similar "Independent Director" positions for affiliates of the Corporation;
(ii) a creditor, customer, supplier, independent contractor, manager or any
other person who derives more than 10% of its gross revenues from its activities
wit the Corporation or any affiliates thereof; (iii) a person controlling any
such stockholder, creditor, customer, supplier, independent contractor, manager
or other person; (iv) the legal or beneficial owner, at any time while serving
as director of the Corporation, of any beneficial interest in the Corporation;
or (v) a member of the immediate family of any such stockholder, officer,
employee, creditor, customer, supplier, director, independent contractor,
manager or any other person of the Corporation. As used herein, the term
"affiliate" means any person controlling, under common control with, or
controlled by the person in question, and the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through ownership
of voting securities, by contract or otherwise. In the event of the death,
incapacity, or resignation of an Independent
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Director, or the vacancy of the Independent Director's seat on the Corporation's
Board of Directors for any reason, a successor Independent Director shall be
appointed by the remaining directors.
(d) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(ix) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall not
(i) commingle its assets with those of, or pledge its assets for the benefit of,
any other person or entity; (ii) assume, guarantee or become obligated, or hold
out its credit as being available to satisfy, the liabilities or obligations of
any other person or entity; (iii) reduce its capital below an amount which is
adequate in light of its contemplated business operations; (iv) acquire
obligations or securities of, or make loans or advances to, any affiliate; (v)
incur or assume any indebtedness other than (A) the indebtedness underlying the
Loan Agreement, (B) the indebtedness underlying the Indenture, and (C)
liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article III and the last sentence of
Article VII of these Amended Articles; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in these Amended Articles. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
ARTICLE IV
The total number of shares of stock which the Corporation shall have
the authority to issue is One Thousand (1,000) shares of common stock, One Cent
($.01) par value per share. The total number of shares issued by the Corporation
is 1,000 shares, and the consideration paid therefor was Ten Dollars ($10.00).
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<PAGE>
ARTICLE V
The board of directors shall consist of at least one (1) director.
The number of directors may be increased or decreased from time to time as
provided in the Bylaws of the Corporation, but shall never be less than one (1).
ARTICLE VI
The name and addresses of the incorporators of the Corporation were:
Alrene L. Spence 208 S. LaSalle Street
Chicago, Illinois 60604
Barbara Smith 208 S. LaSalle Street
Chicago, Illinois 60604
ARTICLE VII
The Corporation shall indemnify any officer or director, or any
former officer or director of the Corporation, to the fullest extent permitted
by law. The foregoing right of indemnification shall not be exclusive of any
other rights to which any director, officer, employee or agent may be entitled
as a matter of law or which he may be lawfully granted. The Corporation's
obligation to indemnify its officers and directors pursuant to this Article
shall be subordinate in all respects to the obligations of the Corporation
arising out of the Loan Documents and shall not constitute a claim against the
Corporation to the extent that the Corporation is unable to pay any amounts it
is obligated to pay under the Loan Documents.
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IN WITNESS WHEREOF, the undersigned corporation has caused these
Second Amended and Restated Articles of Incorporation to be so signed by its
duly authorized officers, each of whom affirms, under penalties of perjury, that
the facts stated herein are true.
Dated: July 23, 1999.
SERVICO ROLLING MEADOWS, INC.
By: /s/ Thomas S. Gryboski
------------------------------------
Name: Thomas S. Gryboski
Title: Assistant Secretary and Vice
President
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Exhibit 3.26.2
SERVICO ROLLING MEADOWS, INC.
*****
BY - LAWS
*****
ARTICLE I
OFFICES
Section 1. The registered office shall be located at C T CORPORATION
SYSTEM 208 S LA SALLE STREET, CHICAGO, ILLINOIS 60604 IN COOK COUNTY.
Section 2. The corporation may also have offices at such other places both
within and without the State of Illinois as the board of directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of directors
shall be held on such day and at such hour as may be fixed from time to time by
the board of directors. Said meetings may also be held at such other place
either within or outside the State of Illinois as shall be designated from time
to time by the board of directors and stated in the notice of the meeting.
Section 2. Annual meetings of shareholders, commencing with the year 1998,
shall be held on the Second Monday in January unless that day is a legal
holiday, and if a legal holiday, then on the next secular day following, at
10:00 a.m., at which they shall elect by a plurality vote a board of directors,
and transact such other business as may properly be brought before the meeting.
Section 3. Written or printed notice of the annual meeting stating the
place, day and hour of the meeting shall be delivered not less than ten nor more
than fifty days before the date of the meeting, either personally or by mail, by
or at the direction of the president, the secretary, or the officer or persons
calling the meeting, to each shareholder of record entitled to vote at such
meeting.
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. Special meetings of shareholders for any purpose other than the
election of directors may be held at such time and place within or without the
state of Illinois as shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
Section 2. Special meetings of the shareholders, for any purposes, unless
otherwise prescribed by statute or by the articles of incorporation, may be
called by the president, the board of
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directors, or the holders of not less than one-tenth of all the shares entitled
to vote at the meeting.
Section 3. Written or printed notice of a special meeting stating the
place, day and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than fifty days
before the date of the meeting, either personally or by mail, by or at the
direction of the president, the secretary, or the officer or persons calling the
meeting, to each shareholder of record entitled to vote at such meeting.
Section 4. The business transacted at any special meeting of shareholders
shall be limited to the purposes stated in the notice.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of stock issued and
outstanding and entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by statute or by the articles of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the shareholders, the shareholders present in person or
represented by proxy shall have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented any business may be transacted which might have
been transacted at the meeting as originally notified.
Section 2. If a quorum is present, the affirmative vote of a majority of
the shares of stock represented at the meeting shall be the act of the
shareholders unless the vote of a greater number of shares of stock is required
by law or the articles of incorporation.
Section 3. Each outstanding share of stock, having voting power, shall be
entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. A shareholder may vote either in person or by proxy executed in
writing by the shareholder or by his duly authorized attorney-in-fact.
Section 4. Any action required to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the shareholders entitled
to vote with respect to the subject matter thereof.
ARTICLE V
DIRECTORS
Section 1. The Board of Directors of the Corporation shall consist of one
(1) member. The number of directors may be either increased or decreased from
time to time by
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resolution of the Board of Directors, but shall never be less than one (1).
Directors need not be residents of the State of Illinois nor shareholders of the
corporation. The directors, other than the first board of directors, shall be
elected at the annual meeting of the shareholders, and each directors elected
shall serve until the next succeeding annual meeting and until his successor
shall have been elected and qualified. The first board of directors shall hold
office until the first annual meeting of shareholders.
Section 2. Any vacancy occuring in the board of directors may be filled by
the shareholders at an annual or a special meeting or by the affirmative vote of
a majority of the remaining directors though less than a quorum of the board of
directors. A director elected to fill a vacancy, shall be elected for the
unexpired portion of the terms of his predecessor in office.
Any directorship to be filled by reason of an increase in the number of
directors may be filled by election at an annual meeting or at a special meeting
of shareholders called for that purpose. A director elected to fill a newly
created directorship shall serve until the next succeeding annual meeting of
shareholders and until his successor shall have been elected and qualified. Any
directorship to filled by reason of an increase in the number of directors may
also be filled by the board of directors for a term of office until the next
election of directors by shareholders provided no more than two directorships
may be so filled during a period between any two successive annual meetings of
shareholders.
Whenever the holders of any class or series of shares are entitled to
elect one or more directors by the provisions of the articles of incorporation,
any vacancies in such directorships and any newly created directorships of such
class or series to be filled by reason of an increase in the number of such
directors may be filled by the affirmative vote of a majority of the directors
elected by such class or series then in office or by a sole remaining director
so elected, or by the vote of the holders of the outstanding shares of such
class or series, and such directorships shall not in any case be filled by the
vote of the remaining directors or the holders of the outstanding shares as a
whole unless otherwise provided in the articles of incorporation.
Section 3. The business affairs of the corporation shall be managed by its
board of directors which may exercise all such powers of the corporation and do
all such lawful acts and things as are not by statute or by the articles of
incorporation or by these by-laws directed or required to be exercised or done
by the shareholders.
Section 4. The directors may keep the books of the corporation, except
such as are required by law to be kept within the state, outside of the State of
Illinois, at such place or places as they may from time to time determine.
Section 5. The board of directors, by the affirmative vote of a majority
of the directors then in office, and irrespective of any personal interest of
any of its members, shall have authority to establish reasonable compensation of
all directors for services to the corporation as directors, officers or
otherwise.
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ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular or special, may be
held either within or without the State of Illinois.
Section 2. The first meeting of each newly elected board of directors
shall be held at such time and place as shall be fixed by the vote of the
shareholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting provided a quorum shall be present, or it may convene at such place and
time as shall be fixed by the consent in writing of all the directors.
Section 3. Regular meetings of the board of directors may be held upon
such notice, or without notice, and at such time and at such place as shall from
time to time be determined by the board.
Section 4. Special meetings of the board of directors may be called by the
president on two days' notice to each director, either personally or by mail or
by telegram; special meeting shall be called by the president or secretary in
like manner and on like notice on the written request of two directors.
Section 5. Attendance of a director at any meeting shall constitute a
waiver of notice of such meeting, except where a director attends for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the board
of directors need be specified in the notice or waiver of notice of such
meeting.
Section 6. A majority of the directors shall constitute a quorum for the
transaction of business unless a greater number is required by law or by the
articles of incorporation. The act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the board of directors,
unless the act of a greater number is required by statute or by the articles of
incorporation. If a quorum shall not be present at any meeting of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 7. Unless otherwise restricted by the articles of incorporation or
these by-laws, any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting, if all members of the board of committee, as the case may be, consent
thereto in writing which shall set forth the action taken and be signed by all
members of the board of directors or of the committee as the case may be.
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ARTICLE VII
COMMITTEES OF DIRECTORS
Section 1. The board of directors, by resolution adopted by a majority of
the [ILLEGIBLE] board of directors, may designate from among its members an
executive committee and one or more other committees, each of which shall be
comprised of one or more members and, to the extent provided in the resolution,
shall have and may exercise all of the authority of the board of directors
except that no such committee shall have the authority of the board of directors
in reference to amending the articles of incorporation, approving a plan of
merger or consolidation, recommencing to the shareholders the sale, lease, or
exchange of all or substantially all of the property and assets of the
corporation otherwise than in the usual and regular course of its business,
recommending; the shareholders a voluntary dissolution of the corporation or a
revocation thereof, amending, altering, or repealing the by-laws of the
corporation or adopting new by-laws for the corporation, filling vacancies in
the board of directors to be filled by reason of an increase in the number of
directors, electing or removing officers or members of a committee, fixing the
compensation of any member of a committee, or altering or repealing any
resolution of the board of directors which by its terms provides that it shall
not be so amendable or repealable, and, unless the resolution expressly so
provides, no committee shall have the power of authority to declare a dividend
or to authorize the issuance of shares of the corporation.
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes of the articles
of incorporation or of these bylaws, notice is required to be given to any
director or shareholder, it shall not be construed to mean personal notice, but
such notice may be given in writing, by mail, addressed to such director or
shareholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telegram.
Section 2. Whenever any notice whatever is required to be given under the
provisions of the statutes or under the provisions of the articles of
incorporation or these by-laws, a waiver thereof in writing signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
ARTICLE IX
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board of
directors and shall be a president and a secretary. The board of directors may
also elect or appoint such other officers, including assistant officers and
agents as may be deemed necessary.
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Section 2. The board of directors at its first meeting after each annual
meeting of shareholders shall choose a president and a secretary, neither of
whom need be a member of the board.
Section 3. The board of directors may also appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall exercise such
powers and perform such duties as shall be determined from time to time by the
board of directors.
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the board
of directors may be removed at any time by the affirmative vote of a majority of
the board of directors. Any vacancy occurring in any office of the corporation
shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the shareholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts requiring
a seal, under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the board of directors to some
other officer or agent of the corporation.
THE VICE-PRESIDENTS
Section 8. The vice-president, or if there is one, or if there shall be
more than one, the vice-presidents in the order determined by the board of
directors, shall, in the absence or disability of the president, perform the
duties and exercise the powers of the president and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the shareholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the shareholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He
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shall have custody of the corporate seal of the corporation and he, or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature or by the
signature of such assistant secretary. The board of directors may give general
authority to any other officer to affect the affixing by his signature.
Section 10. The assistant secretary, if there is one, or if there be more
than one, the assistant secretaries in the order determined by the board of
directors, shall, in the absence or disability of the secretary, perform the
duties and exercise the powers of the secretary and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer, if there is one, shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the board of
directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.
Section 14. The assistant treasurer, if there is one, or, if there shall
be more than one, the assistant treasurers in the order determined by the board
of directors, shall, in the absence or disability of the treasurer, perform the
duties and exercise the powers of the treasurer and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
ARTICLE X
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by
certificates signed by the president or secretary or such other officers as may
be elected or appointed, and may be sealed with the seal of the corporation or a
facsimile thereof.
When the corporation is authorized to issue shares of more than one class
there shall
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be set forth upon the face or back of the certificate, or the certificate shall
have a statement that the corporation will furnish to any shareholder upon
request and without charge, a full statement of the designations, preferences,
limitations and relative rights of the shares of each class authorized to be
issued and, if the corporation is authorized to issue any preferred or special
class in series, the variations in the relative rights and preferences between
the shares of each such series so far as the same have been fixed and determined
and the relative rights and preferences of subsequent series. When the
corporation is authorized to issue shares of more than one class, every
certificate shall also set forth upon the face or back of such certificate a
statement that there is set forth in the articles of incorporation on file in
the office of the Secretary of State a full statement of all the designations,
preferences, limitations and relative rights, including voting rights, or the
shares of each class authorized to be issued and the corporation at its
principal place of business or registered office. Every certificate shall have
noted thereon any information required to be set forth by the [ILLEGIBLE]
Business Corporation Act and such information shall be set forth in the manner
provided in said Act.
Section 2. The signatures of the officers of the corporation upon a
certificate may be facsimiles if the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the corporation itself or an
employee of the corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of its
issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate to be
issued in place of any certificate therefore issued by the corporation alleged
to have been lost or destroyed. When authorizing such issue of a new
certificate, the board of directors, in its discretion and as a condition
precedent to the issuance thereof, may prescribe such terms and conditions as it
deems expedient, and may require such indemnities as it deems adequate, to
protect the corporation from any claim that may be made against it with respect
to any such certificate alleged to have been lost or destroyed.
TRANSFERS OF SHARES
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate representing shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, a new
certificate shall be issued to the person entitled thereto, and the old
certificate cancelled and the transaction recorded upon the books of the
corporation.
CLOSING OF TRANSFER BOOKS
Section 5. For the purpose of determining shareholders entitled to notice
of or to vote at any meeting of shareholders, or any adjournment thereof or
entitled to receive payment of any dividend, or in order to make a determination
of shareholders for any other proper purpose the board of
8
<PAGE>
directors may provide that the stock transfer books shall be closed for a stated
period but not to exceed, in any case, fifty days. If the stock transfer books
shall be closed for the purpose of determining shareholders entitled to notice
of or to vote at a meeting of shareholders, such books shall be closed for at
least ten days immediately preceding such meeting. In lieu of closing the stock
transfer books, the board of directors may fix in advance a date as the record
date for any such determination of shareholder, such date in any case to be not
more than fifty days and, in case of a meeting of shareholders, not less than
ten days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of shareholders, or
shareholders entitled to receive payment of a dividend, the date on which notice
of the meeting is mailed or the date on which the resolution of the board of
directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof.
REGISTERED SHAREHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of share to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize and equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Illinois.
LIST OF SHAREHOLDERS
Section 7. The officer or agent having charge of the transfer books for
shares shall make, at least ten days before each meeting of shareholders, a
complete list of the shareholders entitled to vote at such meeting, arranged in
alphabetical order, with the address of each and the number of shares held by
each, which list, for a period of ten days prior to such meeting, shall be kept
on file at the registered office of the corporation and shall be subject to
inspection by any shareholder at any time during usual business hours. Such list
shall also be produced and kept open at the time and place of the meeting and
shall be subject to the inspection of any shareholders during the whole time of
the meeting. The original share ledger or transfer book, or a duplicate thereof,
shall be prima facie evidence as to who are the shareholders entitled to examine
such list or share ledger or transfer book or to vote at any meeting of the
shareholders.
ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the articles of incorporation
relating thereto, if any, dividends may be declared by the board of directors at
any regular or special meeting, pursuant
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<PAGE>
to law. Dividends may be paid in cash, in property or in shares of the capital
stock, subject to any provisions of the articles of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by resolution
of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words "Corporate Seal,
Illinois". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
ARTICLE XII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new
by-laws may be adopted by the affirmative vote of a majority of the board of
directors at any regular or special meeting of the board subject to repeal or
change at any regular or special meeting of shareholders at which a quorum is
present or represented, by the affirmative vote of a majority of the stock
entitled to vote, provided notice of the proposed repeal or charge be contained
in the notice of such meeting.
ARTICLE XIII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new
by-laws may be adopted at any regular or special meeting of shareholders at
which a quorum is present or represented, by the affirmative vote of a majority
of the stock entitled to vote, provided notice of the proposed alteration,
amendment or repeal be contained in the notice of such meeting.
Dated: July __, 1997
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Exhibit 3.27.1
SECOND AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
SERVICO METAIRIE, INC.
Pursuant to Sections 12:32 and 12:34 of the Louisiana Business
Corporation Law (the "Louisiana Law"), SERVICO METAIRIE, INC., a Louisiana
corporation (the "Corporation"), hereby certifies that these Amended and
Restated Articles of Incorporation (the "Amended Articles"), accurately copy the
original articles and any amendments thereto in effect at the time of this
restatement without substantive change except as made by any new amendments
contained herein, and these Amended Articles contain amendments requiring
shareholder approval, which were duly adopted by the Board of Directors of the
Corporation and by the sole shareholder of the Corporation by written consent
without a meeting, pursuant to Sections 12:79 and 12:81(9) of the Louisiana Law,
as of July ___, 1999. The number of outstanding shares of common stock of the
Corporation (and the number of shares entitled to vote thereon) is 1,000. The
original Articles of Incorporation were filed with the Secretary of State of the
State of Louisiana on April 2, 1996. These Amended Articles correctly set forth
the provisions of the Articles of Incorporation as theretofore amended, which
amendment have been effected in conformity with the Louisiana Law. These Amended
Articles supercede the original Articles of Incorporation and all amendments
thereto.
ARTICLE I
The name of the Corporation is SERVICO METAIRIE, INC.
ARTICLE II
The registered office of the Corporation is located at 8550 United
Plaza Boulevard, Baton Rouge, Louisiana 70809. The name of its registered agent
at that address is CT Corporation System.
ARTICLE III
(a) The purpose for which the Corporation is organized is limited to: (i)
acquiring, owning, leasing, operating, using and managing that certain real
property commonly known as the Quality Hotel, located at 2261 North Causeway
Boulevard, Metairie, Louisiana 70001 (the "Property"); (ii) entering into and
performing its obligations under the credit agreement, among Lodgian Financing
Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel Group, LLC, Servico,
Inc. and other affiliated entities, as affiliate guarantors, the initial lenders
and initial issuing bank named therein, the collateral agent, the administrative
agent, Morgan Stanley Senior Funding, Inc., as co-lead arranger, joint-book
manager and syndication agent and Lehman Brothers, as co-lead arranger,
joint-book manager and documentation agent relating to the financing or
refinancing of the Property (the "Loan Agreement") which provides the lender
<PAGE>
thereunder with a first priority lien on the Property, any promissory-note
evidencing indebtedness incurred pursuant to the Loan Agreement, any mortgage
securing such indebtedness and encumbering the Property (the "Mortgage") and any
other documents securing such indebtedness and any related collateral documents,
each as amended (or pursuant to a consent obtained in accordance with the terms
thereof) (collectively, the "Loan Documents"), which obligations may include
guaranteeing the obligations of other affiliated entities; (iii) entering into
and performing its obligations under the Indenture (the "Indenture"), among
Lodgian Financing Corp, as issuer, Lodgian, Inc., the Subsidiary Guarantors
defined therein and Bankers Trust Company, as trustee, relating to the issuance
of the 12 1/4% Senior Subordinated Notes due 2009 and the Guarantee in favor of
the holders of the Notes, which obligations may include guaranteeing the
obligations of other affiliated entities and (iv) transacting any and all lawful
business that is incident and necessary or appropriate to the ownership and to
the management of the Property for which a corporation may be incorporated under
the laws of the State of Louisiana.
(b) Notwithstanding any other provision of these Amended Articles and
any provision of law that otherwise so empowers the Corporation, until such time
as the Property is released from the lien of the Mortgage, the Corporation shall
not, without the unanimous affirmative vote of the members of its Board of
Directors, (i) amend, alter, change, repeal or adopt any resolution setting
forth a proposed amendment to, any provision of these Articles of Incorporation,
(ii) dissolve or liquidate, in whole or in part, consolidate or merge with or
into any other entity or convey, sell or transfer its properties and assets
substantially as an entirety to any entity, (iii) file a voluntary petition or
otherwise initiate, or consent to, proceedings for the Corporation to be
adjudicated insolvent or seeking an order for relief as a debtor under the
United States Bankruptcy Code, as amended (11 U.S.C. Sections 101 ET SEQ.), or
(iv) file any petition, or consent to any petition, seeking any composition,
reorganization, readjustment, liquidation, dissolution or similar relief under
the present or any future federal bankruptcy laws or any other present or future
applicable federal, state or other statute or law relative to bankruptcy,
insolvency or other relief for debtors; or (v) seek or consent to the
appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, or liquidator (or other similar official) of the Corporation or of
all or any substantial part of the properties and assets of the Corporation, or
(vi) make any general assignment for the benefit of creditors, or (vii) admit in
writing its inability to pay its debts generally as they become due, or (viii)
declare or effect a moratorium on its debt or take any corporate action in
furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all times until
the Property is released from the lien of the Mortgage, include an independent
director (the "Independent Director"). The Independent Director shall be a
person who is not at the time of appointment and who has not at any time during
the prior five years been and who is not while serving as the Independent
Director (i) a director, stockholder, officer or employee of the Corporation or
any affiliates thereof, other than with respect to such person's service as an
Independent Director of the Corporation and such person's service in similar
"Independent Director" positions for affiliates of the Corporation; (ii) a
creditor, customer, supplier, independent contractor, manager or any other
person who derives more than 10% of its gross revenues from its activities wit
the Corporation or any affiliates thereof; (iii) a person controlling any such
stockholder, creditor, customer, supplier, independent contractor, manager or
other person; (iv) the legal or beneficial owner, at any time while serving as
director of the
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<PAGE>
Corporation, of any beneficial interest in the Corporation; or (v) a member of
the immediate family of any such stockholder, officer, employee, creditor,
customer, supplier, director, independent contractor, manager or any other
person of the Corporation. As used herein, the term "affiliate" means any person
controlling, under common control with, or controlled by the person in question,
and the term "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
person, whether through ownership of voting securities, by contract or
otherwise. In the event of the death, incapacity, or resignation of an
Independent Director, or the vacancy of the Independent Director's seat on the
Corporation's Board of Directors for any reason, a successor Independent
Director shall be appointed by the remaining directors.
(d) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(ix) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall not (i)
commingle its assets with those of, or pledge its assets for the benefit of, any
other person or entity; (ii) assume, guarantee or become obligated, or hold out
its credit as being available to satisfy, the liabilities or obligations of any
other person or entity; (iii) reduce its capital below an amount which is
adequate in light of its contemplated business operations; (iv) acquire
obligations or securities of, or make loans or advances to, any affiliate; (v)
incur or assume any indebtedness other than (A) the indebtedness underlying the
Loan Agreement, (B) the indebtedness underlying the Indenture, and (C)
liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article Third and the last sentence of
Article Eighth of these Amended Articles; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in these Amended Articles. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
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<PAGE>
ARTICLE IV
The total number of shares of stock which the Corporation shall have
the authority to issue is One Thousand (1,000) shares of common stock, one cent
($.01) par value per share.
ARTICLE V
The Board of Directors of the Corporation shall be comprised of at
least one (1) person. The number of directors may be increased or decreased from
time to time as provided for in the Bylaws of the Corporation, but shall never
be less than one (1).
ARTICLE VI
The Board of Directors is expressly authorized to adopt, alter, amend
or repeal the Bylaws of the Corporation subject to the limitations set forth in
these Amended Articles. Election of directors need not be by written ballot
unless and to the extent provided in the Bylaws of the Corporation.
ARTICLE VII
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 12:92 of the Louisiana Law, or (iv) for
any transaction from which the director derived an improper personal benefit. If
the Louisiana Law is amended after the date of these Amended Articles to
authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of each director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the Louisiana
Law, as so amended.
The rights and authority conferred in this Article Seventh shall not be
exclusive of any other rights that any person may have or hereafter acquire
under any statute, provision of these Amended Articles or the Bylaws of the
Corporation, agreement, vote of the stockholders or disinterested directors or
otherwise.
ARTICLE VIII
The Corporation shall indemnify any officer or director, or any former
officer or director of the Corporation, to the fullest extent permitted by law.
The foregoing right of indemnification shall not be exclusive of any other
rights to which any director, officer, employee or agent may be entitled as a
matter of law or which he may be lawfully granted. The Corporation's obligation
to indemnify its officers and directors pursuant to this Article shall be
subordinate in all respects to the obligations of the Corporation arising out of
the Loan Documents and shall not constitute a claim against the Corporation to
the extent that the Corporation is unable to pay any amounts it is obligated to
pay under the Loan Documents.
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<PAGE>
IN WITNESS WHEREOF, the undersigned has executed these Amended and
Restated Articles of Incorporation this 22 day of July, 1999.
SERVICO METAIRIE, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
By: /s/ Thomas S. Gryboski
--------------------------
Name: Tom Gryboski
Title: Assistant Secretary
<PAGE>
State of New York )
)
) ss.
)
County of New York )
The foregoing instrument was acknowledged before me this 22nd day of July,
1999, by Robert M. Flanders, as President, and Tom Gryboski, as Assistant
Secretary, of Servico Metairie, Inc., a Louisiana corporation, who are
personally known to me or who have produced a driver's license as
identification and who did (did not) take an oath.
/s/ Athena E. Alexander
--------------------------------
Print or Stamp Name:____________
Notary Public, State of New York
Commission No.:_________________
My Commission Expires:__________
ATHENA E. ALEXANDER
Notary Public, State of New York
No. 02-AL6020772
Qualified in New York County
Commission Expires March 8, 2001
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<PAGE>
Exhibit 3.27.2
SERVICO METAIRIE, INC.
* * * * *
BY - LAWS
* * * * *
ARTICLE I
OFFICERS
Section 1. The registered office shall be located in Baton Rouge,
Louisiana.
Section 2. The corporation may also have offices at such other places both
within and without the State of Louisiana as the board of directors may from
time to time determine or the business of the corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of directors
shall be held within or outside the State of Louisiana as may be fixed from time
to time by the board of directors and stated in the notice of the meeting or in
a duly executed waiver of notice thereof.
Section 2. Annual meetings of shareholders, commencing with the year 1997,
shall be held on the Second Monday in January unless that day is a legal
holiday, and if a legal holiday, then on the next secular day following, at
10:00 a.m., at which they shall elect by a plurality vote a board of directors,
and transact such other business as may properly be brought before the meeting.
<PAGE>
Section 3. Written or printed notice of the annual meeting stating the
place, day and hour of the meeting shall be delivered not less than ten nor more
than fifty days before the date of the meeting, either personally or by mail, by
or at the direction of the president, the secretary, or the officer or persons
calling the meeting, to each shareholder of record entitled to vote at such
meeting.
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. Special meetings of shareholders for any purpose other than the
election of directors may be held at such time and place within or without the
State of Louisiana as shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
Section 2. Special meetings of the shareholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the articles of
incorporation, may be called by the president, the board of directors, or the
holders of not less than one-tenth of all the shares entitled to vote at the
meeting.
Section 3. Written or printed notice of a special meeting stating the
place, day and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than fifty days
before the date of the meeting, either personally or by mail, by or at the
direction of the president, or the secretary, or the officer or persons calling
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<PAGE>
the meeting, to each shareholder of record entitled to vote at such meeting.
Section 4. The business transacted at any special meeting of shareholders
shall be limited to the purposes stated in the notice.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of stock issued and
outstanding and entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by statute or by the articles of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the shareholders, the shareholders present in person or
represented by proxy shall have power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum shall be
present or represented. At such adjourned meeting at which a quorum shall be
present or represented any business may be transacted which might have been
transacted at the meeting as originally notified. In the case of any meeting
called for the election of directors, those who attend the second of such
adjourned meetings, although less than a quorum as fixed herein, shall
nevertheless constitute a quorum for the purpose of electing directors.
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<PAGE>
Section 2. If a quorum is present, the affirmative vote of a majority of
the shares of stock represented at the meeting shall be the act of the
shareholders unless the vote of a greater number of shares of stock is required
by law or the articles of incorporation.
Section 3. Each outstanding share of stock, having voting power, shall be
entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. A shareholder may vote either in person or by proxy executed in
writing by the shareholder or by his duly authorized attorney-in-fact.
Section 4. Any action required to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the shareholders entitled
to vote with respect to the subject matter thereof.
If the articles of incorporation provide that a consent may be signed by
fewer than all of the shareholders having voting power on any question, then the
consent need be signed only by shareholders holding that proportion of the total
voting power on the question which is required by the articles of incorporation
or by law, whichever requirement is higher. The consent, together with a
certificate by the secretary of the corporation to the effect that the
subscribers to the consent constitute all or the required proportion of the
shareholders entitled to vote on the particular question, shall be filed with
the records of proceedings of the shareholders. If the consent is signed by
fewer than all of the
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<PAGE>
shareholders having voting power on the question, prompt notice shall be given
to all of the shareholders of the action taken pursuant to the consent.
ARTICLE V
DIRECTORS
Section 1. The Board of Directors of the Corporation shall consist of one
(1) member. The number of directors may be either increased or decreased from
time to time by resolution of the Board of Directors, but shall never be less
than one (1). Directors need not be residents of the State of Louisiana nor
shareholders of the corporation. The directors, other than the first board of
directors, shall be elected at the annual meeting of the shareholders, and each
directors elected shall serve until the next succeeding annual meeting and until
his successor shall have been elected and qualified. The first board of
directors shall hold office until the first annual meeting of shareholders.
Section 2. Vacancies and newly created directorships resulting from any
increase in the number of directors may be filled by election at an annual
meeting or at a special meeting of shareholders called for that purpose. A
director elected to fill a vacancy, or a newly created directorship, shall hold
office until the next succeeding annual meeting of shareholders and until his
successor shall have been elected and qualified.
In addition vacancies and newly created directorships resulting from any
increase in the number of directors may be
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<PAGE>
filled by a majority of the directors then in office, though less than a quorum,
and the directors so chosen shall hold office until the next annual election and
until their successors are duly elected and shall qualify.
Section 3. The business affairs of the corporation shall be managed by its
board of directors which may exercise all such powers of the corporation and do
all such lawful acts and things as are not by statute or by the articles of
incorporation or by these by-laws directed or required to be exercised or done
by the shareholders.
Section 4. The directors may keep the books of the corporation, except
such as are required by law to be kept within the state, outside of the State of
Louisiana, at such place or places as they may from time to time determine.
Section 5. The board of directors, by the affirmative vote of a majority
of the directors then in office and irrespective of any personal interest of any
of its members, shall have authority to establish reasonable compensation of all
directors for services to the corporation as directors, officers or otherwise.
ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular or special, may be
held either within or without the State of Louisiana.
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<PAGE>
Section 2. The first meeting of each newly elected board of directors
shall be held at such time and place as shall be fixed by the vote of the
shareholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present, or it may convene at such place and
time as shall be fixed by the consent in writing of all the directors.
Section 3. Regular meetings of the board of directors may be held upon
such notice, or without notice, and at such time and at such place as shall from
time to time be determined by the board.
Section 4. Special meetings of the board of directors may be called by the
president on two days' notice to each director, either personally or by mail or
by telegram; special meetings shall be called by the president or secretary in
like manner and on like notice on the written request of two directors.
Section 5. Attendance of a director at any meeting shall constitute a
waiver of notice of such meeting, except where a director attends for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the board
of directors need be specified in the notice or waiver of notice of such
meeting.
Section 6. A majority of the directors shall constitute a quorum for the
transaction of business unless a greater number is required by law or by the
articles of incorporation. The act of a
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<PAGE>
majority of the directors present at any meeting at which a quorum is present
shall be the act of the board of directors, unless the act of a greater number
is required by statute or by the articles of incorporation. If a quorum shall
not be present at any meeting of directors, the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
Section 7. Any action required or permitted to be taken at a meeting of
the directors may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the directors entitled to
vote with respect to the subject matter thereof.
Section 8. Unless otherwise restricted by the articles of incorporation or
these by-laws, members of the board of directors may participate in a meeting of
the board of directors, by means of conference telephone or similar
communications equipment provided all persons participating in the meeting can
hear and communicate with each other, and such participation in a meeting shall
constitute presence in person at the meeting, except where a person participates
in the meeting for the express purpose of objecting to the transaction of any
business on the grounds that the meeting is not lawfully called or convened.
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<PAGE>
ARTICLE VII
EXECUTIVE COMMITTEE
Section 1. The board of directors, by resolution adopted by a majority of
the number of directors fixed by the by-laws or otherwise, may designate two or
more directors to constitute an executive committee, which committee, to the
extent provided in such resolution, shall have and exercise all of the authority
of the board of directors in the management of the corporation, except as
otherwise required by law. Vacancies in the membership of the committee shall be
filled by the board of directors at a regular or special meeting of the board of
directors. The executive committee shall keep regular minutes of its proceedings
and report the same to the board when required.
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
articles of incorporation or of these bylaws, notice is required to be given to
any director or shareholder, it shall not be construed to mean personal notice,
but such notice may be given in writing, by mail, addressed to such director or
shareholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in
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<PAGE>
the United States mail. Notice to directors may also be given by telegram.
Section 2. Whenever any notice whatever is required to be given under the
provisions of the statutes or under the provisions of the articles of
incorporation or these by-laws, a waiver thereof in writing signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
ARTICLE IX
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board of
directors and shall be a president, a vice-president, a secretary and a
treasurer. The board of directors may also choose additional vice-presidents,
and one or more assistant secretaries and assistant treasurers.
Section 2. The board of directors at its first meeting after each annual
meeting of shareholders shall choose a president, one or more vice-presidents, a
secretary and a treasurer, none of whom need be a member of the board.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board of directors.
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Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the board
of directors may be removed at any time by the affirmative vote of a majority of
the board of directors. Any vacancy occurring in any office of the corporation
shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the shareholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts requiring
a seal, under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the board of directors to some
other officer or agent of the corporation.
THE VICE-PRESIDENTS
Section 8. The vice-president, or if there shall be more than one, the
vice-presidents in the order determined by the board
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of directors, shall, in the absence or disability of the president, perform the
duties and exercise the powers of the president and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the shareholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the shareholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such assistant
secretary. The board of directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by his
signature.
Section 10. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors, shall,
in the absence or disability of the secretary, perform the duties and exercise
the powers of the
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secretary and shall perform such other duties and have such other powers as the
board of directors may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.
Section 14. The assistant treasurer, or, if there shall be more than one,
the assistant treasurers in the order determined by
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the board of directors, shall, in the absence or disability of the treasurer,
perform the duties and exercise the powers of the treasurer and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
ARTICLE X
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by
certificates signed by the president or a vice-president and the secretary or an
assistant secretary of the corporation, and may be sealed with the seal of the
corporation or a facsimile thereof. When the corporation is authorized to issue
shares of more than one class there shall be set forth upon the face or back of
the certificate, or the certificate shall have a statement that the corporation
will furnish to any shareholder upon request and without charge, a full or
summary statement of the designations, preferences, limitations, and relative
rights of the shares of each class authorized to be issued and, if the
corporation is authorized to issue any preferred or special class in series, the
variations in the relative rights and preferences between the shares of each
such series so far as the same have been fixed and determined and the authority
of the board of directors to fix and determine the relative rights and
preferences of subsequent series.
Section 2. The signatures of the officers of the corporation upon a
certificate may be facsimiles if the certificate
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is countersigned by a transfer agent, or registered by a registrar, other than
the corporation itself or an employee of the corporation. In case any officer
who has signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer at the date of its issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate to be
issued in place of any certificate theretofore issued by the corporation alleged
to have been lost or destroyed. When authorizing such issue of a new
certificate, the board of directors, in its discretion and as a condition
precedent to the issuance thereof, may prescribe such terms and conditions as it
deems expedient, and may require such indemnities as it deems adequate, to
protect the corporation from any claim that may be made against it with respect
to any such certificate alleged to have been lost or destroyed.
TRANSFERS OF SHARES
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate representing shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, a new
certificate shall be issued to the person entitled thereto, and the old
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certificate cancelled and the transaction recorded upon the books of the
corporation.
FIXING RECORD DATE
Section 5. For the purpose of determining shareholders entitled to notice
of and to vote at a meeting, or to receive a dividend, or to receive or exercise
subscription or other rights, or to participate in a reclassification of stock,
or in order to make a determination of shareholders for any other proper
purpose, the board of directors may fix in advance a record date for
determination of shareholders for such purpose, such date to be not more than
sixty days and, if fixed for the purpose of determining shareholders entitled to
notice of and to vote at a meeting, not less than ten days, prior to the date on
which the action requiring the determination of shareholders is to be taken.
REGISTERED SHAREHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall
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have express or other notice thereof, except as otherwise provided by the laws
of Louisiana.
ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the articles of incorporation
relating thereto, if any, dividends may be declared by the board of directors at
any regular or special meeting, pursuant to law. Dividends may be paid in cash,
in property or in shares of the capital stock, subject to any provisions of the
articles of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 2. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such
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other person or persons as the board of directors may from time to time
designate.
FISCAL YEAR
Section 3. The fiscal year of the corporation shall be fixed by resolution
of the board of directors.
SEAL
Section 4. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words "Corporate Seal,
Louisiana". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
ARTICLE XII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new
by-laws may be adopted at any regular or special meeting of shareholders at
which a quorum is present or represented, by the affirmative vote of a majority
of the stock entitled to vote, provided notice of the proposed alteration,
amendment or repeal be contained in the notice of such meeting.
Dated: April 2, 1996
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Exhibit 3.28.1
ARTICLES OF AMENDMENT AND RESTATMENT OF
SERVICO COLESVILLE, INC.
Pursuant to Sections 2-607, 2-608 and 2-609 of the Maryland General
Corporation Law, SERVICO COLESVILLE, INC., a Maryland corporation (the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that these Amended and Restated Articles of Incorporation
(the "Amended Articles"), were duly advised and approved by the entire Board of
Directors of the Corporation and approved by the sole shareholder of the
Corporation by written consent without a meeting, pursuant to Sections 2-408(c)
and 2-503 of the Maryland Corporation Law, as of July 23, 1999. The Articles as
currently in effect shall be amended and restated to read as herein set forth in
full:
ARTICLE I
The name of the Corporation is SERVICO COLESVILLE, INC.
ARTICLE II
(a) The purpose for which the Corporation is organized is limited
to: (i) acquiring, owning, leasing, operating, using and managing that certain
real property commonly known as the Town Center located at 8727 Colesville Road,
Silver Spring, Maryland 20910 (the "Property"); (ii) entering into and
performing its obligations under the credit agreement, among Lodgian Financing
Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel Group, LLC, Servico,
Inc. and other affiliated entities, as affiliate guarantors, the initial lenders
and initial issuing bank named therein, the collateral agent, the administrative
agent, Morgan Stanley Senior Funding, Inc., as co-lead arranger, joint-book
manager and syndication agent and Lehman Brothers, as co-lead arranger,
joint-book manager and documentation agent relating to the financing or
refinancing of the Property (the "Loan Agreement") which provides the lender
thereunder with a first priority lien on the Property, any promissory-note
evidencing indebtedness incurred pursuant to the Loan Agreement, any mortgage
securing such indebtedness and encumbering the Property (the "Mortgage") and any
other documents securing such indebtedness and any related collateral documents,
each as amended (or pursuant to a consent obtained in accordance with the terms
thereof) (collectively, the "Loan Documents"); (iii) entering into and
performing its obligations under the Indenture (the "Indenture"), among Lodgian
Financing Corp, as issuer, Lodgian, Inc., the Subsidiary Guarantors defined
therein and Bankers Trust Company, as trustee, relating to the issuance of the
12 1/4% Senior Subordinated Notes due 2009 and the Guarantee in favor of the
holders of the Notes and (iv) transacting any and all lawful business that is
incident and necessary or appropriate to the ownership and to the management of
the Property for which a corporation may be incorporated under the laws of the
State of Maryland.
(b) Notwithstanding any other provision of these Amended Articles
and any provision of law that otherwise so empowers the Corporation, until such
time as the Property is released from the lien of the Mortgage, the Corporation
shall not, without the unanimous
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affirmative vote of the members of its Board of Directors, (i) amend, alter,
change, repeal or adopt any resolution setting forth a proposed amendment to,
any provision of these Articles of Incorporation, (ii) dissolve or liquidate, in
whole or in part, consolidate or merge with or into any other entity or convey,
sell or transfer its properties and assets substantially as an entirety to any
entity, (iii) file a voluntary petition or otherwise initiate, or consent to,
proceedings for the Corporation to be adjudicated insolvent or seeking an order
for relief as a debtor under the United States Bankruptcy Code, as amended (11
U.S.C. ss.ss. 101 et seq.), or (iv) file any petition, or consent to any
petition, seeking any composition, reorganization, readjustment, liquidation,
dissolution or similar relief under the present or any future federal bankruptcy
laws or any other present or future applicable federal, state or other statute
or law relative to bankruptcy, insolvency or other relief for debtors; or (v)
seek or consent to the appointment of any trustee, receiver, conservator,
assignee, sequestrator, custodian, or liquidator (or other similar official) of
the Corporation or of all or any substantial part of the properties and assets
of the Corporation, or (vi) make any general assignment for the benefit of
creditors, or (vii) admit in writing its inability to pay its debts generally as
they become due, or (viii) declare or effect a moratorium on its debt or take
any corporate action in furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all times
until the Property is released from the lien of the Mortgage, include an
independent director (the "Independent Director"). The Independent Director
shall be a person who is not at the time of appointment and who has not at any
time during the prior five years been and who is not while serving as the
Independent Director (i) a director, stockholder, officer or employee of the
Corporation or any affiliates thereof, other than with respect to such person's
service as an Independent Director of the Corporation and such person's service
in similar "Independent Director" positions for affiliates of the Corporation;
(ii) a creditor, customer, supplier, independent contractor, manager or any
other person who derives more than 10% of its gross revenues from its activities
wit the Corporation or any affiliates thereof; (iii) a person controlling any
such stockholder, creditor, customer, supplier, independent contractor, manager
or other person; (iv) the legal or beneficial owner, at any time while serving
as director of the Corporation, of any beneficial interest in the Corporation;
or (v) a member of the immediate family of any such stockholder, officer,
employee, creditor, customer, supplier, director, independent contractor,
manager or any other person of the Corporation. As used herein, the term
"affiliate" means any person controlling, under common control with, or
controlled by the person in question, and the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through ownership
of voting securities, by contract or otherwise. In the event of the death,
incapacity, or resignation of an Independent Director, or the vacancy of the
Independent Director's seat on the Corporation's Board of Directors for any
reason, a successor Independent Director shall be appointed by the remaining
directors.
(d) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles
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in a manner that indicates the separate existence of the Corporation and its
assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(ix) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall not
(i) commingle its assets with those of, or pledge its assets for the benefit of,
any other person or entity; (ii) assume, guarantee or become obligated, or hold
out its credit as being available to satisfy, the liabilities or obligations of
any other person or entity; (iii) reduce its capital below an amount which is
adequate in light of its contemplated business operations; (iv) acquire
obligations or securities of, or make loans or advances to, any affiliate; (v)
incur or assume any indebtedness other than (A) the indebtedness underlying the
Loan Agreement, (B) the indebtedness underlying the Indenture, and (C)
liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article II and the last sentence of
Article VI of these Amended Articles; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in these Amended Articles. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
ARTICLE III
The post office address of the principal office of the Corporation in the
State is c/o The Corporation Trust Incorporated, 300 East Lombard Street,
Baltimore, Maryland 21202. The name of the resident agent of the Corporation in
this State is Corporation Trust Incorporated, a corporation of this State, and
the post-office address of the resident agent is 300 East Lombard Street,
Baltimore, Maryland 21202.
ARTICLE IV
The total number of shares of stock which the Corporation shall have
authority to issue is One Thousand (1,000) shares, all of one class, of the par
value of Zero Dollars and One Cent ($0.01) each and of the aggregate par value
of Ten Dollars ($10.00).
ARTICLE V
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The number of directors of the Corporation shall be at least one
(1), which may be changed in accordance with the bylaws of the Corporation. The
name of the directors who shall act until the next annual meeting or until her
successor is duly chosen and qualified is Robert Flanders.
ARTICLE VI
The Corporation shall indemnify any officer or director, or any
former officer or director of the Corporation, to the fullest extent permitted
by law. The foregoing right of indemnification shall not be exclusive of any
other rights to which any director, officer, employee or agent may be entitled
as a matter of law or which he may be lawfully granted. The Corporation's
obligation to indemnify its officers and directors pursuant to this Article
shall be subordinate in all respects to the obligations of the Corporation
arising out of the Loan Documents and shall not constitute a claim against the
Corporation to the extent that the Corporation is unable to pay any amounts it
is obligated to pay under the Loan Documents.
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IN WITNESS WHEREOF, the undersigned President of Servico Colesville,
Inc. who is executing on behalf of said Corporation the foregoing Amended and
Restated Articles of Incorporation, of which this certificate is made a part,
hereby acknowledges, in the name and on behalf of said Corporation, the
foregoing Amended and Restated Articles of Incorporation to be the corporate act
of said Corporation and further certifies that, to the best of her knowledge,
information and belief, that matters and facts set forth therein with respect to
the approval thereof are true in all material respects, under penalties of
perjury.
Dated the 23rd day of July, 1999.
SERVICO COLESVILLE, INC.
By: /s/ Robert M. Flanders
------------------------
Name: Robert M. Flanders
Title: President
Attest:
/s/ Thomas S. Gryboski
----------------------------
Thomas S. Gryboski, Assistant Secretary
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Exhibit 3.28.2
SERVICO COLESVILLE, INC.
*****
BY - LAWS
*****
ARTICLE I
OFFICERS
Section 1. The registered office shall be located at THE CORPORATION TRUST
INCORPORATION, 32 SOUTH STREET, BALTIMORE, MARYLAND 21202.
Section 2. The corporation may also have offices at such other places both
within and without the State of Maryland as the board of directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of directors
shall be held on such day and at such hour as may be fixed from time to time by
the board of directors. Said meetings may also be held at such other place
either within or outside the State of Maryland as shall be designated from time
to time by the board of directors and stated in the notice of the meeting.
Section 2. Annual meetings of shareholders, commencing with the year 1997,
shall be held on the Second Monday in January unless that day is a legal
holiday, and if a legal holiday, then on the next secular day following, at
10:00 a.m., at which they shall elect by a plurality vote a board of directors,
and transact such other business as may properly be brought before the meeting.
Section 3. Written or printed notice of the annual meeting stating the
place, day and hour of the meeting shall be delivered not less than ten nor more
than fifty days before the date of the meeting, either personally or by mail, by
or at the direction of the president, the secretary, or the officer or persons
calling the meeting, to each shareholder of record entitled to vote at such
meeting.
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. Special meetings of shareholders for any purpose other than the
election of directors may be held at such time and place within or without the
State of Maryland as shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
Section 2. Special meetings of the shareholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the articles of
incorporation, may be called by the president, the board of
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directors, or the holders of not less than one-tenth of all the shares entitled
to vote at the meeting.
Section 3. Written or printed notice of a special meeting stating the
place, day and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than fifty days
before the date of the meeting, either personally or by mail, by or at the
direction of the president, or the secretary, or the officer or persons calling
the meeting, to each shareholder of record entitled to vote at such meeting.
Section 4. the business transacted at any special meeting of shareholders
shall be limited to the purposes stated in the notice.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of stock issued and
outstanding and entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by statute or by the articles of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the shareholders, the shareholders present in person or
represented by proxy shall have power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum shall be
present or represented. At such adjourned meeting at which a quorum shall be
present or represented any business may be transacted which might have been
transacted at the meeting as originally notified.
Section 2. If a quorum is present, the affirmative vote of a majority of
the shares of stock represented at the meeting shall be the act of the
shareholders unless the vote of a greater number of shares of stock is required
by law or the articles of incorporation.
Section 3. Each outstanding share of stock, having voting power, shall be
entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. A shareholder may vote either in person or by proxy executed in
writing by the shareholder or by his duly authorized attorney-in-fact.
Section 4. Any action required to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the shareholders entitled
to vote with respect to the subject matter thereof.
ARTICLE V
DIRECTORS
Section 1. The Board of Directors of the Corporation shall consist of one
(1) member. The number of directors may be either increased or decreased from
time to time by
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resolution of the Board of Directors, but shall never be less than one (1).
Directors need not be residents of the State of Maryland nor shareholders of the
corporation. The directors, other than the first board of directors, shall be
elected at the annual meeting of the shareholders, and each directors elected
shall serve until the next succeeding annual meeting and until his successor
shall have been elected and qualified. The first board of directors shall hold
office until the first annual meeting of shareholders.
Section 2. Any vacancy occuring in the board of directors may be filled by
the shareholders at an annual or a special meeting or by the affirmative vote of
a majority of the remaining directors though less than a quorum of the board of
directors. A director elected to fill a vacancy, shall be elected for the
unexpired portion of the terms of his predecessor in office.
Any directorship to be filled by reason of an increase in the number of
directors may be filled by election at an annual meeting or at a special meeting
of shareholders called for that purpose. A director elected to fill a newly
created directorship shall serve until the next succeeding annual meeting of
shareholders and until his successor shall have been elected and qualified. Any
directorship to filled by reason of an increase in the number of directors may
also be filled by the board of directors for a term of office until the next
election of directors by shareholders provided no more than two directorships
may be so filled during a period between any two successive annual meetings of
shareholders.
Whenever the holders of any class or series of shares are entitled to
elect one or more directors by the provisions of the articles of incorporation,
any vacancies in such directorship and any newly created directorships of such
class or series to be filled by reason of an increase in the number of such
directors may be filled by the affirmative vote of a majority of the directors
elected by such class or series then in office or by a sole remaining director
so elected, or by the vote of the holders of the outstanding shares of such
class or series, and such directorships shall not in any case be filled by the
vote of the remaining directors or the holders of the outstanding shares as a
whole unless otherwise provided in the articles of incorporation.
Section 3. The business affairs of the corporation shall be managed by its
board of directors which may exercise all such powers of the corporation and do
all such lawful acts and things as are not by statute or by the articles of
incorporation or by these by-laws directed or required to be exercised or done
by the shareholders.
Section 4. The directors may keep the books of the corporation, except
such as are required by law to be kept within the state, outside of the State of
Maryland, at such place or places as they may from time to time determine.
Section 5. The board of directors, by the affirmative vote of a majority
of the directors then in office and irrespective of any personal interest of any
of its members, shall have authority to establish reasonable compensation of all
directors for services to the corporation as directors, officers or otherwise.
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ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular or special, may be
held either within or without the State of Maryland.
Section 2. The first meeting of each newly elected board of directors
shall be held at such time and place as shall be fixed by the vote of the
shareholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present, or it may convene at such place and
time as shall be fixed by the consent in writing of all the directors.
Section 3. Regular meetings of the board of directors may be held upon
such notice, or without notice, and at such time and at such place as shall from
time to time be determined by the board.
Section 4. Special meetings of the board of directors may be called by the
president on two days' notice to each director, either personally or by mail or
by telegram; special meetings shall be called by the president or secretary in
like manner and on like notice on the written request of two directors.
Section 5. Attendance of a director at any meeting shall constitute a
waiver of notice of such meeting, except where a director attends for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the board
of directors need be specified in the notice or waiver of notice of such
meeting.
Section 6. A majority of the directors shall constitute a quorum for the
transaction of business unless a greater number is required by law or by the
articles of incorporation. The act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the board of directors,
unless the act of a greater number is required by statute or by the articles of
incorporation. If a quorum shall not be present at any meeting of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 7. Unless otherwise restricted by the articles of incorporation or
these by-laws, any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting, if all members of the board of committee, as the case may be, consent
thereto in writing which shall set forth the action taken and be signed by all
members of the board of directors or of the committee as the case may be.
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ARTICLE VII
COMMITTEES OF DIRECTORS
Section 1. The board of directors, by resolution adopted by a majority of
the full board of directors, may designate from among its members an executive
committee and one or more other committees, each of which shall be comprised of
one or more members and, to the extent provided in the resolution, shall have
and may exercise all of the authority of the board of directors except that no
such committee shall have the authority of the board of directors in reference
to amending the articles of incorporation, approving a plan of merger or
consolidation, recommencing to the shareholders the sale, lease, or exchange of
all or substantially all of the property and assets of the corporation otherwise
than in the usual and regular course of its business, recommending to the
shareholders a voluntary dissolution of the corporation or a revocation thereof,
amending, altering, or repealing the by-laws of the corporation or adopting new
by-laws for the corporation, filling vacancies in the board of directors to be
filled by reason of an increase in the number of directors, electing or removing
officers or members of a committee, fixing the compensation of any member of a
committee, or altering or repealing any resolution of the board of directors
which by its terms provides that it shall not be so amendable or repealable,
and, unless the resolution expressly so provides, no committee shall have the
power of authority to declare a dividend or to authorize the issuance of shares
of the corporation.
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
articles of incorporation or of these by-laws, notice is required to be given to
any director or shareholder, it shall not be construed to mean personal notice,
but such notice may be given in writing, by mail, addressed to such director or
shareholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telegram.
Section 2. Whenever any notice whatever is required to be given under the
provisions of the statutes or under the provisions of the articles of
incorporation or these by-laws, a waiver thereof in writing signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
ARTICLE IX
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board of
directors and shall be a president and a secretary. The board of directors may
also elect or appoint such other officers, including assistant officers and
agents as may be deemed necessary.
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Section 2. The board of directors at its first meeting after each annual
meeting of shareholders shall choose a president, one or more vice-presidents, a
secretary and a treasurer, none of whom need be a member of the board.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board of directors.
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the board
of directors may be removed at any time by the affirmative vote of a majority of
the board of directors. Any vacancy occurring in any office of the corporation
shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the shareholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts requiring
a seal, under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the board of directors to some
other officer or agent of the corporation.
THE VICE PRESIDENTS
Section 8. The vice-president, or if there shall be more than one, the
vice-presidents in the order determined by the board of directors, shall, in the
absence or disability of the president, perform the duties and exercise the
powers of the president and shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the shareholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the shareholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He
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shall have custody of the corporate seal of the corporation and he or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature or by the
signature of such assistant secretary. The board of directors may give general
authority to any other officer to affix the seal of the corporation and to
attest the affixing by his signature.
Section 10. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors, shall,
in the absence or disability of the secretary, perform the duties and exercise
the powers of the secretary and shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.
Section 14. The assistant treasurer, or, if there shall be more than one,
the assistant treasurers in the order determined by the board of directors,
shall, in the absence or disability of the treasurer, perform the duties and
exercise the powers of the treasurer and shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
ARTICLE X
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by
certificates signed by the president and secretary or such other officers as may
be elected or appointed, and may be sealed with the seal of the corporation or a
facsimile thereof.
When the corporation is authorized to issue shares of more than one class
there shall
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be set forth upon the face or back of the certificate, or the certificate shall
have a statement that the corporation will furnish to any shareholder upon
request and without charge, a full or summary statement of the designations,
preferences, limitations, and relative rights of the shares of each class
authorized to be issued and, if the corporation is authorized to issue any
preferred or special class in series, the variations in the relative rights and
preferences between the shares of each such series so far as the same have been
fixed and determined and the authority of the board of directors to fix and
determine the relative rights and preferences of subsequent series. When the
corporation is authorized to issue shares of more than one class, every
certificate shall also set forth upon the face or back of such certificate a
statement that there is set forth in the articles of incorporation on file in
the office of the Secretary of State a full statement of all the designations,
preferences, limitations, and relative rights, including voting rights, or the
shares of each class authorized to be issued and the corporation at its
principal place of business or registered office. Every certificate shall have
noted thereon any information required to be set forth by the Maryland business
Corporation Act and such information shall be set forth in the manner provided
in said Act.
Section 2. The signatures of the officers of the corporation upon a
certificate may be facsimiles if the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the corporation itself or an
employee of the corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of its
issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate to be
issued in place of any certificate theretofore issued by the corporation alleged
to have been lost or destroyed. When authorizing such issue of a new
certificate, the board of directors, in its discretion and as a condition
precedent to the issuance thereof, may prescribe such terms and conditions as it
deems expedient, and may require such indemnities as it deems adequate, to
protect the corporation from any claim that may be made against it with respect
to any such certificate alleged to have been lost or destroyed.
TRANSFERS OF SHARES
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate representing shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, a new
certificate shall be issued to the person entitled thereto, and the old
certificate cancelled and the transaction recorded upon the books of the
corporation.
CLOSING OF TRANSFER BOOKS
Section 5. For the purpose of determining shareholders entitled to notice
of and to vote at a meeting, or to receive a dividend, or to receive or exercise
subscription or other rights, or to participate in a reclassification of stock,
or in order to make a determination of shareholders for any other proper
purpose the board of
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directors may provide that the stock transfer books shall be closed for a stated
period but not to exceed, in any case, fifty days. If the stock transfer books
shall be closed for the purpose of determining shareholders entitled to notice
of or to vote at a meeting of shareholders, such books shall be closed for at
least ten days immediately preceding such meeting. In lieu of closing the stock
transfer books, the board of directors may fix in advance a date as the record
date for any such determination of shareholder, such date in any case to be not
more than fifty days and, in case of a meeting of shareholders, not less than
ten days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of shareholders, or
shareholders entitled to receive payment of a dividend, the date on which notice
of the meeting is mailed or the date on which the resolution of the board of
directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof.
REGISTERED SHAREHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of share to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize and equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Maryland.
LIST OF SHAREHOLDERS
Section 7. The officer or agent having charge of the transfer books for
shares shall make, at least ten days before each meeting of shareholders, a
complete list of the shareholders entitled to vote at such meeting, arranged in
alphabetical order, with the address of each and the number of shares held by
each, which list, for a period of ten days prior to such meeting, shall be kept
on file at the registered office of the corporation and shall be subject to
inspection by any shareholder at any time during usual business hours. Such list
shall also be produced and kept open at the time and place of the meeting and
shall be subject to the inspection of any shareholders during the whole time of
the meeting. The original share ledger or transfer book, or a duplicate thereof,
shall be prima facie evidence as to who are the shareholders entitled to examine
such list or share ledger or transfer book or to vote at any meeting of the
shareholders.
ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the articles of incorporation
relating thereto, if any, dividends may be declared by the board of directors at
any regular or special meeting, pursuant
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to law. Dividends may be paid in cash, in property or in shares of the capital
stock, subject to any provisions of the articles of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by resolution
of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words "Corporate Seal,
Maryland". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
ARTICLE XII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new
by-laws may be adopted by the affirmative vote of a majority of the board of
directors at any regular or special meeting of the board subject to repeal or
change at any regular or special meeting of shareholders at which a quorum is
present or represented, by the affirmative vote of a majority of the stock
entitled to vote, provided notice of the proposed repeal or charge be contained
in the notice of such meeting.
ARTICLE XIII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new
by-laws may be adopted at any regular or special meeting of shareholders at
which a quorum is present or represented, by the affirmative vote of a majority
of the stock entitled to vote, provided notice of the proposed alteration,
amendment or repeal be contained in the notice of such meeting.
Dated: December 18, 1997
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Exhibit 3.29.1
ARTICLES OF AMENDMENT AND RESTATMENT OF
SERVICO COLUMBIA, INC.
Pursuant to Sections 2-607, 2-608 and 2-609 of the Maryland General
Corporation Law, SERVICO COLUMBIA, INC., a Maryland corporation (the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that these Amended and Restated Articles of Incorporation
(the "Amended Articles"), were duly advised and approved by the entire Board of
Directors of the Corporation and approved by the sole shareholder of the
Corporation by written consent without a meeting, pursuant to Sections 2-408(c)
and 2-503 of the Maryland Corporation Law, as of July 23, 1999. The Articles as
currently in effect shall be amended and restated to read as herein set forth in
full:
ARTICLE I
The name of the Corporation is SERVICO COLUMBIA, INC.
ARTICLE II
(a) The purpose for which the Corporation is organized is limited
to: (i) acquiring, owning, leasing, operating, using and managing that certain
real property commonly known as the Columbia Hilton, 5485 Twin Knolls Road,
Silver Spring, Maryland 21045 (the "Property"); (ii) entering into and
performing its obligations under the credit agreement, among Lodgian Financing
Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel Group, LLC, Servico,
Inc. and other affiliated entities, as affiliate guarantors, the initial lenders
and initial issuing bank named therein, the collateral agent, the administrative
agent, Morgan Stanley Senior Funding, Inc., as co-lead arranger, joint-book
manager and syndication agent and Lehman Brothers, as co-lead arranger,
joint-book manager and documentation agent relating to the financing or
refinancing of the Property (the "Loan Agreement") which provides the lender
thereunder with a first priority lien on the Property, any promissory-note
evidencing indebtedness incurred pursuant to the Loan Agreement, any mortgage
securing such indebtedness and encumbering the Property (the "Mortgage") and any
other documents securing such indebtedness and any related collateral documents,
each as amended (or pursuant to a consent obtained in accordance with the terms
thereof) (collectively, the "Loan Documents"); (iii) entering into and
performing its obligations under the Indenture (the "Indenture"), among Lodgian
Financing Corp, as issuer, Lodgian, Inc., the Subsidiary Guarantors defined
therein and Bankers Trust Company, as trustee, relating to the issuance of the
12 1/4% Senior Subordinated Notes due 2009 and the Guarantee in favor of the
holders of the Notes and (iv) transacting any and all lawful business that is
incident and necessary or appropriate to the ownership and to the management of
the Property for which a corporation may be incorporated under the laws of the
State of Maryland.
(b) Notwithstanding any other provision of these Amended Articles
and any provision of law that otherwise so empowers the Corporation, until such
time as the Property is released from the lien of the Mortgage, the Corporation
shall not, without the unanimous affirmative vote of the members of its Board of
Directors, (i) amend, alter, change, repeal or
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adopt any resolution setting forth a proposed amendment to, any provision of
these Articles of Incorporation, (ii) dissolve or liquidate, in whole or in
part, consolidate or merge with or into any other entity or convey, sell or
transfer its properties and assets substantially as an entirety to any entity,
(iii) file a voluntary petition or otherwise initiate, or consent to,
proceedings for the Corporation to be adjudicated insolvent or seeking an order
for relief as a debtor under the United States Bankruptcy Code, as amended (11
U.S.C. ss.ss. 101 et seq.), or (iv) file any petition, or consent to any
petition, seeking any composition, reorganization, readjustment, liquidation,
dissolution or similar relief under the present or any future federal bankruptcy
laws or any other present or future applicable federal, state or other statute
or law relative to bankruptcy, insolvency or other relief for debtors; or (v)
seek or consent to the appointment of any trustee, receiver, conservator,
assignee, sequestrator, custodian, or liquidator (or other similar official) of
the Corporation or of all or any substantial part of the properties and assets
of the Corporation, or (vi) make any general assignment for the benefit of
creditors, or (vii) admit in writing its inability to pay its debts generally as
they become due, or (viii) declare or effect a moratorium on its debt or take
any corporate action in furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all times
until the Property is released from the lien of the Mortgage, include an
independent director (the "Independent Director"). The Independent Director
shall be a person who is not at the time of appointment and who has not at any
time during the prior five years been and who is not while serving as the
Independent Director (i) a director, stockholder, officer or employee of the
Corporation or any affiliates thereof, other than with respect to such person's
service as an Independent Director of the Corporation and such person's service
in similar "Independent Director" positions for affiliates of the Corporation;
(ii) a creditor, customer, supplier, independent contractor, manager or any
other person who derives more than 10% of its gross revenues from its activities
wit the Corporation or any affiliates thereof; (iii) a person controlling any
such stockholder, creditor, customer, supplier, independent contractor, manager
or other person; (iv) the legal or beneficial owner, at any time while serving
as director of the Corporation, of any beneficial interest in the Corporation;
or (v) a member of the immediate family of any such stockholder, officer,
employee, creditor, customer, supplier, director, independent contractor,
manager or any other person of the Corporation. As used herein, the term
"affiliate" means any person controlling, under common control with, or
controlled by the person in question, and the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through ownership
of voting securities, by contract or otherwise. In the event of the death,
incapacity, or resignation of an Independent Director, or the vacancy of the
Independent Director's seat on the Corporation's Board of Directors for any
reason, a successor Independent Director shall be appointed by the remaining
directors.
(d) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities
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from any other person or entity; (iv) pay all its liabilities out of its own
funds; (v) in all dealings, identify itself, and conduct its own business and
hold itself out under its own name and as a separate and distinct entity and
correct any misunderstandings regarding its status as a separate entity; (vi)
independently make decisions with respect to its business and daily operations;
(vii) maintain an arm's length relationship with its affiliates; (viii) pay the
salaries of its employees and maintain a sufficient number of employees in light
of its contemplated business operations; (ix) allocate fairly and reasonably any
overhead for shared office space; and (x) use separate stationery, invoices and
checks.
(e) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall not
(i) commingle its assets with those of, or pledge its assets for the benefit of,
any other person or entity; (ii) assume, guarantee or become obligated, or hold
out its credit as being available to satisfy, the liabilities or obligations of
any other person or entity; (iii) reduce its capital below an amount which is
adequate in light of its contemplated business operations; (iv) acquire
obligations or securities of, or make loans or advances to, any affiliate; (v)
incur or assume any indebtedness other than (A) the indebtedness underlying the
Loan Agreement, (B) the indebtedness underlying the Indenture, and (C)
liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article II and the last sentence of
Article VI of these Amended Articles; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in these Amended Articles. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
ARTICLE III
The post office address of the principal office of the Corporation in the
State is c/o The Corporation Trust Incorporated, 300 East Lombard Street,
Baltimore, Maryland 21202. The name of the resident agent of the Corporation in
this State is Corporation Trust Incorporated, a corporation of this State, and
the post-office address of the resident agent is 300 East Lombard Street,
Baltimore, Maryland 21202.
ARTICLE IV
The total number of shares of stock which the Corporation shall have
authority to issue is One Thousand (1,000) shares, all of one class, of the par
value of Zero Dollars and One Cent ($0.01) each and of the aggregate par value
of Ten Dollars ($10.00).
ARTICLE V
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The number of directors of the Corporation shall be at least one
(1), which may be changed in accordance with the bylaws of the Corporation. The
name of the directors who shall act until the next annual meeting or until her
successor is duly chosen and qualified is Robert Flanders.
ARTICLE VI
The Corporation shall indemnify any officer or director, or any
former officer or director of the Corporation, to the fullest extent permitted
by law. The foregoing right of indemnification shall not be exclusive of any
other rights to which any director, officer, employee or agent may be entitled
as a matter of law or which he may be lawfully granted. The Corporation's
obligation to indemnify its officers and directors pursuant to this Article
shall be subordinate in all respects to the obligations of the Corporation
arising out of the Loan Documents and shall not constitute a claim against the
Corporation to the extent that the Corporation is unable to pay any amounts it
is obligated to pay under the Loan Documents.
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IN WITNESS WHEREOF, the undersigned President of Servico Columbia,
Inc. who is executing on behalf of said Corporation the foregoing Amended and
Restated Articles of Incorporation, of which this certificate is made a part,
hereby acknowledges, in the name and on behalf of said Corporation, the
foregoing Amended and Restated Articles of Incorporation to be the corporate act
of said Corporation and further certifies that, to the best of her knowledge,
information and belief, that matters and facts set forth therein with respect to
the approval thereof are true in all material respects, under penalties of
perjury.
Dated the 23rd day of July, 1999.
SERVICO COLUMBIA, INC.
By: /s/ Robert M. Flanders
------------------------
Name: Robert M. Flanders
Title: President
Attest:
/s/ Thomas S. Gryboski
----------------------------
Thomas S. Gryboski, Assistant Secretary
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Exhibit 3.29.2
SERVICO COLUMBIA, INC.
*****
BY - LAWS
*****
ARTICLE I
OFFICES
Section 1. The registered office shall be located at THE CORPORATION TRUST
INCORPORATION, 32 SOUTH STREET, BALTIMORE, MARYLAND 21202.
Section 2. The corporation may also have offices at such other places both
within and without the State of Maryland as the board of directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of directors
shall be held on such day and at such hour as may be fixed from time to time by
the board of directors. Said meetings may also be held at such other place
either within or outside the State of Maryland as shall be designated from time
to time by the board of directors and stated in the notice of the meeting.
Section 2. Annual meetings of shareholders, commencing with the year 1998,
shall be held on the Second Monday in January unless that day is a legal
holiday, and if a legal holiday, then on the next secular day following, at
10:00 a.m., at which they shall elect by a plurality vote a board of directors,
and transact such other business as may properly be brought before the meeting.
Section 3. Written or printed notice of the annual meeting stating the
place, day and hour of the meeting shall be delivered not less than ten nor more
than fifty days before the date of the meeting, either personally or by mail, by
or at the direction of the president, the secretary, or the officer or persons
calling the meeting, to each shareholder of record entitled to vote at such
meeting.
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. Special meetings of shareholders for any purpose other than the
election of directors may be held at such time and place within or without the
State of Maryland as shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
Section 2. Special meetings of the shareholders, for any purposes, unless
otherwise prescribed by statute or by the articles of incorporation, may be
called by the president, the board of
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EXHIBIT C
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directors, or the holders of not less than one-tenth of all the shares entitled
to vote at the meeting.
Section 3. Written or printed notice of a special meeting stating the
place, day and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than fifty days
before the date of the meeting, either personally or by mail, by or at the
direction of the president, or the secretary, or the officer or persons calling
the meeting, to each shareholder of record entitled to vote at such meeting.
Section 4. The business transacted at any special meeting of shareholders
shall be limited to the purposes stated in the notice.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of stock issued and
outstanding and entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction
of business except as otherwise provided by statute or by the articles of
incorporation. If, however, such quorum shall not be present or represented
at any meeting of the shareholders, the shareholders present in person or
represented by proxy shall have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented any business may be transacted which might
have been transacted at the meeting as originally notified.
Section 2. If a quorum is present, the affirmative vote of a majority of
the shares of stock represented at the meeting shall be the act of the
shareholders unless the vote of a greater number of snares of stock is required
by law or the articles of incorporation.
Section 3. Each outstanding share of stock, having voting power, shall be
entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. A shareholder may vote either in person or by proxy executed in
writing by the shareholder or by his duly authorized attorney-in-fact.
Section 4. Any action required to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the shareholders entitled
to vote with respect to the subject matter thereof.
ARTICLE V
DIRECTORS
Section 1. The Board of Directors of the Corporation shall consist of one
(1) member. The number of directors may be either increased or decreased from
time to time by
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resolution of the Board of Directors, but shall never be less than one (1).
Directors need not be residents of the State of Maryland nor shareholders of the
corporation. The directors, other than the first board of directors, shall be
elected at the annual meeting of the shareholders, and each directors elected
shall serve until the next succeeding annual meeting and until his successor
shall have been elected and qualified. The first board of directors shall hold
office until the first annual meeting of shareholders.
Section 2. Any vacancy occuring in the board of directors may be filled by
the shareholders at an annual or a special meeting or by the affirmative vote of
a majority of the remaining directors though less than a quorum of the board of
directors. A director elected to fill a vacancy, shall be elected for the
unexpired portion of the terms of his predecessor in office.
Any directorship to be filled by reason of an increase in the number of
directors may be filled by election at an annual meeting or at a special meeting
of shareholders called for that purpose. A director elected to fill a newly
created directorship shall serve until the next succeeding annual meeting of
shareholders and until his successor shall have been elected and qualified. Any
directorship to filled by reason of an increase in the number of directors may
also be filled by the board of directors for a term of office until the next
election of directors by shareholders, provided no more than two directorships
may be so filled during a period between any two successive annual meetings of
shareholders.
Whenever the holders of any class or series of shares are entitled to
elect one or more directors by the provisions of the articles of incorporation,
any vacancies in such directorships and any newly created directorships of such
class or series to be filled by reason of an increase in the number of such
directors may be filled by the affirmative vote of a majority of the directors
elected by such class or series then in office or by a sole remaining director
so elected, or by the vote of the holders of the outstanding shares of such
class or series, and such directorships shall not in any case be filled by the
vote of the remaining directors or the holders of the outstanding shares as a
whole unless otherwise provided in the articles of incorporation.
Section 3. The business affairs of the corporation shall be managed by its
board of directors which may exercise all such powers of the corporation and do
all such lawful acts and things as are not by statute or by the articles of
incorporation or by these by-laws directed or required to be exercised or done
by the shareholders.
Section 4. The directors may keep the books of the corporation, except
such as are required by law to be kept within the state, outside of the State of
Maryland, at such place or places as they may from time to time determine.
Section 5. The board of directors, by the affirmative vote of a
majority of the directors then in office, and irrespective of any personal
interest to any of its members, shall have authority to establish reasonable
compensation of all directors for services to the corporation as directors,
officers or otherwise.
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ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular or special, may be
held either within or without the State of Maryland.
Section 2. The first meeting of each newly elected board of directors
shall be held at such time and place as shall be fixed by the vote of the
shareholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting provided a quorum shall be present, or it may convene at such place and
time as shall be fixed by the consent in writing of all the directors.
Section 3. Regular meetings of the board of directors may be held upon
such notice, or without notice, and at such time and at such place as shall from
time to time be determined by the board.
Section 4. Special meetings of the board of directors may be called by the
president on two days' notice to each director, either personally or by mail or
by telegram; special meetings shall be called by the president or secretary in
like manner and on like notice on the written request of two directors.
Section 5. Attendance of a director at any meeting shall constitute a
waiver of notice of such meeting, except where a director attends for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the board
of directors need be specified in the notice or waiver of notice of such
meeting.
Section 6. A majority of the directors shall constitute a quorum for the
transaction of business unless greater number is required by law or by the
articles of incorporation. The act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the board of directors,
unless the act of a greater number is required by statute or by the articles of
incorporation. If a quorum shall not be present at any meeting of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 7. Unless otherwise restricted by the articles of incorporation or
these by-laws, any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting, if all members of the board of committee, as the case may be, consent
thereto in writing which shall set forth the action taken and be signed by all
members of the board of directors or of the committee as the case may be.
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ARTICLE VII
COMMITTEES OF DIRECTORS
Section 1. The board of directors, by resolution adopted by a majority of
the full board of directors, may designate from among its members an executive
committee and one or more other committees, each of which shall be comprised of
one or more members and, to the extent provided in the resolution, shall have
and may exercise all of the authority of the board of directors, except that no
such committee shall have the authority of the board of directors in reference
to amending the articles of incorporation, approving a plan of merger or
consolidation, recommending to the shareholders the sale, lease, or exchange of
all or substantially all of the property and assets of the corporation otherwise
than in the usual and regular course of its business, recommending to the
shareholders a voluntary dissolution of the corporation or a revocation thereof,
amending, altering, or repealing the by-laws of the corporation or adopting new
by-laws for the corporation, filling vacancies in the board of directors to be
filled by reason of an increase in the number of directors, electing or removing
officers or members of a committee, fixing the compensation of any member of a
committee, or altering or repealing any resolution of the board of directors
which by its terms provides that it shall not be so amendable or repealable,
and, unless the resolution expressly so provides, no committee shall have the
power of authority to declare a dividend or to authorize the issuance of shares
of the corporation.
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes of the articles
of incorporation or of these by-laws, notice is required to be given to any
director or shareholder, it shall not be construed to mean personal notice, but
such notice may be given in writing, by mail, addressed to such director or
shareholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telegram.
Section 2. Whenever any notice whatever is required to be given under the
provisions of the statutes or under the provisions of the articles of
incorporation or these by-laws, a waiver thereof in writing signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
ARTICLE IX
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board of
directors and shall be a president and a secretary. The board of directors may
also elect or appoint such other officers, including assistant officers and
agents as may be deemed necessary.
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Section 2. The board of directors at its first meeting after each annual
meeting of shareholders shall choose a president and a secretary neither of whom
need be a member of the board.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board of directors.
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the board
of directors may be removed at any time by the affirmative vote of a majority of
the board of directors. Any vacancy occurring in any office of the corporation
shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the shareholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts requiring
a seal, under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the board of directors to some
other officer or agent of the corporation.
THE VICE-PRESIDENTS
Section 8. The vice-president, if there is one, or if there shall be more
than one, the vice-presidents in the order determined by the board of directors,
shall, in the absence or disability of the president, perform the duties and
exercise the powers of the president and shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the shareholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the shareholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He
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shall have custody of the corporate seal of the corporation and he, or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature or by the
signature of such assistant secretary. The board of directors may give general
authority to any other officer to affect the seal of the corporation and to
the affixing by his signature.
Section 10. The assistant secretary, if there is one, or if there be more
than one, the assistant secretaries in the order determined by the board of
directors, shall, in the absence or disability of the secretary, perform the
duties and exercise the powers of the secretary and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer, if there is one, shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the board of
directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind of his possession or under
his control belonging to the corporation.
Section 14. The assistant treasurer, if there is one, or, if there shall
be more than one, the assistant treasurers in the order determined by the board
of directors, shall, in the absence or disability of the treasurer, perform the
duties and exercise the powers of the treasurer and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
ARTICLE X
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by
certificates signed by the president and secretary or such other officers as may
be elected or appointed, and may be sealed with the seal of the corporation or a
facsimile thereof.
When the corporation is authorized to issue shares of more than one class
there shall
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be set forth upon the face or back of the certificate, or the certificate
shall have a statement that the corporation will furnish to any shareholder upon
request and without charge, a full summary statement of the designations,
preferences, limitations, and relative rights of the shares of each class
authorized to be issued and, if the corporation is authorized to issue any
preferred or special class in series, the variations in the relative rights and
preferences between the shares of each such series so far as the same have been
fixed and determined and the relative rights and preferences of subsequent
series. When the corporation is authorized to issue shares of more than one
class, every certificate shall also set forth upon the face or back of such
certificate a statement that there is set forth in the articles of incorporation
on file in the office of the Secretary of State a full statement of all the
designations, preferences, limitations, and relative rights, including voting
rights, or the shares of each class authorized to be issued and the corporation
at its principal place of business or registered office. Every certificate shall
have noted thereon any information required to be set forth by the Maryland
Business Corporation Act and such information shall be set forth in the manner
provided in said Act.
Section 2. The signatures of the officers of the corporation upon a
certificate may be facsimiles if the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the corporation itself or an
employee of the corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of its
issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate to be
issued in place of any certificate therefore issued by the corporation alleged
to have been lost or destroyed. When authorizing such issue of a new
certificate, the board of directors, in its discretion and as a condition
precedent to the issuance thereof, may prescribe such terms and conditions as it
deems expedient, and may require such indemnities as it deems adequate, to
protect the corporation from any claim that may be made against it with respect
to any such certificate alleged to have been lost or destroyed.
TRANSFERS OF SHARES
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate representing shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, a new
certificate shall be issued to the person entitled thereto, and the old
certificate cancelled and the transaction recorded upon the books of the
corporation.
CLOSING OF TRANSFER BOOKS
Section 5. For the purpose of determining shareholders entitled to notice
of or to vote at any meeting of shareholders, or any adjournment thereof or
entitled to recieve payment of any dividend, or in order to make a determination
of shareholders for any other proper purpose the board of
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directors may provide that the stock transfer books shall be closed for a stated
period but not to exceed, in any case, fifty days. If the stock transfer books
shall be closed for the purpose of determining shareholders entitled to notice
of or to vote at a meeting of shareholders, such books shall be closed for at
least ten days immediately preceding such meeting. In lieu of closing the stock
transfer books, the board of directors may fix in advance a date as the record
date for any such determination of shareholder, such date in any case to be not
more than fifty days and, in case of a meeting of shareholders, not less than
ten days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of shareholders, or
shareholders entitled to receive payment of a dividend, the date on which notice
of the meeting is mailed or the date on which the resolution of the board of
directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof.
REGISTERED SHAREHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize and equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Maryland.
LIST OF SHAREHOLDERS
Section 7. The officer or agent having charge of the transfer books for
shares shall make, at least ten days before each meeting of shareholders, a
complete list of the shareholders entitled to vote at such meeting, arranged in
alphabetical order, with the address of each and the number of shares held by
each, which list, for a period of ten days prior to such meeting, shall be kept
on file at the registered office of the corporation and shall be subject to
inspection by any shareholder at any time during usual business hours. Such list
shall also be produced and kept open at the time and place of the meeting and
shall be subject to the inspection of any shareholders during the whole time of
the meeting. The original share ledger or transfer book, or a duplicate thereof,
shall be prima facie evidence as to who are the shareholders entitled to examine
such list or share ledger or transfer book or to vote at any meeting of the
shareholders.
ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the articles of incorporation
relating thereto, if any, dividends may be declared by the board of directors at
any regular or special meeting, pursuant
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to law. Dividends may be paid in cash, in property or in shares of the capital
stock, subject to any provisions of the articles of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by resolution
of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words "Corporate Seal,
"Maryland." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
ARTICLE XII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new
by-laws may be adopted by the affirmative vote of a majority of the board of
directors at any regular or special meeting of the board subject to repeal or
change at any regular or special meeting of shareholders at which a quorum is
present or represented, by the affirmative vote of a majority of the stock
entitled to vote, provided notice of the proposed repeal or charge be contained
in the notice of such meeting.
ARTICLE XIII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new
by-laws may be adopted at any regular or special meeting of shareholders at
which a quorum is present or represented, by the affirmative vote of a majority
of the stock entitled to vote, provided notice of the proposed alteration,
amendment or repeal be contained in the notice of such meeting.
Dated: July __, 1997
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Exhibit 3.30.1
ARTICLES OF AMENDMENT AND RESTATMENT OF
SERVICO MARYLAND, INC.
Pursuant to Sections 2-607, 2-608 and 2-609 of the Maryland General
Corporation Law, SERVICO MARYLAND, INC., a Maryland corporation (the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that these Amended and Restated Articles of Incorporation
(the "Amended Articles"), were duly advised and approved by the entire Board of
Directors of the Corporation and approved by the sole shareholder of the
Corporation by written consent without a meeting, pursuant to Sections 2-408(c)
and 2-503 of the Maryland Corporation Law, as of July 23, 1999. The Articles as
currently in effect shall be amended and restated to read as herein set forth in
full:
ARTICLE I
The name of the Corporation is SERVICO MARYLAND, INC.
ARTICLE II
(a) The purpose for which the Corporation is organized is limited
to: (i) acquiring, owning, leasing, operating, using and managing that certain
real property commonly known as the Holiday Inn Washington D.C., located at 8777
Georgia Avenue, Silver Spring, Maryland 20920 (the "Property"); (ii) entering
into and performing its obligations under the credit agreement, among Lodgian
Financing Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel Group, LLC,
Servico, Inc. and other affiliated entities, as affiliate guarantors, the
initial lenders and initial issuing bank named therein, the collateral agent,
the administrative agent, Morgan Stanley Senior Funding, Inc., as co-lead
arranger, joint-book manager and syndication agent and Lehman Brothers, as
co-lead arranger, joint-book manager and documentation agent relating to the
financing or refinancing of the Property (the "Loan Agreement") which provides
the lender thereunder with a first priority lien on the Property, any
promissory-note evidencing indebtedness incurred pursuant to the Loan Agreement,
any mortgage securing such indebtedness and encumbering the Property (the
"Mortgage") and any other documents securing such indebtedness and any related
collateral documents, each as amended (or pursuant to a consent obtained in
accordance with the terms thereof) (collectively, the "Loan Documents"); (iii)
entering into and performing its obligations under the Indenture (the
"Indenture"), among Lodgian Financing Corp, as issuer, Lodgian, Inc., the
Subsidiary Guarantors defined therein and Bankers Trust Company, as trustee,
relating to the issuance of the 12 1/4% Senior Subordinated Notes due 2009 and
the Guarantee in favor of the holders of the Notes and (iv) transacting any and
all lawful business that is incident and necessary or appropriate to the
ownership and to the management of the Property for which a corporation may be
incorporated under the laws of the State of Maryland.
(b) Notwithstanding any other provision of these Amended Articles
and any provision of law that otherwise so empowers the Corporation, until such
time as the Property is released from the lien of the Mortgage, the Corporation
shall not, without the unanimous
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affirmative vote of the members of its Board of Directors, (i) amend, alter,
change, repeal or adopt any resolution setting forth a proposed amendment to,
any provision of these Articles of Incorporation, (ii) dissolve or liquidate, in
whole or in part, consolidate or merge with or into any other entity or convey,
sell or transfer its properties and assets substantially as an entirety to any
entity, (iii) file a voluntary petition or otherwise initiate, or consent to,
proceedings for the Corporation to be adjudicated insolvent or seeking an order
for relief as a debtor under the United States Bankruptcy Code, as amended (11
U.S.C. ss.ss. 101 et seq.), or (iv) file any petition, or consent to any
petition, seeking any composition, reorganization, readjustment, liquidation,
dissolution or similar relief under the present or any future federal bankruptcy
laws or any other present or future applicable federal, state or other statute
or law relative to bankruptcy, insolvency or other relief for debtors; or (v)
seek or consent to the appointment of any trustee, receiver, conservator,
assignee, sequestrator, custodian, or liquidator (or other similar official) of
the Corporation or of all or any substantial part of the properties and assets
of the Corporation, or (vi) make any general assignment for the benefit of
creditors, or (vii) admit in writing its inability to pay its debts generally as
they become due, or (viii) declare or effect a moratorium on its debt or take
any corporate action in furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all times
until the Property is released from the lien of the Mortgage, include an
independent director (the "Independent Director"). The Independent Director
shall be a person who is not at the time of appointment and who has not at any
time during the prior five years been and who is not while serving as the
Independent Director (i) a director, stockholder, officer or employee of the
Corporation or any affiliates thereof, other than with respect to such person's
service as an Independent Director of the Corporation and such person's service
in similar "Independent Director" positions for affiliates of the Corporation;
(ii) a creditor, customer, supplier, independent contractor, manager or any
other person who derives more than 10% of its gross revenues from its activities
wit the Corporation or any affiliates thereof; (iii) a person controlling any
such stockholder, creditor, customer, supplier, independent contractor, manager
or other person; (iv) the legal or beneficial owner, at any time while serving
as director of the Corporation, of any beneficial interest in the Corporation;
or (v) a member of the immediate family of any such stockholder, officer,
employee, creditor, customer, supplier, director, independent contractor,
manager or any other person of the Corporation. As used herein, the term
"affiliate" means any person controlling, under common control with, or
controlled by the person in question, and the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through ownership
of voting securities, by contract or otherwise. In the event of the death,
incapacity, or resignation of an Independent Director, or the vacancy of the
Independent Director's seat on the Corporation's Board of Directors for any
reason, a successor Independent Director shall be appointed by the remaining
directors.
(d) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles
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in a manner that indicates the separate existence of the Corporation and its
assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(ix) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall not
(i) commingle its assets with those of, or pledge its assets for the benefit of,
any other person or entity; (ii) assume, guarantee or become obligated, or hold
out its credit as being available to satisfy, the liabilities or obligations of
any other person or entity; (iii) reduce its capital below an amount which is
adequate in light of its contemplated business operations; (iv) acquire
obligations or securities of, or make loans or advances to, any affiliate; (v)
incur or assume any indebtedness other than (A) the indebtedness underlying the
Loan Agreement, (B) the indebtedness underlying the Indenture, and (C)
liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article II and the last sentence of
Article VI of these Amended Articles; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in these Amended Articles. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
ARTICLE III
The post office address of the principal office of the Corporation in the
State is c/o The Corporation Trust Incorporated, 300 East Lombard Street,
Baltimore, Maryland 21202. The name of the resident agent of the Corporation in
this State is Corporation Trust Incorporated, a corporation of this State, and
the post-office address of the resident agent is 300 East Lombard Street,
Baltimore, Maryland 21202.
ARTICLE IV
The total number of shares of stock which the Corporation shall have
authority to issue is One Thousand (1,000) shares, all of one class, of the par
value of Zero Dollars and One Cent ($0.01) each and of the aggregate par value
of Ten Dollars ($10.00).
ARTICLE V
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The number of directors of the Corporation shall be at least one
(1), which may be changed in accordance with the bylaws of the Corporation. The
name of the directors who shall act until the next annual meeting or until her
successor is duly chosen and qualified is Robert Flanders.
ARTICLE VI
The Corporation shall indemnify any officer or director, or any
former officer or director of the Corporation, to the fullest extent permitted
by law. The foregoing right of indemnification shall not be exclusive of any
other rights to which any director, officer, employee or agent may be entitled
as a matter of law or which he may be lawfully granted. The Corporation's
obligation to indemnify its officers and directors pursuant to this Article
shall be subordinate in all respects to the obligations of the Corporation
arising out of the Loan Documents and shall not constitute a claim against the
Corporation to the extent that the Corporation is unable to pay any amounts it
is obligated to pay under the Loan Documents.
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IN WITNESS WHEREOF, the undersigned President of Servico Maryland,
Inc. who is executing on behalf of said Corporation the foregoing Amended and
Restated Articles of Incorporation, of which this certificate is made a part,
hereby acknowledges, in the name and on behalf of said Corporation, the
foregoing Amended and Restated Articles of Incorporation to be the corporate act
of said Corporation and further certifies that, to the best of her knowledge,
information and belief, that matters and facts set forth therein with respect to
the approval thereof are true in all material respects, under penalties of
perjury.
Dated the 23rd day of July, 1999.
SERVICO MARYLAND, INC.
By: /s/ Robert M. Flanders
------------------------
Name: Robert M. Flanders
Title: President
Attest:
/s/ Thomas S. Gryboski
----------------------------
Thomas S. Gryboski, Assistant Secretary
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Exhibit 3.30.2
SERVICO MARYLAND, INC.
*****
BY - LAWS
*****
ARTICLE I
OFFICERS
Section 1. The registered office shall be located at THE CORPORATION TRUST
INCORPORATION, 32 SOUTH STREET, BALTIMORE, MARYLAND 21202.
Section 2. The corporation may also have offices at such other places both
within and without the State of Maryland as the board of directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of directors
shall be held on such day and at such hour as may be fixed from time to time by
the board of directors. Said meetings may also be held at such other place
either within or outside the State of Maryland as shall be designated from time
to time by the board of directors and stated in the notice of the meeting.
Section 2. Annual meetings of shareholders, commencing with the year 1997,
shall be held on the Second Monday in January unless that day is a legal
holiday, and if a legal holiday, then on the next secular day following, at
10:00 a.m., at which they shall elect by a plurality vote a board of directors,
and transact such other business as may properly be brought before the meeting.
Section 3. Written or printed notice of the annual meeting stating the
place, day and hour of the meeting shall be delivered not less than ten nor more
than fifty days before the date of the meeting, either personally or by mail, by
or at the direction of the president, the secretary, or the officer or persons
calling the meeting, to each shareholder of record entitled to vote at such
meeting.
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. Special meetings of shareholders for any purpose other than the
election of directors may be held at such time and place within or without the
State of Maryland as shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
Section 2. Special meetings of the shareholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the articles of
incorporation, may be called by the president, the board of
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directors, or the holders of not less than one-tenth of all the shares entitled
to vote at the meeting.
Section 3. Written or printed notice of a special meeting stating the
place, day and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than fifty days
before the date of the meeting, either personally or by mail, by or at the
direction of the president, or the secretary, or the officer or persons calling
the meeting, to each shareholder of record entitled to vote at such meeting.
Section 4. The business transacted at any special meeting of shareholders
shall be limited to the purposes stated in the notice.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of stock issued and
outstanding and entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by statute or by the articles of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the shareholders, the shareholders present in person or
represented by proxy shall have power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum shall be
present or represented. At such adjourned meeting at which a quorum shall be
present or represented any business may be transacted which might have been
transacted at the meeting as originally notified.
Section 2. If a quorum is present, the affirmative vote of a majority of
the shares of stock represented at the meeting shall be the act of the
shareholders unless the vote of a greater number of shares of stock is required
by law or the articles of incorporation.
Section 3. Each outstanding share of stock, having voting power, shall be
entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. A shareholder may vote either in person or by proxy executed in
writing by the shareholder or by his duly authorized attorney-in-fact.
Section 4. Any action required to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the shareholders entitled
to vote with respect to the subject matter thereof.
ARTICLE V
DIRECTORS
Section 1. The Board of Directors of the Corporation shall consist of one
(1) member. The number of directors may be either increased or decreased from
time to time by
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resolution of the Board of Directors, but shall never be less than one (1).
Directors need not be residents of the State of Maryland nor shareholders of the
corporation. The directors, other than the first board of directors, shall be
elected at the annual meeting of the shareholders, and each directors elected
shall serve until the next succeeding annual meeting and until his successor
shall have been elected and qualified. The first board of directors shall hold
office until the first annual meeting of shareholders.
Section 2. Any vacancy occuring in the board of directors may be filled by
the shareholders at an annual or a special meeting or by the affirmative vote of
a majority of the remaining directors though less than a quorum of the board of
directors. A director elected to fill a vacancy, shall be elected for the
unexpired portion of the terms of his predecessor in office.
Any directorship to be filled by reason of an increase in the number of
directors may be filled by election at an annual meeting or at a special meeting
of shareholders called for that purpose. A director elected to fill a newly
created directorship shall serve until the next succeeding annual meeting of
shareholders and until his successor shall have been elected and qualified. Any
directorship to filled by reason of an increase in the number of directors may
also be filled by the board of directors for a term of office until the next
election of directors by shareholders provided no more than two directorships
may be so filled during a period between any two successive annual meetings of
shareholders.
Whenever the holders of any class or series of shares are entitled to
elect one or more directors by the provisions of the articles of incorporation,
any vacancies in such directorship and any newly created directorships of such
class or series to be filled by reason of an increase in the number of such
directors may be filled by the affirmative vote of a majority of the directors
elected by such class or series then in office or by a sole remaining director
so elected, or by the vote of the holders of the outstanding shares of such
class or series, and such directorships shall not in any case be filled by the
vote of the remaining directors or the holders of the outstanding shares as a
whole unless otherwise provided in the articles of incorporation.
Section 3. The business affairs of the corporation shall be managed by its
board of directors which may exercise all such powers of the corporation and do
all such lawful acts and things as are not by statute or by the articles of
incorporation or by these by-laws directed or required to be exercised or done
by the shareholders.
Section 4. The directors may keep the books of the corporation, except
such as are required by law to be kept within the state, outside of the State of
Maryland, at such place or places as they may from time to time determine.
Section 5. The board of directors, by the affirmative vote of a majority
of the directors then in office and irrespective of any personal interest of any
of its members, shall have authority to establish reasonable compensation of all
directors for services to the corporation as directors, officers or otherwise.
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ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular or special, may be
held either within or without the State of Maryland.
Section 2. The first meeting of each newly elected board of directors
shall be held at such time and place as shall be fixed by the vote of the
shareholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present, or it may convene at such place and
time as shall be fixed by the consent in writing of all the directors.
Section 3. Regular meetings of the board of directors may be held upon
such notice, or without notice, and at such time and at such place as shall from
time to time be determined by the board.
Section 4. Special meetings of the board of directors may be called by the
president on two days' notice to each director, either personally or by mail or
by telegram; special meetings shall be called by the president or secretary in
like manner and on like notice on the written request of two directors.
Section 5. Attendance of a director at any meeting shall constitute a
waiver of notice of such meeting, except where a director attends for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the board
of directors need be specified in the notice or waiver of notice of such
meeting.
Section 6. A majority of the directors shall constitute a quorum for the
transaction of business unless a greater number is required by law or by the
articles of incorporation. The act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the board of directors,
unless the act of a greater number is required by statute or by the articles of
incorporation. If a quorum shall not be present at any meeting of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 7. Unless otherwise restricted by the articles of incorporation or
these by-laws, any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting, if all members of the board of committee, as the case may be, consent
thereto in writing which shall set forth the action taken and be signed by all
members of the board of directors or of the committee as the case may be.
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ARTICLE VII
COMMITTEES OF DIRECTORS
Section 1. The board of directors, by resolution adopted by a majority of
the full board of directors, may designate from among its members an executive
committee and one or more other committees, each of which shall be comprised of
one or more members and, to the extent provided in the resolution, shall have
and may exercise all of the authority of the board of directors except that no
such committee shall have the authority of the board of directors in reference
to amending the articles of incorporation, approving a plan of merger or
consolidation, recommencing to the shareholders the sale, lease, or exchange of
all or substantially all of the property and assets of the corporation otherwise
than in the usual and regular course of its business, recommending; the
shareholders a voluntary dissolution of the corporation or a revocation thereof,
amending altering, or repealing the by-laws of the corporation or adopting new
by-laws for the corporation, filling vacancies in the board of directors to be
filled by reason of an increase in the number of directors, electing or removing
officers or members of a committee, fixing the compensation of any member of a
committee, or altering or repealing any resolution of the board of directors
which by its terms provides that it shall not be so amendable or repealable,
and, unless the resolution expressly so provides, no committee shall have the
power of authority to declare a dividend or to authorize the issuance of shares
of the corporation.
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
articles of incorporation or of these by-laws, notice is required to be given to
any director or shareholder, it shall not be construed to mean personal notice,
but such notice may be given in writing, by mail, addressed to such director or
shareholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telegram.
Section 2. Whenever any notice whatever is required to be given under the
provisions of the statutes or under the provisions of the articles of
incorporation or these by-laws, a waiver thereof in writing signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
ARTICLE IX
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board of
directors and shall be a president and a secretary. The board of directors may
also elect or appoint such other officers, including assistant officers and
agents as may be deemed necessary.
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Section 2. The board of directors at its first meeting after each annual
meeting of shareholders shall choose a president and secretary neither of whom
need be a member of the board.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board of directors.
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the board
of directors may be removed at any time by the affirmative vote of a majority of
the board of directors. Any vacancy occurring in any office of the corporation
shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the shareholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts requiring
a seal, under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the board of directors to some
other officer or agent of the corporation.
THE VICE PRESIDENTS
Section 8. The vice-president, or if there shall be more than one, the
vice-presidents in the order determined by the board of directors, shall, in the
absence or disability of the president, perform the duties and exercise the
powers of the president and shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the shareholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the shareholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He
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shall have custody of the corporate seal of the corporation and he or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature or by the
signature of such assistant secretary. The board of directors may give general
authority to any other officer to affix the seal of the corporation and to
attest the affixing by his signature.
Section 10. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors, shall,
in the absence or disability of the secretary, perform the duties and exercise
the powers of the secretary and shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.
Section 14. The assistant treasurer, or, if there shall be more than one,
the assistant treasurers in the order determined by the board of directors,
shall, in the absence or disability of the treasurer, perform the duties and
exercise the powers of the treasurer and shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
ARTICLE X
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by
certificates signed by the president and secretary or such other officers as may
be elected or appointed, and may be sealed with the seal of the corporation or a
facsimile thereof.
When the corporation is authorized to issue shares of more than one class
there shall
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be set forth upon the face or back of the certificate, or the certificate shall
have a statement that the corporation will furnish to any shareholder upon
request and without charge, a full or summary statement of the designations,
preferences, limitations, and relative rights of the shares of each class
authorized to be issued and, if the corporation is authorized to issue any
preferred or special class in series, the variations in the relative rights and
preferences between the shares of each such series so far as the same have been
fixed and determined and the authority of the board of directors to fix and
determine the relative rights and preferences of subsequent series. When the
corporation is authorized to issue shares of more than one class, every
certificate shall also set forth upon the face or back of such certificate a
statement that there is set forth in the articles of incorporation on file in
the office of the Secretary of State a full statement of all the designations,
preferences, limitations, and relative rights, including voting rights, or the
shares of each class authorized to be issued and the corporation at its
principal place of business or registered office. Every certificate shall have
noted thereon any information required to be set forth by the Maryland Business
Corporation Act and such information shall be set forth in the manner provided
in said Act.
Section 2. The signatures of the officers of the corporation upon a
certificate may be facsimiles if the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the corporation itself or an
employee of the corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of its
issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate to be
issued in place of any certificate theretofore issued by the corporation alleged
to have been lost or destroyed. When authorizing such issue of a new
certificate, the board of directors, in its discretion and as a condition
precedent to the issuance thereof, may prescribe such terms and conditions as it
deems expedient, and may require such indemnities as it deems adequate, to
protect the corporation from any claim that may be made against it with respect
to any such certificate alleged to have been lost or destroyed.
TRANSFERS OF SHARES
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate representing shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, a new
certificate shall be issued to the person entitled thereto, and the old
certificate cancelled and the transaction recorded upon the books of the
corporation.
CLOSING OF TRANSFER BOOKS
Section 5. For the purpose of determining shareholders entitled to notice
of or to vote at any meeting of shareholders, or any adjournment thereof or
entitled to receive payment of any dividend, or in order to make a determination
of shareholders for any other proper purpose the board of
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directors may provide that the stock transfer books shall be closed for a stated
period but not to exceed, in any case, fifty days. If the stock transfer books
shall be closed for the purpose of determining shareholders entitled to notice
of or to vote at a meeting of shareholders, such books shall be closed for at
least ten days immediately preceding such meeting. In lieu of closing the stock
transfer books, the board of directors may fix in advance a date as the record
date for any such determination of shareholder, such date in any case to be not
more than fifty days and, in case of a meeting of shareholders, not less than
ten days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of shareholders, or
shareholders entitled to receive payment of a dividend, the date on which notice
of the meeting is mailed or the date on which the resolution of the board of
directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof.
REGISTERED SHAREHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of share to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize and equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Maryland.
LIST OF SHAREHOLDERS
Section 7. The officer or agent having charge of the transfer books for
shares shall make, at least ten days before each meeting of shareholders, a
complete list of the shareholders entitled to vote at such meeting, arranged in
alphabetical order, with the address of each and the number of shares held by
each, which list, for a period of ten days prior to such meeting, shall be kept
on file at the registered office of the corporation and shall be subject to
inspection by any shareholder at any time during usual business hours. Such list
shall also be produced and kept open at the time and place of the meeting and
shall be subject to the inspection of any shareholders during the whole time of
the meeting. The original share ledger or transfer book, or a duplicate thereof,
shall be prima facie evidence as to who are the shareholders entitled to examine
such list or share ledger or transfer book or to vote at any meeting of the
shareholders.
ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the articles of incorporation
relating thereto, if any, dividends may be declared by the board of directors at
any regular or special meeting, pursuant
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to law. Dividends may be paid in cash, in property or in shares of the capital
stock, subject to any provisions of the articles of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by resolution
of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words "Corporate Seal,
Maryland". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
ARTICLE XII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new
by-laws may be adopted by the affirmative vote of a majority of the board of
directors at any regular or special meeting of the board subject to repeal or
change at any regular or special meeting of shareholders at which a quorum is
present or represented, by the affirmative vote of a majority of the stock
entitled to vote, provided notice of the proposed repeal or charge be contained
in the notice of such meeting.
ARTICLE XIII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new
by-laws may be adopted at any regular or special meeting of shareholders at
which a quorum is present or represented, by the affirmative vote of a majority
of the stock entitled to vote, provided notice of the proposed alteration,
amendment or repeal be contained in the notice of such meeting.
Dated: July __, 1997
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Exhibit 3.31.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION OF
NH MOTEL ENTERPRISES, INC.
Pursuant to Sections 450.1641 AND 450.1642 OF THE Michigan Business
Corporation Act, NH MOTEL ENTERPRISES, INC., a Michigan corporation (the
"Corporation"), hereby certifies that these Amended and Restated Articles of
Incorporation (the "Amended Articles"), which contain amendments requiring
shareholder approval, were duly adopted by the Board of Directors of the
Corporation and by the sole shareholder of the Corporation by written consent
without a meeting, pursuant to Sections 450.1611(3), 450.1407 and 450.1525 of
the Michigan Business Corporation Act, as of July 23, 1999. The necessary number
of shares as required by statute were voted in favor of these Amended Articles.
The original Articles of Incorporation were filed with the Dept. of Commerce of
the State of Michigan on December 30, 1981 under Corporation Identification
Number 032-045 and the former name of the Corporation was RRRCHR, Inc.
ARTICLE I
The name of the Corporation is NH MOTEL ENTERPRISES, INC.
ARTICLE II
(a) The purpose for which the Corporation is organized is limited to:
(i) acquiring, owning, leasing, operating, using and managing that certain real
property commonly known as the Northfield Hilton located at 5500 Crooks Road,
Troy, Michigan 48098 (the "Property"); (ii) entering into and performing its
obligations under the credit agreement, among Lodgian Financing Corp., as
borrower, Lodgian, Inc., its parent, Impac Hotel Group, LLC, Servico, Inc. and
other affiliated entities, as affiliate guarantors, the initial lenders and
initial issuing bank named therein, the collateral agent, the administrative
agent, Morgan Stanley Senior Funding, Inc., as co-lead arranger, joint-book
manager and syndication agent and Lehman Brothers, as co-lead arranger,
joint-book manager and documentation agent relating to the financing or
refinancing of the Property (the "Loan Agreement") which provides the lender
thereunder with a first priority lien on the Property, any promissory-note
evidencing indebtedness incurred pursuant to the Loan Agreement, any mortgage
securing such indebtedness and encumbering the Property (the "Mortgage") and any
other documents securing such indebtedness and any related collateral documents,
each as amended (or pursuant to a consent obtained in accordance with the terms
thereof) (collectively, the "Loan Documents"); (iii) entering into and
performing its obligations under the Indenture (the "Indenture"), among Lodgian
Financing Corp, as issuer, Lodgian, Inc., the Subsidiary Guarantors defined
therein and Bankers Trust Company, as trustee, relating to the issuance of the
12 1/4% Senior Subordinated Notes due 2009 and the Guarantee in favor of the
holders of the Notes and (iv) transacting any and all lawful business that is
incident and necessary or appropriate to the ownership and to the management of
the Property for which a corporation may be incorporated under the laws of the
State of Michigan.
<PAGE>
(b) Notwithstanding any other provision of these Amended Articles and
any provision of law that otherwise so empowers the Corporation, until such time
as the Property is released from the lien of the Mortgage, the Corporation shall
not, without the unanimous affirmative vote of the members of its Board of
Directors, (i) amend, alter, change, repeal or adopt any resolution setting
forth a proposed amendment to, any provision of these Articles of Incorporation,
(ii) dissolve or liquidate, in whole or in part, consolidate or merge with or
into any other entity or convey, sell or transfer its properties and assets
substantially as an entirety to any entity, (iii) file a voluntary petition or
otherwise initiate, or consent to, proceedings for the Corporation to be
adjudicated insolvent or seeking an order for relief as a debtor under the
United States Bankruptcy Code, as amended (11 U.S.C. Sections 101 ET SEQ.), or
(iv) file any petition, or consent to any petition, seeking any composition,
reorganization, readjustment, liquidation, dissolution or similar relief under
the present or any future federal bankruptcy laws or any other present or future
applicable federal, state or other statute or law relative to bankruptcy,
insolvency or other relief for debtors; or (v) seek or consent to the
appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, or liquidator (or other similar official) of the Corporation or of
all or any substantial part of the properties and assets of the Corporation, or
(vi) make any general assignment for the benefit of creditors, or (vii) admit in
writing its inability to pay its debts generally as they become due, or (viii)
declare or effect a moratorium on its debt or take any corporate action in
furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all times until
the Property is released from the lien of the Mortgage, include an independent
director (the "Independent Director"). The Independent Director shall be a
person who is not at the time of appointment and who has not at any time during
the prior five years been and who is not while serving as the Independent
Director (i) a director, stockholder, officer or employee of the Corporation or
any affiliates thereof, other than with respect to such person's service as an
Independent Director of the Corporation and such person's service in similar
"Independent Director" positions for affiliates of the Corporation; (ii) a
creditor, customer, supplier, independent contractor, manager or any other
person who derives more than 10% of its gross revenues from its activities wit
the Corporation or any affiliates thereof; (iii) a person controlling any such
stockholder, creditor, customer, supplier, independent contractor, manager or
other person; (iv) the legal or beneficial owner, at any time while serving as
director of the Corporation, of any beneficial interest in the Corporation; or
(v) a member of the immediate family of any such stockholder, officer, employee,
creditor, customer, supplier, director, independent contractor, manager or any
other person of the Corporation. As used herein, the term "affiliate" means any
person controlling, under common control with, or controlled by the person in
question, and the term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a person, whether through ownership of voting securities, by contract or
otherwise. In the event of the death, incapacity, or resignation of an
Independent Director, or the vacancy of the Independent Director's seat on the
Corporation's Board of Directors for any reason, a successor Independent
Director shall be appointed by the remaining directors.
(d) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause
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its financial statements to be prepared in accordance with generally accepted
accounting principles in a manner that indicates the separate existence of the
Corporation and its assets and liabilities from any other person or entity; (iv)
pay all its liabilities out of its own funds; (v) in all dealings, identify
itself, and conduct its own business and hold itself out under its own name and
as a separate and distinct entity and correct any misunderstandings regarding
its status as a separate entity; (vi) independently make decisions with respect
to its business and daily operations; (vii) maintain an arm's length
relationship with its affiliates; (viii) pay the salaries of its employees and
maintain a sufficient number of employees in light of its contemplated business
operations; (ix) allocate fairly and reasonably any overhead for shared office
space; and (x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall not (i)
commingle its assets with those of, or pledge its assets for the benefit of, any
other person or entity; (ii) assume, guarantee or become obligated, or hold out
its credit as being available to satisfy, the liabilities or obligations of any
other person or entity; (iii) reduce its capital below an amount which is
adequate in light of its contemplated business operations; (iv) acquire
obligations or securities of, or make loans or advances to, any affiliate; (v)
incur or assume any indebtedness other than (A) the indebtedness underlying the
Loan Agreement, (B) the indebtedness underlying the Indenture, and (C)
liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article II and the last sentence of
Article VIII of these Amended Articles; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in these Amended Articles. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
ARTICLE III
The total number of shares of stock which the Corporation shall have
the authority to issue is Fifty Thousand (50,000) shares of common stock, One
Dollar ($1.00) par value per share.
ARTICLE IV
The registered office of the Corporation is located at 30600 Telegraph
Road, Binghm Farms, Michigan 48025. The name of its registered agent at that
address is The Corporation Company.
ARTICLE V
Any action required or permitted by the Michigan Business Corporation
Act to be taken at an annual or special meeting of shareholders may be taken
without a meeting, without prior
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notice, and without a vote, if consents in writing, setting forth the action so
taken, are signed by the holders of outstanding shares having not less than the
minimum number of votes that would be necessary to authorize or take the action
at a meeting at which all shares entitled to vote on the action were present and
voted. The written consents shall bear the date of signature of each shareholder
who signs the consent. No written consents shall be affective to take the
corporate action referred to unless, within 60 days after the record date for
determining shareholders entitled to express consent to or to dissent from a
proposal without a meeting, written consents dated not more than 10 days before
the record date and signed by a sufficient number of shareholders to take the
action are delivered to the Corporation. Delivery shall be to the Corporation's
registered office, its principal place of business, or an officer or agent of
the Corporation having custody of the minutes of the proceedings of its
shareholders. Delivery made to a Corporations registered office shall be by hand
or by certified mail, return receipt requested.
Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to shareholders who would
have been entitled to notice of the shareholder meeting if the action had been
taken at a meeting and who have not consented in writing.
ARTICLE VI
The Board of Directors is expressly authorized to adopt, alter, amend
or repeal the Bylaws of the Corporation subject to the limitations set forth in
these Amended Articles. Election of directors need not be by written ballot
unless and to the extent provided in the Bylaws of the Corporation.
ARTICLE VII
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 450.1551 of the Michigan Business
Corporation Act, or (iv) for any transaction from which the director derived an
improper personal benefit. If the Michigan Business Corporation Act is amended
after the date of these Amended Articles to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability
of each director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the Michigan Business Corporation Act, as so
amended.
The rights and authority conferred in this Article VIII shall not be
exclusive of any other rights that any person may have or hereafter acquire
under any statute, provision of these Amended Articles or the Bylaws of the
Corporation, agreement, vote of the stockholders or disinterested directors or
otherwise.
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ARTICLE VIII
The Corporation shall indemnify any officer or director, or any former
officer or director of the Corporation, to the fullest extent permitted by law.
The foregoing right of indemnification shall not be exclusive of any other
rights to which any director, officer, employee or agent may be entitled as a
matter of law or which he may be lawfully granted. The Corporation's obligation
to indemnify its officers and directors pursuant to this Article shall be
subordinate in all respects to the obligations of the Corporation arising out of
the Loan Documents and shall not constitute a claim against the Corporation to
the extent that the Corporation is unable to pay any amounts it is obligated to
pay under the Loan Documents.
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IN WITNESS WHEREOF, the undersigned has executed these Amended and
Restated Articles of Incorporation this ____ day of July, 1999.
NH MOTEL ENTERPRISES, INC.
By: /s/ Thomas S. Gryboski
----------------------------
Name: Thomas S. Gryboski
Title: Assistant Secretary
<PAGE>
Exhibit 3.31.2
BYLAWS
OF
RRCHR, INC.
a Michigan Corporation
ARTICLE I
OFFICES
Section 1. The registered office of the corporation shall be located at
2290 First National Building, in the City of Detroit, County of Wayne, and State
of Michigan, or such other place as may be designated as the registered office
by the board of directors.
Section 2. The corporation may also have offices or branches at such other
places, both within and without the State of Michigan, as the board of directors
may from time to time determine or as the business of the corporation may
require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. All meetings of the shareholders shall be held at the
registered office of the corporation, or at such other place either within or
without the State of Michigan as shall be designated from time to time by the
board of directors and stated in the notice of the meeting.
Section 2. Annual meetings of shareholders shall be held on the first
Tuesday of the third month of each fiscal year of the corporation if not a legal
holiday in the state in which the meeting shall be held, and if a legal holiday,
then on the next secular day following, at such time as determined by the board
of directors, or at such other date and time as shall be
<PAGE>
designated from time to time by the board of directors and stated in the notice
of the meeting. At the annual meeting, the shareholders shall elect a board of
directors and transact such other business as may properly be brought before the
meeting. If the annual meeting is not held on the date designated therefor, the
board of directors shall cause the meeting to be held as soon thereafter as
convenient.
Section 3. Special meetings of the shareholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the Articles of
Incorporation, may be called by the chairman of the board or president, and
shall be called by the chairman of the board or president at the request in
writing of a majority of the board of directors or at the request in writing of
the holders of not less than ten percent (10%) of all the shares entitled to
vote at a meeting. Such request shall state the purpose or purposes of the
proposed meeting.
Section 4. The officer or agent who has charge of the stock ledger or
stock transfer books for shares of the corporation shall make and certify a
complete list of the shareholders entitled to vote at a shareholders' meeting or
any adjournment thereof. The list shall be arranged in alphabetical order with
each class and series and show the address of each shareholder and the number of
shares registered in the name of each shareholder. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any shareholder who is present
Section 5. Except as may be provided by statute, written notice of an
annual or special meeting of shareholders stating the place, date and hour of
the meeting and the purpose or purposes for which the meeting is called shall be
given not less than ten (10) nor more than sixty (60) days before
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the date of the meeting, to each shareholder of record entitled to vote at such
meeting.
Section 6. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise expressly required by statute or by the Articles of
Incorporation. All shareholders present in person or represented by proxy at
such meeting may continue to do business until adjournment, notwithstanding the
withdrawal of enough shareholders to leave less than a quorum. If, however, such
quorum shall not be initially present at any meeting of shareholders, a majority
of the shareholders entitled to vote thereat shall nevertheless have power to
adjourn the meeting from time to time and to another place, without notice other
than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting, at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified. If the adjournment is for more than sixty
(60) days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
shareholder of record entitled to vote at the meeting.
Section 7. When an action other than the election of directors is to be
taken by vote of the shareholders, it shall be authorized by a majority of the
votes cast by the holders of shares entitled to vote thereat, unless a greater
plurality is required by express requirement of the statutes or of the Articles
of Incorporation, in which case such express provision shall govern and control
the decision of such question. Except as otherwise expressly
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required by the Articles of Incorporation, directors shall be elected by a
plurality of the votes cast at an election.
Section 8. Each shareholder shall at every meeting of the shareholders be
entitled to one (1) vote in person or by proxy for each share of the capital
stock having voting power held by such shareholder except as otherwise expressly
required in the Articles of Incorporation. A vote may be cast either orally or
in writing. Each proxy shall be in writing and signed by the shareholder or his
authorized agent or representative. A proxy is not valid after the expiration of
six (6) months after its date unless the person executing it specifies therein
the length of time for which it is to continue in force, which in no case shall
exceed seven (7) years from the date of its execution. All questions regarding
the qualification of voters, the validity of proxies and the acceptance or
rejection of votes shall be decided by the presiding officer of the meeting.
Section 9. To the extent permitted by the Articles of Incorporation, any
action except the election of directors required or permitted to be taken at any
annual or special meeting of shareholders of the corporation, may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take the action at a meeting at which all shares
entitled to vote thereon were present and voted.
Section 10. Any action required or permitted to be taken at an annual
meeting or special meeting of shareholders of the corporation may be taken
without a meeting, without prior notice and without a vote, if all the
shareholders entitled to vote thereon consent thereto in writing.
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Section 11. Attendance of a person at a meeting of shareholders in person
or by proxy constitutes a waiver of notice of the meeting except where the
shareholder attends a meeting for the express purpose of objecting at the
beginning of the meeting to the transaction of any business because the meeting
was not lawfully called or convened.
ARTICLE III
DIRECTORS
Section 1. The business and affairs of the corporation shall be managed by
its board of directors which may exercise all such powers of the corporation and
do all such lawful acts and things as are not by statute or by the Articles of
Incorporation or by these Bylaws directed or required to be exercised or done by
the shareholders.
Section 2. The number of directors which shall constitute the whole board
shall be not less than one (1) nor more than seven (7). The number of directors
shall be determined from time to time by resolution of the board of directors.
The directors shall be elected at the annual meeting of the shareholders, except
as provided in Sections 3 and 5 of this Article, and each director elected shall
hold office until his successor is elected and qualified or until his
resignation or removal. Directors need not be shareholders or officers of the
corporation.
Section 3. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by the affirmative
vote of a majority of the directors then in office, though less than a quorum,
or by a sole remaining director, and the directors so chosen shall hold office
until the next annual election of directors by the shareholders and
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until their successors are duly elected and qualified, or until their
resignation or removal.
Section 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Michigan. Unless
otherwise restricted by the Articles of Incorporation, members of the board of
directors, or any committee designated by the board may participate in a meeting
of the board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
section shall constitute presence in person at such meeting.
Section 5. The first board of directors shall hold office until the first
annual meeting of shareholders. Thereafter, the first meeting of each newly
elected board of directors shall be held promptly following the annual meeting
of shareholders on the date thereof. No notice of such meeting shill be
necessary to the newly elected directors in order to legally constitute the
meeting, provided a quorum shall be present. In the event such meeting is not so
held, the meeting may be held at such time and place as shall be specified in a
notice given as hereinafter provided for special meetings of the board of
directors.
Section 6. Regular meetings of the board of directors may be held at such
time and at such place as shall from time to time be determined by the board of
directors or by the chairman of the board or president. Any notice given of a
regular meeting need not specify the business to be transacted or the purpose of
the meeting.
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Section 7. Special meetings of the board may be called by the chairman of
the board or president on two (2) days notice to each director by mail or
twenty-four (24) hours notice either personally, by telephone or by telegram;
special meetings shall be called by the chairman of the board or president in
like manner and on like notice on the written request of two (2) directors. The
notice need not specify the business to be transacted or the purpose of the
special meeting. The notice shall specify the place of the special meeting.
Section 8. At all meetings of the board or a committee thereof, one-third
(1/3) of the directors then in office or members of such committee, but not less
than two (2) (if there are at least two (2) members of the board of such
committee) shall constitute a quorum for the transaction of business. The act of
a majority of the members present at any meeting at which there is a quorum
shall be the act of the board of directors or the committee, unless the vote of
a larger number is specifically required by statute, by the Articles of
Incorporation, or by these Bylaws. If a quorum shall not be present at any
meeting of the board of directors or a committee, the members present thereat
may adjourn the meeting from time to time and to another place without notice
other than announcement at the' meeting, until a quorum shall be present.
Section 9. Unless otherwise provided by the Articles of Incorporation, any
action required or permitted to be taken at any meeting of the board of
directors or of any committee thereof may be taken without a meeting, if, before
or after the action, all members of the board or committee consent thereto in
writing. The written consents shall be filed with the minutes of proceedings of
the board or committee. Such consents shall have the same effect as a vote of
the board or committee for all purposes.
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Section 10 The board of directors may, by resolution designate one (1) or
more committees, each committee to consist of one (1) or more of directors of
the corporation. The board may designate one (1) or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. In the absence or disqualification of any member
of such committee, the members thereof present at any meeting and not
disqualified from voting, whether or not they constitute a quorum, may
unanimously appoint another member of the board to act at the meeting in place
of such absent or disqualified member. Any such committee, to the extent
provided in the resolution of the board, shall have and may exercise the powers
of the board of directors in the management of the business and affairs of the
corporation; provided, however, such a committee shall not have the power or
authority to:
(a) Amend the Articles of Incorporation.
(b) Adopt an agreement of merger or consolidation.
(c) Recommend to shareholders the sale, lease or exchange of all or
substantially all of the corporation's property and assets.
(d) Recommend to shareholders a dissolution of the corporation or a
revocation of a dissolution.
(e) Amend the Bylaws of the corporation.
(f) Fill vacancies in the board.
(g) Fix compensation of the directors for serving on the board or on
a committee.
(h) Declare a dividend.
(i) Authorize the issuance of stock.
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Such committee or committees shall have such name or names as may be determined
from time to time by resolution adopted by the board of directors. A committee,
and each member thereof, shall serve at the pleasure of the board.
Section 11. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors when required.
Section 12. The board by affirmative vote of a majority of directors in
office and irrespective of any personal interest of any of them, may establish
reasonable compensation of directors for services to the corporation as
directors, officers or members of a committee. No such payment shall preclude
any director from serving the corporation in any other capacity and receiving
compensation therefor.
Section 13. A director may resign by written notice to the corporation.
The resignation is effective upon its receipt by the corporation or a subsequent
time as set forth in the notice of resignation.
Section 14. Attendance of a director at a meeting constitutes a waiver of
notice of the meeting except where a director attends a meeting for the express
purpose of objecting to the transaction of any business because the meeting is
not lawfully called or convened.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
Articles of Incorporation or of these Bylaws, written notice is required to be
given to any director, committee member or shareholder, such notice may be given
in writing by mail (registered, certified or other first class mail)
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addressed to such director, shareholder or committee member at his address as it
appears on the records of the corporation, with postage thereon prepaid. Such
notice shall be deemed to be given at the time when the same shall be deposited
in a post office or official depository under the exclusive care and custody of
the United States postal service.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the Articles of Incorporation or of these
Bylaws, a waiver thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the shareholders, directors or a
committee, need be specified in any written waiver of notice.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board of
directors at its first meeting after each annual meeting of shareholders and
shall be a president, a secretary and a treasurer. The board of directors may
also create and fill the offices of chairman of the board and vice-chairman of
the board, and may choose one or more vice-presidents, one or more assistant
secretaries and assistant treasurers. Any number of offices may be held by the
same person.
Section 2. The board of directors may from time to time appoint such other
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board.
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Section 3 The salaries of all officers of the corporation shall be fixed
by the board of directors.
Section 4. The officers of the corporation shall hold office at the
pleasure of the board of directors. Any officer elected or appointed by the
board of directors may be removed at any time by the board of directors with or
without cause. Any vacancy occurring in any office of the corporation by death,
resignation, removal or otherwise shall be filled by the board of directors. An
officer may resign by written notice to the corporation. The resignation is
effective upon its receipt by the corporation or at a subsequent time specified
in the notice of resignation.
Section 5. Unless otherwise provided by resolution of the board of
directors, the president shall be the chief executive officer of the
corporation, shall preside at all meetings of the shareholders and the board of
directors (if he shall be a member of the board), shall have general and active
management of the business and affairs of the corporation and shall see that all
orders and resolutions of the board of directors are carried into effect. He
shall execute on behalf of the corporation, and may affix or cause the seal to
be affixed to, all instruments requiring such execution except to the extent the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
Section 6. The vice-presidents shall act under the direction of the
president and in the absence or disability of the president shall perform the
duties and exercise the powers of the president. They shall perform such other
duties and have such other powers as the president or the board of directors may
from time to time prescribe. The board of directors may designate one or more
executive vice-presidents or may otherwise specify the
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order of seniority of the vice-presidents. The duties and powers of the
president shall descend to the vice-presidents in such specified order of
seniority.
Section 7. The secretary shall act under the direction of the president.
Subject to the direction of the president he shall attend all meetings of the
board of directors and all meetings of the shareholders and record the
proceedings. He shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of ail meetings of the
shareholders and special meetings of the board of directors, and shall perform
such other duties as may be prescribed by the president or the board of
directors. He shall keep in safe custody the seal of the corporation and, when
authorized by the president or the board of directors, cause it to be affixed to
any instrument requiring it.
Section 8. The assistant secretaries shall act under the direction of the
president. In the order of their seniority, unless otherwise determined by the
president or the board of directors, they shall, in the absence or disability of
the secretary, perform the duties and exercise the powers of the secretary. They
shall perform such other duties and have such other powers as the president or
the board of directors may from time to time prescribe.
Section 9. The treasurer shall act under the direction of the president.
Subject to the direction of the president he shall have custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories a. may be designated by the board of directors. He shall
disburse the funds of the corporation as may be ordered
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by the president or the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation. He may affix or cause to be affixed the seal of the corporation to
documents so requiring the seal.
Section 10. The assistant treasurers in the order of their seniority,
unless otherwise determined by the president or the board of directors shall, in
the absence or disability of the treasurer, perform the duties and exercise the
powers of the treasurer. They shall perform such other duties and have such
other powers as the president or the board of directors may from time to time
prescribe.
Section 11. To the extent the powers and duties of the several officers
are not provided from time to time by resolution or other directive of the board
of directors or by the president (with respect to other officers), the officers
shall have all powers and shall discharge the duties customarily and usually
held and performed by like officers of the corporations similar in organization
and business purposes to this corporation.
ARTICLE VI
CERTIFICATES OF STOCK
AND SHAREHOLDERS OF RECORD
Section 1. The shares of stock of the corporation shall be represented by
certificates signed by, or in the name of the corporation by, the chairman of
the board, vice-chairman of the board, president or vice-president, and by the
treasurer, assistant treasurer, secretary or assistant secretary of the
corporation. Each holder of stock in the
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corporation shall be entitled to have such a certificate certifying the number
of shares owned by him in the corporation.
Section 2. Any of or all the signatures on the certificate may be a
facsimile if the certificate is countersigned by a transfer agent or registered
by a registrar other than the corporation itself or its employee. In case any
officer who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer at the date of issue. The seal of the corporation or a facsimile
thereof may, but need not, be affixed to the certificates of stock.
Section 3. The board of directors may direct a new certificate for shares
to be issued in place of any certificate theretofore issued by the corporation
alleged to have been lost or destroyed, upon the making of an affidavit of that
fact by the person claiming the certificate of stock to be lost or destroyed.
When authorizing such issue of a new certificate, the board of directors may, in
its discretion and as a condition precedent to the issuance thereof, require the
owner of such lost or destroyed certificate, or his legal representative, to
give the corporation a bond in such sum as it may direct as indemnity against
any claim that may be made against the corporation with respect to the
certificate alleged to have been lost or destroyed.
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
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Section 5. In order that the corporation may determine the shareholders
entitled to notice of, or to vote at, any meeting of shareholders or any
adjournment thereof, or to express consent to, or to dissent from, a proposal
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or for the purpose of any other action,
the board of directors may fix, in advance, a date as a record date, which shall
not be more than sixty (60) nor less than ten (10) days before the date of such
meeting, nor more than sixty (60) days prior to any other action.
If no record date is fixed.
(a) The record date for determining the shareholders of record
entitled to notice of, or to vote at, a meeting of shareholders shall be
at the close of business on the day on which notice is given, or, if no
notice is given, at the close of business on the day next preceding the
day on which the meeting is held; and
(b) the record date for determining shareholders for any other
purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
A determination of shareholders of record entitled to notice or to vote at
a meeting of shareholders shall apply to any adjournment of the meeting,
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares for all
purposes, including voting and dividends, and shall not be bound to recognize
any equitable or other claim to interest in such share or shares on
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the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of Michigan.
ARTICLE VII
INDEMNIFICATION
Section 1. The corporation shall indemnify to the fullest extent
authorized or permitted by the Michigan Business Corporation Act any person, and
his heirs, executors, administrators and legal representatives, who is made or
threatened to be made a party to an action, suit or proceeding (whether civil,
criminal, administrative or investigative) by reason of the fact that such
person is or was a director, officer, employee or agent of the corporation or
serves or served any other enterprise at the request of the corporation.
ARTICLE VIII
GENERAL PROVISIONS
Section 1. All checks, drafts or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate. All funds of
the corporation not otherwise employed shall be deposited from time to time to
the credit of the corporation in such banks, trust companies or other
depositories as the board of directors may from time to time designate.
Section 2. The fiscal year of the corporation shall end on the 31st day of
December of each year or such other date as shall be fixed from time to time by
resolution of the board of directors.
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<PAGE>
Section 3. The board of directors may adopt a corporate seal for the
corporation. The corporate seal shall have inscribed thereon the name of the
corporation and the words "Corporate Seal, Michigan". The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.
Section 4. The corporation shall keep within or without the State of
Michigan books and records of account and minutes of the proceedings of its
shareholders, board of directors and executive committee, if any. The
corporation shall keep at its registered office or at the office of its transfer
agent within or without the State of Michigan records containing the names and
addresses of all shareholders, the number, class and series of shares held by
each and the dates when they respectively became holders of record thereof. Any
of such books, records or minutes may be in written form or in any other form
capable of being converted into written form within a reasonable time.
Section 5. These Bylaws shall govern the internal affairs of the
corporation to the extent they are consistent with law and the Articles of
Incorporation. Nothing contained in the Bylaws shall, however, prevent the
imposition by contract of greater voting, notice or other requirements than
those set forth in these Bylaws.
ARTICLE IX
AMENDMENTS
Section 1. The Bylaws may be amended or repealed, or new Bylaws may be
adopted, by action of either the shareholders or the board of directors. The
shareholders may from time to time specify particular
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<PAGE>
provisions of the Bylaws which shall not be altered or repealed by the board of
directors.
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<PAGE>
Exhibit 3.32.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION OF
MINNEAPOLIS MOTEL ENTERPRISES, INC.
Pursuant to Section 302A.139 of the Minnesota Business Corporation Act
(the "Act"), MINNEAPOLIS MOTEL ENTERPRISES, INC., an Iowa corporation (the
"Corporation"), hereby certifies that these Amended and Restated Articles of
Incorporation (the "Amended Articles"), which contain amendments requiring
shareholder approval, were duly adopted by the Board of Directors of the
Corporation and by the sole shareholder of the Corporation by written consent
without a meeting, pursuant to Sections 302A.441 and 302A.239 of the Act, as of
July ___, 1999. The number of votes cast was sufficient for approval. The
Amended Articles were adopted pursuant to Minnesota Statutes Chapter 302A. The
Articles shall be amended and restated to read as herein set forth in full:
ARTICLE I
The name of the Corporation is MINNEAPOLIS MOTEL ENTERPRISES, INC.
ARTICLE II
The registered office of the Corporation is located at 405 Second
Avenue, South Minneapolis, Minnesota, 55401. The name of its registered agent at
that address is CT Corporation System.
ARTICLE III
(a) The purpose for which the Corporation is organized is limited to:
(i) acquiring, owning, leasing, operating, using and managing that certain real
property commonly known as the Holiday Inn St. Paul, located at 1201 West County
Road East, St. Paul, Minnesota 55112 (the "Property"); (ii) entering into and
performing its obligations under the credit agreement, among Lodgian Financing
Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel Group, LLC, Servico,
Inc. and other affiliated entities, as affiliate guarantors, the initial lenders
and initial issuing bank named therein, the collateral agent, the administrative
agent, Morgan Stanley Senior Funding, Inc., as co-lead arranger, joint-book
manager and syndication agent and Lehman Brothers, as co-lead arranger,
joint-book manager and documentation agent relating to the financing or
refinancing of the Property (the "Loan Agreement") which provides the lender
thereunder with a first priority lien on the Property, any promissory-note
evidencing indebtedness incurred pursuant to the Loan Agreement, any mortgage
securing such indebtedness and encumbering the Property (the "Mortgage") and any
other documents securing such indebtedness and any related collateral documents,
each as amended (or pursuant to a consent obtained in accordance with the terms
thereof) (collectively, the "Loan Documents"); (iii) entering into and
performing its obligations under the Indenture (the "Indenture"), among Lodgian
Financing Corp, as issuer, Lodgian, Inc., the Subsidiary Guarantors defined
therein and Bankers Trust Company, as trustee, relating to the issuance of the
12 1/4% Senior Subordinated Notes due 2009 and the Guarantee in favor of the
holders of the Notes and (iv) transacting any
<PAGE>
and all lawful business that is incident and necessary or appropriate to the
ownership and to the management of the Property for which a corporation may be
incorporated under the laws of the State of Minnesota.
(b) Notwithstanding any other provision of these Amended Articles and
any provision of law that otherwise so empowers the Corporation, until such time
as the Property is released from the lien of the Mortgage, the Corporation shall
not, without the unanimous affirmative vote of the members of its Board of
Directors, (i) amend, alter, change, repeal or adopt any resolution setting
forth a proposed amendment to, any provision of these Articles of Incorporation,
(ii) dissolve or liquidate, in whole or in part, consolidate or merge with or
into any other entity or convey, sell or transfer its properties and assets
substantially as an entirety to any entity, (iii) file a voluntary petition or
otherwise initiate, or consent to, proceedings for the Corporation to be
adjudicated insolvent or seeking an order for relief as a debtor under the
United States Bankruptcy Code, as amended (11 U.S.C. Sections 101 ET SEQ.), or
(iv) file any petition, or consent to any petition, seeking any composition,
reorganization, readjustment, liquidation, dissolution or similar relief under
the present or any future federal bankruptcy laws or any other present or future
applicable federal, state or other statute or law relative to bankruptcy,
insolvency or other relief for debtors; or (v) seek or consent to the
appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, or liquidator (or other similar official) of the Corporation or of
all or any substantial part of the properties and assets of the Corporation, or
(vi) make any general assignment for the benefit of creditors, or (vii) admit in
writing its inability to pay its debts generally as they become due, or (viii)
declare or effect a moratorium on its debt or take any corporate action in
furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all times until
the Property is released from the lien of the Mortgage, include an independent
director (the "Independent Director"). The Independent Director shall be a
person who is not at the time of appointment and who has not at any time during
the prior five years been and who is not while serving as the Independent
Director (i) a director, stockholder, officer or employee of the Corporation or
any affiliates thereof, other than with respect to such person's service as an
Independent Director of the Corporation and such person's service in similar
"Independent Director" positions for affiliates of the Corporation; (ii) a
creditor, customer, supplier, independent contractor, manager or any other
person who derives more than 10% of its gross revenues from its activities wit
the Corporation or any affiliates thereof; (iii) a person controlling any such
stockholder, creditor, customer, supplier, independent contractor, manager or
other person; (iv) the legal or beneficial owner, at any time while serving as
director of the Corporation, of any beneficial interest in the Corporation; or
(v) a member of the immediate family of any such stockholder, officer, employee,
creditor, customer, supplier, director, independent contractor, manager or any
other person of the Corporation. As used herein, the term "affiliate" means any
person controlling, under common control with, or controlled by the person in
question, and the term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a person, whether through ownership of voting securities, by contract or
otherwise. In the event of the death, incapacity, or resignation of an
Independent Director, or the vacancy of the Independent Director's seat on the
Corporation's Board of Directors for any reason, a successor Independent
Director shall be appointed by the remaining directors.
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<PAGE>
(d) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(ix) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall not (i)
commingle its assets with those of, or pledge its assets for the benefit of, any
other person or entity; (ii) assume, guarantee or become obligated, or hold out
its credit as being available to satisfy, the liabilities or obligations of any
other person or entity; (iii) reduce its capital below an amount which is
adequate in light of its contemplated business operations; (iv) acquire
obligations or securities of, or make loans or advances to, any affiliate; (v)
incur or assume any indebtedness other than (A) the indebtedness underlying the
Loan Agreement, (B) the indebtedness underlying the Indenture, and (C)
liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article III and the last sentence of
Article VII of these Amended Articles; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in these Amended Articles. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
ARTICLE IV
The total number of shares of stock which the Corporation shall have
the authority to issue is One Thousand (1,00) shares of common stock, One Dollar
($1.00) par value per share.
ARTICLE V
The Board of Directors is expressly authorized to adopt, alter, amend
or repeal the Bylaws of the Corporation subject to the limitations set forth in
these Amended Articles. Election of directors need not be by written ballot
unless and to the extent provided in the Bylaws of the Corporation.
-3-
<PAGE>
ARTICLE VI
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 308A.325 of the Minnesota Statutes, or
(iv) for any transaction from which the director derived an improper personal
benefit. If the Minnesota Statutes is amended after the date of these Amended
Articles to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of each director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Minnesota Statutes, as so amended.
The right and authority conferred in this Article VI shall not be
exclusive of any other rights that any person may have or hereafter acquire
under any statute, provision of these Amended Articles or the Bylaws of the
Corporation, agreement, vote of the stockholders or disinterested directors or
otherwise.
ARTICLE VII
The Corporation shall indemnify any officer or director, or any former
officer or director of the Corporation, to the fullest extent permitted by law.
The foregoing right of indemnification shall not be exclusive of any other
rights to which any director, officer, employee or agent may be entitled as a
matter of law or which he may be lawfully granted. The Corporation's obligation
to indemnify its officers and directors pursuant to this Article shall be
subordinate in all respects to the obligations of the Corporation arising out of
the Loan Documents and shall not constitute a claim against the Corporation to
the extent that the Corporation is unable to pay any amounts it is obligated to
pay under the Loan Documents.
-4-
<PAGE>
IN WITNESS WHEREOF, the undersigned President of Servico Roseville Inc.
certifies that she is authorized to execute these Amended Articles and further
certifies that she understands that by signing these Amended Articles, she is
subject to the penalties of perjury as set forth in Minnesota Statutes Section
609.48 as if she had signed these Amended Articles under oath.
Dated this ___ day of July, 1999.
MINNEAPOLIS MOTEL ENTERPRISES, INC.
By: /s/ Thomas S. Gryboski
-----------------------------
Name: Thomas S. Gryboski
Title: Assistant Secretary
<PAGE>
EXHIBIT 3.32.2
MINNEAPOLIS MOTEL ENTERPRISES, INC.
*****
BY-LAWS
*****
ARTICLE I
OFFICES
Section 1. The registered office shall be located in Minneapolis,
Minnesota.
Section 2. The corporation may also have offices at such other
places both within and without the State of Minnesota as the board of directors
may from time to time determine or the business of the corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of
directors shall be held in West Palm Beach, State of Florida, at such place as
may be fixed from time to time by the board of directors.
<PAGE>
Section 2. Annual meetings of shareholders, commencing with the year
1987, shall be held on the 1st day of July if not a legal holiday, and if a
legal holiday, then on the next secular day following, at 10 A.M., at which they
shall elect by a plurality vote a board of directors, and transact such other
business as may properly be brought before the meeting.
Section 3. Written or printed notice of the annual meeting stating
the place, day and hour of the meeting shall be given to each shareholder
entitled to vote thereat not less than ten (10) days before the date of the
meeting.
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. Special meetings of shareholders for any purpose other
than the election of directors may be held at such time and place within or
without the State of Minnesota as shall be stated in the notice of the meeting
or in a duly executed waiver of notice thereof.
Section 2. Special meetings of shareholders may be called at any
time, for any purpose or purposes, by the board of directors or by such other
persons as may be authorized by law.
<PAGE>
Section 3. Written or printed notice of a special meeting of
shareholders, stating the time, place and purpose or purposes thereof, shall be
given to each shareholder entitled to vote thereat, at least one (1) day before
the date fixed for the meeting.
Section 4. The business transacted at any special meeting of
shareholders shall be limited to the purposes stated in the notice.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of stock issued
and outstanding and entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by statute or by the articles of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the shareholders, the shareholders present in person or
represented by proxy shall have power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum shall be
present or represented. At such adjourned meeting at which a quorum shall be
present
<PAGE>
or represented any business may be transacted which might have been transacted
at the meeting as originally notified.
Section 2. If a quorum is present, the affirmative vote of a
majority of the shares of stock represented at the meeting shall be the act of
the shareholders unless the vote of a greater number of shares of stock is
required by law or the articles of incorporation.
Section 3. Each outstanding share of stock, having voting power,
shall be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. A shareholder may vote either in person or by proxy executed in
writing by the shareholder or by his duly authorized attorney-in-fact.
Section 4. Any action required to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the shareholders entitled
to vote with respect to the subject matter thereof.
ARTICLE V
DIRECTORS
Section 1. The number of directors shall be three (3). Directors
need not be residents of the State of Minnesota nor shareholders of the
corporation. The
<PAGE>
directors, other than the first board of directors, shall be elected at the
annual meeting of the shareholders, and each director elected shall serve until
the next succeeding annual meeting and until his successor shall have been
elected and qualified. The first board of directors shall hold office until the
first annual meeting of shareholders.
Section 2. Any vacancy occurring in the board of directors may be
filled by the affirmative vote of a majority of the remaining directors though
less than a quorum of the board of directors. A director elected to fill a
vacancy shall be elected for the unexpired portion of the term of his
predecessor in office.
My directorship to be filled by reason of an increase in the number
of directors shall be filled by election at an annual meeting or at a special
meeting of shareholders called for that purpose. A director elected to fill a
newly created directorship shall serve until the next succeeding annual meeting
of shareholders and until his successor shall have been elected and qualified.
Section 3. The business affairs of the corporation shall be managed
by its board of directors which may exercise all such powers of the corporation
and do all such lawful acts and things as are not by statute or by the
<PAGE>
articles of incorporation or by these by-laws directed or required to be
exercised or done by the shareholders.
Section 4. The directors may keep the books of the corporation,
except such as are required by law to be kept within the state, outside of the
State of Minnesota, at such place or places as they may from time to time
determine.
Section 5. The board of directors, by the affirmative vote of a
majority of the directors then in office, and irrespective of any personal
interest of any of its members, shall have authority to establish reasonable
compensation of all directors for service to the corporation as directors,
officers or otherwise.
ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular or special.
may be held either within or without the State of Minnesota.
Section 2. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the vote of
the shareholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to
<PAGE>
constitute the meeting, provided a quorum shall be present, or it may convene at
such place and time as shall be fixed by the consent in writing of all the
directors.
Section 3. Regular meetings of the board of directors may be held
upon such notice, or without notice, and at such time and at such place as shall
from time to time be determined by the board.
Section 4. Special meetings of the board of directors may be called
by the president on ten (10) days' notice to each director, either personally or
by mail, or by telegram; special meetings shall be called by the president or
secretary in like manner and on like notice on the written request of two
directors.
Section 5. Attendance of a director at any meeting shall constitute
a waiver of notice of such meeting, except where a director attends for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the board
of directors need be specified in the notice or waiver of notice of such
meeting.
Section 6. Two (2) of the directors shall constitute a quorum for
the transaction of business unless a greater number is required by law or by the
articles of
<PAGE>
incorporation. The act of a majority of the directors present at any meeting at
which a quorum is present shall be the act of the board of directors, unless the
act of a greater number is required by statute or by the articles of
incorporation. If a quorum shall not be present at any meeting of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 7. Any action required to permitted to be taken at a meeting
of the directors may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the directors entitled to
vote with respect to the subject matter thereof.
ARTICLE VII
EXECUTIVE COMMITTEE
Section 1. The board of directors, by resolution adopted by a
majority of the number of directors fixed by the by-laws or otherwise, may
designate two or more directors to constitute an executive committee, which
committee, to the extent provided in such resolution, shall have and exercise
all of the authority of the board of directors in the management of the
corporation, except as otherwise
<PAGE>
required by law. Vacancies in the membership of the committee shall be filled by
the board of directors at a regular or special meeting of the board of
directors. The executive committee shall keep regular minutes of its proceedings
and report the same to the board when required.
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
articles of incorporation or of these by-laws, notice is required to be given to
any director or shareholder, it shall not be construed to mean personal notice,
but such notice may be given in writing, by mail, addresses to such director or
shareholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telegram.
Section 2. Whenever any notice whatever is required to be given
under the provisions of the statutes or under the provisions of the articles of
incorporation or these by-laws, a waiver thereof in writing signed by the person
or persons entitled to such notice, whether before or
<PAGE>
after the time stated therein, shall be deemed equivalent to the giving of such
notice.
ARTICLE TX
OFFICERS
Section 1. The officers of the corporation shall be chosen by the
board of directors and shall be a president, a vice-president, a secretary and a
treasurer. The board of directors may also choose additional vice-presidents,
and one or more assistant secretaries and assistant treasurers.
Section 2. The board of directors at its first meeting after each
annual meeting of shareholders shall choose a president, one or more
vice-presidents, a secretary and a treasurer, none of whom need be a member of
the board.
Section 3. The board of directors may appoint such other officers
and agents as it shall deem necessary who shall hold their offices for such
terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board of directors.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
<PAGE>
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by the
board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the shareholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
<PAGE>
THE VICE-PRESIDENTS
Section 8. The vice-president, or if there shall be more than one,
the vice-presidents in the order determined by the board of directors, shall, in
the absence or disability of the president, perform the duties and exercise the
powers of the president and shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the shareholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the shareholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he, or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature
<PAGE>
or by the signature of such assistant secretary. The board of directors may give
general authority to any other officer to affix the seal of the corporation and
to attest the affixing by his signature.
Section 10. The assistant secretary, or if there be more than one,
the assistant secretaries in the order determined by the board of directors,
shall, in the absence or disability of the secretary. perform the duties and
exercise the powers of the secretary and shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its
<PAGE>
regular meetings, or when the board of directors so requires, an account of all
his transactions as treasurer and of the financial condition of the corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.
Section 14. The assistant treasurer, or, if there shall be more than
one, the assistant treasurers in the order determined by the board of directors,
shall, in the absence or disability of the treasurer, perform the duties and
exercise the powers of the treasurer and shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
ARTICLE X
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be
<PAGE>
represented by certificates signed by the president or a vice-president and the
secretary or an assistant secretary of the corporation, and may be sealed with
the seal of the corporation or a facsimile thereof.
When the corporation is authorized to issue shares of more than one
class, every certificate shall set forth upon the face or back of such
certificate a statement of the designations, preferences, limitations and
relative rights of the shares of each class authorized to be issued, as required
by the laws of the State of Minnesota.
Section 2. The signatures of the officers of the corporation upon a
certificate may be facsimiles if the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the corporation itself or an
employee of the corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of its
issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a
<PAGE>
new certificate to be issued in place of any certificate theretofore issued by
the corporation alleged to have been lost or destroyed. When authorizing such
issue of a new certificate, the board of directors, in its discretion and as a
condition precedent to the issuance thereof, may prescribe such terms and
conditions as it deems expedient, and may require such indemnities as it deems
adequate, to protect the corporation from any claim that may be made against it
with respect to any such certificate alleged to have been lost or destroyed.
TRANSFERS OF SHARES
Section 4. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate representing shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, a new certificate shall be issued to the person entitled thereto, and
the old certificate cancelled and the transaction recorded upon the books of the
corporation.
CLOSING OF TRANSFER BOOKS
Section 5. For the purpose of determining shareholders entitled to
notice of or to vote at any meeting of shareholders, or shareholders entitled to
receive payment of
<PAGE>
any dividend, or in order to make a determination of shareholders for any other
proper purpose, the board of directors may provide that the stock transfer books
shall be closed for a stated period but not to exceed, in any case, forty days.
If the stock transfer books shall be closed for the purpose of determining
shareholders entitled to notice of or to vote at a meeting of shareholders, such
books shall be closed for at least ten days, immediately preceding such meeting.
In lieu of closing the stock transfer books, the board of directors may fix in
advance a date as the record date for any such determination of shareholders,
such date in any case to be not more than forty days and, in case of a meeting
of shareholders, not less than ten days prior to the date on which the
particular action requiring such determination of shareholders is to be taken.
If the stock transfer books are not closed and no record date is fixed, the
determination of shareholders entitled to notice of or to vote at a meeting, or
to receive payment of a dividend, the date on which notice of the meeting is
mailed or the date on which the resolution of the board of directors declaring
such dividend is adopted, as the case may be, shall be the record date for such
determination of shareholders. When a determination of shareholders entitled to
vote at any meeting of shareholders has been made as provided in this
<PAGE>
section, such determination shall apply to any adjournment thereof.
REGISTERED SHAREHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Minnesota.
ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the articles of
incorporation relating thereto, if any, dividends may be declared by the board
of directors at any regular or special meeting, pursuant to law. Dividends may
be paid in cash, in property or in shares of the capital
<PAGE>
stock, subject to any provisions of the articles of incorporation.
Section 2. Before payment of any dividend, there may be set aside
out of any funds of the corporation available for dividends such sum or sums as
the directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
<PAGE>
SEAL
Section 5. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its organization and the words "Corporate Seal,
Minnesota". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
ARTICLE XII
AMENDMENTS
Section 1. These by-laws may be altered, amended, or repealed or new
by-laws may be adopted by the affirmative vote of a majority of the board of
directors at any regular or special meeting of the board.
The board of directors shall not make or alter any by-law fixing
their number, qualifications, classifications, term of office or compensation.
The shareholders shall have the right to change or repeal any
by-laws adopted by the directors.
<PAGE>
Exhibit 3.33.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION OF
SERVICO ROSEVILLE, INC.
Pursuant to Section 302A.139 of the Minnesota Business Corporation Act
(the "Act"), SERVICO ROSEVILLE, INC., an Iowa corporation (the "Corporation"),
hereby certifies that these Amended and Restated Articles of Incorporation (the
"Amended Articles"), which contain amendments requiring shareholder approval,
were duly adopted by the Board of Directors of the Corporation and by the sole
shareholder of the Corporation by written consent without a meeting, pursuant to
Sections 302A.441 and 302A.239 of the Act, as of July ___, 1999. The number of
votes cast was sufficient for approval. The Amended Articles were adopted
pursuant to Minnesota Statutes Chapter 302A. The Articles shall be amended and
restated to read as herein set forth in full:
ARTICLE I
The name of the Corporation is SERVICO ROSEVILLE, INC.
ARTICLE II
The registered office of the Corporation is located at 405 Second
Avenue, South Minneapolis, Minnesota, 55401. The name of its registered agent at
that address is CT Corporation System.
ARTICLE III
(a) The purpose for which the Corporation is organized is limited to: (i)
acquiring, owning, leasing, operating, using and managing that certain real
property commonly known as the Comfort Inn Roseville, located at 2715 Long Lake
Road, Roseville, Minnesota 55113 (the "Property"); (ii) entering into and
performing its obligations under the credit agreement, among Lodgian Financing
Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel Group, LLC, Servico,
Inc. and other affiliated entities, as affiliate guarantors, the initial lenders
and initial issuing bank named therein, the collateral agent, the administrative
agent, Morgan Stanley Senior Funding, Inc., as co-lead arranger, joint-book
manager and syndication agent and Lehman Brothers, as co-lead arranger,
joint-book manager and documentation agent relating to the financing or
refinancing of the Property (the "Loan Agreement") which provides the lender
thereunder with a first priority lien on the Property, any promissory-note
evidencing indebtedness incurred pursuant to the Loan Agreement, any mortgage
securing such indebtedness and encumbering the Property (the "Mortgage") and any
other documents securing such indebtedness and any related collateral documents,
each as amended (or pursuant to a consent obtained in accordance with the terms
thereof) (collectively, the "Loan Documents"); (iii) entering into and
performing its obligations under the Indenture (the "Indenture"), among Lodgian
Financing Corp, as issuer, Lodgian, Inc., the Subsidiary Guarantors defined
therein and Bankers Trust Company, as trustee, relating to the issuance of the
12 1/4% Senior Subordinated Notes due 2009 and the Guarantee in favor of the
holders of the Notes and (iv) transacting any
<PAGE>
and all lawful business that is incident and necessary or appropriate to the
ownership and to the management of the Property for which a corporation may be
incorporated under the laws of the State of Minnesota.
(b) Notwithstanding any other provision of these Amended Articles and
any provision of law that otherwise so empowers the Corporation, until such time
as the Property is released from the lien of the Mortgage, the Corporation shall
not, without the unanimous affirmative vote of the members of its Board of
Directors, (i) amend, alter, change, repeal or adopt any resolution setting
forth a proposed amendment to, any provision of these Articles of Incorporation,
(ii) dissolve or liquidate, in whole or in part, consolidate or merge with or
into any other entity or convey, sell or transfer its properties and assets
substantially as an entirety to any entity, (iii) file a voluntary petition or
otherwise initiate, or consent to, proceedings for the Corporation to be
adjudicated insolvent or seeking an order for relief as a debtor under the
United States Bankruptcy Code, as amended (11 U.S.C. Section 101 ET SEQ.), or
(iv) file any petition, or consent to any petition, seeking any composition,
reorganization, readjustment, liquidation, dissolution or similar relief under
the present or any future federal bankruptcy laws or any other present or future
applicable federal, state or other statute or law relative to bankruptcy,
insolvency or other relief for debtors; or (v) seek or consent to the
appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, or liquidator (or other similar official) of the Corporation or of
all or any substantial part of the properties and assets of the Corporation, or
(vi) make any general assignment for the benefit of creditors, or (vii) admit in
writing its inability to pay its debts generally as they become due, or (viii)
declare or effect a moratorium on its debt or take any corporate action in
furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all times until
the Property is released from the lien of the Mortgage, include an independent
director (the "Independent Director"). The Independent Director shall be a
person who is not at the time of appointment and who has not at any time during
the prior five years been and who is not while serving as the Independent
Director (i) a director, stockholder, officer or employee of the Corporation or
any affiliates thereof, other than with respect to such person's service as an
Independent Director of the Corporation and such person's service in similar
"Independent Director" positions for affiliates of the Corporation; (ii) a
creditor, customer, supplier, independent contractor, manager or any other
person who derives more than 10% of its gross revenues from its activities wit
the Corporation or any affiliates thereof; (iii) a person controlling any such
stockholder, creditor, customer, supplier, independent contractor, manager or
other person; (iv) the legal or beneficial owner, at any time while serving as
director of the Corporation, of any beneficial interest in the Corporation; or
(v) a member of the immediate family of any such stockholder, officer, employee,
creditor, customer, supplier, director, independent contractor, manager or any
other person of the Corporation. As used herein, the term "affiliate" means any
person controlling, under common control with, or controlled by the person in
question, and the term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a person, whether through ownership of voting securities, by contract or
otherwise. In the event of the death, incapacity, or resignation of an
Independent Director, or the vacancy of the Independent Director's seat on the
Corporation's Board of Directors for any reason, a successor Independent
Director shall be appointed by the remaining directors.
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<PAGE>
(d) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(ix) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall not (i)
commingle its assets with those of, or pledge its assets for the benefit of, any
other person or entity; (ii) assume, guarantee or become obligated, or hold out
its credit as being available to satisfy, the liabilities or obligations of any
other person or entity; (iii) reduce its capital below an amount which is
adequate in light of its contemplated business operations; (iv) acquire
obligations or securities of, or make loans or advances to, any affiliate; (v)
incur or assume any indebtedness other than (A) the indebtedness underlying the
Loan Agreement, (B) the indebtedness underlying the Indenture, and (C)
liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article III and the last sentence of
Article VII of these Amended Articles; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in these Amended Articles. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
ARTICLE IV
The total number of shares of stock which the Corporation shall have
the authority to issue is One Thousand (1,00) shares of common stock, One Dollar
($1.00) par value per share.
ARTICLE V
The Board of Directors is expressly authorized to adopt, alter, amend
or repeal the Bylaws of the Corporation subject to the limitations set forth in
these Amended Articles. Election of directors need not be by written ballot
unless and to the extent provided in the Bylaws of the Corporation.
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<PAGE>
ARTICLE VI
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 308A.325 of the Minnesota Statutes, or
(iv) for any transaction from which the director derived an improper personal
benefit. If the Minnesota Statutes is amended after the date of these Amended
Articles to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of each director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Minnesota Statutes, as so amended.
The right and authority conferred in this Article VI shall not be
exclusive of any other rights that any person may have or hereafter acquire
under any statute, provision of these Amended Articles or the Bylaws of the
Corporation, agreement, vote of the stockholders or disinterested directors or
otherwise.
ARTICLE VII
The Corporation shall indemnify any officer or director, or any former
officer or director of the Corporation, to the fullest extent permitted by law.
The foregoing right of indemnification shall not be exclusive of any other
rights to which any director, officer, employee or agent may be entitled as a
matter of law or which he may be lawfully granted. The Corporation's obligation
to indemnify its officers and directors pursuant to this Article shall be
subordinate in all respects to the obligations of the Corporation arising out of
the Loan Documents and shall not constitute a claim against the Corporation to
the extent that the Corporation is unable to pay any amounts it is obligated to
pay under the Loan Documents.
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<PAGE>
IN WITNESS WHEREOF, the undersigned President of Servico
Roseville Inc. certifies that she is authorized to execute these Amended
Articles and further certifies that she understands that by signing these
Amended Articles, she is subject to the penalties of perjury as set forth in
Minnesota Statutes Section 609.48 as if she had signed these Amended Articles
under oath.
Dated this ___ day of July, 1999.
SERVICO ROSEVILLE, INC.
By: /s/ Thomas S. Gryboski
--------------------------
Name: Thomas S. Gryboski
Title: Assistant Secretary
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<PAGE>
EXHIBIT 3.33.2
SERVICO ROSEVILLE NC
BY-LAWS
ARTICLE I
OFFICES
Section 1. The registered office shall be located in South Minneapolis,
Minnesota.
Section 2. The corporation may also have offices at such other places both
within and without the State of Minnesota as the Board of directors may from
time to time determine or the business of the corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of directors
shall be held within or outside the State of Minnesota as may be fixed from time
to time by the Board of directors and stated in the notice of the meeting or in
a duly executed waiver of notice thereof.
Section 2. Annual meetings of shareholders commencing with the year 1998
shall be held on the second Monday in January unless that day is a legal holiday
and a legal holiday then on the next secular day following, at 10:00 a.m. at
which they shall elect by a plurality vote a Board of directors and transact
such other business as may properly be brought before the meeting.
Section 3. Written or printed notice of the annual meeting stating the
place, day and hour of the meeting shall be delivered not less than ten nor more
than fifty days before the date of the meeting, either personally or by mail by
or at the direction of the president, the secretary, or the officer or persons
calling the meeting, to each shareholder of record entitled to vote at such
meeting.
<PAGE>
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. [Illegible].
Section 2. Special meetings of the shareholders for any purpose or
purposes unless otherwise prescribed by statute or by the articles of
incorporation may be called by the president of the Board of directors or the
holders of not less than one-tenth of all the shares entitled to vote at the
meeting.
Section 3. Written or printed notice of a special meeting state the place,
day and hour of the meeting and purpose for which the meeting is called shall be
delivered not less than ten nor more than fifty days before the date of the
meeting either personally or by mail, by or at the direction of the president or
the secretary or the officer or persons calling the meeting to each shareholder
of record entitled to vote at such meeting.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of stock issued and
outstanding and entitled to vote represented in person or proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by statute or by the articles of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the shareholders the shareholders present in person or
represented by proxy shall have power to adjourn the meeting from time to time
without notice other than announcement at the meeting until a quorum shall be
present or represented. At such adjourned meeting at which a quorum shall be
present or represented any business may be transacted which might have been
transacted at the meeting as originally notified.
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<PAGE>
Section 2. [Illegible].
Section 3. [Illegible].
[Illegible].
Section 4. [Illegible].
If the articles of incorporation provide that a consent may be signed by
fewer than all of the shareholders having voting power on any question, then the
consent need be signed only by the shareholders holding that proportion of the
total voting power on the question which is required by the articles of
incorporation or by law whichever requirement is higher. The consent, together
with a certificate by the secretary of the corporation to the effect that the
subscribers to the consent constitute all or the required proportion of the
shareholders entitled to vote on the particular question shall be filed with the
records of proceedings of the shareholder. If the consent is signed by fewer
than all of the shareholders having voting power on the question prompt notice
shall be given to all to all of the shareholders of the action taken pursuant to
the consent.
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<PAGE>
ARTICLE V
DIRECTORS
Section 1. [Illegible].
Section 2. Vacancies and newly created directorships resulting from any
increase in the number of directors may be filled by election at an annual
meeting or at a special meeting of shareholders called for that purpose. A
director elected to fill a vacancy or newly created directorship shall hold
office until the next succeeding annual meeting of shareholders and until his
successor shall have been elected and qualified.
In addition vacancies and newly created directorships resulting from any
increase in the number of directors may be filled by a majority of the directors
then in office though less than a quorum and the directors so chosen shall hold
office until the next annual election and until their successors are duly
elected and shall qualify.
Section 3. The business affairs of the corporation shall be managed by its
board of directors which may exercise all such powers of the corporation and do
all such lawful acts and things as are not by statute or by the articles of
incorporation or by these by-laws directed or required to be exercised or done
by the shareholders.
Section 4. The directors may keep the books of the corporation, except
such as are required by law to be kept within the state, outside of the State of
Minnesota at such place or places as they may from time to time determine.
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<PAGE>
Section 5. [Illegible].
ARTICLE VI
MEETINGS OF THE Board of directors
Section 1. [Illegible].
Section 2. The first meeting of each newly elected board of directors
shall be held at such time and place as shall be fixed by the vote of the
shareholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting provided a quorum shall be present or it may convene at such place and
time and shall be fixed by the consent in writing of all the directors.
Section 3. Regular meetings of the board of directors may be held upon
such notice or without notice and at such time and at such place as shall from
time to time be determined by the board.
Section 4. Special meetings of the board of directors may be called by the
president on two days notice to each director either personally or by mail or by
telegram special meetings shall be called by the president or secretary in like
manner and on like notice on the written request of two directors.
Section 5. Attendance of a director at any meeting shall constitute a
waive of notice of such meeting, except where a director attends for the express
purpose of objecting to the transaction of any business because the meeting is
not lawfully called or convened. Neither the business to be transacted at, nor
the purpose of any regular or special meeting of the board of directors need be
specified in the notice or waiver of notice of such meeting.
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<PAGE>
Section 6. [Illegible].
Section 7. [Illegible].
Section 8. Unless otherwise restricted by the articles of incorporation or
these by-laws, members of the board of directors may participate in a meeting of
the board of directors by means of conference telephone or similar
communications equipment provided all persons participating in the meeting can
hear and communicate with each other and such participation in a meeting shall
constitute presence in person at the meeting, except where a person participates
in the meeting for the express purpose of objecting to the transaction of any
business on the grounds that the meeting is not lawfully called or convened.
ARTICLE VII
EXECUTIVE COMMITTEE
Section 1. The board of directors by resolution adopted by a majority of
the number of directors fixed by the by-laws or otherwise, may designate two or
more directors to constitute an executive committee, which committee, to the
extent provided in such resolution, shall have and exercise all of the authority
of the board of directors in the management of the corporation, except as
otherwise required by law. Vacancies in the membership of the committee shall be
filled by the board of directors at a regular
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<PAGE>
or special meeting of the board of directors. The executive committee shall keep
regular minutes of its proceedings and report the same to the board when
required.
ARTICLE VIII
NOTICES
Section 1. [Illegible].
Section 2. Whenever any notice whatever is required to be given under the
provisions of the statutes or under the provisions of the articles of
incorporation or these by-laws, a waiver thereof in writing signed by the person
or persons entitled to such notice whether before or after the time stated
therein shall be deemed equivalent to the giving of such notice.
ARTICLE IX
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board of
directors and shall be a president, a vice president, a secretary and a
treasurer. The board of directors may also choose additional vice presidents and
one or more assistant secretaries and assistant treasurers. Any two or more
offices may be held by the same person except the offices of President and
Secretary.
Section 2. The board of directors at its first meeting after each annual
meeting of shareholders shall choose a president, one or more vice presidents, a
secretary and a treasurer, none of whom need be a member of the board
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<PAGE>
Section 3. The board of directors may appoint such other officers and
agents as they deem necessary, who shall hold the offices for such terms and
shall exercise such powers and perform such duties as shall be determined from
time to time by the board of directors.
Section 4. The salaries of all officers and directors of the corporation
shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the board
of directors may be removed at any time by the affirmative vote of a majority of
the board of directors. Any vacancy occurring in any office of the corporation
shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the shareholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts requiring
a seal under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the board of directors to some
other officer or agent of the corporation.
THE VICE PRESIDENTS
Section 8. The vice president, or if there shall be more than one, the
vice presidents, in the order determined by the board of directors, shall in the
absence or disability of the president, perform the duties and exercise the
powers of the president and shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
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<PAGE>
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the shareholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform the duties of the standing committees
when required. He shall give or cause to be given notice of all meetings of the
shareholders and special meetings of the board of directors and shall perform
such other duties as may be prescribed by the board of directors or president
under whose supervision he shall be. He shall have custody of the corporate seal
of the corporation and he or an assistant secretary shall have the authority to
affix the same to any instrument requiring it and when so affixed it may be
attested by his signature or by the signature of each assistant secretary. The
board of directors may give general authority to any other officer to affix the
seal of the corporation and to attest the affixing by his signature.
Section 10. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors, shall,
in the absence or disability of the secretary, perform the duties and exercise
the powers of the secretary and shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such disbursements
and shall render to the president and the board of directors at its regular
meetings, or when the board of directors so requires, an account of all his
transactions as treasurer and of the financial condition of the corporation.
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<PAGE>
Section 13. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.
Section 14. The assistant treasurer, or if there be more than one, the
assistant treasurers in the order determined by the board of directors, shall,
in the absence or disability of the treasurer, perform the duties and exercise
the powers of the treasurer and shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
ARTICLE X
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by
certificates signed by the president or a vice president and the secretary or an
assistant secretary of the corporation, and may be sealed with the seal of the
corporation or a facsimile thereof. When the corporation is authorized to issue
shares of more than one class there shall be set forth upon the face or back of
the certificate, or the certificate shall have a statement that the corporation
will furnish to any shareholder upon request and without charge a full and
summary statement of designations, preference, limitations and relative rights
of the shares of each class authorized to be issued and if the corporation is
authorized to issue any preferred or special class in series, the variations in
the relative rights and preferences between the shares of each such series so
far as the same have been fixed and determined and the authority of the board of
directors to fix and determine the relative rights and preferences of subsequent
series.
Section 2. The signatures of the officers of the corporation upon a
certificate may be facsimiles if the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the corporation itself or an
employee of the corporation. In
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<PAGE>
case any officer who has signed or whose facsimile signature has been placed
upon such certificate shall have ceased to be such officer before such
certificate is issued may be issued by the corporation with the same effect as
if he were such officer at the date of its issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate to be
issued in place of any certificate theretofore issued by the corporation alleged
to have been lost or destroyed. When authorizing such issue of a new certificate
the board of directors in its discretion and as such a condition precedent to
the issuance thereof, may prescribe such terms and conditions as it deems
expedient, and may require such indemnities as it deems adequate to protect the
corporation from any claim that may be made against it with respect to any such
certificate alleged to have been lost or destroyed.
TRANSFERS OF SHARES
Section 4. Upon surrender to the corporation or the transfer agent or the
corporation of a certificate representing shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, a new
certificate shall be issued to the person entitled thereto, and the old
certificate cancelled and the transaction recorded upon the books of the
corporation.
FIXING OF RECORD DATE
Section 5. For the purpose of determining shareholders entitled to notice
of and to vote at a meeting, or to receive a dividend, or to receive or exercise
subscription or other rights, or to participate in a reclassification of stock,
or in order to make a determination of shareholders for such purpose, such date
to be not more than seventy days and, if fixed for the purpose of determining
shareholders entitled to notice of and to vote at a meeting, not less than ten
days prior to the date on which the action requiring the determination of
shareholders is to be taken.
If no record date is fixed, the record date for determining shareholders
entitled to notice of or to vote at a meeting of shareholders shall be at four
o'clock in the afternoon
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<PAGE>
on the day before the day on which notice is given, or if notice is waived at
the commencement of the meeting. If no record date is fixed the record date for
determining shareholders entitled to express consent to corporate action in
writing without meeting shall be the time of day on which the first written
consent is served on the corporation as provided by law.
A determination of shareholders of record entitled to notice of or to vote
at a meeting of shareholders shall apply to any adjournment of the meeting
provided however that the board of directors may fix a new record date for the
adjourned meeting and further provide that the adjournment or adjournments do
not exceed thirty days in the aggregate.
REGISTERED SHAREHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of the shares, and
shall not be bound to recognize any equitable or other claim to or interest in
such share or shares on the part of any other person whether or not it shall
have expressed or other notice thereof, except as otherwise provided by the laws
of Minnesota.
LIST OF SHAREHOLDERS
Section 7. The officer or agent having charge of the transfer books for
shares shall make a complete list of the shareholders entitled to vote at such
meeting, arranged in alphabetical order, with the address of each and the number
of shares held by each, which list shall be kept on file at the principal office
of the corporation and shall be subject to inspection by any shareholder at any
time during usual business hours. Such list shall also be produced and kept open
at the time and place of the meeting and shall be subject to the inspection of
any shareholder during the whole time of the meeting.
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VOTING RECORD
Section 8. The officer or agent having charge of the stock transfer books
for shares shall make before each meeting of shareholders a complete record of
the shareholders entitled to vote at shareholders meeting or any adjournment
thereof, arranged in alphabetical order with the address of each and the number
of shares held by each. Such record shall be produced and kept open at the time
and place of the meeting and shall be subject to the inspection of any
shareholder during the whole time of the meeting for the purposes thereof.
ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the articles of incorporation
relating thereto, if any, dividends may be declared by the board of directors at
any regular or special meeting pursuant to law. Dividends may be paid in cash,
in property or in shares of the capital stock, subject to any provisions of the
articles of incorporation.
Section 2. Before payment of any dividend there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies or for equalizing dividends, or for repairing
or maintaining any property of the corporation, or for such other purpose as the
directors shall think conducive to the interest of the corporation, and the
directors may modify or abolish any such reserve in the manner in which it was
created.
CHECKS
Section 3. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person as the board of
directors may from time to time designate.
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FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by resolution
of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words "Corporate Seal,
Minnesota." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
ARTICLE XII
AMENDMENTS
Section 1. These by-laws may be altered or repealed or new by-laws may be
adopted at any regular or special meeting of shareholders at which a quorum is
present or represented, by the affirmative vote of a majority of the stock
entitled to vote, provided notice of the proposed alteration, amendment or
repeal be contained in the notice of such meeting.
Dated 1997
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<PAGE>
EXHIBIT 3.34.2
LODGIAN MOUNT LAUREL, INC.
*****
BYLAWS
*****
ARTICLE I
OFFICES
Section 1. Principal Place of Business. The principal office shall be at
Two Live Oak Center, Suite 700, 3445 Peachtree Road, N.E., Atlanta, GA 30326.
Section 2. Other Places of Business. The corporation may also have offices
at such other places both within and without the State of New Jersey as the
board of directors may, from time to time determine or the business of the
corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place. Meetings of stockholders shall be held at the corporate
offices in Atlanta, Georgia, or at any other place within the United States as
shall be designated from time to time by the board of directors and stated in
the notice of meeting or in a duly executed waiver of notice thereof.
Section 2. Annual Meeting. Annual meetings of stockholders, commencing
with the year 2000, shall be held on or before the last day of the third month
if not a legal holiday, and if a legal holiday then on the next secular day
following, at such time as shall be fixed by the Board of Directors, or at such
other date and tine as shall be fixed by the Board of Directors and stated in
the notice of the meeting, at which they shall elect a board of directors and
may transact any business within the powers of the corporation. Any business of
the corporation may be transacted at the annual meeting without being specially
designated in the notice, except such business as is specifically required by
statute to be stated in the notice.
Section 3. Special Meeting. At any time in the interval between annual
meetings, special meetings of the stockholders may be called by the board of
directors, or by the president, a vice-president, the secretary, or an assistant
secretary. In addition, special meetings of stockholders shall be called by the
secretary upon the written request of the holders of shares entitled to not less
than twenty-five percent (25%) of all the votes entitled to be cast at such
meeting. Such written request shall state the purpose or purposes of such
meeting and the matters proposed to be acted on thereat. The secretary shall
inform such stockholders of the reasonably estimated cost of preparing and
mailing such notice of the meeting, and upon payment to the corporation of such
costs the secretary shall give notice stating the purpose or purposes of the
meeting to all stockholders entitled to notice at such meeting. No special
meeting need be called upon the request of the holders of shares entitled to
cast less than a majority of all votes
<PAGE>
entitled to be cast at such meeting to consider any matter which is
substantially the same as a matter voted upon at any special meeting of the
stockholders held during the preceding twelve (12) months.
Business transacted at any special meeting of stockholders shall be
limited to the purposes stated in the notice.
Section 4. Notice of Shareholder Meetings. Not less than ten (10) nor more
than sixty (60) days before the date of every stockholders' meeting, the
secretary shall give to each stockholder entitled to vote at such meeting, and
to each stockholder not entitled to vote who is entitled by statute to notice,
written or printed notice stating the time and place of the meeting and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called, either by mail or by presenting it to him personally or by leaving it at
his residence or usual place of business. If mailed, such notice shall be deemed
to be given when deposited in the United States mail addressed to the
stockholder at his post office address as it appears on the records of the
corporation, with postage thereon prepaid.
Section 5. Quorum of Shareholders. At any meeting of stockholders, the
presence in person or by proxy of stockholders entitled to cast fifty-one
percent (51%) of the votes thereat shall constitute a quorum; but this section
shall not affect any requirement under the New Jersey Business Corporation Act
(the "Act") or under the Certificate of Incorporation (the "Certificate") for
the vote necessary for the adoption of any measure. If, however, such quorum
shall not be present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented any business may be transacted which might have been transacted at
the meeting as originally notified.
Section 6. Action by Majority. A majority of the votes cast at a meeting
of stockholders, duly called and at which a quorum is present, shall be
sufficient to take or authorize action upon any matter which may properly come
before the meeting, unless more than a majority of the votes cast is required by
the Act or by the Certificate.
Section 7. Shareholder Voting. Unless the Certificate provides otherwise,
each outstanding share of stock having voting power shall be entitled to one (1)
vote on each matter submitted to a vote at a meeting of stockholders; but no
share shall be entitled to vote if any installment payable thereon is overdue
and unpaid. A stockholder may vote the shares owned of record by him either in
person or by proxy executed in writing by the stockholder or by his duly
authorized attorney-in-fact. No proxy shall be valid after eleven (11) months
from its date, unless otherwise provided in the proxy. At all meetings of
stockholders, unless the voting is conducted by inspectors, all questions
relating to the qualification of voters and the validity of proxies and the
acceptance or rejection of votes shall be decided by the chairman of the
meeting.
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Section 8. Action Without a Meeting. Any action required or permitted to
be taken at any meeting of stockholders may be taken without a meeting in
accordance with N.J.S.A. 14A:5-6, if a consent in writing, setting forth such
action, is signed by all the stockholders entitled to vote on the subject matter
thereof and any other stockholders entitled to notice of a meeting of
stockholders but not to vote thereat have waived in writing any rights which
they may have to dissent from such action, and such consent and waiver are filed
with the records of stockholders meetings.
ARTICLE III
DIRECTORS
Section 1. Number and Term of Office. The number of directors of the
corporation shall be three (3). By vote of a majority of the entire board of
directors, the number of directors fixed by the Certificate of Incorporation
(the "Certificate") or by these bylaws may be increased or decreased from time
to time but shall never be less than one (1). The tenure of office of a director
shall not be affected by any decrease in the number of directors so made by the
board. Until the final annual meeting of stockholders or until successors are
duly elected and qualify, the board shall consist of the persons named as such
in the Certificate. At the first annual meeting of stockholders and at each
annual meeting thereafter, the stockholders shall elect directors to hold office
until the next annual meeting or until their successors are elected and qualify.
Directors need not be stockholders in the corporation. The Corporation shall
comply with the provisions of Article Second of the Certificate as pertains to
the inclusion of an Independent Director on the Board of Directors.
Section 2. Vacancies in Board of Directors. Any vacancy occurring in the
board of directors for any cause other than by reason of an increase in the
number of directors may be filled by a majority of the remaining members of the
board of directors, although such majority is less than a quorum or is by a sole
remaining director. Any vacancy occurring by reason of an increase in the number
of directors may be filled by action of a majority of the entire board of
directors. If the stockholders of any class or series are entitled separately to
elect one or more directors, a majority of the remaining directors elected by
that class or series or the sole remaining director elected by that class or
series may fill any vacancy among the number of directors elected by that class
or series. A director elected by the board of directors to fill a vacancy shall
be elected to hold office until the next annual meeting of stockholders or until
his successor is elected and qualified.
Section 3. Powers of Board of Directors. The business and affairs of the
corporation shall be managed by its board of directors, which may exercise all
of the powers of the corporation except such as are by law or by the Certificate
or by these bylaws conferred upon or reserved to the stockholders.
Section 4. Removal of Directors. At any meeting of stockholders, duly
called and at which a quorum is present, the stockholders may, by the
affirmative vote of
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the holders of a majority of the votes entitled to be cast thereon, remove any
director or directors from office and may elect a successor or successors to
fill any resulting vacancies for the unexpired terms of removed directors.
Section 5. Meetings of the Board of Directors. Meetings of the board of
directors, regular or special, may be held at any place in or out of the State
of New Jersey as the board may from time to time determine.
Section 6. Regular Meetings. Regular meetings of the board of directors
may be held without notice at such time and place as shall from time to time be
determined by the board of directors.
Section 7. Special Meetings. Special meetings of the board of directors
may be called at any time by the board of directors or the executive committee,
if one be constituted, by vote at a meeting, or by the president or by a
majority of the directors or a majority of the members of the executive
committee in writing with or without a meeting. Special meetings may be held at
such place or places within or without New Jersey as may be designated from time
to time by the board of directors; in the absence of such designation such
meetings shall be held at such places as may be designated in the call.
Section 8. Notice of Board Meetings. Notice of the place and time of every
special meeting of the board or directors shall be served on each director or
sent to him by telegraph or by mail, or by leaving the same at his residence or
usual place of business at least ten (10) days before the date of the meeting.
If mailed, such notice shall be deemed to be given when deposited in the United
States mail addressed to the director at his post-office address as it appears
on the records of the corporation, with postage thereon prepaid. The actual
attendance at or participation in a meeting of directors, by any director,
without protesting prior to the conclusion of the meeting the lack of notice of
such meeting, shall constitute a waiver by such director.
Section 9. Quorum and Action. At all meetings of the board two-thirds of
the entire board of directors shall constitute a quorum for the transaction of
business and the action of a majority of the directors present at any meeting at
which a quorum is present shall be the action of the board of directors unless
the occurrence of a greater proportion is required for such action by Act, the
Certificate or these bylaws. If a quorum shall not be present at any meeting of
directors, the directors present thereat may by a majority vote adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
Section 10. Action Without a Meeting. Any action required or permitted to
be taken at any meeting of the board of directors or of any committee thereof
may be taken without a meeting, if a written consent to such action is signed by
all members of the board or of such committee, as the case may be, and such
written consent is filed with the minutes of proceedings of the board or
committee.
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Section 11. Presence at Meetings. Where appropriate communication
facilities are reasonably available, any or all directors shall have the right
to participate in all or any part of a meeting of the board or a committee of
the board by means of conference telephone or any means of communication by
which all persons participating in the meeting are able to hear each other.
Section 12. Delegation to Committee or Committees. The board of directors
may appoint from among its members an executive committee and other committees
composed of two (2) or more directors, and may delegate to such committees, any
of the powers of the board of directors except the power to declare dividends or
distributions on stock, recommend to the stockholders any action which requires
stockholder approval, amend the bylaws, approve any merger or share exchange
which does not require stockholder approval or issue stock. However, if the
board of directors has given general authorization for the issuance of stock, a
committee of the board, in accordance with a general formula or method specified
by the board of directors by resolution or by adoption of a stock option plan,
may fix the terms of stock subject to classification or reclassification and the
terms on which any stock may be issued. In the absence of any member of any such
committee, the members, thereof present at any meeting, whether or not they
constitute a quorum may appoint a member of the board of directors to act in the
place of such absent members.
Section 13. Minutes and Reports of Committees. The committees will keep
minutes of their proceedings and shall report the same to the board of directors
at the meeting next succeeding, and any action by the committees shall be
subject to revision and alteration by the board of directors, provided that no
rights of third persons shall be affected by any such revision or alteration.
Section 14. Compensation or Directors. Directors, as such, shall not
receive any stated salary for their services but, by resolution of the board, a
fixed sum and expenses of attendance, if any, may be allowed to directors for
attendance at each regular or special meeting of the board of directors, or of
any committee thereof, but nothing herein contained shall be construed to
preclude any director from serving the corporation in any other capacity and
receiving compensation therefor.
ARTICLE IV
NOTICES
Section 1. Form of Notice. Notices to directors and stockholders shall be
in writing and delivered personally or mailed to the directors or stockholders
at their addresses appearing on the books of the corporation. Notice by mail
shall be deemed to be given at the time when the same shall be mailed. In the
case of stockholders' meetings the notice may be left at the stockholders
residence or usual place of business. Notice to directors may also be given by
telegram.
Section 2. Waivers by Notice. Whenever any notice of the time, place or
purpose of any meeting of stockholders, directors or committee is required to be
given
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under the provisions of the Act or under The provisions of the Certificate or
these bylaws, a waiver thereof in writing, signed by the person or persons
entitled to such notice and filed with the records of the meeting, whether
before or after the holding thereof, shall be deemed equivalent to the giving of
such notice to such persons. Actual attendance at or participation in the
meeting of stockholders in person or by proxy, or at the meeting of directors or
committee in person, without protest by such person prior to the conclusion of
the meeting of the lack of notice of such meeting, shall also be deemed
equivalent to the giving of such notice to such persons.
ARTICLE V
OFFICERS
Section 1. Election. The officers of the corporation shall be elected by
the board of directors and shall be a president, a vice-president, a secretary
and a treasurer. The board of directors may also choose additional
vice-presidents, and one or more assistant secretaries and assistant treasurers.
Two (2) or more offices, except those of president and vice-president, may be
held by the same person but no officer shall execute, acknowledge or verify any
instrument in more than one capacity, if such instrument is required by law, the
Certificate or these bylaws to be executed, acknowledged or verified by two (2)
or more officers. The board of directors at its first meeting after each annual
meeting of stockholders shall choose a president, one or more vice-presidents, a
secretary and a treasurer, none of whom need be a member of the board.
Section 2. Other Officers. The board of directors may appoint such other
officers and agents as it shall deem necessary, who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board.
Section 3. Salaries of Officers. The salaries of all officers and agents
of the corporation shall be fixed from time to time by the board of directors.
Section 4. Term of Officers. The officers of the corporation shall serve
for one (1) year and until their successors are chosen and qualify. Any officer
or agent may be removed by the board of directors with or without cause
whenever, in its judgment, the best interests of the corporation will be served
thereby, but such removal shall be without prejudice to the contractual rights,
if any, of the person so removed. If the office of any officer becomes vacant
for any reason, the vacancy shall be filled by the board of directors.
Section 5. Duties and Authority of President. The president shall be the
chief executive officer of the corporation: he shall preside at all meetings of
such stockholders and directors, shall have general and active management of
the business of the corporation, and shall see that all orders and resolutions
of the board are carried into effect. He shall execute in the corporate name all
authorized deeds, mortgages, bonds, contracts or other instruments requiring a
seal, under the seal of the corporation, except in
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cases in which the signing or execution thereof shall be expressly delegated by
the board of directors to some other officer or agent of the corporation.
Section 6. Duties and Authority of Vice President. The vice president, or
if there shall be more than one, the vice presidents in the order determined by
the board of directors, shall, in the absence or disability of the president,
perform the duties and exercise the powers of the president, and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
Section 7. Duties and Authority of Secretary and Assistant Secretary. The
secretary shall attend all meetings of the board of directors and all meetings
of the stockholders and record all the proceedings of the meetings of the
corporation and of the board of directors in a book to be kept for that purpose
and shall perform like duties for the standing committees when required. He
shall give, or cause to be given, notices of all meetings of the stockholders
and special meetings of the board of directors, and shall perform such other
duties as may be prescribed by the board of directors or president, under whose
supervision he shall be. He shall keep in safe custody the seal of the
corporation and, when authorized by the board of directors, affix the same to
any instrument requiring it and, when to affixed, it shall be attested by his
signature or by the signature of an assistant secretary. The assistant
secretary, or if there be more than one, the assistant secretaries in the order
determined by the board of directors, shall in the absence or disability of the
secretary, perform the duties and exercise the powers of the secretary and shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
Section 8. Duties and Authority of Treasurer and Assistant Treasurer. The
treasurer shall have the custody of the corporate funds and securities and shall
keep full and accurate accounts of receipts and disbursements in books belonging
to the corporation and shall deposit all moneys and other valuable effects in
the name and to the credit of the corporation in such depositories; as may be
designated by the board of directors. He shall disburse the funds of the
corporation as may be ordered by the board of directors, taking proper vouchers
for such disbursements, and shall render to the president and the board of
directors, at its regular meetings, or when the board of directors so requires
an account of all his transactions as treasurer and of the financial condition
of the corporation. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board for the faithful performance of the duties of his
office and for the restoration to the corporation in case of his death,
resignation, retirement or removal from office, of all books, papers, vouchers,
money and other property of whatever kind in his possession or under his control
belonging to the corporation. The assistant treasurer, or if there shall be more
than one, the assistant treasurers in the order determined by the board of
directors, shall, in the absence or disability of the treasurer, perform the
duties and exercise the powers of the treasurer and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
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ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Issuance. Each stockholder shall be entitled to a certificate
or certificates which shall represent and certify the number and kind and class
of shares owned by him in the corporation. Each certificate shall be signed by
the president or a vice president and countersigned by the secretary or an
assistant secretary or the treasurer or an assistant treasurer and may be sealed
with the corporate seal.
Section 2. Signatures; Contents of Certificates. The signatures may be
either manual or facsimile signatures and the seal may be either facsimile or
any other form of seal. In case any officer who has signed any certificate
ceases to be an officer of the corporation before the certificate is issued, the
certificate may nevertheless be issued by the corporation with the same effect
as if the officer had not ceased to be such officer as of the date of its issue.
Each stock certificate shall include on its face the name of the corporation,
the name of the stockholder and the class of stock and number of shares
represented by the certificate. If the corporation has authority to issue stock
of more than one class, the stock certificate shall contain on its face or back
a full statement or summary of the designations and any preferences, conversion
and other rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption of the stock of each
class which the corporation is authorized to issue and if the corporation is
authorized to issue any preferred or special class in series, the differences in
the relative rights and preferences between the shares of each series to the
extent they have been set and the authority of the board of directors to set the
relative rights and preferences of subsequent series. A summary of such
information included in a registration statement permitted to become effective
under the Federal Securities Act of 1933, as now or hereafter amended, shall be
an acceptable summary, for the purposes of this section. In lieu of such full
statement or summary, there may be set forth upon the face or back of the
certificate a statement that the corporation will furnish to any stockholder
upon request and without charge a full statement of such information. Every
stock certificate representing shares of stock which are restricted as to
transferability by the corporation shall contain a full statement of the
restriction or state that the corporation will furnish information about the
restriction to the stockholder on request and without charge. A stock
certificate may not be issued until the stock represented by it is fully paid,
as provided by Section 14A:7-5(2) of the Act.
Section 3. Lost Certificates. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been stolen,
lost or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be stolen, lost or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such stolen, lost or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and to give the corporation a bond, with sufficient surety,
to the corporation to indemnify it against any loss or claim which may arise by
reason of the issuance of a new certificate.
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Section 4. Transfers of Stock. Upon surrender to the corporation or the
transfer agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 5. Closing of Transfer Books. The board of directors may fix, in
advance, a date as the record date for the purpose of stockholders entitled to
notice of, or to vote at any meeting of stockholders, or stockholders entitled
to receive payment of any dividend or the allotment of any rights, or in order
to make a determination of stockholders for any other proper purpose. Such date,
in any case, shall be not be than sixty (60) days, and in case of a meeting of
stockholders not less than ten (10) days prior to the date on which the
particular action requiring such determination of stockholders is to be taken.
In lieu of fixing a record date, the board of directors may provide that the
stock transfer books shall be closed for a stated period but not to exceed, in
any case, twenty (20) days. If the stock transfer books are closed for the
purpose of determining stockholders entitled to notice of or to vote at a
meeting of stockholders, such books shall be closed for at least ten (10) days
immediately preceding such meeting.
Section 6. Registered Stockholders. The corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends and to vote as such owner, and to hold liable for
calls and assessments a person registered on its books as the owner of shares,
and shall not be bound to recognize any equitable or other claim to or interest
in such share or shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise provided by the laws
of the State of New Jersey.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the corporation,
subject to the provisions of the Certificate, if any, may be declared by the
board of directors at any regular or special meeting, pursuant to law. Dividends
may be paid in cash, in property, or in its own shares, subject to the
provisions of the Act and of the Certificate. Before payment of any dividend,
there may be set aside out of any funds of the corporation available for
dividends such sum or sums as the directors from time to time, in their absolute
discretion, think proper as a reserve fund to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the directors shall think conducive to
the interests of the corporation, and the directors may modify or abolish any
such reserve in the manner in which it was created.
Section 2. Annual Statement. The president or a vice president or the
treasurer shall prepare or cause to be prepared annually a full and correct
statement of the affairs of the corporation, including a balance sheet and a
financial statement of
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operations for the preceding fiscal year, which shall be submitted at the annual
meeting and shall be filed within twenty (20) days thereafter at the principal
office of the corporation in the State of New Jersey.
Section 3. Checks. All checks, drafts, and orders for the payment of
money, notes and other evidences of indebtedness, issued in the name of the
corporation shall be signed by such officer or officers as the board of
directors may from time to time designate.
Section 4. Fiscal Year. The fiscal year of the corporation shall be fixed
by resolution of the board of directors.
Section 5. Seal. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its organization and the words "Corporate Seal,
New Jersey." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
Section 6. Stock Ledger. The corporation shall maintain at its office an
original stock ledger containing the names and addresses of all stockholders and
the number of shares each class held by each stockholder. Such stock ledger may
be in written form or any other form capable of being converted into written
form within a reasonable time for visual inspection.
Section 7. Plural/Singular. Wherever in these by-laws references are made
to more than one incorporator, director, or shareholder, they shall, if this is
a sole incorporator, director, shareholder corporation, be construed to mean the
solitary person; and all provisions dealing with the quantum of majorities or
quorums shall be deemed to mean the action by the one person constituting the
corporation.
ARTICLE VIII
AMENDMENTS
Section 1. Amendment by Board. The board of directors shall have the
power, at any regular meeting or at any special meeting if notice thereof be
included in the notice of such special meeting, to alter or repeal any bylaws of
the corporation and to make new bylaws, except that the board of directors shall
not alter or repeal any bylaws made by the stockholders.
Section 2. Amendment by Stockholders. The stockholders shall have the
power, at any annual meeting or at any special meeting if notice thereof be
included in the notice of such special meeting, to alter or repeal any bylaws of
the corporation and to make new bylaws.
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I, THE UNDERSIGNED, being the secretary of Lodgian Mount Laurel, Inc. DO
HEREBY CERTIFY the foregoing to be the by-laws of said corporation, as adopted
at a meeting of the directors held on the 23 day of April, 1999.
/s/ Mark Rafuse
------------------------------
Mark Rafuse, Secretary
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Exhibit 3.35.1
RESTATED CERTIFICATE OF INCORPORATION
OF
SERVICO GRAND ISLAND, INC.
UNDER SECTION 807 OF THE BUSINESS CORPORATION LAW
1. The name of the corporation is SERVICO GRAND ISLAND, INC.
2. The certificate of incorporation was filed by the department of
state on the 4th day of December, 1997.
3. The text of the certificate of incorporation is hereby restated
as amended to effect one of the amendments authorized by the Business
Corporation Law, to wit:
The amendment replaces the Purpose clause of the certificate of
incorporation, which formerly stated as follows:
(a) The purpose for which the Corporation is organized is limited
to: (i) acquiring, owning, leasing, operating, using and managing that certain
real property commonly known as the Holiday Inn Grand Island, located at 100
Whitehaven Road, Grand Island, New York 14072 (the "Property"); (ii) entering
into and performing its obligations under any loan agreement relating to the
financing or refinancing of the Property (the "Loan Agreement") which provides
the lender thereunder with a first priority lien on the Property, any promissory
note evidencing indebtedness incurred pursuant to the Loan Agreement, any
mortgage securing such indebtedness and encumbering the Property (the
"Mortgage") and any other documents securing such indebtedness and any related
collateral documents (collectively, the "Loan Documents"); and (iii) transacting
any and all lawful business that is incident and necessary or appropriate to the
ownership and to the management of the Property for which a corporation may be
incorporated under the laws of the State of Alabama.
(b) Notwithstanding any other provision of this Amended Certificate
and any provision of law that otherwise so empowers the Corporation, until such
time as the Property is released from the lien of the Mortgage, the Corporation
shall not, without the unanimous affirmative vote of the members of its Board of
Directors, file a voluntary petition or otherwise initiate, or consent to,
proceedings for the Corporation to be adjudicated insolvent or seeking an order
for relief as a debtor under the United States Bankruptcy Code, as amended (11
U.S.C. ss.ss. 101 et seq.), or file any petition, or consent to any petition,
seeking any composition, reorganization, readjustment, liquidation, dissolution
or similar relief under the present or any future federal bankruptcy laws or any
other present or future applicable federal, state or other statute or law
relative to bankruptcy, insolvency or other relief for debtors; or seek or
consent to the appointment of any trustee, receiver, conservator, assignee,
sequestrator,
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custodian, or liquidator (or other similar official) of the Corporation or of
all or any substantial part of the properties and assets of the Corporation, or
make any general assignment for the benefit of creditors, or admit in writing
its inability to pay its debts generally as they become due, or declare or
effect a moratorium on its debt or take any corporate action in furtherance of
any such action.
(c) The Board of Directors of the Corporation shall, at all times
until the Property is released from the lien of the Mortgage, include an
independent director (the "Independent Director"). The Independent Director
shall be a person who is not at the time of appointment and who has not at any
time during the prior five years been and who is not while serving as the
Independent Director (i) a director, stockholder, officer or employee of the
Corporation or any affiliates thereof, other than with respect to such person's
service as an Independent Director of the Corporation and such person's service
in similar "Independent Director" positions for affiliates of the Corporation;
(ii) a creditor, customer, supplier, independent contractor, manager or any
other person who derives more than 10% of its gross revenues from its activities
wit the Corporation or any affiliates thereof; (iii) a person controlling any
such stockholder, creditor, customer, supplier, independent contractor, manager
or other person; (iv) the legal or beneficial owner, at any time while serving
as director of the Corporation, of any beneficial interest in the Corporation;
or (v) a member of the immediate family of any such stockholder, officer,
employee, creditor, customer, supplier, director, independent contractor,
manager or any other person of the Corporation. As used herein, the term
"affiliate" means any person controlling, under common control wit, or
controlled by the person in question, and the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through ownership
of voting securities, by contact or otherwise. In the event of the death,
incapacity, or resignation of an Independent Director, or the vacancy of the
Independent Director's seat on the Corporation's Board of Directors for any
reason, a successor Independent Director shall be appointed by the remaining
directors.
(d) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(Lx) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall not
(i) commingle its assets with those
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of, or pledge its assets for the benefit of, any other person or entity; (ii)
assume, guarantee or become obligated, or hold out its credit as being available
to satisfy, the liabilities or obligations of any other person or entity; (iii)
reduce its capital below an amount which is adequate in light of its
contemplated business operations; (iv) acquire obligations or securities of, or
make loans or advances to, any affiliate; (v) incur or assume any indebtedness
other than (A) the indebtedness underlying the Loan Agreement, and (B)
liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article Second and the last sentence of
Article Eighth of this Amended Certificate; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in this Amended Certificate. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
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and to substitute the following provision:
ARTICLE II
(a) The purpose for which the Corporation is organized is limited
to: (i) acquiring, owning, leasing, operating, using and managing that certain
real property commonly known as the Holiday Inn Grand Island, located at 100
Whitehaven Road, Grand Island, New York 14072 (the "Property"); (ii) entering
into and performing its obligations under the credit agreement, among Lodgian
Financing Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel Group, LLC,
Servico, Inc. and other affiliated entities, as affiliate guarantors, the
initial lenders and initial issuing bank named therein, the collateral agent,
the administrative agent, Morgan Stanley Senior Funding, Inc., as co-lead
arranger, joint-book manager and syndication agent and Lehman Brothers, as
co-lead arranger, joint-book manager and documentation agent relating to the
financing or refinancing of the Property (the "Loan Agreement") which provides
the lender thereunder with a first priority lien on the Property, any
promissory-note evidencing indebtedness incurred pursuant to the Loan Agreement,
any mortgage securing such indebtedness and encumbering the Property (the
"Mortgage") and any other documents securing such indebtedness and any related
collateral documents, each as amended (or pursuant to a consent obtained in
accordance with the terms thereof) (collectively, the "Loan Documents"); (iii)
entering into and performing its obligations under the Indenture (the
"Indenture"), among Lodgian Financing Corp, as issuer, Lodgian, Inc., the
Subsidiary Guarantors defined therein and Bankers Trust Company, as trustee,
relating to the issuance of the 12 1/4% Senior Subordinated Notes due 2009 and
the Guarantee in favor of the holders of the Notes and (iv) transacting any and
all lawful business that is incident and necessary or appropriate to the
ownership and to the management of the Property for which a corporation may be
incorporated under the laws of the State of New York.
(b) Notwithstanding any other provision of this Amended Certificate
and any provision of law that otherwise so empowers the Corporation, until such
time as the Property is released from the lien of the Mortgage, the Corporation
shall not, without the unanimous affirmative vote of the members of its Board of
Directors, (i) amend, alter, change, repeal or adopt any resolution setting
forth a proposed amendment to, any provision of these Articles of Incorporation,
(ii) dissolve or liquidate, in whole or in part, consolidate or merge with or
into any other entity or convey, sell or transfer its properties and assets
substantially as an entirety to any entity, (iii) file a voluntary petition or
otherwise initiate, or consent to, proceedings for the Corporation to be
adjudicated insolvent or seeking an order for relief as a debtor under the
United States Bankruptcy Code, as amended (11 U.S.C. ss.ss. 101 et seq.), or
(iv) file any petition, or consent to any petition, seeking any composition,
reorganization, readjustment, liquidation, dissolution or similar relief under
the present or any future federal bankruptcy laws or any other present or future
applicable federal, state or other statute or law relative to bankruptcy,
insolvency or other relief for debtors; or (v) seek or consent to the
appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, or liquidator (or other similar official) of the Corporation or of
all or any substantial part of the properties and assets of the Corporation, or
(vi) make any general assignment for the benefit of creditors, or (vii) admit in
writing its inability
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to pay its debts generally as they become due, or (viii) declare or effect a
moratorium on its debt or take any corporate action in furtherance of any such
action.
(c) The Board of Directors of the Corporation shall, at all times
until the Property is released from the lien of the Mortgage, include an
independent director (the "Independent Director"). The Independent Director
shall be a person who is not at the time of appointment and who has not at any
time during the prior five years been and who is not while serving as the
Independent Director (i) a director, stockholder, officer or employee of the
Corporation or any affiliates thereof, other than with respect to such person's
service as an Independent Director of the Corporation and such person's service
in similar "Independent Director" positions for affiliates of the Corporation;
(ii) a creditor, customer, supplier, independent contractor, manager or any
other person who derives more than 10% of its gross revenues from its activities
with the Corporation or any affiliates thereof; (iii) a person controlling any
such stockholder, creditor, customer, supplier, independent contractor, manager
or other person; (iv) the legal or beneficial owner, at any time while serving
as director of the Corporation, of any beneficial interest in the Corporation;
or (v) a member of the immediate family of any such stockholder, officer,
employee, creditor, customer, supplier, director, independent contractor,
manager or any other person of the Corporation. As used herein, the term
"affiliate" means any person controlling, under common control wit, or
controlled by the person in question, and the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through ownership
of voting securities, by contact or otherwise. In the event of the death,
incapacity, or resignation of an Independent Director, or the vacancy of the
Independent Director's seat on the Corporation's Board of Directors for any
reason, a successor Independent Director shall be appointed by the remaining
directors.
(d) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(ix) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall not
(i) commingle its assets with those of, or pledge its assets for the benefit of,
any other person or entity; (ii) assume, guarantee or become obligated, or hold
out its credit as being available to satisfy, the liabilities or obligations of
any other person or entity; (iii) reduce its capital below an amount which is
adequate in light
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of its contemplated business operations; (iv) acquire obligations or securities
of, or make loans or advances to, any affiliate; (v) incur or assume any
indebtedness other than (A) the indebtedness underlying the Loan Agreement, (B)
the indebtedness underlying the Indenture, and (C) liabilities (including, but
not limited to, trade payables) arising in the ordinary course of the
Corporation's business relating to the acquisition, ownership, operation, lease,
use or management of the Property; (vi) amend, alter, change or repeal any
provision of Article II and the last sentence of Article VIII of these Amended
Articles; (vii) engage in any dissolution or liquidation, in whole or in part,
consolidation or merger with or into any other entity or conveyance, sale or
transfer of its properties and assets substantially as an entirety to any
entity; or (viii) engage in any business or activity other than as set forth in
these Amended Articles. Notwithstanding anything contained herein to the
contrary, nothing herein shall be deemed to prohibit or otherwise limit any
dividends or other distributions from the Corporation to its shareholders.
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The text of the Certificate of Incorporation is therefore restated
as amended to read as herein set forth in full:
ARTICLE I
The name of the Corporation is SERVICO GRAND ISLAND, INC.
ARTICLE II
(a) The purpose for which the Corporation is organized is limited
to: (i) acquiring, owning, leasing, operating, using and managing that certain
real property commonly known as the Holiday Inn Grand Island, located at 100
Whitehaven Road, Grand Island, New York 14072 (the "Property"); (ii) entering
into and performing its obligations under the credit agreement, among Lodgian
Financing Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel Group, LLC,
Servico, Inc. and other affiliated entities, as affiliate guarantors, the
initial lenders and initial issuing bank named therein, the collateral agent,
the administrative agent, Morgan Stanley Senior Funding, Inc., as co-lead
arranger, joint-book manager and syndication agent and Lehman Brothers, as
co-lead arranger, joint-book manager and documentation agent relating to the
financing or refinancing of the Property (the "Loan Agreement") which provides
the lender thereunder with a first priority lien on the Property, any
promissory-note evidencing indebtedness incurred pursuant to the Loan Agreement,
any mortgage securing such indebtedness and encumbering the Property (the
"Mortgage") and any other documents securing such indebtedness and any related
collateral documents, each as amended (or pursuant to a consent obtained in
accordance with the terms thereof) (collectively, the "Loan Documents"); (iii)
entering into and performing its obligations under the Indenture (the
"Indenture"), among Lodgian Financing Corp, as issuer, Lodgian, Inc., the
Subsidiary Guarantors defined therein and Bankers Trust Company, as trustee,
relating to the issuance of the 12 1/4% Senior Subordinated Notes due 2009 and
the Guarantee in favor of the holders of the Notes and (iv) transacting any and
all lawful business that is incident and necessary or appropriate to the
ownership and to the management of the Property for which a corporation may be
incorporated under the laws of the State of New York.
(b) Notwithstanding any other provision of this Amended Certificate
and any provision of law that otherwise so empowers the Corporation, until such
time as the Property is released from the lien of the Mortgage, the Corporation
shall not, without the unanimous affirmative vote of the members of its Board of
Directors, (i) amend, alter, change, repeal or adopt any resolution setting
forth a proposed amendment to, any provision of these Articles of Incorporation,
(ii) dissolve or liquidate, in whole or in part, consolidate or merge with or
into any other entity or convey, sell or transfer its properties and assets
substantially as an entirety to any entity, (iii) file a voluntary petition or
otherwise initiate, or consent to, proceedings for the Corporation to be
adjudicated insolvent or seeking an order for relief as a debtor under the
United States Bankruptcy Code, as amended (11 U.S.C. ss.ss. 101 et seq.), or
(iv) file any petition, or consent to any petition, seeking any composition,
reorganization, readjustment, liquidation, dissolution or similar relief under
the present or any future federal bankruptcy laws or any other
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present or future applicable federal, state or other statute or law relative to
bankruptcy, insolvency or other relief for debtors; or (v) seek or consent to
the appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, or liquidator (or other similar official) of the Corporation or of
all or any substantial part of the properties and assets of the Corporation, or
(vi) make any general assignment for the benefit of creditors, or (vii) admit in
writing its inability to pay its debts generally as they become due, or (viii)
declare or effect a moratorium on its debt or take any corporate action in
furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all times
until the Property is released from the lien of the Mortgage, include an
independent director (the "Independent Director"). The Independent Director
shall be a person who is not at the time of appointment and who has not at any
time during the prior five years been and who is not while serving as the
Independent Director (i) a director, stockholder, officer or employee of the
Corporation or any affiliates thereof, other than with respect to such person's
service as an Independent Director of the Corporation and such person's service
in similar "Independent Director" positions for affiliates of the Corporation;
(ii) a creditor, customer, supplier, independent contractor, manager or any
other person who derives more than 10% of its gross revenues from its activities
with the Corporation or any affiliates thereof; (iii) a person controlling any
such stockholder, creditor, customer, supplier, independent contractor, manager
or other person; (iv) the legal or beneficial owner, at any time while serving
as director of the Corporation, of any beneficial interest in the Corporation;
or (v) a member of the immediate family of any such stockholder, officer,
employee, creditor, customer, supplier, director, independent contractor,
manager or any other person of the Corporation. As used herein, the term
"affiliate" means any person controlling, under common control wit, or
controlled by the person in question, and the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through ownership
of voting securities, by contact or otherwise. In the event of the death,
incapacity, or resignation of an Independent Director, or the vacancy of the
Independent Director's seat on the Corporation's Board of Directors for any
reason, a successor Independent Director shall be appointed by the remaining
directors.
(d) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(ix) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
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(e) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall not
(i) commingle its assets with those of, or pledge its assets for the benefit of,
any other person or entity; (ii) assume, guarantee or become obligated, or hold
out its credit as being available to satisfy, the liabilities or obligations of
any other person or entity; (iii) reduce its capital below an amount which is
adequate in light of its contemplated business operations; (iv) acquire
obligations or securities of, or make loans or advances to, any affiliate; (v)
incur or assume any indebtedness other than (A) the indebtedness underlying the
Loan Agreement, (B) the indebtedness underlying the Indenture, and (C)
liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article II and the last sentence of
Article VIII of these Amended Articles; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in these Amended Articles. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
ARTICLE III
The office of the Corporation is to be located in the County of
Niagara, State of New York.
ARTICLE IV
The aggregate number of shares which the Corporation shall have the
authority to issue is One Thousand (1,000) of the par value of Zero Dollars and
One Cent ($0.01) each.
ARTICLE V
The Secretary of State is designated as the agent of the Corporation
upon whom process against the Corporation may be served. The post office address
to which the Secretary of State shall mail a copy of any process against the
Corporation served upon him is c/o CT Corporation System, 1633 Broadway, New
York, New York 10019.
ARTICLE VI
The name and address of the registered agent which is to be the
agent of the Corporation upon which process against it may be served, are CT
Corporation System, 1633 Broadway, new York, New York 10019.
ARTICLE VII
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No director shall be personally liable to the Corporation or its
shareholders for damages for any breach of duty in such capacity, except that
this provision shall not eliminate or limit the liability of any director if a
judgment or other final adjudication adverse to such director establishes that
such director's acts or omissions were in bad faith or involved intentional
misconduct or a knowing violation of law or that such director personally gained
in fact a financial profit or other advantage to which such director was not
legally entitled or that such director's acts violated Section 719 of the New
York Business Corporation Law, nor shall this provision eliminate or limit the
liability of any director for any act or omission prior to the adoption of this
provision.
ARTICLE VIII
The Corporation shall indemnify any officer or director, or any
former officer or director of the Corporation, to the fullest extent permitted
by law. The foregoing right of indemnification shall not be exclusive of any
other rights to which any director, officer, employee or agent may be entitled
as a matter of law or which he may be lawfully granted. The Corporation's
obligation to indemnify its officers and directors pursuant to this Article
shall be subordinate in all respects to the obligations of the Corporation
arising out of the Loan Documents and shall not constitute a claim against the
Corporation to the extent that the Corporation is unable to pay any amounts it
is obligated to pay under the Loan Documents.
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4. This restatement of the certificate of incorporation was
authorized by the Board of Directors of the Corporation and by the sole
shareholder of the Corporation by written consent without a meeting, pursuant to
Sections 615 and 708(b) of the New York Business Corporation Law, as of July 23,
1999. The number of outstanding shares of common stock of the Corporation (and
the number of shares entitled to vote thereon) is 1,000. The number of votes
cast were sufficient for approval.
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IN WITNESS WHEREOF, the undersigned has executed this Second Amended
and Restated Certificate of Incorporation this 23rd day of July, 1999.
SERVICO GRAND ISLAND, INC.
By: /s/ Thomas S. Gryboski
--------------------------
Name: Tom Gryboski
Title: Assistant Secretary
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Exhibit 3.35.2
SERVICO GRAND ISLAND, INC.
* * * * *
BY - LAWS
* * * * *
ARTICLE I
OFFICES
Section 1. The registered office shall be located at C T CORPORATION
SYSTEM, 155 WASHINGTON AVENUE, ALBANY, NEW YORK 12210
Section 2. The corporation may also have offices at such other
places both within and without the State of New York as the board of directors
may from time to time determine or the business of the corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of
directors shall be held on such day and at such hour as may be fixed from time
to time by the board of directors. Said meetings may also be held at such other
place either within or without the State of New York as shall be designated from
time to time by the board of directors and stated in the notice of the meeting.
Section 2. Annual meetings of shareholders, commencing with the year
1998, shall be held on the Second Monday in January unless that day is a legal
holiday, and if a legal holiday, then on the next secular day following, at
10:00 a.m., at which they shall elect by a plurality vote a board of directors,
and transact such other business as may properly be brought before the meeting.
Section 3. Written or printed notice of the annual meeting stating
the place, day and hour of the meeting shall be delivered not less than ten nor
more than fifty days before the date of the meeting, either personally or by
mail, by or at the direction of the president, the secretary, or the officer or
persons calling the meeting, to each shareholder of record entitled to vote at
such meeting.
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. Special meetings of shareholders for any purpose other
than the election of directors may be held at such time and place within or
without the state of New York as shall be stated in the notice of the meeting or
in a duly executed waiver of notice thereof.
Section 2. Special meetings of the shareholders, for any purposes,
unless otherwise prescribed by statute or by the articles of incorporation, may
be called by the president, the board of
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directors, or the holders of not less than one-tenth of all the shares entitled
to vote at the meeting.
Section 3. Written or printed notice of a special meeting stating
the place, day and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than fifty days
before the date of the meeting, either personally or by mail, by or at the
direction of the president, the secretary, or the officer or persons calling the
meeting, to each shareholder of record entitled to vote at such meeting.
Section 4. The business transacted at any special meeting of
shareholders shall be limited to the purposes stated in the notice.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of stock issued
and outstanding and entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by statute or by the articles of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the shareholders, the shareholders present in person or
represented by proxy shall have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented any business may be transacted which might have
been transacted at the meeting as originally notified.
Section 2. If a quorum is present, the affirmative vote of a
majority of the shares of stock represented at the meeting shall be the act of
the shareholders unless the vote of a greater number of shares of stock is
required by law or the articles of incorporation.
Section 3. Each outstanding share of stock, having voting power,
shall be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. A shareholder may vote either in person or by proxy executed in
writing by the shareholder or by his duly authorized attorney-in-fact.
Section 4. Any action required to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the shareholders entitled
to vote with respect to the subject matter thereof.
ARTICLE V
DIRECTORS
Section 1. The Board of Directors of the Corporation shall consist
of one (1) member. The number of directors may be either increased or decreased
from time to time by
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resolution of the Board of Directors, but shall never be less than one (1).
Directors need not be residents of the State of New York nor shareholders of the
corporation. The directors, other than the first board of directors, shall be
elected at the annual meeting of the shareholders, and each directors elected
shall serve until the next succeeding annual meeting and until his successor
shall have been elected and qualified. The first board of directors shall hold
office until the first annual meeting of shareholders.
Section 2. Any vacancy occurring in the board of directors may be
filled by the shareholders at an annual or a special meeting or by the
affirmative vote of a majority of the remaining directors though less than a
quorum of the board of directors. A director elected to fill a vacancy shall be
elected for the unexpired portion of the terms of his predecessor in office.
Any directorship to be filled by reason of an increase in the number
of directors may be filled by election at an annual meeting or at a special
meeting of shareholders called for that purpose. A director elected to fill a
newly created directorship shall serve until the next succeeding annual meeting
of shareholders and until his successor shall have been elected and qualified.
Any directorship to filled by reason of an increase in the number of directors
may also be filled by the board of directors for a term of office until the next
election of directors by shareholders; provide no more than two directorships
may be so filled during a period between any two successive annual meetings of
shareholders.
Whenever the holders of any class or series of shares are entitled
to elect one or more directors by the provisions of the articles of
incorporation, any vacancies in such directorships and any newly created
directorships of such class of series to be filled by reason of an increase in
the number of such directors may be filled by the affirmative vote of a majority
of the directors elected by such class or series then in office or by a sole
remaining director so elected, or by the vote of the holders of the outstanding
shares of such class or series, and such directorships shall not in any case be
filled by the vote of the remaining directors or the holders of the outstanding
shares as a whole unless otherwise provided in the articles of incorporation.
Section 3. The business affairs of the corporation shall be managed
by its board of directors which may exercise all such powers of the corporation
and do all such lawful acts and things as are not by statute or by the articles
of incorporation or by these by-laws directed or required to be exercised or
done by the shareholders.
Section 4. The directors may keep the books of the corporation,
except such as are required by law to be kept within the state, outside of the
State of New York, at such place or places as they may from time to time
determine.
Section 5. The board of directors, by the affirmative vote of a
majority of the directors then in office, and irrespective of any personal
interest to any of its members, shall have authority to establish reasonable
compensation of all directors for services to the corporation as directors,
officers or otherwise.
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ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular or special,
may be held either within or without the State of New York.
Section 2. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the vote of
the shareholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting provided a quorum shall be present, or it may convene at such place and
time as shall be fixed by the consent in writing of all the directors.
Section 3. Regular meetings of the board of directors may be held
upon such notice, or without notice, and at such time and at such place as shall
from time to time be determined by the board.
Section 4. Special meetings of the board of directors may be called
by the president on two days' notice to each director, either personally or by
mail or by telegram; special meeting shall be called by the president or
secretary in like manner and on like notice on the written request of two
directors.
Section 5. Attendance of a director at any meeting shall constitute
a waiver of notice of such meeting, except where a director attends for the
express purpose of objecting to the transaction of any business because the
meeting os not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
board of directors need be specified in the notice or waiver of notice of
such meeting.
Section 6. A majority of the directors shall constitute a quorum for
the transaction of business unless greater number is required by law or by the
articles of incorporation. The act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the board of directors,
unless the act of a greater number is required by statute or by the articles of
incorporation. If a quorum shall not be present at any meeting of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 7. Unless otherwise restricted by the articles of
incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting, if all members of the board of committee, as the case may be,
consent thereto in writing which shall set forth the action taken and be signed
by all members of the board of directors or of the committee as the case may be.
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ARTICLE VII
COMMITTEES OF DIRECTORS
Section 1. The board of directors, by resolution adopted by a majority of
the full board of directors, may designate from among its members an executive
committee and one or more other committees, each of which shall be comprised of
one or more members and, to the extent provided in the resolution, shall have
and may exercise all of the authority of the board of directors, except that no
such committee shall have the authority of the board of directors in reference
to amending the articles of incorporation, approving a plan of merger or
consolidation, recommending to the shareholders the sale, lease, or exchange of
all or substantially all of the property and assets of the corporation otherwise
than in the usual and regular course of its business, recommending to the
shareholders a voluntary dissolution of the corporation or a revocation thereof,
amending, altering, or repealing the by-laws of the corporation or adopting new
by-laws for the corporation, filling vacancies in the board of directors to be
filled by reason of an increase in the number of directors, electing or removing
officers or members of an committee, fixing the compensation of any member of a
committee, or altering or repealing any resolution of the board of directors
which by its terms provides that it shall not be so amendable or repealable;
and, unless the resolution expressly so provides, no committee shall have the
power of authority to declare a dividend or to authorize the issuance of shares
of the corporation.
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes of the
articles of incorporation or of these by-laws, notice is required to be given to
any director or shareholder, it shall not be construed to mean personal notice,
but such notice may be given in writing, by mail, addressed to such director or
shareholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telegram.
Section 2. Whenever any notice whatever is required to be given
under the provisions of the statutes or under the provisions of the articles of
incorporation or these by-laws, a waiver thereof in writing signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
ARTICLE IX
OFFICERS
Section 1. The offices of the corporation shall be chosen by the
board of directors and shall be a president and a secretary. The board of
directors may also elect or appoint such other officers, including assistant
officers and agents as may be deemed necessary.
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Section 2. The board of directors at its first meeting after each
annual meeting of shareholders shall choose a president and a secretary neither
of whom need be a member of the board.
Section 3. The board of directors may also appoint such other
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall
exercise such powers and perform such duties as shall be determined from time to
time by the board of directors.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officers elected or appointed by
the board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the shareholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
THE VICE PRESIDENTS
Section 8. The vice-president, if there is one, or if there shall be
more than one, the vice-presidents in the order determined by the board of
directors, shall, in the absence of disability of the president, perform the
duties and exercise the powers of the president and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the shareholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the shareholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He
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shall have custody of the corporate seal of the corporation and he, or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature or by the
signature of such assistance secretary. The board of directors may give general
authority to any other officer to affect the affixing by his signature.
Section 10. The assistant secretary, if there is one, or if there be
more than one, the assistant secretaries in the order determined by the board of
directors, shall, in the absence or disability of the secretary, perform the
duties and exercise the powers of the secretary and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
THE TREASURER AND ASSISTANT TREASURES
Section 11. The treasurer, if there is one, shall have the custody
of the corporate funds and securities and shall keep full and accurate accounts
of receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the board of
directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind of his possession or under
his control belonging to the corporation.
Section 14. The assistant treasurer, if there is one, or, if there
shall be more than one, the assistant treasurers in the order determined by the
board of directors, shall, in the absence or disability of the treasurer,
perform the duties and exercise the powers of the treasurer and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
ARTICLE X
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by
certificates signed by the president and secretary or such other officers as may
be elected or appointed, and may be sealed with the seal of the corporation or a
facsimile thereof.
When the corporation is authorized to issue shares of more than one
class there shall
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be set forth upon the face or back of the certificate, or the certificate shall
have a statement that the corporation will furnish to any shareholder upon
request and without charge, a full statement of the designations, preferences,
limitations and relative rights of the shares of each class authorized to be
issued and, if the corporation is authorized to issue any preferred or special
class in series, the variations in the relative rights and preferences between
the shares of each such series so far as the same have been fixed and determined
and the relative rights and preferences of subsequent series. When the
corporation is authorized to issue shares of more than one class, every
certificate shall also set forth upon the face or the back of such certificate a
statement that there is set forth in the articles of incorporation on file in
the office of the Secretary of State a full statement of all the designations,
preferences, limitations and relative rights, including voting rights, or the
shares of each class authorized to be issued and the corporation at its
principal place of business or registered office. Every certificate shall have
noted thereon any information required to be set forth by the New York Business
Corporation Act and such information shall be set forth in the manner provided
in said Act.
Section 2. The signatures of the officers of the corporation upon a
certificate may be facsimiles of the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the corporation itself or an
employee of the corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of its
issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate to be
issued in place of any certificate therefore issued by the corporation alleged
to have been lost or destroyed. When authorizing such issue of a new
certificate, the board of directors, in its discretion and as a condition
precedent to the issuance thereof, may prescribe such terms and conditions as
its deems expedient, and may require such indemnities as it deems adequate, to
protect the corporation from any claim that may be made against it with respect
to any such certificate alleged to have been lost or destroyed.
TRANSFERS OF SHARES
Section 4. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate representing shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, a new certificate shall be issued to the person entitled thereto, and
the old certificate canceled and the transaction recorded upon the books of the
corporation.
CLOSING OF TRANSFER BOOKS
Section 5. For the purpose of determining shareholders entitled to
notice of or to vote at any meeting of shareholders, or any adjournment thereof
or entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose the board of
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directors may provide that the stock transfer books shall be closed for a stated
period but not to exceed, in any case, fifty days. If the stock transfer books
shall be closed for the purpose of determining shareholders entitled to notice
of or to vote at a meeting of shareholders, such books shall be closed for at
least ten days immediately preceding such meeting. In lieu of closing the stock
transfer books, the board of directors may fix in advance a date as the record
date for any such determination of shareholder, such date in any case to be not
more than fifty days and, in case of a meeting of shareholders, not less than
ten days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of shareholders, or
shareholders entitled to receive payment of a dividend, the date on which notice
of the meeting is mailed or the date on which the resolution of the board of
directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof.
REGISTERED SHAREHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize and equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
New York.
LIST OF SHAREHOLDERS
Section 7. The officer or agent having charge of the transfer books
for shares shall make, at least ten days before each meeting of shareholders, a
complete list of the shareholders entitled to vote at such meeting, arranged in
alphabetical order, with the address of each and the number of shares held by
each, which list, for a period of ten days prior to such meeting, shall be kept
on file at the registered office of the corporation and shall be subject to
inspection by any shareholder at any time during usual business hours. Such list
shall also be produced and kept open at the time and place of the meeting and
shall be subject so the inspection of any shareholders during the whole time of
the meeting. The original share ledger or transfer book, or a duplicate thereof,
shall be prima facie evidence as to who are the shareholders entitled to examine
such list or share ledger or transfer book or to vote at any meeting of the
shareholders.
ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the articles of
incorporation relating thereto, if any, dividends may be declared by the board
of directors at any regular or special meeting, pursuant
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to law Dividends may be paid in cash, in property or in shares of the capital
stock, subject to any provisions of the articles or incorporation.
Section 2. Before payment of any dividend, there may be set aside
out of any funds of the corporation available for dividends such sum or sums as
the directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time delegate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its organization and the words "Corporate Seal,
New York." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
ARTICLE XII
AMENDMENTS
Section 1. These by-laws maybe altered, amended, or repealed or new
by-laws may be adopted by the affirmative vote of a majority of the board of
directors at any regular or special meeting of the board subject to repeal or
change at any regular or special meeting of shareholders as which a quorum is
present or represented, by the affirmative vote of a majority of the stock
entitled to vote, provided notice of the proposed repeal or change be contained
in the notice of such meeting.
ARTICLE XIII
AMENDMENTS
Section 1. These by-laws maybe altered, amended or repealed or new
by-laws may be adopted at any regular or special meeting of shareholders at
which a quorum is present or represented, by the affirmative vote of a majority
of the stock entitled so vote, provided notice of the proposed alteration,
amendment or repeal be contained in the notice of such meeting.
Dated: December 8, 1997
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Exhibit 3.36.1
RESTATED CERTIFICATE OF INCORPORATION
OF
SERVICO JAMESTOWN, INC.
UNDER SECTION 807 OF THE BUSINESS CORPORATION LAW
1. The name of the corporation is SERVICO JAMESTOWN, INC.
2. The certificate of incorporation was filed by the department of
state on the 14th day of October, 1997.
3. The text of the certificate of incorporation is hereby restated
as amended to effect one of the amendments authorized by the Business
Corporation Law, to wit:
The amendment replaces the Purpose clause of the certificate of
incorporation, which formerly stated as follows:
(a) The purpose for which the Corporation is organized is limited
to: (i) acquiring, owning, leasing, operating, using and managing that certain
real property commonly known as the Holiday Inn Jamestown, located at 150 West
4th Street, Jamestown, New York 14701 (the "Property"); (ii) entering into and
performing its obligations under any loan agreement relating to the financing or
refinancing of the Property (the "Loan Agreement") which provides the lender
thereunder with a first priority lien on the Property, any promissory note
evidencing indebtedness incurred pursuant to the Loan Agreement, any mortgage
securing such indebtedness and encumbering the Property (the "Mortgage") and any
other documents securing such indebtedness and any related collateral documents
(collectively, the "Loan Documents"); and (iii) transacting any and all lawful
business that is incident and necessary or appropriate to the ownership and to
the management of the Property for which a corporation may be incorporated under
the laws of the State of Alabama.
(b) Notwithstanding any other provision of this Amended Certificate
and any provision of law that otherwise so empowers the Corporation, until such
time as the Property is released from the lien of the Mortgage, the Corporation
shall not, without the unanimous affirmative vote of the members of its Board of
Directors, file a voluntary petition or otherwise initiate, or consent to,
proceedings for the Corporation to be adjudicated insolvent or seeking an order
for relief as a debtor under the United States Bankruptcy Code, as amended (11
U.S.C. ss.ss. 101 et seq.), or file any petition, or consent to any petition,
seeking any composition, reorganization, readjustment, liquidation, dissolution
or similar relief under the present or any future federal bankruptcy laws or any
other present or future applicable federal, state or other statute or law
relative to bankruptcy, insolvency or other relief for debtors; or seek or
consent to the appointment of any trustee, receiver, conservator, assignee,
sequestrator, custodian, or liquidator (or other similar official) of the
Corporation or of all or any substantial part of the properties and assets of
the Corporation, or make any general assignment for the benefit of creditors, or
admit in writing its inability to pay its debts generally as they become due, or
declare or effect a moratorium on its debt or take any corporate action in
furtherance of any such action.
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(c) The Board of Directors of the Corporation shall, at all times
until the Property is released from the lien of the Mortgage, include an
independent director (the "Independent Director"). The Independent Director
shall be a person who is not at the time of appointment and who has not at any
time during the prior five years been and who is not while serving as the
Independent Director (i) a director, stockholder, officer or employee of the
Corporation or any affiliates thereof, other than with respect to such person's
service as an Independent Director of the Corporation and such person's service
in similar "Independent Director" positions for affiliates of the Corporation;
(ii) a creditor, customer, supplier, independent contractor, manager or any
other person who derives more than 10% of its gross revenues from its activities
wit the Corporation or any affiliates thereof; (iii) a person controlling any
such stockholder, creditor, customer, supplier, independent contractor, manager
or other person; (iv) the legal or beneficial owner, at any time while serving
as director of the Corporation, of any beneficial interest in the Corporation;
or (v) a member of the immediate family of any such stockholder, officer,
employee, creditor, customer, supplier, director, independent contractor,
manager or any other person of the Corporation. As used herein, the term
"affiliate" means any person controlling, under common control wit, or
controlled by the person in question, and the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through ownership
of voting securities, by contact or otherwise. In the event of the death,
incapacity, or resignation of an Independent Director, or the vacancy of the
Independent Director's seat on the Corporation's Board of Directors for any
reason, a successor Independent Director shall be appointed by the remaining
directors.
(d) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(Lx) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall not
(i) commingle its assets with those of, or pledge its assets for the benefit of,
any other person or entity; (ii) assume, guarantee or become obligated, or hold
out its credit as being available to satisfy, the liabilities or obligations of
any other person or entity; (iii) reduce its capital below an amount which is
adequate in light of its contemplated business operations; (iv) acquire
obligations or securities of, or make loans or advances to, any affiliate; (v)
incur or assume any indebtedness other than (A) the indebtedness underlying the
Loan Agreement, and (B) liabilities (including, but not limited to, trade
payables)
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arising in the ordinary course of the Corporation's business relating to the
acquisition, ownership, operation, lease, use or management of the Property;
(vi) amend, alter, change or repeal any provision of Article Second and the last
sentence of Article Seventh of this Amended Certificate; (vii) engage in any
dissolution or liquidation, in whole or in part, consolidation or merger with or
into any other entity or conveyance, sale or transfer of its properties and
assets substantially as an entirety to any entity; or (viii) engage in any
business or activity other than as set forth in this Amended Certificate.
Notwithstanding anything contained herein to the contrary, nothing herein shall
be deemed to prohibit or otherwise limit any dividends or other distributions
from the Corporation to its shareholders.
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The former Purpose clause is replaced with the following provision:
ARTICLE II
(a) The purpose for which the Corporation is organized is limited
to: (i) acquiring, owning, leasing, operating, using and managing that certain
real property commonly known as the Holiday Inn Jamestown, located at 150 West
4th Street, Jamestown, New York 14701 (the "Property"); (ii) entering into and
performing its obligations under the credit agreement, among Lodgian Financing
Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel Group, LLC, Servico,
Inc. and other affiliated entities, as affiliate guarantors, the initial lenders
and initial issuing bank named therein, the collateral agent, the administrative
agent, Morgan Stanley Senior Funding, Inc., as co-lead arranger, joint-book
manager and syndication agent and Lehman Brothers, as co-lead arranger,
joint-book manager and documentation agent relating to the financing or
refinancing of the Property (the "Loan Agreement") which provides the lender
thereunder with a first priority lien on the Property, any promissory-note
evidencing indebtedness incurred pursuant to the Loan Agreement, any mortgage
securing such indebtedness and encumbering the Property (the "Mortgage") and any
other documents securing such indebtedness and any related collateral documents,
each as amended (or pursuant to a consent obtained in accordance with the terms
thereof) (collectively, the "Loan Documents"); (iii) entering into and
performing its obligations under the Indenture (the "Indenture"), among Lodgian
Financing Corp, as issuer, Lodgian, Inc., the Subsidiary Guarantors defined
therein and Bankers Trust Company, as trustee, relating to the issuance of the
12 1/4% Senior Subordinated Notes due 2009 and the Guarantee in favor of the
holders of the Notes and (iv) transacting any and all lawful business that is
incident and necessary or appropriate to the ownership and to the management of
the Property for which a corporation may be incorporated under the laws of the
State of New York.
(b) Notwithstanding any other provision of this Amended Certificate
and any provision of law that otherwise so empowers the Corporation, until such
time as the Property is released from the lien of the Mortgage, the Corporation
shall not, without the unanimous affirmative vote of the members of its Board of
Directors, (i) amend, alter, change, repeal or adopt any resolution setting
forth a proposed amendment to, any provision of this Certificate of
Incorporation, (ii) dissolve or liquidate, in whole or in part, consolidate or
merge with or into any other entity or convey, sell or transfer its properties
and assets substantially as an entirety to any entity, (iii) file a voluntary
petition or otherwise initiate, or consent to, proceedings for the Corporation
to be adjudicated insolvent or seeking an order for relief as a debtor under the
United States Bankruptcy Code, as amended (11 U.S.C. ss.ss. 101 et seq.), or
(iv) file any petition, or consent to any petition, seeking any composition,
reorganization, readjustment, liquidation, dissolution or similar relief under
the present or any future federal bankruptcy laws or any other present or future
applicable federal, state or other statute or law relative to bankruptcy,
insolvency or other relief for debtors; or (v) seek or consent to the
appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, or liquidator (or other similar official) of the Corporation or of
all or any substantial part of the properties and assets of the Corporation, or
(vi) make any general assignment for the benefit of creditors, or (vii) admit in
writing its inability to pay its debts generally as they become due, or (viii)
declare or effect a moratorium on its debt or take any corporate action in
furtherance of any such action.
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(c) The Board of Directors of the Corporation shall, at all times
until the Property is released from the lien of the Mortgage, include an
independent director (the "Independent Director"). The Independent Director
shall be a person who is not at the time of appointment and who has not at any
time during the prior five years been and who is not while serving as the
Independent Director (i) a director, stockholder, officer or employee of the
Corporation or any affiliates thereof, other than with respect to such person's
service as an Independent Director of the Corporation and such person's service
in similar "Independent Director" positions for affiliates of the Corporation;
(ii) a creditor, customer, supplier, independent contractor, manager or any
other person who derives more than 10% of its gross revenues from its activities
with the Corporation or any affiliates thereof; (iii) a person controlling any
such stockholder, creditor, customer, supplier, independent contractor, manager
or other person; (iv) the legal or beneficial owner, at any time while serving
as director of the Corporation, of any beneficial interest in the Corporation;
or (v) a member of the immediate family of any such stockholder, officer,
employee, creditor, customer, supplier, director, independent contractor,
manager or any other person of the Corporation. As used herein, the term
"affiliate" means any person controlling, under common control wit, or
controlled by the person in question, and the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through ownership
of voting securities, by contact or otherwise. In the event of the death,
incapacity, or resignation of an Independent Director, or the vacancy of the
Independent Director's seat on the Corporation's Board of Directors for any
reason, a successor Independent Director shall be appointed by the remaining
directors.
(d) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(ix) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall not
(i) commingle its assets with those of, or pledge its assets for the benefit of,
any other person or entity; (ii) assume, guarantee or become obligated, or hold
out its credit as being available to satisfy, the liabilities or obligations of
any other person or entity; (iii) reduce its capital below an amount which is
adequate in light of its contemplated business operations; (iv) acquire
obligations or securities of, or make loans or advances to, any affiliate; (v)
incur or assume any indebtedness other than (A) the indebtedness underlying the
Loan Agreement, (B) the indebtedness underlying the Indenture, and (C)
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liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article II and the last sentence of
Article VII of this Amended Certificate; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in this Amended Certificate. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
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The text of the Certificate of Incorporation is therefore restated
as amended to read as herein set forth in full:
ARTICLE I
The name of the Corporation is SERVICO JAMESTOWN, INC.
ARTICLE II
(a) The purpose for which the Corporation is organized is limited
to: (i) acquiring, owning, leasing, operating, using and managing that certain
real property commonly known as the Holiday Inn Jamestown, located at 150 West
4th Street, Jamestown, New York 14701 (the "Property"); (ii) entering into and
performing its obligations under the credit agreement, among Lodgian Financing
Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel Group, LLC, Servico,
Inc. and other affiliated entities, as affiliate guarantors, the initial lenders
and initial issuing bank named therein, the collateral agent, the administrative
agent, Morgan Stanley Senior Funding, Inc., as co-lead arranger, joint-book
manager and syndication agent and Lehman Brothers, as co-lead arranger,
joint-book manager and documentation agent relating to the financing or
refinancing of the Property (the "Loan Agreement") which provides the lender
thereunder with a first priority lien on the Property, any promissory-note
evidencing indebtedness incurred pursuant to the Loan Agreement, any mortgage
securing such indebtedness and encumbering the Property (the "Mortgage") and any
other documents securing such indebtedness and any related collateral documents,
each as amended (or pursuant to a consent obtained in accordance with the terms
thereof) (collectively, the "Loan Documents"); (iii) entering into and
performing its obligations under the Indenture (the "Indenture"), among Lodgian
Financing Corp, as issuer, Lodgian, Inc., the Subsidiary Guarantors defined
therein and Bankers Trust Company, as trustee, relating to the issuance of the
12 1/4% Senior Subordinated Notes due 2009 and the Guarantee in favor of the
holders of the Notes and (iv) transacting any and all lawful business that is
incident and necessary or appropriate to the ownership and to the management of
the Property for which a corporation may be incorporated under the laws of the
State of New York.
(b) Notwithstanding any other provision of this Amended Certificate
and any provision of law that otherwise so empowers the Corporation, until such
time as the Property is released from the lien of the Mortgage, the Corporation
shall not, without the unanimous affirmative vote of the members of its Board of
Directors, (i) amend, alter, change, repeal or adopt any resolution setting
forth a proposed amendment to, any provision of this Certificate of
Incorporation, (ii) dissolve or liquidate, in whole or in part, consolidate or
merge with or into any other entity or convey, sell or transfer its properties
and assets substantially as an entirety to any entity, (iii) file a voluntary
petition or otherwise initiate, or consent to, proceedings for the Corporation
to be adjudicated insolvent or seeking an order for relief as a debtor under the
United States Bankruptcy Code, as amended (11 U.S.C. ss.ss. 101 et seq.), or
(iv) file any petition, or consent to any petition, seeking any composition,
reorganization, readjustment, liquidation, dissolution or similar relief under
the present or any future federal bankruptcy laws or any other present or future
applicable federal, state or other statute or law relative to bankruptcy,
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insolvency or other relief for debtors; or (v) seek or consent to the
appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, or liquidator (or other similar official) of the Corporation or of
all or any substantial part of the properties and assets of the Corporation, or
(vi) make any general assignment for the benefit of creditors, or (vii) admit in
writing its inability to pay its debts generally as they become due, or (viii)
declare or effect a moratorium on its debt or take any corporate action in
furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all times
until the Property is released from the lien of the Mortgage, include an
independent director (the "Independent Director"). The Independent Director
shall be a person who is not at the time of appointment and who has not at any
time during the prior five years been and who is not while serving as the
Independent Director (i) a director, stockholder, officer or employee of the
Corporation or any affiliates thereof, other than with respect to such person's
service as an Independent Director of the Corporation and such person's service
in similar "Independent Director" positions for affiliates of the Corporation;
(ii) a creditor, customer, supplier, independent contractor, manager or any
other person who derives more than 10% of its gross revenues from its activities
with the Corporation or any affiliates thereof; (iii) a person controlling any
such stockholder, creditor, customer, supplier, independent contractor, manager
or other person; (iv) the legal or beneficial owner, at any time while serving
as director of the Corporation, of any beneficial interest in the Corporation;
or (v) a member of the immediate family of any such stockholder, officer,
employee, creditor, customer, supplier, director, independent contractor,
manager or any other person of the Corporation. As used herein, the term
"affiliate" means any person controlling, under common control wit, or
controlled by the person in question, and the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through ownership
of voting securities, by contact or otherwise. In the event of the death,
incapacity, or resignation of an Independent Director, or the vacancy of the
Independent Director's seat on the Corporation's Board of Directors for any
reason, a successor Independent Director shall be appointed by the remaining
directors.
(d) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(ix) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall not
(i) commingle its assets with those
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of, or pledge its assets for the benefit of, any other person or entity; (ii)
assume, guarantee or become obligated, or hold out its credit as being available
to satisfy, the liabilities or obligations of any other person or entity; (iii)
reduce its capital below an amount which is adequate in light of its
contemplated business operations; (iv) acquire obligations or securities of, or
make loans or advances to, any affiliate; (v) incur or assume any indebtedness
other than (A) the indebtedness underlying the Loan Agreement, (B) the
indebtedness underlying the Indenture, and (C) liabilities (including, but not
limited to, trade payables) arising in the ordinary course of the Corporation's
business relating to the acquisition, ownership, operation, lease, use or
management of the Property; (vi) amend, alter, change or repeal any provision of
Article II and the last sentence of Article VII of this Amended Certificate;
(vii) engage in any dissolution or liquidation, in whole or in part,
consolidation or merger with or into any other entity or conveyance, sale or
transfer of its properties and assets substantially as an entirety to any
entity; or (viii) engage in any business or activity other than as set forth in
this Amended Certificate. Notwithstanding anything contained herein to the
contrary, nothing herein shall be deemed to prohibit or otherwise limit any
dividends or other distributions from the Corporation to its shareholders.
ARTICLE III
The office of the Corporation is to be located in the County of New
York, State of New York.
ARTICLE IV
The aggregate number of shares which the Corporation shall have the
authority to issue is One Thousand (1,000) of the par value of Zero Dollars and
One Cent ($0.01) each.
ARTICLE V
The Secretary of State is designated as the agent of the Corporation
upon whom process against the Corporation may be served. The post office address
to which the Secretary of State shall mail a copy of any process against the
Corporation served upon him is c/o CT Corporation System, 1633 Broadway, New
York, New York 10019.
ARTICLE VI
The name and address of the registered agent which is to be the
agent of the Corporation upon which process against it may be served, are CT
Corporation System, 1633 Broadway, new York, New York 10019.
ARTICLE VII
The Corporation shall indemnify any officer or director, or any
former officer or director of the Corporation, to the fullest extent permitted
by law. The foregoing right of indemnification shall not be exclusive of any
other rights to which any director, officer, employee or agent may be entitled
as a matter of law or which he may be lawfully granted. The
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Corporation's obligation to indemnify its officers and directors pursuant to
this Article shall be subordinate in all respects to the obligations of the
Corporation arising out of the Loan Documents and shall not constitute a claim
against the Corporation to the extent that the Corporation is unable to pay any
amounts it is obligated to pay under the Loan Documents.
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4. This restatement of the certificate of incorporation was
authorized by the Board of Directors of the Corporation and by the sole
shareholder of the Corporation by written consent without a meeting, pursuant to
Sections 615 and 708(b) of the New York Business Corporation Law, as of July 23,
1999. The number of outstanding shares of common stock of the Corporation (and
the number of shares entitled to vote thereon) is 1,000. The number of votes
cast were sufficient for approval.
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<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Second Amended
and Restated Certificate of Incorporation this 23rd day of July, 1999.
SERVICO JAMESTOWN, INC.
By: /s/ Thomas S. Gryboski
-------------------------------------
Name: Tom Gryboski
Title: Assistant Secretary
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Exhibit 3.36.2
SERVICO JAMESTOWN, INC.
* * * * *
BY - LAWS
* * * * *
ARTICLE I
OFFICES
Section 1. The registered office shall be located at C T CORPORATION
SYSTEM, 155 WASHINGTON AVENUE, ALBANY, NEW YORK 12210
Section 2. The corporation may also have offices at such other
places both within and without the State of New York as the board of directors
may from time to time determine or the business of the corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of
directors shall be held on such day and at such hour as may be fixed from time
to time by the board of directors. Said meetings may also be held at such other
place either within or without the State of New York as shall be designated from
time to time by the board of directors and stated in the notice of the meeting.
Section 2. Annual meetings of shareholders, commencing with the year
1998, shall be held on the Second Monday in January unless that day is a legal
holiday, and if a legal holiday, then on the next secular day following, at
10:00 a.m., at which they shall elect by a plurality vote a board of directors,
and transact such other business as may properly be brought before the meeting.
Section 3. Written or printed notice of the annual meeting stating
the place, day and hour of the meeting shall be delivered not less than ten nor
more than fifty days before the date of the meeting, either personally or by
mail, by or at the direction of the president, the secretary, or the officer or
persons calling the meeting, to each shareholder of record entitled to vote at
such meeting.
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. Special meetings of shareholders for any purpose other
than the election of directors may be held at such time and place within or
without the state of Maryland as shall be stated in the notice of the meeting or
in a duly executed waiver of notice thereof.
Section 2. Special meetings of the shareholders, for any purposes,
unless otherwise prescribed by statute or by the articles of incorporation, may
be called by the president, the board of
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EXHIBIT C
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directors, or the holders of not less than one-tenth of all the shares entitled
to vote at the meeting.
Section 3. Written or printed notice of a special meeting stating
the place, day and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than fifty days
before the date of the meeting, either personally or by mail, by or at the
direction of the president, the secretary, or the officer or persons calling the
meeting, to each shareholder of record entitled to vote at such meeting.
Section 4. The business transacted at any special meeting of
shareholders shall be limited to the purposes stated in the notice.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of stock issued
and outstanding and entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by statute or by the articles of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the shareholders, the shareholders present in person or
represented by proxy shall have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented any business may be transacted which might have
been transacted at the meeting as originally notified.
Section 2. If a quorum is present, the affirmative vote of a
majority of the shares of stock represented at the meeting shall be the act of
the shareholders unless the vote of a greater number of shares of stock is
required by law or the articles of incorporation.
Section 3. Each outstanding share of stock, having voting power,
shall be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. A shareholder may vote either in person or by proxy executed in
writing by the shareholder or by his duly authorized attorney-in-fact.
Section 4. Any action required to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the shareholders entitled
to vote with respect to the subject matter thereof.
ARTICLE V
DIRECTORS
Section 1. The Board of Directors of the Corporation shall consist
of one (1) member. The number of directors may be either increased or decreased
from time to time by
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resolution of the Board of Directors, but shall never be less than one (1).
Directors need not be residents of the State of Maryland nor shareholders of the
corporation. The directors, other than the first board of directors, shall be
elected at the annual meeting of the shareholders, and each directors elected
shall serve until the next succeeding annual meeting and until his successor
shall have been elected and qualified. The first board of directors shall hold
office until the first annual meeting of shareholders.
Section 2. Any vacancy occurring in the board of directors may be
filled by the shareholders at an annual or a special meeting or by the
affirmative vote of a majority of the remaining directors though less than a
quorum of the board of directors. A director elected to fill a vacancy shall be
elected for the unexpired portion of the terms of his predecessor in office.
Any directorship to be filled by reason of an increase in the number
of directors may be filled by election at an annual meeting or at a special
meeting of shareholders called for that purpose. A director elected to fill a
newly created directorship shall serve until the next succeeding annual meeting
of shareholders and until his successor shall have been elected and qualified.
Any directorship to filled by reason of an increase in the number of directors
may also be filled by the board of directors for a term of office until the next
election of directors by shareholders; provide no more than two directorships
may be so filled during a period between any two successive annual meetings of
shareholders.
Whenever the holders of any class or series of shares are entitled
to elect one or more directors by the provisions of the articles of
incorporation, any vacancies in such directorships and any newly created
directorships of such class of series to be filled by reason of an increase in
the number of such directors may be filled by the affirmative vote of a majority
of the directors elected by such class or series then in office or by a sole
remaining director so elected, or by the vote of the holders of the outstanding
shares of such class or series, and such directorships shall not in any case be
filled by the vote of the remaining directors or the holders of the outstanding
shares as a whole unless otherwise provided in the articles of incorporation.
Section 3. The business affairs of the corporation shall be managed
by its board of directors which may exercise all such powers of the corporation
and do all such lawful acts and things as are not by statute or by the articles
of incorporation or by these by-laws directed or required to be exercised or
done by the shareholders.
Section 4. The directors may keep the books of the corporation,
except such as are required by law to be kept within the state, outside of the
State of Maryland, at such place or places as they may from time to time
determine.
Section 5. The board of directors, by the affirmative vote of a
majority of the directors then in office, and irrespective of any personal
interest to any of its members, shall have authority to establish reasonable
compensation of all directors for services to the corporation as directors,
officers or otherwise.
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ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular or special,
may be held either within or without the State of Maryland.
Section 2. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the vote of
the shareholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting provided a quorum shall be present, or it may convene at such place and
time as shall be fixed by the consent in writing of all the directors.
Section 3. Regular meetings of the board of directors may be held
upon such notice, or without notice, and at such time and at such place as shall
from time to time be determined by the board.
Section 4. Special meetings of the board of directors may be called
by the president on two days' notice to each director, either personally or by
mail or by telegram; special meeting shall be called by the president or
secretary in like manner and on like notice on the written request of two
directors.
Section 5. Attendance of a director at any meeting shall constitute
a waiver of notice of such meeting, except where a director attends for the
express purpose of objecting to the transaction of any business because the
meeting os not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
board of directors need be specified in the notice or waiver of notice of
such meeting.
Section 6. A majority of the directors shall constitute a quorum for
the transaction of business unless greater number is required by law or by the
articles of incorporation. The act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the board of directors,
unless the act of a greater number is required by statute or by the articles of
incorporation. If a quorum shall not be present at any meeting of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 7. Unless otherwise restricted by the articles of
incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting, if all members of the board of committee, as the case may be,
consent thereto in writing which shall set forth the action taken and be signed
by all members of the board of directors or of the committee as the case may be.
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ARTICLE VII
COMMITTEES OF DIRECTORS
Section 1. The board of directors, by resolution adopted by a majority of
the full board of directors, may designate from among its members an executive
committee and one or more other committees, each of which shall be comprised of
one or more members and, to the extent provided in the resolution, shall have
and may exercise all of the authority of the board of directors, except that no
such committee shall have the authority of the board of directors in reference
to amending the articles of incorporation, approving a plan of merger or
consolidation, recommending to the shareholders the sale, lease, or exchange of
all or substantially all of the property and assets of the corporation otherwise
than in the usual and regular course of its business, recommending to the
shareholders a voluntary dissolution of the corporation or a revocation thereof,
amending, altering, or repealing the by-laws of the corporation or adopting new
by-laws for the corporation, filling vacancies in the board of directors to be
filled by reason of an increase in the number of directors, electing or removing
officers or members of an committee, fixing the compensation of any member of a
committee, or altering or repealing any resolution of the board of directors
which by its terms provides that it shall not be so amendable or repealable;
and, unless the resolution expressly so provides, no committee shall have the
power of authority to declare a dividend or to authorize the issuance of shares
of the corporation.
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes of the
articles of incorporation or of these by-laws, notice is required to be given to
any director or shareholder, it shall not be construed to mean personal notice,
but such notice may be given in writing, by mail, addressed to such director or
shareholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telegram.
Section 2. Whenever any notice whatever is required to be given
under the provisions of the statutes or under the provisions of the articles of
incorporation or these by-laws, a waiver thereof in writing signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
ARTICLE IX
OFFICERS
Section 1. The offices of the corporation shall be chosen by the
board of directors and shall be a president and a secretary. The board of
directors may also elect or appoint such other officers, including assistant
officers and agents as may be deemed necessary.
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Section 2. The board of directors at its first meeting after each
annual meeting of shareholders shall choose a president and a secretary neither
of whom need be a member of the board.
Section 3. The board of directors may also appoint such other
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall
exercise such powers and perform such duties as shall be determined from time to
time by the board of directors.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officers elected or appointed by
the board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the shareholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
THE VICE PRESIDENTS
Section 8. The vice-president, if there is one, or if there shall be
more than one, the vice-presidents in the order determined by the board of
directors, shall, in the absence of disability of the president, perform the
duties and exercise the powers of the president and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the shareholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the shareholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He
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shall have custody of the corporate seal of the corporation and he, or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature or by the
signature of such assistance secretary. The board of directors may give general
authority to any other officer to affect the affixing by his signature.
Section 10. The assistant secretary, if there is one, or if there be
more than one, the assistant secretaries in the order determined by the board of
directors, shall, in the absence or disability of the secretary, perform the
duties and exercise the powers of the secretary and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
THE TREASURER AND ASSISTANT TREASURES
Section 11. The treasurer, if there is one, shall have the custody
of the corporate funds and securities and shall keep full and accurate accounts
of receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the board of
directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind of his possession or under
his control belonging to the corporation.
Section 14. The assistant treasurer, if there is one, or, if there
shall be more than one, the assistant treasurers in the order determined by the
board of directors, shall, in the absence or disability of the treasurer,
perform the duties and exercise the powers of the treasurer and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
ARTICLE X
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by
certificates signed by the president and secretary or such other officers as may
be elected or appointed, and may be sealed with the seal of the corporation or a
facsimile thereof.
When the corporation is authorized to issue shares of more than one
class there shall
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be set forth upon the face or back of the certificate, or the certificate shall
have a statement that the corporation will furnish to any shareholder upon
request and without charge, a full statement of the designations, preferences,
limitations and relative rights of the shares of each class authorized to be
issued and, if the corporation is authorized to issue any preferred or special
class in series, the variations in the relative rights and preferences between
the shares of each such series so far as the same have been fixed and determined
and the relative rights and preferences of subsequent series. When the
corporation is authorized to issue shares of more than one class, every
certificate shall also set forth upon the face or the back of such certificate a
statement that there is set forth in the articles of incorporation on file in
the office of the Secretary of State a full statement of all the designations,
preferences, limitations and relative rights, including voting rights, or the
shares of each class authorized to be issued and the corporation at its
principal place of business or registered office. Every certificate shall have
noted thereon any information required to be set forth by the Maryland Business
Corporation Act and such information shall be set forth in the manner provided
in said Act.
Section 2. The signatures of the officers of the corporation upon a
certificate may be facsimiles of the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the corporation itself or an
employee of the corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of its
issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate to be
issued in place of any certificate therefore issued by the corporation alleged
to have been lost or destroyed. When authorizing such issue of a new
certificate, the board of directors, in its discretion and as a condition
precedent to the issuance thereof, may prescribe such terms and conditions as
its deems expedient, and may require such indemnities as it deems adequate, to
protect the corporation from any claim that may be made against it with respect
to any such certificate alleged to have been lost or destroyed.
TRANSFERS OF SHARES
Section 4. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate representing shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, a new certificate shall be issued to the person entitled thereto, and
the old certificate canceled and the transaction recorded upon the books of the
corporation.
CLOSING OF TRANSFER BOOKS
Section 5. For the purpose of determining shareholders entitled to
notice of or to vote at any meeting of shareholders, or any adjournment thereof
or entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose the board of
8
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directors may provide that the stock transfer books shall be closed for a stated
period but not to exceed, in any case, fifty days. If the stock transfer books
shall be closed for the purpose of determining shareholders entitled to notice
of or to vote at a meeting of shareholders, such books shall be closed for at
least ten days immediately preceding such meeting. In lieu of closing the stock
transfer books, the board of directors may fix in advance a date as the record
date for any such determination of shareholder, such date in any case to be not
more than fifty days and, in case of a meeting of shareholders, not less than
ten days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of shareholders, or
shareholders entitled to receive payment of a dividend, the date on which notice
of the meeting is mailed or the date on which the resolution of the board of
directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof.
REGISTERED SHAREHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize and equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Maryland.
LIST OF SHAREHOLDERS
Section 7. The officer or agent having charge of the transfer books
for shares shall make, at least ten days before each meeting of shareholders, a
complete list of the shareholders entitled to vote at such meeting, arranged in
alphabetical order, with the address of each and the number of shares held by
each, which list, for a period of ten days prior to such meeting, shall be kept
on file at the registered office of the corporation and shall be subject to
inspection by any shareholder at any time during usual business hours. Such list
shall also be produced and kept open at the time and place of the meeting and
shall be subject so the inspection of any shareholders during the whole time of
the meeting. The original share ledger or transfer book, or a duplicate thereof,
shall be prima facie evidence as to who are the shareholders entitled to examine
such list or share ledger or transfer book or to vote at any meeting of the
shareholders.
ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the articles of
incorporation relating thereto, if any, dividends may be declared by the board
of directors at any regular or special meeting, pursuant
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<PAGE>
to law Dividends may be paid in cash, in property or in shares of the capital
stock, subject to any provisions of the articles or incorporation.
Section 2. Before payment of any dividend, there may be set aside
out of any funds of the corporation available for dividends such sum or sums as
the directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time delegate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its organization and the words "Corporate Seal,
Maryland." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
ARTICLE XII
AMENDMENTS
Section 1. These by-laws maybe altered, amended, or repealed or new
by-laws may be adopted by the affirmative vote of a majority of the board of
directors at any regular or special meeting of the board subject to repeal or
change at any regular or special meeting of shareholders as which a quorum is
present or represented, by the affirmative vote of a majority of the stock
entitled to vote, provided notice of the proposed repeal or change be contained
in the notice of such meeting.
ARTICLE XIII
AMENDMENTS
Section 1. These by-laws maybe altered, amended or repealed or new
by-laws may be adopted at any regular or special meeting of shareholders at
which a quorum is present or represented, by the affirmative vote of a majority
of the stock entitled so vote, provided notice of the proposed alteration,
amendment or repeal be contained in the notice of such meeting.
Dated: July ____, 1997
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Exhibit 3.37.1
RESTATED CERTIFICATE OF INCORPORATION
OF
SERVICO NEW YORK, INC.
UNDER SECTION 807 OF THE BUSINESS CORPORATION LAW
1. The name of the corporation is SERVICO NEW YORK, INC.
2. The certificate of incorporation was filed by the department of
state on the 4th day of December, 1997.
3. The text of the certificate of incorporation is hereby restated
as amended to effect one of the amendments authorized by the Business
Corporation Law, to wit:
The amendment replaces the Purpose clause of the certificate of
incorporation, which formerly stated as follows:
(a) The purpose for which the Corporation is organized is limited
to: (i) acquiring, owning, leasing, operating, using and managing that certain
real property commonly known as the Clarion Hotel Niagara falls, located at
Third and Old Falls Street, Niagara Falls, New York 14303 (the "Property"); (ii)
entering into and performing its obligations under any loan agreement relating
to the financing or refinancing of the Property (the "Loan Agreement") which
provides the lender thereunder with a first priority lien on the Property, any
promissory note evidencing indebtedness incurred pursuant to the Loan Agreement,
any mortgage securing such indebtedness and encumbering the Property (the
"Mortgage") and any other documents securing such indebtedness and any related
collateral documents (collectively, the "Loan Documents"); and (iii) transacting
any and all lawful business that is incident and necessary or appropriate to the
ownership and to the management of the Property for which a corporation may be
incorporated under the laws of the State of Alabama.
(b) Notwithstanding any other provision of this Amended Certificate
and any provision of law that otherwise so empowers the Corporation, until such
time as the Property is released from the lien of the Mortgage, the Corporation
shall not, without the unanimous affirmative vote of the members of its Board of
Directors, file a voluntary petition or otherwise initiate, or consent to,
proceedings for the Corporation to be adjudicated insolvent or seeking an order
for relief as a debtor under the United States Bankruptcy Code, as amended (11
U.S.C. ss.ss. 101 et seq.), or file any petition, or consent to any petition,
seeking any composition, reorganization, readjustment, liquidation, dissolution
or similar relief under the present or any future federal bankruptcy laws or any
other present or future applicable federal, state or other statute or law
relative to bankruptcy, insolvency or other relief for debtors; or seek or
consent to the appointment of any trustee, receiver, conservator, assignee,
sequestrator,
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custodian, or liquidator (or other similar official) of the Corporation or of
all or any substantial part of the properties and assets of the Corporation, or
make any general assignment for the benefit of creditors, or admit in writing
its inability to pay its debts generally as they become due, or declare or
effect a moratorium on its debt or take any corporate action in furtherance of
any such action.
(c) The Board of Directors of the Corporation shall, at all times
until the Property is released from the lien of the Mortgage, include an
independent director (the "Independent Director"). The Independent Director
shall be a person who is not at the time of appointment and who has not at any
time during the prior five years been and who is not while serving as the
Independent Director (i) a director, stockholder, officer or employee of the
Corporation or any affiliates thereof, other than with respect to such person's
service as an Independent Director of the Corporation and such person's service
in similar "Independent Director" positions for affiliates of the Corporation;
(ii) a creditor, customer, supplier, independent contractor, manager or any
other person who derives more than 10% of its gross revenues from its activities
wit the Corporation or any affiliates thereof; (iii) a person controlling any
such stockholder, creditor, customer, supplier, independent contractor, manager
or other person; (iv) the legal or beneficial owner, at any time while serving
as director of the Corporation, of any beneficial interest in the Corporation;
or (v) a member of the immediate family of any such stockholder, officer,
employee, creditor, customer, supplier, director, independent contractor,
manager or any other person of the Corporation. As used herein, the term
"affiliate" means any person controlling, under common control wit, or
controlled by the person in question, and the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through ownership
of voting securities, by contact or otherwise. In the event of the death,
incapacity, or resignation of an Independent Director, or the vacancy of the
Independent Director's seat on the Corporation's Board of Directors for any
reason, a successor Independent Director shall be appointed by the remaining
directors.
(d) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(Lx) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall not
(i) commingle its assets with those
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of, or pledge its assets for the benefit of, any other person or entity; (ii)
assume, guarantee or become obligated, or hold out its credit as being available
to satisfy, the liabilities or obligations of any other person or entity; (iii)
reduce its capital below an amount which is adequate in light of its
contemplated business operations; (iv) acquire obligations or securities of, or
make loans or advances to, any affiliate; (v) incur or assume any indebtedness
other than (A) the indebtedness underlying the Loan Agreement, and (B)
liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article Second and the last sentence of
Article Eighth of this Amended Certificate; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in this Amended Certificate. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
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<PAGE>
and to substitute the following provision:
ARTICLE II
(a) The purpose for which the Corporation is organized is limited
to: (i) acquiring, owning, leasing, operating, using and managing that certain
real property commonly known as the Four Points by Sheraton Niagara Inn, located
at 300 Third Street, Niagara Falls, New York 14303 (the "Property"); (ii)
entering into and performing its obligations under the credit agreement, among
Lodgian Financing Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel
Group, LLC, Servico, Inc. and other affiliated entities, as affiliate
guarantors, the initial lenders and initial issuing bank named therein, the
collateral agent, the administrative agent, Morgan Stanley Senior Funding, Inc.,
as co-lead arranger, joint-book manager and syndication agent and Lehman
Brothers, as co-lead arranger, joint-book manager and documentation agent
relating to the financing or refinancing of the Property (the "Loan Agreement")
which provides the lender thereunder with a first priority lien on the Property,
any promissory-note evidencing indebtedness incurred pursuant to the Loan
Agreement, any mortgage securing such indebtedness and encumbering the Property
(the "Mortgage") and any other documents securing such indebtedness and any
related collateral documents, each as amended (or pursuant to a consent obtained
in accordance with the terms thereof) (collectively, the "Loan Documents");
(iii) entering into and performing its obligations under the Indenture (the
"Indenture"), among Lodgian Financing Corp, as issuer, Lodgian, Inc., the
Subsidiary Guarantors defined therein and Bankers Trust Company, as trustee,
relating to the issuance of the 12 1/4% Senior Subordinated Notes due 2009 and
the Guarantee in favor of the holders of the Notes and (iv) transacting any and
all lawful business that is incident and necessary or appropriate to the
ownership and to the management of the Property for which a corporation may be
incorporated under the laws of the State of New York.
(b) Notwithstanding any other provision of this Amended Certificate
and any provision of law that otherwise so empowers the Corporation, until such
time as the Property is released from the lien of the Mortgage, the Corporation
shall not, without the unanimous affirmative vote of the members of its Board of
Directors, (i) amend, alter, change, repeal or adopt any resolution setting
forth a proposed amendment to, any provision of these Articles of Incorporation,
(ii) dissolve or liquidate, in whole or in part, consolidate or merge with or
into any other entity or convey, sell or transfer its properties and assets
substantially as an entirety to any entity, (iii) file a voluntary petition or
otherwise initiate, or consent to, proceedings for the Corporation to be
adjudicated insolvent or seeking an order for relief as a debtor under the
United States Bankruptcy Code, as amended (11 U.S.C. ss.ss. 101 et seq.), or
(iv) file any petition, or consent to any petition, seeking any composition,
reorganization, readjustment, liquidation, dissolution or similar relief under
the present or any future federal bankruptcy laws or any other present or future
applicable federal, state or other statute or law relative to bankruptcy,
insolvency or other relief for debtors; or (v) seek or consent to the
appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, or liquidator (or other similar official) of the Corporation or of
all or any substantial part of the properties and assets of the Corporation, or
(vi) make any general assignment for the benefit of creditors, or (vii) admit in
writing its inability
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to pay its debts generally as they become due, or (viii) declare or effect a
moratorium on its debt or take any corporate action in furtherance of any such
action.
(c) The Board of Directors of the Corporation shall, at all times
until the Property is released from the lien of the Mortgage, include an
independent director (the "Independent Director"). The Independent Director
shall be a person who is not at the time of appointment and who has not at any
time during the prior five years been and who is not while serving as the
Independent Director (i) a director, stockholder, officer or employee of the
Corporation or any affiliates thereof, other than with respect to such person's
service as an Independent Director of the Corporation and such person's service
in similar "Independent Director" positions for affiliates of the Corporation;
(ii) a creditor, customer, supplier, independent contractor, manager or any
other person who derives more than 10% of its gross revenues from its activities
with the Corporation or any affiliates thereof; (iii) a person controlling any
such stockholder, creditor, customer, supplier, independent contractor, manager
or other person; (iv) the legal or beneficial owner, at any time while serving
as director of the Corporation, of any beneficial interest in the Corporation;
or (v) a member of the immediate family of any such stockholder, officer,
employee, creditor, customer, supplier, director, independent contractor,
manager or any other person of the Corporation. As used herein, the term
"affiliate" means any person controlling, under common control wit, or
controlled by the person in question, and the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through ownership
of voting securities, by contact or otherwise. In the event of the death,
incapacity, or resignation of an Independent Director, or the vacancy of the
Independent Director's seat on the Corporation's Board of Directors for any
reason, a successor Independent Director shall be appointed by the remaining
directors.
(d) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(ix) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall not
(i) commingle its assets with those of, or pledge its assets for the benefit of,
any other person or entity; (ii) assume, guarantee or become obligated, or hold
out its credit as being available to satisfy, the liabilities or obligations of
any other person or entity; (iii) reduce its capital below an amount which is
adequate in light
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<PAGE>
of its contemplated business operations; (iv) acquire obligations or securities
of, or make loans or advances to, any affiliate; (v) incur or assume any
indebtedness other than (A) the indebtedness underlying the Loan Agreement, (B)
the indebtedness underlying the Indenture, and (C) liabilities (including, but
not limited to, trade payables) arising in the ordinary course of the
Corporation's business relating to the acquisition, ownership, operation, lease,
use or management of the Property; (vi) amend, alter, change or repeal any
provision of Article II and the last sentence of Article VIII of these Amended
Articles; (vii) engage in any dissolution or liquidation, in whole or in part,
consolidation or merger with or into any other entity or conveyance, sale or
transfer of its properties and assets substantially as an entirety to any
entity; or (viii) engage in any business or activity other than as set forth in
these Amended Articles. Notwithstanding anything contained herein to the
contrary, nothing herein shall be deemed to prohibit or otherwise limit any
dividends or other distributions from the Corporation to its shareholders.
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<PAGE>
The text of the Certificate of Incorporation is therefore restated
as amended to read as herein set forth in full:
ARTICLE I
The name of the Corporation is SERVICO NEW YORK, INC.
ARTICLE II
(a) The purpose for which the Corporation is organized is limited
to: (i) acquiring, owning, leasing, operating, using and managing that certain
real property commonly known as the Four Points by Sheraton Niagara Inn, located
at 300 Third Street, Niagara Falls, New York 14303 (the "Property"); (ii)
entering into and performing its obligations under the credit agreement, among
Lodgian Financing Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel
Group, LLC, Servico, Inc. and other affiliated entities, as affiliate
guarantors, the initial lenders and initial issuing bank named therein, the
collateral agent, the administrative agent, Morgan Stanley Senior Funding, Inc.,
as co-lead arranger, joint-book manager and syndication agent and Lehman
Brothers, as co-lead arranger, joint-book manager and documentation agent
relating to the financing or refinancing of the Property (the "Loan Agreement")
which provides the lender thereunder with a first priority lien on the Property,
any promissory-note evidencing indebtedness incurred pursuant to the Loan
Agreement, any mortgage securing such indebtedness and encumbering the Property
(the "Mortgage") and any other documents securing such indebtedness and any
related collateral documents, each as amended (or pursuant to a consent obtained
in accordance with the terms thereof) (collectively, the "Loan Documents");
(iii) entering into and performing its obligations under the Indenture (the
"Indenture"), among Lodgian Financing Corp, as issuer, Lodgian, Inc., the
Subsidiary Guarantors defined therein and Bankers Trust Company, as trustee,
relating to the issuance of the 12 1/4% Senior Subordinated Notes due 2009 and
the Guarantee in favor of the holders of the Notes and (iv) transacting any and
all lawful business that is incident and necessary or appropriate to the
ownership and to the management of the Property for which a corporation may be
incorporated under the laws of the State of New York.
(b) Notwithstanding any other provision of this Amended Certificate
and any provision of law that otherwise so empowers the Corporation, until such
time as the Property is released from the lien of the Mortgage, the Corporation
shall not, without the unanimous affirmative vote of the members of its Board of
Directors, (i) amend, alter, change, repeal or adopt any resolution setting
forth a proposed amendment to, any provision of these Articles of Incorporation,
(ii) dissolve or liquidate, in whole or in part, consolidate or merge with or
into any other entity or convey, sell or transfer its properties and assets
substantially as an entirety to any entity, (iii) file a voluntary petition or
otherwise initiate, or consent to, proceedings for the Corporation to be
adjudicated insolvent or seeking an order for relief as a debtor under the
United States Bankruptcy Code, as amended (11 U.S.C. ss.ss. 101 et seq.), or
(iv) file any petition, or consent to any petition, seeking any composition,
reorganization, readjustment, liquidation, dissolution or similar relief under
the present or any future federal bankruptcy laws or any other
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<PAGE>
present or future applicable federal, state or other statute or law relative to
bankruptcy, insolvency or other relief for debtors; or (v) seek or consent to
the appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, or liquidator (or other similar official) of the Corporation or of
all or any substantial part of the properties and assets of the Corporation, or
(vi) make any general assignment for the benefit of creditors, or (vii) admit in
writing its inability to pay its debts generally as they become due, or (viii)
declare or effect a moratorium on its debt or take any corporate action in
furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all times
until the Property is released from the lien of the Mortgage, include an
independent director (the "Independent Director"). The Independent Director
shall be a person who is not at the time of appointment and who has not at any
time during the prior five years been and who is not while serving as the
Independent Director (i) a director, stockholder, officer or employee of the
Corporation or any affiliates thereof, other than with respect to such person's
service as an Independent Director of the Corporation and such person's service
in similar "Independent Director" positions for affiliates of the Corporation;
(ii) a creditor, customer, supplier, independent contractor, manager or any
other person who derives more than 10% of its gross revenues from its activities
with the Corporation or any affiliates thereof; (iii) a person controlling any
such stockholder, creditor, customer, supplier, independent contractor, manager
or other person; (iv) the legal or beneficial owner, at any time while serving
as director of the Corporation, of any beneficial interest in the Corporation;
or (v) a member of the immediate family of any such stockholder, officer,
employee, creditor, customer, supplier, director, independent contractor,
manager or any other person of the Corporation. As used herein, the term
"affiliate" means any person controlling, under common control wit, or
controlled by the person in question, and the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through ownership
of voting securities, by contact or otherwise. In the event of the death,
incapacity, or resignation of an Independent Director, or the vacancy of the
Independent Director's seat on the Corporation's Board of Directors for any
reason, a successor Independent Director shall be appointed by the remaining
directors.
(d) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(ix) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
-8-
<PAGE>
(e) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall not
(i) commingle its assets with those of, or pledge its assets for the benefit of,
any other person or entity; (ii) assume, guarantee or become obligated, or hold
out its credit as being available to satisfy, the liabilities or obligations of
any other person or entity; (iii) reduce its capital below an amount which is
adequate in light of its contemplated business operations; (iv) acquire
obligations or securities of, or make loans or advances to, any affiliate; (v)
incur or assume any indebtedness other than (A) the indebtedness underlying the
Loan Agreement, (B) the indebtedness underlying the Indenture, and (C)
liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article II and the last sentence of
Article VIII of these Amended Articles; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in these Amended Articles. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
ARTICLE III
The office of the Corporation is to be located in the County of
Niagara, State of New York.
ARTICLE IV
The aggregate number of shares of stock which the Corporation shall
have the authority to issue is One Thousand (1,000) of the par value of Zero
Dollars and One Cent ($0.01) each.
ARTICLE V
The Secretary of State is designated as the agent of the Corporation
upon whom process against the Corporation may be served. The post office address
to which the Secretary of State shall mail a copy of any process against the
Corporation served upon him is c/o CT Corporation System, 1633 Broadway, New
York, New York 10019.
ARTICLE VI
The name and address of the registered agent which is to be the
agent of the Corporation upon which process against it may be served, are CT
Corporation System, 1633 Broadway, new York, New York 10019.
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ARTICLE VII
No director shall be personally liable to the Corporation or its
shareholders for damages for any breach of duty in such capacity, except that
this provision shall not eliminate or limit the liability of any director if a
judgment or other final adjudication adverse to such director establishes that
such director's acts or omissions were in bad faith or involved intentional
misconduct or a knowing violation of law or that such director personally gained
in fact a financial profit or other advantage to which such director was not
legally entitled or that such director's acts violated Section 719 of the New
York Business Corporation Law, nor shall this provision eliminate or limit the
liability of any director for any act or omission prior to the adoption of this
provision.
ARTICLE VIII
The Corporation shall indemnify any officer or director, or any
former officer or director of the Corporation, to the fullest extent permitted
by law. The foregoing right of indemnification shall not be exclusive of any
other rights to which any director, officer, employee or agent may be entitled
as a matter of law or which he may be lawfully granted. The Corporation's
obligation to indemnify its officers and directors pursuant to this Article
shall be subordinate in all respects to the obligations of the Corporation
arising out of the Loan Documents and shall not constitute a claim against the
Corporation to the extent that the Corporation is unable to pay any amounts it
is obligated to pay under the Loan Documents.
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<PAGE>
4. This restatement of the certificate of incorporation was
authorized by the Board of Directors of the Corporation and by the sole
shareholder of the Corporation by written consent without a meeting, pursuant to
Sections 615 and 708(b) of the New York Business Corporation Law, as of July 23,
1999. The number of outstanding shares of common stock of the Corporation (and
the number of shares entitled to vote thereon) is 1,000. The number of votes
cast were sufficient for approval.
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<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Second Amended
and Restated Certificate of Incorporation this 23nd day of July, 1999.
SERVICO NEW YORK, INC.
By: /s/ Thomas S. Gryboski
-------------------------------------
Name: Tom Gryboski
Title: Assistant Secretary
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<PAGE>
Exhibit 3.37.2
SERVICO NEW YORK, INC.
* * * * *
BY - LAWS
* * * * *
ARTICLE I
OFFICES
Section 1. The registered office shall be located at C T CORPORATION
SYSTEM, 155 WASHINGTON AVENUE, ALBANY, NEW YORK 12210
Section 2. The corporation may also have offices at such other
places both within and without the State of New York as the board of directors
may from time to time determine or the business of the corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of
directors shall be held on such day and at such hour as may be fixed from time
to time by the board of directors. Said meetings may also be held at such other
place either within or without the State of New York as shall be designated from
time to time by the board of directors and stated in the notice of the meeting.
Section 2. Annual meetings of shareholders, commencing with the year
1998, shall be held on the Second Monday in January unless that day is a legal
holiday, and if a legal holiday, then on the next secular day following, at
10:00 a.m., at which they shall elect by a plurality vote a board of directors,
and transact such other business as may properly be brought before the meeting.
Section 3. Written or printed notice of the annual meeting stating
the place, day and hour of the meeting shall be delivered not less than ten nor
more than fifty days before the date of the meeting, either personally or by
mail, by or at the direction of the president, the secretary, or the officer or
persons calling the meeting, to each shareholder of record entitled to vote at
such meeting.
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. Special meetings of shareholders for any purpose other
than the election of directors may be held at such time and place within or
without the state of New York as shall be stated in the notice of the meeting or
in a duly executed waiver of notice thereof.
Section 2. Special meetings of the shareholders, for any purposes,
unless otherwise prescribed by statute or by the articles of incorporation, may
be called by the president, the board of
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directors, or the holders of not less than one-tenth of all the shares entitled
to vote at the meeting.
Section 3. Written or printed notice of a special meeting stating
the place, day and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than fifty days
before the date of the meeting, either personally or by mail, by or at the
direction of the president, the secretary, or the officer or persons calling the
meeting, to each shareholder of record entitled to vote at such meeting.
Section 4. The business transacted at any special meeting of
shareholders shall be limited to the purposes stated in the notice.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of stock issued
and outstanding and entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by statute or by the articles of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the shareholders, the shareholders present in person or
represented by proxy shall have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented any business may be transacted which might have
been transacted at the meeting as originally notified.
Section 2. If a quorum is present, the affirmative vote of a
majority of the shares of stock represented at the meeting shall be the act of
the shareholders unless the vote of a greater number of shares of stock is
required by law or the articles of incorporation.
Section 3. Each outstanding share of stock, having voting power,
shall be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. A shareholder may vote either in person or by proxy executed in
writing by the shareholder or by his duly authorized attorney-in-fact.
Section 4. Any action required to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the shareholders entitled
to vote with respect to the subject matter thereof.
ARTICLE V
DIRECTORS
Section 1. The Board of Directors of the Corporation shall consist
of one (1) member. The number of directors may be either increased or decreased
from time to time by
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resolution of the Board of Directors, but shall never be less than one (1).
Directors need not be residents of the State of New York nor shareholders of the
corporation. The directors, other than the first board of directors, shall be
elected at the annual meeting of the shareholders, and each directors elected
shall serve until the next succeeding annual meeting and until his successor
shall have been elected and qualified. The first board of directors shall hold
office until the first annual meeting of shareholders.
Section 2. Any vacancy occurring in the board of directors may be
filled by the shareholders at an annual or a special meeting or by the
affirmative vote of a majority of the remaining directors though less than a
quorum of the board of directors. A director elected to fill a vacancy shall be
elected for the unexpired portion of the terms of his predecessor in office.
Any directorship to be filled by reason of an increase in the number
of directors may be filled by election at an annual meeting or at a special
meeting of shareholders called for that purpose. A director elected to fill a
newly created directorship shall serve until the next succeeding annual meeting
of shareholders and until his successor shall have been elected and qualified.
Any directorship to filled by reason of an increase in the number of directors
may also be filled by the board of directors for a term of office until the next
election of directors by shareholders; provide no more than two directorships
may be so filled during a period between any two successive annual meetings of
shareholders.
Whenever the holders of any class or series of shares are entitled
to elect one or more directors by the provisions of the articles of
incorporation, any vacancies in such directorships and any newly created
directorships of such class of series to be filled by reason of an increase in
the number of such directors may be filled by the affirmative vote of a majority
of the directors elected by such class or series then in office or by a sole
remaining director so elected, or by the vote of the holders of the outstanding
shares of such class or series, and such directorships shall not in any case be
filled by the vote of the remaining directors or the holders of the outstanding
shares as a whole unless otherwise provided in the articles of incorporation.
Section 3. The business affairs of the corporation shall be managed
by its board of directors which may exercise all such powers of the corporation
and do all such lawful acts and things as are not by statute or by the articles
of incorporation or by these by-laws directed or required to be exercised or
done by the shareholders.
Section 4. The directors may keep the books of the corporation,
except such as are required by law to be kept within the state, outside of the
State of New York, at such place or places as they may from time to time
determine.
Section 5. The board of directors, by the affirmative vote of a
majority of the directors then in office, and irrespective of any personal
interest to any of its members, shall have authority to establish reasonable
compensation of all directors for services to the corporation as directors,
officers or otherwise.
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ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular or special,
may be held either within or without the State of New York.
Section 2. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the vote of
the shareholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting provided a quorum shall be present, or it may convene at such place and
time as shall be fixed by the consent in writing of all the directors.
Section 3. Regular meetings of the board of directors may be held
upon such notice, or without notice, and at such time and at such place as shall
from time to time be determined by the board.
Section 4. Special meetings of the board of directors may be called
by the president on two days' notice to each director, either personally or by
mail or by telegram; special meeting shall be called by the president or
secretary in like manner and on like notice on the written request of two
directors.
Section 5. Attendance of a director at any meeting shall constitute
a waiver of notice of such meeting, except where a director attends for the
express purpose of objecting to the transaction of any business because the
meeting os not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the board
of directors need be specified in the notice or waiver of notice of such
meeting.
Section 6. A majority of the directors shall constitute a quorum for
the transaction of business unless greater number is required by law or by the
articles of incorporation. The act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the board of directors,
unless the act of a greater number is required by statute or by the articles of
incorporation. If a quorum shall not be present at any meeting of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 7. Unless otherwise restricted by the articles of
incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting, if all members of the board of committee, as the case may be,
consent thereto in writing which shall set forth the action taken and be signed
by all members of the board of directors or of the committee as the case may be.
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ARTICLE VII
COMMITTEES OF DIRECTORS
Section 1. The board of directors, by resolution adopted by a majority of
the full board of directors, may designate from among its members an executive
committee and one or more other committees, each of which shall be comprised of
one or more members and, to the extent provided in the resolution, shall have
and may exercise all of the authority of the board of directors, except that no
such committee shall have the authority of the board of directors in reference
to amending the articles of incorporation, approving a plan of merger or
consolidation, recommending to the shareholders the sale, lease, or exchange of
all or substantially all of the property and assets of the corporation otherwise
than in the usual and regular course of its business, recommending to the
shareholders a voluntary dissolution of the corporation or a revocation thereof,
amending, altering, or repealing the by-laws of the corporation or adopting new
by-laws for the corporation, filling vacancies in the board of directors to be
filled by reason of an increase in the number of directors, electing or removing
officers or members of an committee, fixing the compensation of any member of a
committee, or altering or repealing any resolution of the board of directors
which by its terms provides that it shall not be so amendable or repealable;
and, unless the resolution expressly so provides, no committee shall have the
power of authority to declare a dividend or to authorize the issuance of shares
of the corporation.
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes of the
articles of incorporation or of these by-laws, notice is required to be given to
any director or shareholder, it shall not be construed to mean personal notice,
but such notice may be given in writing, by mail, addressed to such director or
shareholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telegram.
Section 2. Whenever any notice whatever is required to be given
under the provisions of the statutes or under the provisions of the articles of
incorporation or these by-laws, a waiver thereof in writing signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
ARTICLE IX
OFFICERS
Section 1. The offices of the corporation shall be chosen by the
board of directors and shall be a president and a secretary. The board of
directors may also elect or appoint such other officers, including assistant
officers and agents as may be deemed necessary.
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Section 2. The board of directors at its first meeting after each
annual meeting of shareholders shall choose a president and a secretary neither
of whom need be a member of the board.
Section 3. The board of directors may also appoint such other
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall
exercise such powers and perform such duties as shall be determined from time to
time by the board of directors.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officers elected or appointed by
the board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the shareholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
THE VICE PRESIDENTS
Section 8. The vice-president, if there is one, or if there shall be
more than one, the vice-presidents in the order determined by the board of
directors, shall, in the absence of disability of the president, perform the
duties and exercise the powers of the president and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the shareholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the shareholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He
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shall have custody of the corporate seal of the corporation and he, or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature or by the
signature of such assistance secretary. The board of directors may give general
authority to any other officer to affect the affixing by his signature.
Section 10. The assistant secretary, if there is one, or if there be
more than one, the assistant secretaries in the order determined by the board of
directors, shall, in the absence or disability of the secretary, perform the
duties and exercise the powers of the secretary and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
THE TREASURER AND ASSISTANT TREASURES
Section 11. The treasurer, if there is one, shall have the custody
of the corporate funds and securities and shall keep full and accurate accounts
of receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the board of
directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind of his possession or under
his control belonging to the corporation.
Section 14. The assistant treasurer, if there is one, or, if there
shall be more than one, the assistant treasurers in the order determined by the
board of directors, shall, in the absence or disability of the treasurer,
perform the duties and exercise the powers of the treasurer and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
ARTICLE X
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by
certificates signed by the president and secretary or such other officers as may
be elected or appointed, and may be sealed with the seal of the corporation or a
facsimile thereof.
When the corporation is authorized to issue shares of more than one
class there shall
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be set forth upon the face or back of the certificate, or the certificate shall
have a statement that the corporation will furnish to any shareholder upon
request and without charge, a full statement of the designations, preferences,
limitations and relative rights of the shares of each class authorized to be
issued and, if the corporation is authorized to issue any preferred or special
class in series, the variations in the relative rights and preferences between
the shares of each such series so far as the same have been fixed and determined
and the relative rights and preferences of subsequent series. When the
corporation is authorized to issue shares of more than one class, every
certificate shall also set forth upon the face or the back of such certificate a
statement that there is set forth in the articles of incorporation on file in
the office of the Secretary of State a full statement of all the designations,
preferences, limitations and relative rights, including voting rights, or the
shares of each class authorized to be issued and the corporation at its
principal place of business or registered office. Every certificate shall have
noted thereon any information required to be set forth by the New York Business
Corporation Act and such information shall be set forth in the manner provided
in said Act.
Section 2. The signatures of the officers of the corporation upon a
certificate may be facsimiles of the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the corporation itself or an
employee of the corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of its
issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate to be
issued in place of any certificate therefore issued by the corporation alleged
to have been lost or destroyed. When authorizing such issue of a new
certificate, the board of directors, in its discretion and as a condition
precedent to the issuance thereof, may prescribe such terms and conditions as
its deems expedient, and may require such indemnities as it deems adequate, to
protect the corporation from any claim that may be made against it with respect
to any such certificate alleged to have been lost or destroyed.
TRANSFERS OF SHARES
Section 4. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate representing shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, a new certificate shall be issued to the person entitled thereto, and
the old certificate canceled and the transaction recorded upon the books of the
corporation.
CLOSING OF TRANSFER BOOKS
Section 5. For the purpose of determining shareholders entitled to
notice of or to vote at any meeting of shareholders, or any adjournment thereof
or entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose the board of
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directors may provide that the stock transfer books shall be closed for a stated
period but not to exceed, in any case, fifty days. If the stock transfer books
shall be closed for the purpose of determining shareholders entitled to notice
of or to vote at a meeting of shareholders, such books shall be closed for at
least ten days immediately preceding such meeting. In lieu of closing the stock
transfer books, the board of directors may fix in advance a date as the record
date for any such determination of shareholder, such date in any case to be not
more than fifty days and, in case of a meeting of shareholders, not less than
ten days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of shareholders, or
shareholders entitled to receive payment of a dividend, the date on which notice
of the meeting is mailed or the date on which the resolution of the board of
directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof.
REGISTERED SHAREHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize and equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
New York.
LIST OF SHAREHOLDERS
Section 7. The officer or agent having charge of the transfer books
for shares shall make, at least ten days before each meeting of shareholders, a
complete list of the shareholders entitled to vote at such meeting, arranged in
alphabetical order, with the address of each and the number of shares held by
each, which list, for a period of ten days prior to such meeting, shall be kept
on file at the registered office of the corporation and shall be subject to
inspection by any shareholder at any time during usual business hours. Such list
shall also be produced and kept open at the time and place of the meeting and
shall be subject so the inspection of any shareholders during the whole time of
the meeting. The original share ledger or transfer book, or a duplicate thereof,
shall be prima facie evidence as to who are the shareholders entitled to examine
such list or share ledger or transfer book or to vote at any meeting of the
shareholders.
ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the articles of
incorporation relating thereto, if any, dividends may be declared by the board
of directors at any regular or special meeting, pursuant
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to law Dividends may be paid in cash, in property or in shares of the capital
stock, subject to any provisions of the articles or incorporation.
Section 2. Before payment of any dividend, there may be set aside
out of any funds of the corporation available for dividends such sum or sums as
the directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time delegate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its organization and the words "Corporate Seal,
New York." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
ARTICLE XII
AMENDMENTS
Section 1. These by-laws maybe altered, amended, or repealed or new
by-laws may be adopted by the affirmative vote of a majority of the board of
directors at any regular or special meeting of the board subject to repeal or
change at any regular or special meeting of shareholders as which a quorum is
present or represented, by the affirmative vote of a majority of the stock
entitled to vote, provided notice of the proposed repeal or change be contained
in the notice of such meeting.
ARTICLE XIII
AMENDMENTS
Section 1. These by-laws maybe altered, amended or repealed or new
by-laws may be adopted at any regular or special meeting of shareholders at
which a quorum is present or represented, by the affirmative vote of a majority
of the stock entitled so vote, provided notice of the proposed alteration,
amendment or repeal be contained in the notice of such meeting.
Dated: December 8, 1997
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Exhibit 3.38.1
RESTATED CERTIFICATE OF INCORPORATION
OF
SERVICO NIAGARA FALLS, INC.
UNDER SECTION 807 OF THE BUSINESS CORPORATION LAW
1. The name of the corporation is SERVICO NIAGARA FALLS, INC.
2. The certificate of incorporation was filed by the department of
state on the 3rd day of December, 1997.
3. The text of the certificate of incorporation is hereby restated
as amended to effect one of the amendments authorized by the Business
Corporation Law, to wit:
The amendment replaces the Purpose clause of the certificate of
incorporation, which formerly stated as follows:
(a) The purpose for which the Corporation is organized is limited
to: (i) acquiring, owning, leasing, operating, using and managing that certain
real property commonly known as the Holiday Inn Select Niagara Falls, located at
114 Buffalo Street, Niagara Falls, New York 14303 (the "Property"); (ii)
entering into and performing its obligations under any loan agreement relating
to the financing or refinancing of the Property (the "Loan Agreement") which
provides the lender thereunder with a first priority lien on the Property, any
promissory note evidencing indebtedness incurred pursuant to the Loan Agreement,
any mortgage securing such indebtedness and encumbering the Property (the
"Mortgage") and any other documents securing such indebtedness and any related
collateral documents (collectively, the "Loan Documents"); and (iii) transacting
any and all lawful business that is incident and necessary or appropriate to the
ownership and to the management of the Property for which a corporation may be
incorporated under the laws of the State of Alabama.
(b) Notwithstanding any other provision of this Amended Certificate
and any provision of law that otherwise so empowers the Corporation, until such
time as the Property is released from the lien of the Mortgage, the Corporation
shall not, without the unanimous affirmative vote of the members of its Board of
Directors, file a voluntary petition or otherwise initiate, or consent to,
proceedings for the Corporation to be adjudicated insolvent or seeking an order
for relief as a debtor under the United States Bankruptcy Code, as amended (11
U.S.C. ss.ss. 101 et seq.), or file any petition, or consent to any petition,
seeking any composition, reorganization, readjustment, liquidation, dissolution
or similar relief under the present or any future federal bankruptcy laws or any
other present or future applicable federal, state or other statute or law
relative to bankruptcy, insolvency or other relief for debtors; or seek or
consent to the appointment of any trustee, receiver, conservator, assignee,
sequestrator,
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custodian, or liquidator (or other similar official) of the Corporation or of
all or any substantial part of the properties and assets of the Corporation, or
make any general assignment for the benefit of creditors, or admit in writing
its inability to pay its debts generally as they become due, or declare or
effect a moratorium on its debt or take any corporate action in furtherance of
any such action.
(c) The Board of Directors of the Corporation shall, at all times
until the Property is released from the lien of the Mortgage, include an
independent director (the "Independent Director"). The Independent Director
shall be a person who is not at the time of appointment and who has not at any
time during the prior five years been and who is not while serving as the
Independent Director (i) a director, stockholder, officer or employee of the
Corporation or any affiliates thereof, other than with respect to such person's
service as an Independent Director of the Corporation and such person's service
in similar "Independent Director" positions for affiliates of the Corporation;
(ii) a creditor, customer, supplier, independent contractor, manager or any
other person who derives more than 10% of its gross revenues from its activities
wit the Corporation or any affiliates thereof; (iii) a person controlling any
such stockholder, creditor, customer, supplier, independent contractor, manager
or other person; (iv) the legal or beneficial owner, at any time while serving
as director of the Corporation, of any beneficial interest in the Corporation;
or (v) a member of the immediate family of any such stockholder, officer,
employee, creditor, customer, supplier, director, independent contractor,
manager or any other person of the Corporation. As used herein, the term
"affiliate" means any person controlling, under common control wit, or
controlled by the person in question, and the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through ownership
of voting securities, by contact or otherwise. In the event of the death,
incapacity, or resignation of an Independent Director, or the vacancy of the
Independent Director's seat on the Corporation's Board of Directors for any
reason, a successor Independent Director shall be appointed by the remaining
directors.
(d) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(Lx) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall not
(i) commingle its assets with those
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<PAGE>
of, or pledge its assets for the benefit of, any other person or entity; (ii)
assume, guarantee or become obligated, or hold out its credit as being available
to satisfy, the liabilities or obligations of any other person or entity; (iii)
reduce its capital below an amount which is adequate in light of its
contemplated business operations; (iv) acquire obligations or securities of, or
make loans or advances to, any affiliate; (v) incur or assume any indebtedness
other than (A) the indebtedness underlying the Loan Agreement, and (B)
liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article Second and the last sentence of
Article Eighth of this Amended Certificate; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in this Amended Certificate. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
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<PAGE>
and to substitute the following provision:
ARTICLE II
(a) The purpose for which the Corporation is organized is limited
to: (i) acquiring, owning, leasing, operating, using and managing that certain
real property commonly known as the Holiday Inn Select Niagara Falls, located at
114 Buffalo Street, Niagara Falls, New York 14303 (the "Property"); (ii)
entering into and performing its obligations under the credit agreement, among
Lodgian Financing Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel
Group, LLC, Servico, Inc. and other affiliated entities, as affiliate
guarantors, the initial lenders and initial issuing bank named therein, the
collateral agent, the administrative agent, Morgan Stanley Senior Funding, Inc.,
as co-lead arranger, joint-book manager and syndication agent and Lehman
Brothers, as co-lead arranger, joint-book manager and documentation agent
relating to the financing or refinancing of the Property (the "Loan Agreement")
which provides the lender thereunder with a first priority lien on the Property,
any promissory-note evidencing indebtedness incurred pursuant to the Loan
Agreement, any mortgage securing such indebtedness and encumbering the Property
(the "Mortgage") and any other documents securing such indebtedness and any
related collateral documents, each as amended (or pursuant to a consent obtained
in accordance with the terms thereof) (collectively, the "Loan Documents");
(iii) entering into and performing its obligations under the Indenture (the
"Indenture"), among Lodgian Financing Corp, as issuer, Lodgian, Inc., the
Subsidiary Guarantors defined therein and Bankers Trust Company, as trustee,
relating to the issuance of the 12 1/4% Senior Subordinated Notes due 2009 and
the Guarantee in favor of the holders of the Notes and (iv) transacting any and
all lawful business that is incident and necessary or appropriate to the
ownership and to the management of the Property for which a corporation may be
incorporated under the laws of the State of New York.
(b) Notwithstanding any other provision of this Amended Certificate
and any provision of law that otherwise so empowers the Corporation, until such
time as the Property is released from the lien of the Mortgage, the Corporation
shall not, without the unanimous affirmative vote of the members of its Board of
Directors, (i) amend, alter, change, repeal or adopt any resolution setting
forth a proposed amendment to, any provision of these Articles of Incorporation,
(ii) dissolve or liquidate, in whole or in part, consolidate or merge with or
into any other entity or convey, sell or transfer its properties and assets
substantially as an entirety to any entity, (iii) file a voluntary petition or
otherwise initiate, or consent to, proceedings for the Corporation to be
adjudicated insolvent or seeking an order for relief as a debtor under the
United States Bankruptcy Code, as amended (11 U.S.C. ss.ss. 101 et seq.), or
(iv) file any petition, or consent to any petition, seeking any composition,
reorganization, readjustment, liquidation, dissolution or similar relief under
the present or any future federal bankruptcy laws or any other present or future
applicable federal, state or other statute or law relative to bankruptcy,
insolvency or other relief for debtors; or (v) seek or consent to the
appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, or liquidator (or other similar official) of the Corporation or of
all or any substantial part of the properties and assets of the Corporation, or
(vi) make any general assignment for the benefit of creditors, or (vii) admit in
writing its inability
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<PAGE>
to pay its debts generally as they become due, or (viii) declare or effect a
moratorium on its debt or take any corporate action in furtherance of any such
action.
(c) The Board of Directors of the Corporation shall, at all times
until the Property is released from the lien of the Mortgage, include an
independent director (the "Independent Director"). The Independent Director
shall be a person who is not at the time of appointment and who has not at any
time during the prior five years been and who is not while serving as the
Independent Director (i) a director, stockholder, officer or employee of the
Corporation or any affiliates thereof, other than with respect to such person's
service as an Independent Director of the Corporation and such person's service
in similar "Independent Director" positions for affiliates of the Corporation;
(ii) a creditor, customer, supplier, independent contractor, manager or any
other person who derives more than 10% of its gross revenues from its activities
with the Corporation or any affiliates thereof; (iii) a person controlling any
such stockholder, creditor, customer, supplier, independent contractor, manager
or other person; (iv) the legal or beneficial owner, at any time while serving
as director of the Corporation, of any beneficial interest in the Corporation;
or (v) a member of the immediate family of any such stockholder, officer,
employee, creditor, customer, supplier, director, independent contractor,
manager or any other person of the Corporation. As used herein, the term
"affiliate" means any person controlling, under common control wit, or
controlled by the person in question, and the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through ownership
of voting securities, by contact or otherwise. In the event of the death,
incapacity, or resignation of an Independent Director, or the vacancy of the
Independent Director's seat on the Corporation's Board of Directors for any
reason, a successor Independent Director shall be appointed by the remaining
directors.
(d) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(ix) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall not
(i) commingle its assets with those of, or pledge its assets for the benefit of,
any other person or entity; (ii) assume, guarantee or become obligated, or hold
out its credit as being available to satisfy, the liabilities or obligations of
any other person or entity; (iii) reduce its capital below an amount which is
adequate in light
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<PAGE>
of its contemplated business operations; (iv) acquire obligations or securities
of, or make loans or advances to, any affiliate; (v) incur or assume any
indebtedness other than (A) the indebtedness underlying the Loan Agreement, (B)
the indebtedness underlying the Indenture, and (C) liabilities (including, but
not limited to, trade payables) arising in the ordinary course of the
Corporation's business relating to the acquisition, ownership, operation, lease,
use or management of the Property; (vi) amend, alter, change or repeal any
provision of Article II and the last sentence of Article VIII of these Amended
Articles; (vii) engage in any dissolution or liquidation, in whole or in part,
consolidation or merger with or into any other entity or conveyance, sale or
transfer of its properties and assets substantially as an entirety to any
entity; or (viii) engage in any business or activity other than as set forth in
these Amended Articles. Notwithstanding anything contained herein to the
contrary, nothing herein shall be deemed to prohibit or otherwise limit any
dividends or other distributions from the Corporation to its shareholders.
-6-
<PAGE>
The text of the Certificate of Incorporation is therefore restated
as amended to read as herein set forth in full:
ARTICLE I
The name of the Corporation is SERVICO NIAGARA FALLS, INC.
ARTICLE II
(a) The purpose for which the Corporation is organized is limited
to: (i) acquiring, owning, leasing, operating, using and managing that certain
real property commonly known as the Holiday Inn Select Niagara Falls, located at
114 Buffalo Street, Niagara Falls, New York 14303 (the "Property"); (ii)
entering into and performing its obligations under the credit agreement, among
Lodgian Financing Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel
Group, LLC, Servico, Inc. and other affiliated entities, as affiliate
guarantors, the initial lenders and initial issuing bank named therein, the
collateral agent, the administrative agent, Morgan Stanley Senior Funding, Inc.,
as co-lead arranger, joint-book manager and syndication agent and Lehman
Brothers, as co-lead arranger, joint-book manager and documentation agent
relating to the financing or refinancing of the Property (the "Loan Agreement")
which provides the lender thereunder with a first priority lien on the Property,
any promissory-note evidencing indebtedness incurred pursuant to the Loan
Agreement, any mortgage securing such indebtedness and encumbering the Property
(the "Mortgage") and any other documents securing such indebtedness and any
related collateral documents, each as amended (or pursuant to a consent obtained
in accordance with the terms thereof) (collectively, the "Loan Documents");
(iii) entering into and performing its obligations under the Indenture (the
"Indenture"), among Lodgian Financing Corp, as issuer, Lodgian, Inc., the
Subsidiary Guarantors defined therein and Bankers Trust Company, as trustee,
relating to the issuance of the 12 1/4% Senior Subordinated Notes due 2009 and
the Guarantee in favor of the holders of the Notes and (iv) transacting any and
all lawful business that is incident and necessary or appropriate to the
ownership and to the management of the Property for which a corporation may be
incorporated under the laws of the State of New York.
(b) Notwithstanding any other provision of this Amended Certificate
and any provision of law that otherwise so empowers the Corporation, until such
time as the Property is released from the lien of the Mortgage, the Corporation
shall not, without the unanimous affirmative vote of the members of its Board of
Directors, (i) amend, alter, change, repeal or adopt any resolution setting
forth a proposed amendment to, any provision of these Articles of Incorporation,
(ii) dissolve or liquidate, in whole or in part, consolidate or merge with or
into any other entity or convey, sell or transfer its properties and assets
substantially as an entirety to any entity, (iii) file a voluntary petition or
otherwise initiate, or consent to, proceedings for the Corporation to be
adjudicated insolvent or seeking an order for relief as a debtor under the
United States Bankruptcy Code, as amended (11 U.S.C. ss.ss. 101 et seq.), or
(iv) file any petition, or consent to any petition, seeking any composition,
reorganization, readjustment, liquidation, dissolution or similar relief under
the present or any future federal bankruptcy laws or any other
-7-
<PAGE>
present or future applicable federal, state or other statute or law relative to
bankruptcy, insolvency or other relief for debtors; or (v) seek or consent to
the appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, or liquidator (or other similar official) of the Corporation or of
all or any substantial part of the properties and assets of the Corporation, or
(vi) make any general assignment for the benefit of creditors, or (vii) admit in
writing its inability to pay its debts generally as they become due, or (viii)
declare or effect a moratorium on its debt or take any corporate action in
furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all times
until the Property is released from the lien of the Mortgage, include an
independent director (the "Independent Director"). The Independent Director
shall be a person who is not at the time of appointment and who has not at any
time during the prior five years been and who is not while serving as the
Independent Director (i) a director, stockholder, officer or employee of the
Corporation or any affiliates thereof, other than with respect to such person's
service as an Independent Director of the Corporation and such person's service
in similar "Independent Director" positions for affiliates of the Corporation;
(ii) a creditor, customer, supplier, independent contractor, manager or any
other person who derives more than 10% of its gross revenues from its activities
with the Corporation or any affiliates thereof; (iii) a person controlling any
such stockholder, creditor, customer, supplier, independent contractor, manager
or other person; (iv) the legal or beneficial owner, at any time while serving
as director of the Corporation, of any beneficial interest in the Corporation;
or (v) a member of the immediate family of any such stockholder, officer,
employee, creditor, customer, supplier, director, independent contractor,
manager or any other person of the Corporation. As used herein, the term
"affiliate" means any person controlling, under common control wit, or
controlled by the person in question, and the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through ownership
of voting securities, by contact or otherwise. In the event of the death,
incapacity, or resignation of an Independent Director, or the vacancy of the
Independent Director's seat on the Corporation's Board of Directors for any
reason, a successor Independent Director shall be appointed by the remaining
directors.
(d) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(ix) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
-8-
<PAGE>
(e) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall not
(i) commingle its assets with those of, or pledge its assets for the benefit of,
any other person or entity; (ii) assume, guarantee or become obligated, or hold
out its credit as being available to satisfy, the liabilities or obligations of
any other person or entity; (iii) reduce its capital below an amount which is
adequate in light of its contemplated business operations; (iv) acquire
obligations or securities of, or make loans or advances to, any affiliate; (v)
incur or assume any indebtedness other than (A) the indebtedness underlying the
Loan Agreement, (B) the indebtedness underlying the Indenture, and (C)
liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article II and the last sentence of
Article VIII of these Amended Articles; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in these Amended Articles. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
ARTICLE III
The office of the Corporation is to be located in the County of
Niagara, State of New York.
ARTICLE IV
The aggregate number of shares of stock which the Corporation shall
have the authority to issue is One Thousand (1,000) of the par value of Zero
Dollars and One Cent ($0.01) each.
ARTICLE V
The Secretary of State is designated as the agent of the Corporation
upon whom process against the Corporation may be served. The post office address
to which the Secretary of State shall mail a copy of any process against the
Corporation served upon him is c/o CT Corporation System, 1633 Broadway, New
York, New York 10019.
ARTICLE VI
The name and address of the registered agent which is to be the
agent of the Corporation upon which process against it may be served, are CT
Corporation System, 1633 Broadway, new York, New York 10019.
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<PAGE>
ARTICLE VII
No director shall be personally liable to the Corporation or its
shareholders for damages for any breach of duty in such capacity, except that
this provision shall not eliminate or limit the liability of any director if
a judgment or other final adjudication adverse to such director establishes
that such director's acts or omissions were in bad faith or involved
intentional misconduct or a knowing violation of law or that such director
personally gained in fact a financial profit or other advantage to which such
director was not legally entitled or that such director's acts violated
Section 719 of the New York Business Corporation Law, nor shall this
provision eliminate or limit the liability of any director for any act or
omission prior to the adoption of this provision.
ARTICLE VIII
The Corporation shall indemnify any officer or director, or any
former officer or director of the Corporation, to the fullest extent permitted
by law. The foregoing right of indemnification shall not be exclusive of any
other rights to which any director, officer, employee or agent may be entitled
as a matter of law or which he may be lawfully granted. The Corporation's
obligation to indemnify its officers and directors pursuant to this Article
shall be subordinate in all respects to the obligations of the Corporation
arising out of the Loan Documents and shall not constitute a claim against the
Corporation to the extent that the Corporation is unable to pay any amounts it
is obligated to pay under the Loan Documents.
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<PAGE>
4. This restatement of the certificate of incorporation was
authorized by the Board of Directors of the Corporation and by the sole
shareholder of the Corporation by written consent without a meeting, pursuant to
Sections 615 and 708(b) of the New York Business Corporation Law, as of July 23,
1999. The number of outstanding shares of common stock of the Corporation (and
the number of shares entitled to vote thereon) is 1,000. The number of votes
cast were sufficient for approval.
-11-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Second Amended
and Restated Certificate of Incorporation this 23rd day of July, 1999.
SERVICO NIAGARA FALLS, INC.
By: /s/ Thomas S. Gryboski
-------------------------------------
Name: Tom Gryboski
Title: Assistant Secretary
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<PAGE>
Exhibit 3.38.2
SERVICO NIAGRA FALLS, INC.
* * * * *
BY - LAWS
* * * * *
ARTICLE I
OFFICES
Section 1. The registered office shall be located at C T CORPORATION
SYSTEM, 155 WASHINGTON AVENUE, ALBANY, NEW YORK 12210
Section 2. The corporation may also have offices at such other
places both within and without the State of New York as the board of directors
may from time to time determine or the business of the corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of
directors shall be held on such day and at such hour as may be fixed from time
to time by the board of directors. Said meetings may also be held at such other
place either within or without the State of New York as shall be designated from
time to time by the board of directors and stated in the notice of the meeting.
Section 2. Annual meetings of shareholders, commencing with the year
1998, shall be held on the Second Monday in January unless that day is a legal
holiday, and if a legal holiday, then on the next secular day following, at
10:00 a.m., at which they shall elect by a plurality vote a board of directors,
and transact such other business as may properly be brought before the meeting.
Section 3. Written or printed notice of the annual meeting stating
the place, day and hour of the meeting shall be delivered not less than ten nor
more than fifty days before the date of the meeting, either personally or by
mail, by or at the direction of the president, the secretary, or the officer or
persons calling the meeting, to each shareholder of record entitled to vote at
such meeting.
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. Special meetings of shareholders for any purpose other
than the election of directors may be held at such time and place within or
without the state of New York as shall be stated in the notice of the meeting or
in a duly executed waiver of notice thereof.
Section 2. Special meetings of the shareholders, for any purposes,
unless otherwise prescribed by statute or by the articles of incorporation, may
be called by the president, the board of
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<PAGE>
directors, or the holders of not less than one-tenth of all the shares entitled
to vote at the meeting.
Section 3. Written or printed notice of a special meeting stating
the place, day and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than fifty days
before the date of the meeting, either personally or by mail, by or at the
direction of the president, the secretary, or the officer or persons calling the
meeting, to each shareholder of record entitled to vote at such meeting.
Section 4. The business transacted at any special meeting of
shareholders shall be limited to the purposes stated in the notice.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of stock issued
and outstanding and entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by statute or by the articles of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the shareholders, the shareholders present in person or
represented by proxy shall have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented any business may be transacted which might have
been transacted at the meeting as originally notified.
Section 2. If a quorum is present, the affirmative vote of a
majority of the shares of stock represented at the meeting shall be the act of
the shareholders unless the vote of a greater number of shares of stock is
required by law or the articles of incorporation.
Section 3. Each outstanding share of stock, having voting power,
shall be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. A shareholder may vote either in person or by proxy executed in
writing by the shareholder or by his duly authorized attorney-in-fact.
Section 4. Any action required to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the shareholders entitled
to vote with respect to the subject matter thereof.
ARTICLE V
DIRECTORS
Section 1. The Board of Directors of the Corporation shall consist
of one (1) member. The number of directors may be either increased or decreased
from time to time by
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<PAGE>
resolution of the Board of Directors, but shall never be less than one (1).
Directors need not be residents of the State of New York nor shareholders of the
corporation. The directors, other than the first board of directors, shall be
elected at the annual meeting of the shareholders, and each directors elected
shall serve until the next succeeding annual meeting and until his successor
shall have been elected and qualified. The first board of directors shall hold
office until the first annual meeting of shareholders.
Section 2. Any vacancy occurring in the board of directors may be
filled by the shareholders at an annual or a special meeting or by the
affirmative vote of a majority of the remaining directors though less than a
quorum of the board of directors. A director elected to fill a vacancy shall be
elected for the unexpired portion of the terms of his predecessor in office.
Any directorship to be filled by reason of an increase in the number
of directors may be filled by election at an annual meeting or at a special
meeting of shareholders called for that purpose. A director elected to fill a
newly created directorship shall serve until the next succeeding annual meeting
of shareholders and until his successor shall have been elected and qualified.
Any directorship to filled by reason of an increase in the number of directors
may also be filled by the board of directors for a term of office until the next
election of directors by shareholders; provide no more than two directorships
may be so filled during a period between any two successive annual meetings of
shareholders.
Whenever the holders of any class or series of shares are entitled
to elect one or more directors by the provisions of the articles of
incorporation, any vacancies in such directorships and any newly created
directorships of such class of series to be filled by reason of an increase in
the number of such directors may be filled by the affirmative vote of a majority
of the directors elected by such class or series then in office or by a sole
remaining director so elected, or by the vote of the holders of the outstanding
shares of such class or series, and such directorships shall not in any case be
filled by the vote of the remaining directors or the holders of the outstanding
shares as a whole unless otherwise provided in the articles of incorporation.
Section 3. The business affairs of the corporation shall be managed
by its board of directors which may exercise all such powers of the corporation
and do all such lawful acts and things as are not by statute or by the articles
of incorporation or by these by-laws directed or required to be exercised or
done by the shareholders.
Section 4. The directors may keep the books of the corporation,
except such as are required by law to be kept within the state, outside of the
State of New York, at such place or places as they may from time to time
determine.
Section 5. The board of directors, by the affirmative vote of a
majority of the directors then in office, and irrespective of any personal
interest to any of its members, shall have authority to establish reasonable
compensation of all directors for services to the corporation as directors,
officers or otherwise.
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<PAGE>
ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular or special,
may be held either within or without the State of New York.
Section 2. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the vote of
the shareholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting provided a quorum shall be present, or it may convene at such place and
time as shall be fixed by the consent in writing of all the directors.
Section 3. Regular meetings of the board of directors may be held
upon such notice, or without notice, and at such time and at such place as shall
from time to time be determined by the board.
Section 4. Special meetings of the board of directors may be called
by the president on two days' notice to each director, either personally or by
mail or by telegram; special meeting shall be called by the president or
secretary in like manner and on like notice on the written request of two
directors.
Section 5. Attendance of a director at any meeting shall constitute
a waiver of notice of such meeting, except where a director attends for the
express purpose of objecting to the transaction of any business because the
meeting os not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the board
of directors need be specified in the notice or waiver of notice of such
meeting.
Section 6. A majority of the directors shall constitute a quorum for
the transaction of business unless greater number is required by law or by the
articles of incorporation. The act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the board of directors,
unless the act of a greater number is required by statute or by the articles of
incorporation. If a quorum shall not be present at any meeting of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 7. Unless otherwise restricted by the articles of
incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting, if all members of the board of committee, as the case may be,
consent thereto in writing which shall set forth the action taken and be signed
by all members of the board of directors or of the committee as the case may be.
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ARTICLE VII
COMMITTEES OF DIRECTORS
Section 1. The board of directors, by resolution adopted by a majority of
the full board of directors, may designate from among its members an executive
committee and one or more other committees, each of which shall be comprised of
one or more members and, to the extent provided in the resolution, shall have
and may exercise all of the authority of the board of directors, except that no
such committee shall have the authority of the board of directors in reference
to amending the articles of incorporation, approving a plan of merger or
consolidation, recommending to the shareholders the sale, lease, or exchange of
all or substantially all of the property and assets of the corporation otherwise
than in the usual and regular course of its business, recommending to the
shareholders a voluntary dissolution of the corporation or a revocation thereof,
amending, altering, or repealing the by-laws of the corporation or adopting new
by-laws for the corporation, filling vacancies in the board of directors to be
filled by reason of an increase in the number of directors, electing or removing
officers or members of an committee, fixing the compensation of any member of a
committee, or altering or repealing any resolution of the board of directors
which by its terms provides that it shall not be so amendable or repealable;
and, unless the resolution expressly so provides, no committee shall have the
power of authority to declare a dividend or to authorize the issuance of shares
of the corporation.
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes of the
articles of incorporation or of these by-laws, notice is required to be given to
any director or shareholder, it shall not be construed to mean personal notice,
but such notice may be given in writing, by mail, addressed to such director or
shareholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telegram.
Section 2. Whenever any notice whatever is required to be given
under the provisions of the statutes or under the provisions of the articles of
incorporation or these by-laws, a waiver thereof in writing signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
ARTICLE IX
OFFICERS
Section 1. The offices of the corporation shall be chosen by the
board of directors and shall be a president and a secretary. The board of
directors may also elect or appoint such other officers, including assistant
officers and agents as may be deemed necessary.
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Section 2. The board of directors at its first meeting after each
annual meeting of shareholders shall choose a president and a secretary neither
of whom need be a member of the board.
Section 3. The board of directors may also appoint such other
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall
exercise such powers and perform such duties as shall be determined from time to
time by the board of directors.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officers elected or appointed by
the board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the shareholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
THE VICE PRESIDENTS
Section 8. The vice-president, if there is one, or if there shall be
more than one, the vice-presidents in the order determined by the board of
directors, shall, in the absence of disability of the president, perform the
duties and exercise the powers of the president and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the shareholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the shareholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He
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shall have custody of the corporate seal of the corporation and he, or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature or by the
signature of such assistance secretary. The board of directors may give general
authority to any other officer to affect the affixing by his signature.
Section 10. The assistant secretary, if there is one, or if there be
more than one, the assistant secretaries in the order determined by the board of
directors, shall, in the absence or disability of the secretary, perform the
duties and exercise the powers of the secretary and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
THE TREASURER AND ASSISTANT TREASURES
Section 11. The treasurer, if there is one, shall have the custody
of the corporate funds and securities and shall keep full and accurate accounts
of receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the board of
directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind of his possession or under
his control belonging to the corporation.
Section 14. The assistant treasurer, if there is one, or, if there
shall be more than one, the assistant treasurers in the order determined by the
board of directors, shall, in the absence or disability of the treasurer,
perform the duties and exercise the powers of the treasurer and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
ARTICLE X
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by
certificates signed by the president and secretary or such other officers as may
be elected or appointed, and may be sealed with the seal of the corporation or a
facsimile thereof.
When the corporation is authorized to issue shares of more than one
class there shall
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be set forth upon the face or back of the certificate, or the certificate shall
have a statement that the corporation will furnish to any shareholder upon
request and without charge, a full statement of the designations, preferences,
limitations and relative rights of the shares of each class authorized to be
issued and, if the corporation is authorized to issue any preferred or special
class in series, the variations in the relative rights and preferences between
the shares of each such series so far as the same have been fixed and determined
and the relative rights and preferences of subsequent series. When the
corporation is authorized to issue shares of more than one class, every
certificate shall also set forth upon the face or the back of such certificate a
statement that there is set forth in the articles of incorporation on file in
the office of the Secretary of State a full statement of all the designations,
preferences, limitations and relative rights, including voting rights, or the
shares of each class authorized to be issued and the corporation at its
principal place of business or registered office. Every certificate shall have
noted thereon any information required to be set forth by the New York Business
Corporation Act and such information shall be set forth in the manner provided
in said Act.
Section 2. The signatures of the officers of the corporation upon a
certificate may be facsimiles of the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the corporation itself or an
employee of the corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of its
issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate to be
issued in place of any certificate therefore issued by the corporation alleged
to have been lost or destroyed. When authorizing such issue of a new
certificate, the board of directors, in its discretion and as a condition
precedent to the issuance thereof, may prescribe such terms and conditions as
its deems expedient, and may require such indemnities as it deems adequate, to
protect the corporation from any claim that may be made against it with respect
to any such certificate alleged to have been lost or destroyed.
TRANSFERS OF SHARES
Section 4. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate representing shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, a new certificate shall be issued to the person entitled thereto, and
the old certificate canceled and the transaction recorded upon the books of the
corporation.
CLOSING OF TRANSFER BOOKS
Section 5. For the purpose of determining shareholders entitled to
notice of or to vote at any meeting of shareholders, or any adjournment thereof
or entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose the board of
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directors may provide that the stock transfer books shall be closed for a stated
period but not to exceed, in any case, fifty days. If the stock transfer books
shall be closed for the purpose of determining shareholders entitled to notice
of or to vote at a meeting of shareholders, such books shall be closed for at
least ten days immediately preceding such meeting. In lieu of closing the stock
transfer books, the board of directors may fix in advance a date as the record
date for any such determination of shareholder, such date in any case to be not
more than fifty days and, in case of a meeting of shareholders, not less than
ten days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of shareholders, or
shareholders entitled to receive payment of a dividend, the date on which notice
of the meeting is mailed or the date on which the resolution of the board of
directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof.
REGISTERED SHAREHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize and equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
New York.
LIST OF SHAREHOLDERS
Section 7. The officer or agent having charge of the transfer books
for shares shall make, at least ten days before each meeting of shareholders, a
complete list of the shareholders entitled to vote at such meeting, arranged in
alphabetical order, with the address of each and the number of shares held by
each, which list, for a period of ten days prior to such meeting, shall be kept
on file at the registered office of the corporation and shall be subject to
inspection by any shareholder at any time during usual business hours. Such list
shall also be produced and kept open at the time and place of the meeting and
shall be subject so the inspection of any shareholders during the whole time of
the meeting. The original share ledger or transfer book, or a duplicate thereof,
shall be prima facie evidence as to who are the shareholders entitled to examine
such list or share ledger or transfer book or to vote at any meeting of the
shareholders.
ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the articles of
incorporation relating thereto, if any, dividends may be declared by the board
of directors at any regular or special meeting, pursuant
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to law Dividends may be paid in cash, in property or in shares of the capital
stock, subject to any provisions of the articles or incorporation.
Section 2. Before payment of any dividend, there may be set aside
out of any funds of the corporation available for dividends such sum or sums as
the directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time delegate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its organization and the words "Corporate Seal,
New York." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
ARTICLE XII
AMENDMENTS
Section 1. These by-laws maybe altered, amended, or repealed or new
by-laws may be adopted by the affirmative vote of a majority of the board of
directors at any regular or special meeting of the board subject to repeal or
change at any regular or special meeting of shareholders as which a quorum is
present or represented, by the affirmative vote of a majority of the stock
entitled to vote, provided notice of the proposed repeal or change be contained
in the notice of such meeting.
ARTICLE XIII
AMENDMENTS
Section 1. These by-laws maybe altered, amended or repealed or new
by-laws may be adopted at any regular or special meeting of shareholders at
which a quorum is present or represented, by the affirmative vote of a majority
of the stock entitled so vote, provided notice of the proposed alteration,
amendment or repeal be contained in the notice of such meeting.
Dated: December 8, 1997
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Exhibit 3.39.1
State of North Carolina
Department of the Secretary of State
RESTATED
ARTICLES OF INCORPORATION OF
FAYETTEVILLE MOTEL ENTERPRISES, INC.
Pursuant to Section 55-10-06 and 55-10-07 of the North Carolina Business
Corporations Act, the undersigned Corporation hereby submits the following
Amended and Restated Articles of Incorporation for filing with the North
Carolina Secretary of State:
1. The name of the Corporation is Fayetteville Motel Enterprises, Inc.
2. The text of the Amended and Restated Articles of Incorporation are
attached hereto as Exhibit "A".
3. The date of adoption of the Amended and Restated Articles of
Incorporation was July 23, 1999.
4. The Amended and Restated Articles of Incorporation were duly adopted
and approved by the sole shareholder and board of directors of the Corporation,
by written consent in lieu of a meeting pursuant to the provisions of Sections
55-7-04 and 55-8-21 of the North Carolina Business Corporation Act. The number
of votes cast was sufficient for approval.
5. These Amended and Restated Articles of Incorporation will be effective
upon filing with the North Carolina Secretary of State.
Dated this 23rd day of July, 1999.
FAYETTEVILLE MOTEL ENTERPRISES, INC.
By: /s/ Thomas S. Gryboski
-------------------------------------
Name: Thomas S. Gryboski
Title: Assistant Secretary
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<PAGE>
EXHIBIT "A"
SECOND AMENDED AND RESTATED
ARTICLES OF INCORPORATION OF
FAYETTEVILLE MOTEL ENTERPRISES, INC.
ARTICLE I
The name of the Corporation is FAYETTEVILLE MOTEL ENTERPRISES, INC.
ARTICLE II
The registered office of the Corporation is located at 225 Hillsborough
Street, Raleigh, Wake County, North Carolina 27603. The name of its registered
agent at that address is CT Corporation System, Inc.
ARTICLE III
(a) The purpose for which the Corporation is organized is limited
to: (i) acquiring, owning, leasing, operating, using and managing that certain
real property commonly known as the Holiday Inn Faytteville, located at 1844
Cedar Creek Road, Fayetteville, North Carolina 28303 (the "Property"); (ii)
entering into and performing its obligations under the credit agreement, among
Lodgian Financing Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel
Group, LLC, Servico, Inc. and other affiliated entities, as affiliate
guarantors, the initial lenders and initial issuing bank named therein, the
collateral agent, the administrative agent, Morgan Stanley Senior Funding, Inc.,
as co-lead arranger, joint-book manager and syndication agent and Lehman
Brothers, as co-lead arranger, joint-book manager and documentation agent
relating to the financing or refinancing of the Property (the "Loan Agreement")
which provides the lender thereunder with a first priority lien on the Property,
any promissory-note evidencing indebtedness incurred pursuant to the Loan
Agreement, any mortgage securing such indebtedness and encumbering the Property
(the "Mortgage") and any other documents securing such indebtedness and any
related collateral documents, each as amended (or pursuant to a consent obtained
in accordance with the terms thereof) (collectively, the "Loan Documents");
(iii) entering into and performing its obligations under the Indenture (the
"Indenture"), among Lodgian Financing Corp, as issuer, Lodgian, Inc., the
Subsidiary Guarantors defined therein and Bankers Trust Company, as trustee,
relating to the issuance of the 12 1/4% Senior Subordinated Notes due 2009 and
the Guarantee in favor of the holders of the Notes and (iv) transacting any and
all lawful business that is incident and necessary or appropriate to the
ownership and to the management of the Property for which a corporation may be
incorporated under the laws of the State of North Carolina.
(b) Notwithstanding any other provision of these Amended Articles
and any provision of law that otherwise so empowers the Corporation, until such
time as the Property is
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released from the lien of the Mortgage, the Corporation shall not, without the
unanimous affirmative vote of the members of its Board of Directors, (i) amend,
alter, change, repeal or adopt any resolution setting forth a proposed amendment
to, any provision of these Articles of Incorporation, (ii) dissolve or
liquidate, in whole or in part, consolidate or merge with or into any other
entity or convey, sell or transfer its properties and assets substantially as an
entirety to any entity, (iii) file a voluntary petition or otherwise initiate,
or consent to, proceedings for the Corporation to be adjudicated insolvent or
seeking an order for relief as a debtor under the United States Bankruptcy Code,
as amended (11 U.S.C. ss.ss. 101 et seq.), or (iv) file any petition, or consent
to any petition, seeking any composition, reorganization, readjustment,
liquidation, dissolution or similar relief under the present or any future
federal bankruptcy laws or any other present or future applicable federal, state
or other statute or law relative to bankruptcy, insolvency or other relief for
debtors; or (v) seek or consent to the appointment of any trustee, receiver,
conservator, assignee, sequestrator, custodian, or liquidator (or other similar
official) of the Corporation or of all or any substantial part of the properties
and assets of the Corporation, or (vi) make any general assignment for the
benefit of creditors, or (vii) admit in writing its inability to pay its debts
generally as they become due, or (viii) declare or effect a moratorium on its
debt or take any corporate action in furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all times
until the Property is released from the lien of the Mortgage, include an
independent director (the "Independent Director"). The Independent Director
shall be a person who is not at the time of appointment and who has not at any
time during the prior five years been and who is not while serving as the
Independent Director (i) a director, stockholder, officer or employee of the
Corporation or any affiliates thereof, other than with respect to such person's
service as an Independent Director of the Corporation and such person's service
in similar "Independent Director" positions for affiliates of the Corporation;
(ii) a creditor, customer, supplier, independent contractor, manager or any
other person who derives more than 10% of its gross revenues from its activities
wit the Corporation or any affiliates thereof; (iii) a person controlling any
such stockholder, creditor, customer, supplier, independent contractor, manager
or other person; (iv) the legal or beneficial owner, at any time while serving
as director of the Corporation, of any beneficial interest in the Corporation;
or (v) a member of the immediate family of any such stockholder, officer,
employee, creditor, customer, supplier, director, independent contractor,
manager or any other person of the Corporation. As used herein, the term
"affiliate" means any person controlling, under common control with, or
controlled by the person in question, and the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through ownership
of voting securities, by contract or otherwise. In the event of the death,
incapacity, or resignation of an Independent Director, or the vacancy of the
Independent Director's seat on the Corporation's Board of Directors for any
reason, a successor Independent Director shall be appointed by the remaining
directors.
(d) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its
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financial statements to be prepared in accordance with generally accepted
accounting principles in a manner that indicates the separate existence of the
Corporation and its assets and liabilities from any other person or entity; (iv)
pay all its liabilities out of its own funds; (v) in all dealings, identify
itself, and conduct its own business and hold itself out under its own name and
as a separate and distinct entity and correct any misunderstandings regarding
its status as a separate entity; (vi) independently make decisions with respect
to its business and daily operations; (vii) maintain an arm's length
relationship with its affiliates; (viii) pay the salaries of its employees and
maintain a sufficient number of employees in light of its contemplated business
operations; (ix) allocate fairly and reasonably any overhead for shared office
space; and (x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as
the Property is subject to the lien of the Mortgage, the Corporation shall not
(i) commingle its assets with those of, or pledge its assets for the benefit of,
any other person or entity; (ii) assume, guarantee or become obligated, or hold
out its credit as being available to satisfy, the liabilities or obligations of
any other person or entity; (iii) reduce its capital below an amount which is
adequate in light of its contemplated business operations; (iv) acquire
obligations or securities of, or make loans or advances to, any affiliate; (v)
incur or assume any indebtedness other than (A) the indebtedness underlying the
Loan Agreement, (B) the indebtedness underlying the Indenture, and (C)
liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article Third and the last sentence of
Article Eighth of these Amended Articles; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in these Amended Articles. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
ARTICLE IV
The total number of shares of stock which the Corporation shall have
the authority to issue is One Hundred Thousand (100,000) shares of common stock,
One Dollar ($1.00) par value per share.
ARTICLE V
The number of directors of the Corporation may be fixed by the
Bylaws of the Corporation. The number of directors constituting the board of
directors shall be at least one (1), and the name and address of the director of
the Corporation to serve until the next annual meeting of the shareholders or
until a successor is elected and qualified is:
Name Address
---- -------
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Karyn Marasco 3445 Peachtree Road, N.E.
Two Live Oak Center, Suite 700
Atlanta, Georgia 30326
ARTICLE VI
The Board of Directors is expressly authorized to adopt, alter,
amend or repeal the Bylaws of the Corporation subject to the limitations set
forth in these Amended Articles. Election of directors need not be by written
ballot unless and to the extent provided in the Bylaws of the Corporation.
ARTICLE VII
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 55-8-33 of the North Carolina Business
Corporation Act, or (iv) for any transaction from which the director derived an
improper personal benefit. If the North Carolina Business Corporation Act is
amended after the date of these Amended Articles to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of each director of the Corporation shall be eliminated or limited to
the fullest extent permitted by the North Carolina Business Corporation Act, as
so amended.
The rights and authority conferred in this Article Seventh shall not
be exclusive of any other rights that any person may have or hereafter acquire
under any statute, provision of these Amended Articles or the Bylaws of the
Corporation, agreement, vote of the stockholders or disinterested directors or
otherwise.
ARTICLE VIII
The Corporation shall indemnify any officer or director, or any
former officer or director of the Corporation, to the fullest extent permitted
by law. The foregoing right of indemnification shall not be exclusive of any
other rights to which any director, officer, employee or agent may be entitled
as a matter of law or which he may be lawfully granted. The Corporation's
obligation to indemnify its officers and directors pursuant to this Article
shall be subordinate in all respects to the obligations of the Corporation
arising out of the Loan Documents and shall not constitute a claim against the
Corporation to the extent that the Corporation is unable to pay any amounts it
is obligated to pay under the Loan Documents.
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<PAGE>
IN WITNESS WHEREOF, I have signed these Amended and Restated
Articles of Incorporation on this 23rd day of July, 1999.
FAYETTEVILLE MOTEL ENTERPRISES, INC.
By: /s/ Thomas S. Gryboski
-------------------------------------
Name: Thomas S. Gryboski
Title: Assistant Secretary
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<PAGE>
Exhibit 3.39.2
BY-LAWS
OF
FAYETTEVILLE MOTEL ENTERPRISES, INC.
ARTICLES I - OFFICES
Section 1. Principal Office: The principal office of the corporation shall
be located at 100 S. Corcoran Street, Durham, North Carolina.
Section 2. Registered Office: The registered office of the corporation
required by law to be maintained in the State of North Carolina may
be, but need not be, identical with the principal office.
Section 3. Other Offices: The corporation may have offices at such other
place, either within or without the State of North Carolina, as the
Board of Directors may from time to time determine, or as the
affairs of the corporation may require.
ARTICLE II - MEETING OF SHAREHOLDERS
Section 1. Place of Meetings: All meetings of shareholders shall be held at
the principal office of the corporation, or at such other place,
either within or without the State of North Carolina, as shall be
designated in the notice of the meeting or agreed upon by a majority
of the shareholders entitled to vote thereat.
Section 2. Annual Meetings: The annual meetings of shareholders shall be
held at 11:00 A.M., on the First Tuesday in July of each year, if
not a legal holiday, for the purpose of electing Directors of the
corporation and for the transaction of such other business as may be
properly brought before the meeting.
Section 3. Substitute Annual Meetings: If the annual meeting shall not be
held on the day designated by these by-laws, a substitute annual
meeting may be called in accordance with the provisions of Section 4
of this article. A meeting so called shall be designated and treated
for all purposes as the annual meeting.
Section 4. Special Meetings: Special meetings of the shareholders may be
called at any time by the President, Secretary of Board of Directors
of the corporation, or by any shareholder pursuant to the written
request of the holders of not less than one-tenth of all the shares
entitled to vote at the meeting.
<PAGE>
Section 5. Notice of Meetings: Written or printed notice stating the time
and place of the meeting shall he delivered not less than ten nor
more than fifty days before the date thereof, either personally or
by mail, by or at the direction of the President, the Secretary, or
other person calling the meeting, to each shareholder of record
entitled to vote at such meeting.
In the case of an annual or substitute annual meeting, the notice of
meeting need not specifically state the business to be transacted
thereat unless it is a matter, other than election of Directors, on
which the vote of shareholders is expressly required by the
provisions of The North Carolina Business Corporation Act. In the
case of a special meeting, the notice of meeting shall specifically
state the purpose or purposes for which the meeting is called.
When a meeting is adjourned for thirty days or more, notice of the
adjourned meeting shall he given as in the case of an original
meeting. When a meeting is adjourned for less than thirty days in
any one adjournment, it is not necessary to give any notice of the
adjourned meeting other than by announcement at the meeting at which
the adjournment is taken.
Section 6. Voting Lists: At least ten days before each meeting of
shareholders, the secretary of the corporation shall prepare an
alphabetical list of the shareholders entitled to vote at such
meetings, with the address of and the number of shares held by each,
which list shall be kept on file at the registered office of the
corporation for a period of ten days prior to such meeting, and
shall be subject to inspection by any shareholder at any time during
the usual business hours. This list shall also be produced and kept
open at the time and place of the meeting and shall be subject to
inspection by any shareholder during the whole time of the meeting.
Section 7. Quorum: The holders of a majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum at
meetings of shareholders. If there is no quorum at the opening of a
meeting of shareholders, such meeting may be adjourned from time to
time by the vote of a majority of the shares voting on the motion to
adjourn; and, at any adjourned meeting at which a quorum is present,
any business may be transacted which might have been transacted at
the original meeting.
The shareholders at a meeting at which a quorum is present may
continue to do business until adjournment, notwithstanding the
withdrawal of enough shareholders to leave less than a quorum.
Section 8. Voting of Shares: Each outstanding share having voting rights
shall be entitled to one vote on each matter submitted to a vote at
a meeting of shareholders.
Section 9. Informal Action by Shareholders: Any action which may be taken at
a meeting of the shareholders may be taken without a meeting if a
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consent in writing, setting forth the action so taken, shall be
signed by all of the persons who would be entitled to vote upon such
action at a meeting, and filed with the Secretary of the corporation
to be kept in the Corporate Minute Book.
ARTICLE III - DIRECTORS
Section 1. General Powers: The business and affairs of the corporation shall be
managed by the Board of Directors or by such Executive Committees as
the Board may establish pursuant to these By-Laws.
Section 2. Number, Term and Qualifications: The number of Directors of the
corporation shall be four. Each Director shall hold office until his
death, resignation, retirement, removal, disqualification, or his
successor is elected and qualifies. Directors need not be residents
of the State of North Carolina or shareholders of the corporation.
Section 3. Election of Directors: Except as provided in Section 6 of this
Article, the Directors shall be elected at the annual meeting of
shareholders; and those persons who receive the highest number of
votes shall be deemed to have been elected. If any shareholder so
demands, election of Directors shall be by ballot.
Section 4. Cumulative Voting: Every shareholder entitled to vote at an
election of Directors shall have the right to vote the number of
shares standing of record in his name for as many persons as there
are Directors to be elected and for whose election, he has a right
to vote, or to cumulate his vote by giving one candidate as many
votes as the number of such Directors multiplied by the number of
his shares shall equal, or by distributing such votes on the same
principal among any number of such candidates. This right of
cumulative voting shall not be exercised unless some shareholder or
proxy holder announces in open meeting, before the voting for the
Directors starts, his intention so to vote cumulatively; and shall
thereupon grant a recess of not less than one nor more than four
hours, as he shall determine, or of such other period of time as is
unanimously then agreed upon.
Section 5. Removal: Director, may he removed from office with or without
cause by a vote of shareholders holding a majority of the shares
entitled to vote at an election of Directors. However, unless the
entire board is removed, an individual Director may not be removed
if the number of shares voting against the removal would be
sufficient to elect a Director if such shares were voted
cumulatively at an annual election. If any Directors are a removed,
new Directors may be elected at the same meeting.
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Section 6. Vacancies: A vacancy occurring in the Board of Directors may be
filled by a majority of the remaining Directors, though less than a
quorum, or by the sole remaining Director; but a vacancy created by
an increase in the authorized number of Directors shall be filled
only by election at an annual meeting or at a special meeting of
shareholders called for that purpose. The shareholders may elect a
Director at any time to fill any vacancy not filled by the
Directors.
Section 7. Chairman: There may be a Chairman of the Board of Directors
elected by the Directors from their number at any meeting of the
Board. The Chairman shall preside at all meetings of the Board of
Directors and perform such other duties as may be directed by the
Board.
Section 8. Compensations: The Board of Directors may compensate Directors
for their services as such and may provide for the payment of all
expenses incurred by Directors in attending regular and special
meetings of the Board.
Section 9. Executive Committee: The Board of Directors may, by resolution
adopted by a majority of the number of Directors fixed by these
By-Laws, designate two or more Directors to constitute an Executive
Committee, which committee to the extent provided in such resolution
shall have and may exercise all of the authority of the Board of
Directors in the management of the corporation.
ARTICLE IV - MEETINGS OF DIRECTORS
Section 1. Regular Meetings: A regular meeting of the Board of Directors
shall be held immediately after, and at the same place as, the
annual meeting of shareholders. In addition, the Board of Directors
may provide, by resolution, the time and place, either within or
without the State of North Carolina, for the holding of additional
regular meetings.
Section 2. Special Meetings: Special meetings of the Board of Directors may
be called by or at the request of the President or any two
Directors. Such meetings may be held either within or without the
State of North Carolina.
Section 3. Notice of Meetings: Regular meetings of the Board of Directors
may be held without notice.
The person or persons calling a special meeting of the Board of
Directors shall, at least two days before the meeting, give notice
thereof by any usual means of communication. Such notice need not
specify the purpose for which the meeting is called.
Attendance by a Director at a meeting shall constitute a waiver
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of notice of such meeting, except where a Director attends a meeting
for the express purpose of objecting to the transaction of any
business because the meeting is not lawfully called.
Section 4. Quorum: A majority of the Directors fixed by these By-Laws shall
constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
Section 5. Manner of Acting: Except as otherwise provided in this section,
the act of the majority of the Directors present at meeting which a
quorum is present shall be the act of the Board Directors.
The vote of a majority of the number of Directors fixed by these
By-Laws shall be required to adopt a resolution constituting an
Executive Committee. The vote of a majority of the Directors then
holding office shall be required to adopt, amend or repeal a By-Law,
or to adopt a resolution dissolving the corporation without action
by the shareholders. Vacancies in the Board of Director may be
filled as provided in Article III, Section 6, of these By-Laws.
Section 6. Informal Action by Directors: Action taken by a majority of the
Directors without a meeting is nevertheless Board action if written
consent to the action in question is signed by all the Directors and
filed with the minutes of the proceedings of the Board, whether done
before or after the action so taken.
ARTICLE V - OFFICERS
Section 1. Number: The officers of the corporation shall consist of a
President, a Secretary, a Treasurer, and such Vice-Presidents,
Assistant Secretaries, Assistant Treasurers and other officers as
the Board of Directors may from time to time elect. Any two or more
offices may be held by the same person, except the offices of
President and Secretary.
Section 2. Election and Term: The officers of the corporation shall be
elected by the Board of Directors. Such elections may be held at any
regular or special meeting of the Board. Each officer shall hold
office until his death, resignation, retirement, removal,
disqualification, or his successor is elected and qualified.
Section 3. Removal: Any officer or agent elected or appointed by the Board
of Directors may be removed by the Board with or without cause; but
such removal shall be without prejudice to the contract rights, if
any, of the person so removed.
Section 4. Compensation: The compensation of all officers of the corporation
shall be fixed by the Board of Directors.
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<PAGE>
Section 5. President: The President shall be the principal executive officer
of the corporation, and, subject to the control of the Board of
Directors, shall supervise and control the management of the
corporation in accordance with these By-Laws.
He shall, when present, preside at all meetings of shareholders. He
shall sign, with any other proper officer, certificates for shares
of the corporation and any deeds, mortgages, bonds, contracts, or
other instruments which may be lawfully executed on behalf of the
corporation, except where required or permitted by law to be
otherwise signed and executed and except where the signing and
execution thereof shall be delegated by the Board of Directors to
some other officer or agent; and, in general, he shall perform all
duties incident to the office of President and such other duties as
may be prescribed by the Board of Directors from time to time.
Section 6. Vice-Presidents: The Vice-Presidents in the order of their
election, unless otherwise determined by the Board of Directors,
shall, in the absence or disability of the President, perform the
duties and exercise the powers of that office. In addition, they
shall perform such other duties and have such other powers as the
Board of Directors shall prescribe.
Section 7. Secretary: The Secretary shall keep accurate records of the acts
and proceedings of all meetings of shareholders and Directors. He
shall give all notices required by law and by these By-Laws. He
shall have general charge of the corporate books and records and of
the corporate seal, and shall affix the corporate seal to any
lawfully executed instrument requiring it. He shall have general
charge of the stock transfer books of the corporation and shall
keep, at the registered or principal office of the corporation, a
record of shareholders showing the name and address of each
shareholder and the number and class of the shares held by each. He
shall sign such instruments as may require his signature, and, in
general, shall perform all duties incident to the office of
Secretary and such other duties as may be assigned him from time to
time by the President or by the Board of Directors.
Section 8. Treasurer: The Treasurer shall have custody of all funds and
securities belonging to the corporation and shall receive, deposit
or disburse the same under the direction of the Board of Directors.
He shall keep full and accurate accounts of the finances of the
corporation in books especially provided for that purpose; and shall
cause a true statement of its assets and liabilities as of the close
of each fiscal year at of the results of its operations and of
changes in surplus for such fiscal year, all in reasonable detail,
including particulars as to convertible securities then outstanding,
to be made and filed at the registered or principal office of the
corporation
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<PAGE>
within four months after the end of such fiscal year. The statement
so filed shall be kept available for inspection by any shareholder
for a period of ten years; and the Treasurer shall mail or otherwise
deliver a copy of the latest such statement to any shareholder upon
his written request therefor. The Treasurer shall, in general,
perform all duties incident to his office and such other duties as
may be assigned to him from time to time by the President or by the
Board of Directors.
Section 9. Assistant Secretaries and Treasurers: The Assistant Secretaries
and Assistant Treasurers shall, in the absence or disability of the
Secretary or the Treasurer, respectively, perform the duties and
exercise the powers of those offices, and they shall, in general,
perform such other duties as shall be assigned to them by the
Secretary or the Treasurer, respectively, or by the President or the
Board of Directors.
Section 10. Bonds: The Board of Directors may by resolution require any or
all officers, agents and employees of the corporation to give bond
to the corporation, with sufficient sureties, conditioned on the
faithful performance of the duties of their respective offices or
positions, and to comply with such other conditions as may from time
to time be required by the Board of Directors.
ARTICLE VI - CONTRACTS, LOANS AND DEPOSITS
Section 1. Contracts: The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and
deliver any instrument on behalf of the corporation, and such
authority may be general or confined to specific instances.
Section 2. Loans: No loans shall be contracted on behalf of the corporation
and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority
may be general or confined to specific instances.
Section 3. Checks and Drafts: All checks, drafts or other orders for the
payment of money issued in the name of the corporation shall be
signed by such officer or officers, agent or agents of the
corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
Section 4. Deposits: All funds of the corporation not otherwise employed shall
be deposited from time to time to the credit of the corporation in
such depositories as the Board of Directors shall direct.
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<PAGE>
ARTICLE VII - CERTIFICATE FOR SHARES AND THEIR TRANSFER
Section 1. Certificates for Shares - Certificates representing shares of the
corporation shall be issued, in such form as the Board of Directors
shall determine, to every shareholder for the fully paid shares
owned by him. These certificates shall be signed by the President or
any Vice-President and the Secretary, Assistant Secretary, Treasurer
or Assistant Treasurer. They shall be consecutively numbered or
otherwise identified; and the name and address of the persons to
whom they are issued, with the number of shares and date of issue,
shall be entered on the stock transfer books of the corporation.
The stockholders of this corporation shall have pre-emptive rights
in the issuance of all new shares of stock in this corporation.
Before any stockholder may sell his share or shares of stock in this
corporation, or any part of them, to any person not already a
stockholder in this corporation, such stockholder shall offer such
share or shares of stock in this corporation to one or more of the
remaining stockholders at the same price which he proposes to sell
such share or shares to a person not already a stockholder of this
corporation. If such stockholder or stockholders to whom the share
or shares of stock are offered refuse to purchase, the selling
stockholder shall offer to other stockholders until all stockholders
in the corporation have had an opportunity to purchase said stock;
if none of the stockholders of this corporation elect to purchase
such share or shares of stock at the price offered, the selling
stockholder may then offer such share or shares to other persons,
but not for a price, less than that quoted to other stockholders of
this corporation; nor on more favorable terms than those offered to
other stockholders of this corporation. It is the intent of this
restriction that no stockholder shall sell his stock to a person not
already a stockholder until every holder of stock in this
corporation shall have had an opportunity to buy the stock belonging
to the selling stockholder. A statement of this limitation on the
sale of stock shall be written on each share of stock issued by this
corporation.
Section 2. Transfer of Shares: Transfer of shares shall be made on the stock
transfer books of the corporation only upon surrender of the
certificates for the shares sought to be transferred by the record
holder thereof or by his duly authorized agent, transferee or legal
representatives. All certificates surrendered for transfer shall be
cancelled before new certificates for the transferred shares shall
be issued.
Section 3. Closing Transfer Books and Fixing Record Date: For the purpose of
determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or
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<PAGE>
entitled to receive parent of any dividend, or in order to make a
determination of shareholders for any other proper purpose, the
Board of Directors may provide that the stock transfer books shall
he closed for a stated period but not to exceed, in any case, fifty
days. If the stock transfer books shall be closed for the purpose of
determining shareholders entitled to notice of or to vote at a
meeting of shareholders, such books shall he closed for at least ten
days immediately preceding such meeting.
In lieu of closing the stock transfer books, the Board of Directors
may fix in advance a date as the record date for any such
determination of shareholders, such record date in any case to be
not more than fifty days, and, in case of a meeting of shareholders,
not less than ten days immediately preceding the date on which the
particular action, requiring such determination of shareholders, is
to be taken.
If the stock transfer books are not closed and no record date is
fixed for the determination of shareholders entitled to notice of or
to vote at a meeting of shareholders, or shareholders entitled to
receive payment of a dividend, the date on which notice of the
noting is mailed or the date on which the resolution of the Board of
Directors declaring such dividend is adopted, as the case may be,
shall be the record date for such determination of shareholders.
Section 4. Lost Certificates: The Board of Directors may authorize the
issuance of a new share certificate in place of certificate claimed
to have been lost or destroyed, upon receipt of an affidavit of such
fact from the person claiming the loss or destruction. When
authorizing such issuance of a new certificate, the Board may
require the claimant to give the corporation a bond in such sum as
it may direct to indemnify the corporation against loss from any
claim with respect to the certificate claimed to have been lost or
destroyed; or the Board may, by resolution reciting that the
circumstances justify such action, authorize the issuance of the new
certificate without requiring such a bond.
ARTICLE VIII - GENERAL PROVISION
Section 1. Dividends: The Board of Directors may from time to time declare,
and the corporation may pay, dividends on its outstanding shares in
the manner and upon the term and conditions provided by law and by
its charter.
Section 2. Seal: The corporate seal of the corporation shall consist of a
circular impressed seal containing the name of the corporation
around the outer area and the word "SEAL" and the year of formation
in the inner area; and such seal as impressed on the margin hereof,
is hereby adopted as the corporate seal of the corporation.
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<PAGE>
Section 3. Waiver of Notice: Whenever any notice is required to be given to
any shareholder or Director under the provisions of the North
Carolina Business Corporation Act or under the provisions of the
charter or By-Laws of this corporation, a waiver thereof in writing,
signed by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be equivalent to the
giving of such notice.
Section 4. Fiscal Year: Unless otherwise ordered by the Board of Directors,
the fiscal year of the corporation shall be from January 1 to
December 31.
Section 5. Amendments: Except as otherwise provided herein, these By-Laws
may be amended or repealed and new By-Laws may be adopted by the
affirmative vote of a majority of the Directors then holding office
at any regular or special meeting of the Board of Directors.
The Board of Directors shall have no power to adopt a By-Law (1)
requiring more than a majority of the voting shares for a quorum at
a meeting of shareholders or more than a majority of the votes cast
to constitute action by the shareholders, except where higher
percentages are required by law; (2) providing for the management of
the corporation otherwise than by the Board of Directors or its
Executive Committees; (3) increasing or decreasing the number of
Directors; (4) classifying and staggering the election of Directors.
No By-Law adopted or amended by the shareholders shall be altered or
repealed by the Board of Directors.
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<PAGE>
Upon motions duly made and unanimously carried, the following Resolutions
were enacted:
RESOLVED FURTHER, That the officers of this corporation take immediate
steps to do all things necessary and proper to commence business and operations,
to carry out the purposes of this corporation as authorized by the Charter and
the Laws of the State of North Carolina, and to that end all contracts necessary
to be entered into shall be executed by the President in the name of the
corporation, and where necessary to comply with the laws of North Carolina and
otherwise where desirable or practicable, such contracts shall be sealed with
the corporate seal and attested by the Secretary of the corporation.
The President then presented to the meeting the question of taking
advantage of the provisions of Section 1244 of the Internal Revenue Code of
1954. He noted that this section permits ordinary loss treatment when either the
holder of Section 1244 stock sells or exchanges such stock at a loss or when
such stock becomes worthless. After a discussion, the following preambles were
stated and the following resolutions were unanimously adopted:
Whereas Section 1244 of the Internal Revenue Code and the Regulations
issued thereunder require that common stock of a corporation be issued pursuant
to a written plan adopted by the Corporation after June 30, 1958, which plan
must offer only such common stock during a period specified in the plan ending
not later than two years after the date the plan is adopted, and
Whereas Section 1244 and the Regulations issued thereunder further require
that the plan must specifically state, in terms of dollars, the maximum amount
to be received by the Corporation in consideration of the stock to be issued
pursuant thereto and that such stock must be issued only for money or property
(other than stock or securities), and
Whereas this Corporation qualifies as a small business corporation as
defined in Section 1244, and there is not unissued any portion of a prior
offering of any of this Corporation's stock, and
Whereas pursuant to the requirements of Section 1244 and the Regulations
issued thereunder the following plan has been submitted to the Corporation by
the Board of Directors of the Corporation:
"PLAN TO ISSUE SECTION 1244 STOCK
"1. The plan as herein set forth upon its adoption by the Board of
Directors of the Corporation shall become effective August 27, 1979.
"2. As part of this Plan, the Corporation is authorized to offer and issue
100,000 shares of common stock, par value of $1.00 per share.
<PAGE>
"3. The Corporation shall offer and issue such 100,000 shares of common
stock from the date hereof to August 26, 1981 or to the date when the
Corporation shall make a subsequent offering of any stock, whichever shall
sooner occur.
"4. During such period as set forth in Paragraph 3, the Corporation shall
offer and issue only such common stock.
"5. The maximum amount to be received by the Corporation in consideration
of the stock to be issued pursuant to this plan shall be $1.00 per share.
"6. Such common stock shall be issued only for money and other property
(other than stock or securities).
"7. Such other action shall be taken by the Corporation as shall qualify
the stock offered and issued under this plan as 'Section 1244 stock,' as such
term is defined in the Internal Revenue Code and the Regulations issued
thereunder."
Upon motion duly made, seconded, and unanimously carried, it was
RESOLVED that the foregoing plan to issue Section 1244 stock be and the
same is hereby adopted by the Corporation.
FURTHER RESOLVED, that the proper officers of the Corporation be and they
are hereby authorized, empowered, and directed to do and perform any and all
acts and deeds necessary to carry out such plan.
RESOLVED, That pursuant to the above resolution, stock of the corporation
be issued to the following:
SERVICO, INC., a Delaware corporation, 100 shares.
There being no further business, the meeting was adjourned.
/s/ [ILLEGIBLE]
-----------------------------------
Secretary
APPROVED:
/s/ [ILLEGIBLE]
- -----------------------------------
Director
/s/ [ILLEGIBLE]
- -----------------------------------
Director
/s/ [ILLEGIBLE]
- -----------------------------------
Director
<PAGE>
Exhibit 3.40.1
SECOND AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
APICO HILLS, INC.
Pursuant to Sections 1914 and 1915 of the Pennsylvania
Business Corporation Law (the "Law"), APICO HILLS, INC., a Pennsylvania
corporation (the "Corporation"), hereby certifies that these Second Amended and
Restated Articles of Incorporation (the "Amended Articles"), which contain
amendments requiring shareholder approval, were duly adopted by the Board of
Directors of the Corporation and by the sole shareholder of the Corporation by
written consent without a meeting, pursuant to Sections 1766 and 1727(b) of the
Law, as of July 22, 1999. The number of votes cast was sufficient for approval.
The original Articles of Incorporation were filed with the Department of State
of the State of Pennsylvania on April 17, 1972, pursuant to P.L. 364 (15 P.S.
Section 1307), as amended. These Amended Articles supersede the original
Articles of Incorporation and all amendments thereto and shall be effective upon
filing these Amended Articles with the Department of State. The amendment
adopted by the Corporation, set forth in full, is as follows:
ARTICLE I
The name of the Corporation is APICO HILLS, INC.
ARTICLE II
The address of the Corporation's registered office is CT
Corporation System, Philadelphia County.
ARTICLE III
(a) The purpose for which the Corporation is organized is
limited to: (i) acquiring, owning, leasing, operating, using and managing that
certain real property commonly known as the Holiday Inn Parkway East, located at
915 Brinton Road, Pittsburgh, Pennsylvania 15221 (the "Property"); (ii) entering
into and performing its obligations under the credit agreement, among Lodgian
Financing Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel Group, LLC,
Servico, Inc. and other affiliated entities, as affiliate guarantors, the
initial lenders and initial issuing bank named therein, the collateral agent,
the administrative agent, Morgan Stanley Senior Funding, Inc., as co-lead
arranger, joint-book manager and syndication agent and Lehman Brothers, as
co-lead arranger, joint-book manager and documentation agent relating to the
financing or refinancing of the Property (the "Loan Agreement") which provides
the lender thereunder with a first priority lien on the Property, any
promissory-note evidencing indebtedness incurred pursuant to the Loan Agreement,
any mortgage securing such
<PAGE>
indebtedness and encumbering the Property (the "Mortgage") and any other
documents securing such indebtedness and any related collateral documents, each
as amended (or pursuant to a consent obtained in accordance with the terms
thereof) (collectively, the "Loan Documents"); (iii) entering into and
performing its obligations under the Indenture (the "Indenture"), among Lodgian
Financing Corp, as issuer, Lodgian, Inc., the Subsidiary Guarantors defined
therein and Bankers Trust Company, as trustee, relating to the issuance of the
12 1/4% Senior Subordinated Notes due 2009 and the Guarantee in favor of the
holders of the Notes and (iv) transacting any and all lawful business that is
incident and necessary or appropriate to the ownership and to the management of
the Property for which a corporation may be incorporated under the laws of the
State of Pennsylvania.
(b) Notwithstanding any other provision of these Amended
Articles and any provision of law that otherwise so empowers the Corporation,
until such time as the Property is released from the lien of the Mortgage, the
Corporation shall not, without the unanimous affirmative vote of the members of
its Board of Directors, (i) amend, alter, change, repeal or adopt any resolution
setting forth a proposed amendment to, any provision of these Articles of
Incorporation, (ii) dissolve or liquidate, in whole or in part, consolidate or
merge with or into any other entity or convey, sell or transfer its properties
and assets substantially as an entirety to any entity, (iii) file a voluntary
petition or otherwise initiate, or consent to, proceedings for the Corporation
to be adjudicated insolvent or seeking an order for relief as a debtor under the
United States Bankruptcy Code, as amended (11 U.S.C. Section Section 101 et
seq.), or (iv) file any petition, or consent to any petition, seeking any
composition, reorganization, readjustment, liquidation, dissolution or similar
relief under the present or any future federal bankruptcy laws or any other
present or future applicable federal, state or other statute or law relative to
bankruptcy, insolvency or other relief for debtors; or (v) seek or consent to
the appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, or liquidator (or other similar official) of the Corporation or of
all or any substantial part of the properties and assets of the Corporation, or
(vi) make any general assignment for the benefit of creditors, or (vii) admit in
writing its inability to pay its debts generally as they become due, or (viii)
declare or effect a moratorium on its debt or take any corporate action in
furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all
times until the Property is released from the lien of the Mortgage, include an
independent director (the "Independent Director"). The Independent Director
shall be a person who is not at the time of appointment and who has not at any
time during the prior five years been and who is not while serving as the
Independent Director (i) a director, stockholder, officer or employee of the
Corporation or any affiliates thereof, other than with respect to such person's
service as an Independent Director of the Corporation and such person's service
in similar "Independent Director" positions for affiliates of the Corporation;
(ii) a creditor, customer, supplier, independent contractor, manager or any
other person who derives more than 10% of its gross revenues from its activities
with the Corporation or any affiliates thereof; (iii) a person controlling any
such stockholder, creditor, customer, supplier, independent contractor, manager
or other person; (iv) the legal or beneficial owner, at any time while serving
as director of the Corporation, of any beneficial interest in the Corporation;
or (v) a member of the immediate family of any such stockholder, officer,
employee, creditor, customer, supplier, director, independent contractor,
manager or any other person of the Corporation. As used herein, the term
"affiliate" means any person controlling,
<PAGE>
under common control wit, or controlled by the person in question, and the term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a person, whether
through ownership of voting securities, by contact or otherwise. In the event of
the death, incapacity, or resignation of an Independent Director, or the vacancy
of the Independent Director's seat on the Corporation's Board of Directors for
any reason, a successor Independent Director shall be appointed by the remaining
directors.
(d) Except as otherwise permitted by the Loan Documents, so
long as the Property is subject to the lien of the Mortgage, the Corporation
shall (i) observe all corporate formalities, including the maintenance of
current minute books; (ii) maintain its own separate and distinct books of
account and corporate records from any other person or entity; (iii) cause its
financial statements to be prepared in accordance with generally accepted
accounting principles in a manner that indicates the separate existence of the
Corporation and its assets and liabilities from any other person or entity; (iv)
pay all its liabilities out of its own funds; (v) in all dealings, identify
itself, and conduct its own business and hold itself out under its own name and
as a separate and distinct entity and correct any misunderstandings regarding
its status as a separate entity; (vi) independently make decisions with respect
to its business and daily operations; (vii) maintain an arm's length
relationship with its affiliates; (viii) pay the salaries of its employees and
maintain a sufficient number of employees in light of its contemplated business
operations; (ix) allocate fairly and reasonably any overhead for shared office
space; and (x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so
long as the Property is subject to the lien of the Mortgage, the Corporation
shall not (i) commingle its assets with those of, or pledge its assets for the
benefit of, any other person or entity; (ii) assume, guarantee or become
obligated, or hold out its credit as being available to satisfy, the liabilities
or obligations of any other person or entity; (iii) reduce its capital below an
amount which is adequate in light of its contemplated business operations; (iv)
acquire obligations or securities of, or make loans or advances to, any
affiliate; (v) incur or assume any indebtedness other than (A) the indebtedness
underlying the Loan Agreement (B) the indebtedness underlying the Indenture, and
(C) liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article III and the last sentence of
Article VIII of these Amended Articles; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in these Amended Articles. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
ARTICLE IV
The total number of shares of stock which the Corporation
shall have authority to issue is One Hundred Thousand (100,000) shares of common
stock, One Dollar ($1.00) par value per share.
<PAGE>
ARTICLE V
The number of directors of the Corporation may be fixed by the
Bylaws of the Corporation. The number of directors constituting the Board of
Directors shall be at least one (1), and the name and address of the director of
the Corporation to serve until the next annual meeting of the shareholders until
a successor is elected and qualified is:
Name Address
---- -------
Robert Flanders 3445 Peachtree Road, N.E.
Two Live Oak Center, Suite 700
Atlanta, Georgia 30326
ARTICLE VI
The Board of Directors of the Corporation is expressly
authorized to adopt, alter, amend or repeal the Bylaws of the Corporation
subject to the limitations set forth in these Amended Articles. Election of
directors need not be by written ballot unless and to the extent provided in the
Bylaws of the Corporation.
ARTICLE VII
No director of the Corporation shall be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duties as a director, except for liability (I)( for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not on good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 513 of the Pennsylvania Business
Corporation Law, or (iv) for any transaction from which the director derived an
improper personal benefit. If the Pennsylvania Business Corporation Law is
amended after the date of these Amended Articles to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of a director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the Pennsylvania Business Corporation Law, as so
amended.
The rights and authority conferred in this Article VII shall
not be exclusive of any other right which any person may have or hereafter
acquire under any statute, provision of these Amended Articles or Bylaws of the
Corporation, agreement, vote of stockholders or disinterested directors, or
otherwise.
ARTICLE VIII
The Corporation shall indemnify any officer or director, or
any former officer or director of the Corporation, to the fullest extent
permitted by law. The foregoing right of indemnification shall not be exclusive
of any other rights to which any director, officer, employee or agent may be
entitled as a matter of law or which he may be lawfully granted. The
Corporation's obligation to indemnify its officers and directors pursuant to
this Article shall be
<PAGE>
subordinate in all respects to the obligations of the Corporation arising out of
the Loan Documents and shall not constitute a claim against the Corporation to
the extent that the Corporation is unable to pay any amounts it is obligated to
pay under the Loan Documents.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed these Second
Amended and Restated Articles of Incorporation this ____ day of July, 1999.
APICO HILLS, INC.
By: /s/ Thomas S. Gryboski
--------------------------
Name: Tom Gyboski
Title: Assistant Secretary
<PAGE>
Exhibit 3.40.2
BY-LAWS
OF
APICO INNS OF GREEN TREE
ARTICLE I.
Office
Section 1. The offices of this corporation shall be 1601 Belvedere
Road, Suite 501, South, West Palm Beach, Florida 33406, with branch offices in
such other places as the board of Directors may deem necessary to the conduct of
the business of the corporation.
ARTICLE II.
Meetings of Shareholders
Section 1. The annual meeting of the shareholders of the corporation
for the election of Directors shall be held at the office of the corporation in
New York, Florida or at such other place as the Board of Directors may fix on
the last day of July in each year beginning in the year 1972.
Section 2. Special meetings may be held at such time and place as
the Board of Directors may determine.
Section 3. The presence, in person or by proxy, of the holders of a
majority of the outstanding shares of the corporation entitled to vote shall be
necessary to constitute a quorum, and a shareholders' meeting shall not be
organized for the transaction of business unless a quorum is present. The
shareholders present at a duly organized meeting can continue to do business
until adjournment, notwithstanding the withdrawal of enough shareholders to
leave less than a quorum. If a meeting cannot be organized because a quorum has
not attended, those present may (except as otherwise provided in the Business
Corporation Law) adjourn the meeting to such time and place as they may
determine. In the case of any meeting called for the election of directors,
those who attend the second of such adjourned meetings, although less than a
quorum as fixed in these By-Laws, shall nevertheless constitute a quorum for the
purpose of electing directors.
<PAGE>
Section 4. - Written notice of every meeting of the shareholders
shall be given by or at the direction of the person authorized to call the
meeting to each shareholder of record entitled to vote at the meeting, at least
ten (10) days prior to the day named for the meeting, unless a greater period of
notice is required by law to be given in any particular case. Notice of any
meeting may be waived in writing by the shareholders and attendance at the
meeting shall itself constitute a waiver of notice of the meeting.
Section 5. - At the annual meeting of the shareholders the election
of Directors for the ensuing year shall be held and such other business
transacted as shall properly be brought before the meeting. Election of
Directors need not be by ballot.
Section 6. - Except for the action required by law for increasing
the capital or indebtedness of the corporation, any action required by the
Business Corporation Law of Pennsylvania to be taken at a meeting of the
shareholders of the corporation may be taken without a meeting, it a consent in
writing, setting forth the action so taken, shall be signed by all the
shareholders who would be entitled to vote at a meeting for such purpose and
shall be filed with the Secretary of the corporation.
ARTICLE III.
Board of Directors
Section 1. - The business and affairs of the corporation shall be
managed by a board consisting of three (3) directors who shall be elected and
qualified. The number of directors shall be three (3) until such time as the
Board of Directors may change the number within the limits provided above.
Section 2. - After the Board of Directors shall have been elected,
they shall meet and choose a President, Vice President, Secretary and Treasurer,
and such assistants as the Board of Directors may authorize, who shall serve for
a period of one year and until their successors are chosen and qualified. Any
two or more offices may be held by the same person except the office of
President and Secretary.
Section 3. - Any vacancy in the Board of Directors shall be
filled by a majority of the remaining members of the Board, though less than
a quorum and each person so elected shall be a Director until his successor
is elected by the shareholders, who may make such election at the next annual
<PAGE>
meeting of the shareholders or at any special meeting duly called for that
purpose and held prior thereto.
Section 4. - Meetings of the Board of Directors shall be held at
such time as the Board may appoint or upon call by the President or a majority
of the Board of Directors. Meetings may be held at such place as the majority of
the Directors may from time to time appoint or as may be designated in the
notice calling the meeting.
Section 5. - A majority of the Directors in office shall be
necessary to constitute a quorum for the transaction of business.
Section 6. - If all the Directors shall severally or collectively
consent in writing to any action to be taken by the corporation, such action
shall be as valid corporate action as though it had been authorized at a meeting
of the Board of Directors.
Section 7. - The Board of Directors may, by resolution adopted by a
majority of the whole Board; delegate two or more of its members to constitute
an Executive Committee, which, to the extent provided in said resolution shall
have and exercise the authority of the Board of Directors in the management of
the business of the corporation.
Section 8. - Written notice of every meeting of the board of
Directors shall be given to each Director at least three (3) days prior to the
date named for the meeting, but such notice may be waived in writing and
attendance at the meeting shall itself constitute a waiver of notice of the
meeting.
Section 9. - The entire Board of Directors or any individual
Director my be removed from office by a majority vote of the holders of the
outstanding share entitled to vote at an election of Directors. In case the
Board or any one or more Directors be so removed, new Directors may be elected
at the same meeting.
ARTICLE IV.
Officers
Section 1. - The officers of the corporation shall consist of a
President, Vice President, Secretary and Treasurer and such assistants as the
Board of Directors may authorize.
<PAGE>
Section 2. - It shall be the duty of the President to preside at
all meetings of the shareholders and Board of Directors and to enforce the
observance of all rules of order and the By-Laws of the corporation and he
shall be, ex-officio, a member of each standing committee. He shall have such
other duties as the Board of Directors may prescribe.
Section 3. - In the absence of the President, the Vice President
shall be the presiding officer and shall have such other duties as the Board
of Directors may specify.
Section 4. - It shall be the duty of the Secretary to keep or cause
to be kept a proper record of all the votes of the corporation and a minute of
its transactions and minutes of all Directors' and shareholders' meetings in a
book to be kept for that purpose. Be shall keep an accurate list of all the
shareholders and the number of shares held by each. He shall have the custody of
all stock and transfer books and shall affix the corporate seal to such
documents as may require it, and perform such other duties as the Board of
Directors may require.
Section 5. - It shall be the duty of the Treasurer to receive and to
have the care and custody of all the moneys and funds belonging to the
corporation and to deposit the same to the credit of the corporation is such
bank or banks as the Board of Directors may designate, and to perform such other
duties, usually pertaining to the office, as the Board of Directors may require.
Section 6. - Any officer or agent elected or appointed by the Board
of Directors may be removed by the Board of Directors whenever, in its best
judgement, the best interests of the corporation will be served thereby, without
prejudice, however, to any contract rights the person so removed may have.
ARTICLE V.
Shares and Classes of Stock
Section 1. - The shares of stock and the classes of stock of this
corporation shall be such as are provided for in the Articles of Incorporation
and any amendments thereto.
Section 2. - The Board of Directors shall provide share certificates
in form and as required by law. Share certificates shall be signed by the
President or Vice President and Secretary, or by the President or Vice President
and Treasurer, and sealed with the corporate seal, and shall be transferable
only on the books of the corporation by the holder
<PAGE>
in person, or by duly authorized agent, upon the surrender of the certificate,
properly endorsed.
ARTICLE VI.
Obligations - How Approved
Section 1. - The Board of Directors may adopt such system or method
for the auditing and approving of the corporation's liabilities and for the
payment of the same by voucher or check as the Board may from time to time see
proper.
Section 2. - The Board of Directors is authorized to borrow money
for the current business of the corporation and to delegate this authority, by
resolution of the Board, to an officer or officers of the corporation.
ARTICLE VII.
Reports or Statements
Section 1. - Reports or statements showing the financial condition
of the corporation may be made to the shareholders in such form and at such time
as the Board of Directors shall not be required to make financial reports to the
shareholders or to have such financial reports examined by an independent
certified public accountant as is provided in Section 318 of the Business
Corporation Law of Pennsylvania, as amended.
ARTICLE VIII.
Corporate Records
Section 1.- The corporations may maintain its corporate records
either at its registered office is Pennsylvania or at such other place as the
Board of Directors may determine, provided, however, that if such records are
not maintained at registered office in Pennsylvania a duplicate record of the
proceedings of the shareholders and of the directors and a copy of its By-Laws,
including all amendments or alterations thereto to date, certified by the
Secretary of the corporation shall be maintained at the registered office a well
as a duplicate share register, giving the names of the shareholders
<PAGE>
in alphabetical order, and showing their respective addresses, the number and
classes of shares held by each, the number and date of the certificates issued
for the shares and the number and date of cancellation of every certificate
surrender for cancellation. The corporation shall also maintain at its
registered office in Pennsylvania or at its principal place of business complete
and accurate books or records of account.
ARTICLE IX.
By-Laws
Section 1. - The Board of Directors, by a majority vote of the
members thereof, shall have authority to make, alter, amend and repeal the
By-Laws of the corporation, subject to the power of the shareholders, by a
majority vote, to change or repeal such By-Laws at any regularly called meeting
of the shareholders.
<PAGE>
Exhibit 3.41.1
SECOND AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
APICO INNS OF GREEN TREE, INC.
Pursuant to Sections 1914 and 1915 of the Pennsylvania
Business Corporation Law (the "Law"), APICO INNS OF GREEN TREE, INC., an
Pennsylvania corporation (the "Corporation"), hereby certifies that these Second
Amended and Restated Articles of Incorporation (the "Amended Articles"), which
contain amendments requiring shareholder approval, were duly adopted by the
Board of Directors of the Corporation and by the sole shareholder of the
Corporation by written consent without a meeting, pursuant to Sections 1766 and
1727(b) of the Law, as of July 22, 1999. The number of votes cast was sufficient
for approval. The original Articles of Incorporation were filed with the
Department of State of the State of Pennsylvania on August 2, 1972, pursuant to
P.L. 364 (15 P.S. Section 1307), as amended. These Amended Articles supersede
the original Articles of Incorporation and all amendments thereto and shall be
effective upon filing these Amended Articles with the Department of State. The
amendment adopted by the Corporation, set forth in full, is as follows:
ARTICLE I
The name of the Corporation is APICO INNS OF GREEN TREE, INC.
ARTICLE II
The address of the Corporation's registered office is CT
Corporation System, Philadelphia County.
The address of the principal office and the mailing address of the Corporation
is 3445 Peachtree Road, N.E., Two Live Oak Center, Suite 700, Atlanta, GA 30326.
ARTICLE III
(a) The purpose for which the Corporation is organized is
limited to: (i) acquiring, owning, leasing, operating, using and managing that
certain real property commonly known as the Holiday Inn Green Tree, located at
401 Holiday Drive, Pittsburgh, Pennsylvania 15220 (the "Property"); (ii)
entering into and performing its obligations under the credit agreement, among
Lodgian Financing Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel
Group, LLC, Servico, Inc. and other affiliated entities, as affiliate
guarantors, the initial lenders and initial issuing bank named therein, the
collateral agent, the administrative agent, Morgan Stanley Senior Funding, Inc.,
as co-lead arranger, joint-book manager and syndication agent and Lehman
Brothers, as co-lead arranger, joint-book manager and documentation agent
relating to the financing or refinancing of the Property (the "Loan Agreement")
which provides the lender
<PAGE>
thereunder with a first priority lien on the Property, any promissory-note
evidencing indebtedness incurred pursuant to the Loan Agreement, any mortgage
securing such indebtedness and encumbering the Property (the "Mortgage") and any
other documents securing such indebtedness and any related collateral documents,
each as amended (or pursuant to a consent obtained in accordance with the terms
thereof) (collectively, the "Loan Documents"); (iii) entering into and
performing its obligations under the Indenture (the "Indenture"), among Lodgian
Financing Corp, as issuer, Lodgian, Inc., the Subsidiary Guarantors defined
therein and Bankers Trust Company, as trustee, relating to the issuance of the
12 1/4% Senior Subordinated Notes due 2009 and the Guarantee in favor of the
holders of the Notes and (iv) transacting any and all lawful business that is
incident and necessary or appropriate to the ownership and to the management of
the Property for which a corporation may be incorporated under the laws of the
State of Pennsylvania.
(b) Notwithstanding any other provision of these Amended
Articles and any provision of law that otherwise so empowers the Corporation,
until such time as the Property is released from the lien of the Mortgage,
the Corporation shall not, without the unanimous affirmative vote of the
members of its Board of Directors, (i) amend, alter, change, repeal or adopt
any resolution setting forth a proposed amendment to, any provision of these
Articles of Incorporation, (ii) dissolve or liquidate, in whole or in part,
consolidate or merge with or into any other entity or convey, sell or
transfer its properties and assets substantially as an entirety to any
entity, (iii) file a voluntary petition or otherwise initiate, or consent to,
proceedings for the Corporation to be adjudicated insolvent or seeking an
order for relief as a debtor under the United States Bankruptcy Code, as
amended (11 U.S.C. Sections 101 ET SEQ.), or (iv) file any petition, or
consent to any petition, seeking any composition, reorganization,
readjustment, liquidation, dissolution or similar relief under the present or
any future federal bankruptcy laws or any other present or future applicable
federal, state or other statute or law relative to bankruptcy, insolvency or
other relief for debtors; or (v) seek or consent to the appointment of any
trustee, receiver, conservator, assignee, sequestrator, custodian, or
liquidator (or other similar official) of the Corporation or of all or any
substantial part of the properties and assets of the Corporation, or (vi)
make any general assignment for the benefit of creditors, or (vii) admit in
writing its inability to pay its debts generally as they become due, or
(viii) declare or effect a moratorium on its debt or take any corporate
action in furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all
times until the Property is released from the lien of the Mortgage, include an
independent director (the "Independent Director"). The Independent Director
shall be a person who is not at the time of appointment and who has not at any
time during the prior five years been and who is not while serving as the
Independent Director (i) a director, stockholder, officer or employee of the
Corporation or any affiliates thereof, other than with respect to such person's
service as an Independent Director of the Corporation and such person's service
in similar "Independent Director" positions for affiliates of the Corporation;
(ii) a creditor, customer, supplier, independent contractor, manager or any
other person who derives more than 10% of its gross revenues from its activities
with the Corporation or any affiliates thereof; (iii) a person controlling any
such stockholder, creditor, customer, supplier, independent contractor, manager
or other person; (iv) the legal or beneficial owner, at any time while serving
as director of the Corporation, of any beneficial interest in the
<PAGE>
Corporation; or (v) a member of the immediate family of any such stockholder,
officer, employee, creditor, customer, supplier, director, independent
contractor, manager or any other person of the Corporation. As used herein, the
term "affiliate" means any person controlling, under common control wit, or
controlled by the person in question, and the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through ownership
of voting securities, by contact or otherwise. In the event of the death,
incapacity, or resignation of an Independent Director, or the vacancy of the
Independent Director's seat on the Corporation's Board of Directors for any
reason, a successor Independent Director shall be appointed by the remaining
directors.
(d) Except as otherwise permitted by the Loan Documents, so
long as the Property is subject to the lien of the Mortgage, the Corporation
shall (i) observe all corporate formalities, including the maintenance of
current minute books; (ii) maintain its own separate and distinct books of
account and corporate records from any other person or entity; (iii) cause its
financial statements to be prepared in accordance with generally accepted
accounting principles in a manner that indicates the separate existence of the
Corporation and its assets and liabilities from any other person or entity; (iv)
pay all its liabilities out of its own funds; (v) in all dealings, identify
itself, and conduct its own business and hold itself out under its own name and
as a separate and distinct entity and correct any misunderstandings regarding
its status as a separate entity; (vi) independently make decisions with respect
to its business and daily operations; (vii) maintain an arm's length
relationship with its affiliates; (viii) pay the salaries of its employees and
maintain a sufficient number of employees in light of its contemplated business
operations; (ix) allocate fairly and reasonably any overhead for shared office
space; and (x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so
long as the Property is subject to the lien of the Mortgage, the Corporation
shall not (i) commingle its assets with those of, or pledge its assets for the
benefit of, any other person or entity; (ii) assume, guarantee or become
obligated, or hold out its credit as being available to satisfy, the liabilities
or obligations of any other person or entity; (iii) reduce its capital below an
amount which is adequate in light of its contemplated business operations; (iv)
acquire obligations or securities of, or make loans or advances to, any
affiliate; (v) incur or assume any indebtedness other than (A) the indebtedness
underlying the Loan Agreement (B) the indebtedness underlying the Indenture, and
(C) liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article III and the last sentence of
Article VII of these Amended Articles; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in these Amended Articles. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
ARTICLE IV
<PAGE>
The total number of shares of stock which the Corporation
shall have authority to issue is One Hundred Thousand (100,000) shares of common
stock, One Dollar ($1.00) par value per share.
ARTICLE V
The Board of Directors is expressly authorized to adopt,
alter, amend or repeal the Bylaws of the Corporation subject to the limitations
set forth in these Amended Articles. Election of directors need not be by
written ballot unless and to the extent provided in the Bylaws of the
Corporation.
ARTICLE VI
No director of the Corporation shall be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duties as a director, except for liability (I)( for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not on good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 513 of the Pennsylvania Business
Corporation Law, or (iv) for any transaction from which the director derived an
improper personal benefit. If the Pennsylvania Business Corporation Law is
amended after the date of these Amended Articles to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of a director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the Pennsylvania Business Corporation Law, as so
amended.
The rights and authority conferred in this Article VI shall
not be exclusive of any other right which any person may have or hereafter
acquire under any statute, provision of these Amended Articles or Bylaws of the
Corporation, agreement, vote of stockholders or disinterested directors, or
otherwise.
ARTICLE VII
The Corporation shall indemnify any officer or director, or
any former officer or director of the Corporation, to the fullest extent
permitted by law. The foregoing right of indemnification shall not be exclusive
of any other rights to which any director, officer, employee or agent may be
entitled as a matter of law or which he may be lawfully granted. The
Corporation's obligation to indemnify its officers and directors pursuant to
this Article shall be subordinate in all respects to the obligations of the
Corporation arising out of the Loan Documents and shall not constitute a claim
against the Corporation to the extent that the Corporation is unable to pay any
amounts it is obligated to pay under the Loan Documents.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed these Second
Amended and Restated Articles of Incorporation this ____ day of July, 1999.
APICO INNS OF GREEN TREE, INC.
By: /s/ Thomas S. Gryboski
--------------------------
Name: Tom Gryboski
Title: Assistant Secretary
<PAGE>
Exhibit 3.41.2
BYLAWS OF
APICO HILLS, INC.
ARTICLE 1
CORPORATION OFFICE
Section 1.1 The Corporation shall have and continuously maintain in
the Commonwealth of Pennsylvania a registered office at an address to be
designated from time to time by the Board of Directors which may, but need not,
be the same as its place of business.
Section 1.2 The Corporation may also have offices at such other
places as the Board of Directors may from time to time designate or the business
of the Corporation may require.
Article 2
SHAREHOLDER MEETINGS
Section 2.1 All meetings of the shareholders shall be held at such
time and place, within or without the Commonwealth of Pennsylvania, as may be
determined from time to time by the Board of Directors and need not be held at
the registered office of the Corporation.
Section 2.2 An annual meeting of the shareholders for the election
of directors and the transaction of such other business as may properly be
brought before the meeting shall be held in each calendar year at such time and
place as may be determined by the Board of Directors.
Section 2.3 Special meetings of the shareholders may be called at
any time by (i) the Chairman or President, (ii) the Board of Directors or (iii)
shareholders entitled to cast at least one-fifth of the votes that all
shareholders are entitled to cast at the particular meeting. The request of any
person who has called a special meeting of shareholders shall be addressed to
the Secretary of the Corporation, shall be signed by the persons making the
request and shall state the purpose or purposes of the meeting. Upon receipt of
any such request it shall be the duty of the Secretary to fix the time and
provide written notice of the special meeting of shareholders, which shall be
held not more than 60 days after the receipt of the request. If the Secretary
shall neglect or refuse to fix the time or provide written notice of the special
meeting, the person or persons making the request may fix the time and provide
written notice of the special meeting.
1
<PAGE>
Section 2.4 Written notice of each meeting other than an adjourned
meeting of shareholders, stating the place and time, and, in the case of a
special meeting of shareholders, the general nature of the business to be
transacted, shall be provided to each shareholder of record entitled to vote at
the meeting at such address as appears on the books of the Corporation. Such
notice shall be given, in accordance with the provisions of Article 30 of these
Bylaws, at least (i) ten days prior to the day named for a meeting to consider a
fundamental change under Chapter 19 of the Pennsylvania Business Corporation Law
of 1988 (the "BCL") or (ii) five days prior to the day named for the meeting in
any other case.
Section 2.5
(a) Whenever the Corporation has been unable to communicate with a
shareholder for more than 24 consecutive months because communications to the
shareholder are returned unclaimed or the shareholder has otherwise failed to
provide the Corporation with a current address, the giving of notice to such
shareholder pursuant to Section 2.4 of these Bylaws shall not be required. Any
action or meeting that is taken or held without notice or communication to that
shareholder shall have the same validity as if the notice or communication had
been duly given. Whenever a shareholder provides the Corporation with a current
address this Subsection 2.5(a) shall cease to be applicable to such shareholder.
(b) The Corporation shall not be required to give notice to any
shareholder pursuant to Section 2.4 hereof if and for so long as communication
with such shareholder is unlawful.
Section 2.6 The Board of Directors may provide by resolution with
respect to a specific meeting or with respect to a class of meetings that one or
more shareholders may participate in such meeting or meetings of shareholders by
means of conference telephone or other communications equipment by means of
which all persons participating in the meeting can hear one another.
Participation in the meeting by such means shall constitute presence in person
at the meeting. Any notice otherwise required to be given in connection with any
meeting at which participation by conference telephone or other communications
equipment is permitted shall so specify.
Article 3
QUORUM OF SHAREHOLDERS
Section 3.1 A meeting of shareholders duly called shall not be
organized for the transaction of business unless a quorum is present.
2
<PAGE>
Section 3.2 The presence, in person or by proxy, of shareholders
entitled to cast at least a majority of the votes that all shareholders are
entitled to cast on a particular matter to be acted upon at the meeting shall
constitute a quorum for purposes of consideration and action on such matter.
Section 3.3 The shareholders present at a duly organized meeting can
continue to do business until adjournment notwithstanding the withdrawal of
enough shareholders to leave less than a quorum.
Section 3.4 If a meeting of shareholders cannot be organized because
a quorum is not present, those present in person or by proxy may, except as
otherwise provided by statute, adjourn the meeting to such time and place as
they may determine, without notice other than an announcement at the meeting,
until the requisite number of shareholders for a quorum shall be present in
person or by proxy.
Section 3.5 Notwithstanding the provisions of Sections 3.1, 3.2, 3.3
and 3.4 of these Bylaws:
a) Any meeting at which directors are to be elected may be adjourned
only from day to day, or for such longer periods not exceeding 15 days each as
the shareholders present and entitled to vote shall direct.
b) Those shareholders entitled to vote who attend a meeting called
for election of directors that has been previously adjourned for lack of a
quorum, although less than a quorum as fixed in these Bylaws, shall nevertheless
constitute a quorum for the purpose of electing directors.
c) Those shareholders entitled to vote who attend a meeting that has
been previously adjourned for one or more periods aggregating at least 15 days
because of an absence of a Quorum, although less than a quorum as fixed in these
Bylaws, shall nevertheless constitute a quorum for the purpose of acting upon
any matter set forth in the notice of the meeting if the notice states that
those shareholders who attend the adjourned meeting shall nevertheless
constitute a quorum for the purpose of acting upon the matter.
Article 4
VOTING RIGHTS
Section 4.1 Except as my be otherwise provided by the Corporation's
Articles of Incorporation, at every meeting of shareholders, every shareholder
entitled to vote thereat shall be entitles to one vote for every share having
voting power standing in his name on the books of the Corporation on the record
date
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fixed for the meeting. Except as otherwise provided in the Corporation's
Articles of Incorporation, in each election of directors every shareholder
entitled to vote shall have the right to multiply the number of votes to which
he may be entitled by the total number of directors to be elected in the same
election and he may cast the whole number of his votes for one candidate or he
may distribute them among any two or more candidates.
Section 4.2 Except as otherwise provided by statute, at any duly
organized meeting of shareholders the vote of the holders of a majority of the
votes cast shall decide any question brought before such meeting.
Section 4.3 Unless demand is made before the voting begins by a
shareholder entitled to vote at any election for directors, the election of such
directors need not be by ballot.
Section 4.4 No shareholder shall be permitted to nominate a
candidate for election as a director unless such shareholder shall provide to
the Secretary of the Corporation (a) information about such candidate which is
equivalent to the information concerning the candidates nominated by the Board
of Directors which was contained in the Corporation's proxy statement for the
immediately preceding annual meeting of shareholders at which directors were
elected if the Corporation distributed a proxy statement to its shareholders in
connection with such election of directors or (b) if the Corporation did not
distribute such a proxy statement, the following information about such
candidate: name, age, any position or office held with the Corporation, a
description of any arrangement between the candidate and any other person(s)
(naming such person(s)) pursuant to which he was nominated as a director,
principal occupation for the five years prior to the election, the number of
shares of the Corporation's stock beneficially owned by the candidate and a
description of any material transaction or series of transactions to which the
Corporation or any of its affiliates is a party and in which the candidate or
any of his affiliates has a direct or indirect material interest, which
description shall specify the candidates interest in the transaction, the amount
of the transaction and, where practicable, the amount of the candidate's
interest in the transaction. Such information shall be provided in writing not
later than 120 days before the first anniversary of the preceding annual meeting
of shareholders.
Article 5
PROXIES
Section 5.1 Every shareholder entitled to vote at a meeting of
shareholders, or to express consent or dissent to corporate action in
writing without a meeting, may authorize another person or persons to act for
him by proxy. Every proxy
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shall be executed in writing by the shareholder or his duly authorized
attorney-in-fact and filed with the Secretary of the Corporation. A proxy,
unless coupled with an interest, shall be revocable at will, notwithstanding any
other agreement or any provision in the proxy to the contrary, but the
revocation of a proxy shall not be effective until written notice thereof has
been given to the Secretary of the Corporation. An unrevoked proxy shall not be
valid after three years from the date of its execution unless a longer time is
expressly provided therein. A proxy shall not be revoked by the death or
incapacity of the maker, unless before the vote is counted or the authority is
exercised, written notice of such death or incapacity is given to the Secretary
of the Corporation.
Section 5.2 Where two or more proxies of a shareholder are present,
the Corporation shall, unless otherwise expressly provided in the proxy, accept
as the vote of all shares represented thereby the vote cast by a majority of
them and if a majority of the proxies cannot agree whether the shares
represented shall be voted or upon the manner of voting the shares, the voting
of the shares shall be divided equally among those persons.
Article 6
RECORD DATE
Section 6.1 The Board of Directors may fix a time prior to the date
of any meeting of shareholders as a record date for the determination of the
shareholders entitled to notice of, or to vote at, the meeting, which time,
except in the case of an adjourned meeting, shall not be more than 90 days prior
to the date of the meeting of shareholders. Only shareholders of record on the
date so fixed shall be entitled to notice of, or to vote at, such meeting,
notwithstanding any transfer of shares on the books of the Corporation after any
record date fixed as aforesaid. The Board of Directors may similarly fix a
record date for the determination of shareholders of record for any other
purpose, such as the payment of a distribution or a conversion or exchange of
shares.
Section 6.2 The Board of Directors may by resolution adopt a
procedure whereby a shareholder of the corporation may certify in writing to the
corporation that all or a portion of the shares registered in such shareholder's
name are held for the account of a specified person or persons. Such resolution
my set forth: (a) the classification of shareholder who may certify; (b) the
purpose or purposes for which the certification may be made; (c) the form of
certification and information to be contained therein; (d) if the certification
is with request to a record date, the time after the record date within which
the certification must be received by the Corporation; and (e) such other
provisions with respect to the procedure as are deemed necessary or desirable.
Upon receipt by the Corporation of a certification complying with
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the procedure, the person specified in the certification shall be deemed, for
the purposes set forth in the certification, to be the holders of record of the
number of shares specified in place of the shareholder making the certification.
Article 7
SHAREHOLDER LIST
Section 7.1 The officer or agent having charge of the share transfer
books of the Corporation shall make a complete alphabetical list of the
shareholders entitled to vote at any meeting, with their addresses and the
number of shares held by each. The list shall be produced and kept open at the
time and place of the meeting for inspection by any shareholder during the
entire meeting except that if the Corporation has 5,000 or more shareholders, in
lieu of the making of the list the Corporation may make the information
available at the meeting by other means.
Section 7.2 Failure to comply with the provisions of Section 7.1 of
these Bylaws shall not affect the validity of any action taken at a meeting
prior to a demand at the meeting by any shareholder entitled to vote thereat to
examine the list.
Section 7.3 The original transfer books for the shares of the
Corporation. or a duplicate thereof kept in the Commonwealth of Pennsylvania,
shall be prima facie evidence as to who are the shareholders entitled to examine
the list or transfer books for shares or to vote at any meeting.
Article 8
JUDGES OF ELECTION
Section 8.1 Prior to any meeting of shareholders, the Board of
Directors may appoint judges of election, who may but need not be shareholders,
to act at such meeting or any adjournment thereof. If judges of election are not
so appointed, the presiding officer of any such meeting may, and on the request
of any shareholder or his proxy shall, make such appointment at the meeting. The
number of judges shall be one or three. No person who is a candidate for an
office to be filled at the meeting shall act as a judge of election.
Section 8.2 In case any person appointed as a judge of election
fails to appear or fails or refuses to act, the vacancy so created may be filled
by appointment made by the Board of Directors in advance of the convening of the
meeting or at the meeting by the presiding officer thereof.
Section 8.3 The judges of election shall determine the number of
shares outstanding and the voting power of each, the
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shares represented at the meeting, the existence of a quorum and the
authenticity, validity and effect of proxies. The judges of election shall also
receive votes or ballots, hear and determine all challenges and questions in any
way arising in connection with the right to vote, count and tabulate all votes,
determine the result and do such other acts as may be proper to conduct the
election or vote with fairness to all shareholders. The judges of election shall
perform their duties impartially, in good faith, to the best of their ability
and as expeditiously as practicable. If there are three judges of election the
decision, act or certificate of a majority shall be the decision, act or
certificate of all.
Section 8.4 On request of the presiding officer of the meeting or of
any shareholder, the judges of election shall make a report in writing of any
challenge, question or matter determined by them and execute a certificate of
any fact found by them. Any report or certificate made by them shall be prima
facie evidence of the facts found by them.
Article 9
CONSENT OF SHAREHOLDERS IN LIEU OF MEETING
Section 9.1 Any action required or permitted to be taken at a
meeting of the shareholders may be taken without a meeting if, prior or
subsequent to the action, a written consent or consents thereto signed by all of
the shareholders who would be entitled to vote at a meeting for such purpose
shall be filed with the Secretary of the Corporation.
Article 10
DIRECTORS
Section 10.1 The number of directors shall be determined by the
Board of Directors from time to time. The Chairman of the Board of Directors
shall preside at all meetings of shareholders ad directors. The Chairman may be
an officer of the Corporation.
Section 10.2 Each director shall be a natural person of full age and
need not be a resident of the Commonwealth of Pennsylvania or a shareholder of
the Corporation.
faction 10.3 Except as otherwise provided in Article 12 of these
Bylaws, directors shell be selected by the shareholders. The candidates
receiving the highest number of votes from the shareholders or each class or
group of classes, if any, entitled to elect directors separately up to the
number of directors to be elected by the shareholders, or class or group of
classes, if any, shall be elected. Each director shall be selected for a term of
one year and until his successor has been selected
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and qualified or until his earlier death, resignation or removal. A decrease in
the number of directors shall not have the effect of shortening the term of any
incumbent director.
Article 11
REMOVAL OF DIRECTORS
Section 11.1 The entire Board of Directors, or a class of the Board
of Directors where the Board of Directors is classified with respect to the
power of shareholders to select directors, or any individual director may be
removed from office without assigning any cause by the vote of the shareholders
or of the holders of a class or series of shares, entitled to elect directors or
the class of directors. Notwithstanding the foregoing, an individual director
shall not be removed (unless the entire Board of Directors or class of directors
is removed) from the Board of Directors if sufficient votes are cast against the
resolution for such director's removal which, if cumulatively voted at an annual
or other regular election of directors, would be sufficient to elect one or more
directors to the Board of Directors or a class thereof. If any directors are so
removed, new directors may be elected at the same meeting.
Section 11.2 The Board of Directors may declare vacant the office of
a director who has been judicially declared of unsound mind or who has been
convicted of an offense punishable by imprisonment for a term of more than one
year.
Section 11.3 The Board of Directors may be removed at any time with
or without cause by the unanimous vote or consent of shareholders entitled to
vote thereon.
Article 12
VACANCIES ON BOARD OF DIRECTORS
Section 12.1 Vacancies on the Board of Directors, including
vacancies resulting from an increase in the number of directors, shall be filled
by a majority vote of the remaining members of the Board of Directors, though
less than a quorum, or by a sole remaining director and each person so selected
shall be a director to serve for the balance of the unexpired term.
Section 12.2 When one or more directors resign from the Board of
Directors effective at a future date, the directors then in office, including
those who have resigned, shall have the power of a majority vote to fill the
vacancies, the vote thereon to take effect when resignation become effective.
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Article 13
POWERS OF THE BOARD
Section 13.1 The business and affairs of the Corporation shall be
managed under the direction of the Board of Directors, which may exercise all
such powers of the Corporation and do all such lawful acts and things as are
directed or required to be exercised and done by statute, the Articles of
Incorporation or these Bylaws.
Section 13.2 The Board of Directors may, by resolution adopted by a
majority of the directors in office, establish one or more committees consisting
of one or more directors as may be deemed appropriate or desirable by the Board
of Directors to serve at the pleasure of the Board. Any committee, to the extent
provided in the resolution of the Board of Directors pursuant to which it
was created, shall have and may exercise all of the powers and authority of the
Board of Directors, except that no committee shall have any power or authority
as to the following:
a) The submission to shareholders of any action requiring approval
of shareholders;
b) The creation or filling of vacancies in the Board of Directors;
c) The adoption, amendment or repeal of these Bylaws;
d) The amendment or repeal of any resolution of the Board of
Directors that by its terms is amendable or repealable only by the Board of
Directors; and
e) Action on matters committed by the Bylaws or resolution of the
Board of Directors to another committee of the Board of Directors.
Article 14
MEETINGS OF THE BOARD OF DIRECTORS
Section 14.1 A meeting of the Board of Directors may be held
immediately following the annual meeting of shareholders at which directors have
been elected without the necessity of notice to the directors.
Section 14.2 Meetings of the Board of Directors shall be held at
such times and places within or without the Commonwealth of Pennsylvania as the
Board of Directors may from time to time appoint or as may be designed in the
notice of the meeting. One or more directors may participate in any meeting of
the Board of Directors, or of any committee thereof, by means of a conference
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telephone or similar communications equipment by means of which all persons
participating in the meeting can hear one another. Participation in a meeting by
such means shall constitute presence in person at the meeting.
Section 14.3 Special meetings of the Board of Directors may be
called by the Chairman of the Corporation on one day's notice to each director,
either by telephone, or if in writing, in accordance with the provisions of
Article 30 of these Bylaws. Special meetings shall be called by the Chairman or
Secretary in like manner and on like notice upon the written request of a
majority of the directors in the office.
Section 14.4 At all meetings of the Board of Directors a majority of
the directors in office shall constitute a quorum for the transaction of
business, and the acts of a majority of the directors present and voting at a
meeting at which a quorum is present shall be the acts of the Board of
Directors, except as may be otherwise specifically provided by statute or by the
Articles of Incorporation or by these Bylaws.
Article 15
ACTION BY WRITTEN CONSENT
Section 15.1 Any action required or permitted to be taken at a
meeting of the Board of Directors may be taken without a meeting if, prior or
subsequent to the action, a consent or consents thereto signed by all of the
directors is filed with the Secretary of the Corporation.
Article 16
COMPENSATION OF DIRECTORS
Section 17.1 A director of the Corporation shall stand in a
fiduciary relation to the Corporation and shall perform his duties as a
director, including his duties as a member of any committee of the Board of
Directors upon which he may serve, in good faith, in a manner he reasonably
believes to be in the best
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interests of the Corporation, and with such care, including reasonable inquiry,
skill and diligence, as a person of ordinary prudence would use under similar
circumstances. In performing his duties, a director shall be entitled to rely in
good faith on information, opinions, reports or statements, including financial
statements and other financial data, in each case prepared or presented by any
of the following: (a) one or more officers or employees of the Corporation whom
the director reasonably believes to be reliable and competent in the matters
presented; (b) legal counsel, public accountants or other persons as to matters
which the director reasonably believes to be within the professional or expert
competence of such persons; or (c) a committee of the Board of Directors upon
which he does not serve, duly designated in accordance with law, as to matters
within its designated authority, which committee the director reasonably
believes to merit confidence. A director shall not be considered to be acting in
good faith if he has knowledge concerning the matter in questions that would
cause his reliance to be unwarranted.
Section 17.1 In discharging the duties of their respective
positions, the Board of Directors, committees of the Board of Directors and
individual directors may, in considering the best interests of the Corporation,
consider the effects of any action upon employees, suppliers and customers of
the Corporation and communities in which offices or other establishments of the
Corporation are located, and all other pertinent factors. The consideration of
these factors shall not constitute a violation of Section 17.1 hereof.
Section 17.3 Absent breach of fiduciary duty, lack of good faith or
self-dealing, actions taken as a director or any failure to take any action
shall be presumed to be in the best interests of the Corporation.
Section 17.4 A director of the Corporation shall not be personally
liable, as such, for monetary damages for any action taken, or any failure to
take any action, unless: (a) the director has breached or failed to perform the
duties of his office under Sections 17.1 through 17.3 hereof; and (b) the breach
or failure to perform constitutes self-dealing, willful misconduct or
recklessness.
Section 17.5 The provisions of Section 17.4 hereof shall not apply
to: (a) the responsibility or liability of a director pursuant to any criminal
statute; or (b) the liability of a director for the payment of taxes pursuant to
local, state or federal law.
Section 17.6 Notwithstanding any other provision of these Bylaws,
approval of shareholders shall be required to amend, repeal or adopt any
provision as part of these Bylaws that is inconsistent with the purpose or
intent of Sections 17.1, 17.2,
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17.3, 17.4, 17.5 or 17.6 of this Article 17, and, if any such action shall be
taken, it shall become effective only on a prospective basis from and after the
date of such shareholder approval.
Article 18
OFFICERS
Section 18.1 The Corporation shall have a President, a Secretary and
a Treasurer, or persons who shall act as such, regardless of the name or title
by which they may be designated, elected or appointed and may have such other
officers and assistant officers as the Board of Directors may authorize from
time to time. The President and Secretary shall be natural persons of full age.
The Treasurer may be a corporation but if a natural person shall be of full age.
It shall not be necessary for the officers to be directors. Any number of
offices may be held by the same person. Each officer shall hold office at the
pleasure of the Board of Directors and until his successor has been selected and
qualified or until his earlier death, resignation or removal. Any officer may
resign at any time upon written notice to the Corporation. The resignation shall
be effective upon receipt thereof by the Corporation or at such subsequent time
as may be specified in the notice of resignation. The Corporation may secure the
fidelity of any or all of the officers by bond or otherwise.
Section 18.2 Except as otherwise provided in the Articles of
incorporation, an officer shall perform his duties as an officer in good faith,
in a manner he reasonably believes to be in the best interests of the
Corporation and with such care, including reasonable inquiry, skill and
diligence, as a person of ordinary prudence would use under similar
circumstances. A person who so performs his duties shall not be liable by reason
of having been an officer of the Corporation.
Section 18.2 Any officer or agent of the Corporation may be removed
by the Board of Directors with or without cause. The removal shall be without
prejudice to the contract rights, if any, of any person so removed. Election or
appointment of an officer or agent shall not of itself create contract rights.
If the office of any officer becomes vacant for any reason, the vacancy may be
filled by the Board of Directors.
Article 19
THE PRESIDENT
Section 19.1 In the absence of the Chairman of the Board of
Directors, the President shall preside at all meetings of shareholders and
directors. Unless otherwise provided by
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resolution of the Board of Directors, he shall be the chief executive officer of
the Corporation; shall be responsible for the general and active management of
the business of the Corporation; shall see that all orders and resolutions of
the Board of Directors are put into effect, subject, however, to the right of
the Board of Directors to delegate any specific powers, except such as may be by
statute exclusively conferred on the President, to any other officer or officers
of the Corporation; and shall have the authority to execute bonds, mortgages and
other contracts requiring a seal, under the seal of the Corporation, except
where required or permitted by law to be otherwise signed and executed and
except where the signing and execution thereof shall be expressly delegated by
the Board of Directors to some other officer or agent of the Corporation.
Article 20
THE VICE PRESIDENT
Section 20.1 The Vice President or, if more than one, the Vice
Presidents in the order, if any, established by the Board of Directors shall, in
the absence or incapacity of the President, have the authority to exercise all
the powers and perform the duties of the President. The Vice Presidents,
respectively, shall also have such other authority and perform such other duties
as may be provided in the Bylaws or as shall be determined by the Board of
Directors or the President. Any Vice President may, in the discretion of the
Board of Directors, be designated as "executive", "senior" or by departmental or
functional classification.
Article 21
THE SECRETARY
Section 21.1 The Secretary shall attend all meetings of the Board of
Directors and of the shareholders as keep accurate records thereof in one or
more minute books kept for that purpose and shall perform the duties customarily
performed by the secretary of a corporation and such other duties as may be
assigned to him by the Board of Directors or President.
Article 22
THE TREASURER
Section 22.1 The Treasurer shall be responsible for the custody of
the corporate funds and securities; shall be responsible for full and accurate
accounts of receipts and disbursements in books belonging to the Corporation;
and shall perform such other duties as may be assigned to him by the Board of
Directors or the President. He shall give bond in such sum and with such surety
as the Board of Directors may from time to time direct.
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Article 23
ASSISTANT OFFICERS
Section 23.1 Each assistant officer shall assist in the performance
of the duties of the officer to whom he is assistant and shall perform such
duties in the absence of the officer. He shall perform such additional duties as
the Board of Directors, the President or the officer to whom he is assistant may
from time to time assign him. Such officers may be given such functional titles
as the Board of Directors shall from time to time determine.
Article 24
INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS
Section 24.1 The Corporation shall indemnify any director or
officer, and may indemnify any other employee or agent, who was or is a party
to, or is threatened to be made a party to, or who is called as a witness in
connection with, any threatened, pending, or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, including
an action by or in the right of the Corporation, by reason of the act that he is
or was a director officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another domestic or foreign corporation for profit or not-for-profit,
partnership, joint venture, trust or other enterprise, against expenses,
including attorneys' fees, judgments, fines and amounts paid in settlement,
actually and reasonably incurred by him in connection with such action, suit or
proceeding unless the act or failure to act giving rise to the claim for
indemnification is determined by a court to have constituted willful misconduct
or recklessness.
Section 24.2 The indemnification and advancement of expenses
provided by, or granted pursuant to, this Article 24 shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any Bylaw, agreement, contract,
vote of shareholders or directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office. It is the policy of the Corporation that indemnification of, and
advancement of expenses to, directors and officers of the Corporation shall be
made to the fullest extent permitted by law. To this end, the provisions of this
Article 24 shall be deemed to have been amended for the benefit of directors and
officers of the Corporation effective immediately upon any modification of the
BCL or any modification, or adoption of any other law that expands or enlarges
the power or obligation of corporations organized under the BCL to indemnify, or
advance expenses to, directors and officers of corporations.
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Section 24.3 The Corporation shall pay expenses incurred by an
officer or director, and may pay expenses incurred by any other employee or
agent, in defending an action, or proceeding referred to in this Article 24 in
advance of the final disposition of such action or proceeding upon receipt of an
undertaking by or on behalf of such person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
Corporation.
Section 24.4 The indemnification and advancement of expenses
provided by, or granted pursuant to, this Article 24 shall, unless otherwise
provided when authorized or ratified, continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such person.
Section 24.5 The Corporation shall have the authority to create a
fund of any nature, which may, but need not be, under the control of a trustee,
or otherwise secure or insure in any manner, its indemnification obligations,
whether arising under these Bylaws or otherwise. This authority shall include,
without limitation, the authority to: (i) deposit funds in trust or in escrow;
(ii) establish any form of self-insurance; (iii) secure its indemnity obligation
by grant of a security interest, mortgage or other lien on the assets of the
Corporation; or (iv) establish a letter of credit, guaranty or surety
arrangement for the benefit of such persons in connection with the anticipated
indemnification or advancement of expenses contemplated by this Article 24. The
provisions of this Article 24 shall not be deemed to preclude the
indemnification of, or advancement of expenses to, any person who is not
specified in Section 24.1 of this Article 24 but whom the Corporation has the
power or obligation to indemnify, or to advance expenses for, under the
provisions of the BCL or otherwise. The authority granted by this Section 24.5
shall be exercised by the Board of Directors of the Corporation.
Section 24.6 The Corporation shall have the authority to enter into
a separate indemnification agreement with any officer, director, employee or
agent of the Corporation or any subsidiary providing for such indemnification of
such person as the Board of Directors shall determine up to the fullest extent
permitted by law.
Section 24.7 As soon as practicable after receipt by any person
specified in Section 24.1 of this Article 24 of notice of the commencement of
any action, suit or proceeding specified in Section 24.1 of this Article 24,
such person shall, if a claim with respect thereto may be made against the
Corporation under Article 24 of these Bylaws, notify the Corporation in writing
of the commencement or threat thereof; however, the omission so to notify the
Corporation shall not relieve the Corporation from any liability under Article
24 of these Bylaws unless the Corporation
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shall have been prejudiced thereby or from any other liability which it may have
to such person other than under Article 24 of these Bylaws. With respect to any
such action as to which such person notifies the Corporation of the commencement
or threat thereof, the Corporation may participate therein at its own expense
and, except as otherwise provided herein, to the extent that it desires, the
Corporation, jointly with any other indemnifying party similarly notified, shall
be entitled to assume the defense thereof, with counsel selected by the
Corporation to the reasonable satisfaction of such person. After notice from the
Corporation to such person of its election to assume the defense thereof, the
Corporation shall not be liable to such person under Article 24 of these Bylaws
for any legal or other expenses subsequently incurred by such person in
connection with the defense thereof other than as otherwise provided herein.
Such person shall have the right to employ his own counsel in such action, but
the fees and expenses of such counsel incurred after notice from the Corporation
of its assumption of the defense thereof shall be at the expense of such person
unless: (i) the employment of counsel by such person shall have been authorized
by the Corporation; (ii) such person shall have reasonably concluded that there
may be a conflict of interest between the Corporation and such person in the
conduct of the defense of such proceeding; or (iii) the Corporation shall not in
fact have employed counsel to assume the defense of such action. The
Corporation shall not be entitled to assume the defense of any proceeding
brought by or on behalf of the Corporation or as to which such person shall have
reasonably concluded that there may be a conflict of interest. If
indemnification under Article 24 of these Bylaws or advancement of expenses are
not paid or made by the Corporation, or on its behalf, within 90 days after a
written claim for indemnification or a request for an advancement of expenses
has been received by the Corporation, such person may, at any time thereafter,
bring suit against the Corporation to recover the unpaid amount of the claim or
the advancement of expenses. The right to indemnification and advancements
provided hereunder shall be enforceable by such person in any court of competent
jurisdiction. The burden of proving that indemnification is not appropriate
shall be on the Corporation. Expenses reasonably incurred by such person in
connection with successfully establishing the right to indemnification or
advancement of expenses, in whole or in part, shall also be indemnified by the
Corporation.
Section 24.8 The Corporation shall have the power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another domestic or
foreign corporation for profit or not-for-profit, partnership, joint venture,
trust or other enterprise against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would
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have the power to indemnify him against such liability under the provisions of
this Article 24.
Section 24.9 Notwithstanding any other provisions of these Bylaws,
the approval of shareholders shall be required to amend, repeal or adopt any
provision as part of these Bylaws which is inconsistent with the purpose or
intent of this Article 24, and, if any such action shall be taken, it shall
become effective only on a prospective basis from and after the date of such
shareholder approval.
Article 25
SHARES: SHARE CERTIFICATES
Section 25.1 All shares issued by the Corporation shall be
represented by certificates. The share certificates of the Corporation shall be
numbered and registered in a share register as they are issued; shall state that
the Corporation is incorporated under the laws of the Commonwealth of
Pennsylvania; shall bear the name of the registered holder, the number and class
of shares and the designation of the series, if any, represented thereby, the
par value if any, of each share or a statement that the shares are without par
value, as the case may be; shall be signed by the President or a Vice President,
and the Secretary or the Treasurer or any other person properly authorized by
the Board of Directors, and shall bear the corporate seal, which seal may be a
facsimile engraved or printed. In case any officer who has signed, or whose
facsimile signature has been placed upon, any share certificate shall have
ceased to be such officer because of death, resignation or otherwise before the
certificate is issued, such share certificate may be issued by the corporation
with the same effect as if the officer had not ceased to be such at the data of
its issue.
Article 26
TRANSFER OF SHARES
Section 26.1 Upon surrender to the Corporation of a share
certificate duly endorsed by the person named in the certificate or by attorney
duly appointed in writing and accompanied where necessary by proper evidence of
succession, assignment or authority to transfer, a new certificate shall be
issued to the person entitled thereto and the old certificate cancelled and the
transfer recorded on the share register of the cancelled and the transfer
recorded on the share register of the Corporation. Except as otherwise provided
pursuant to Section 6.2 hereof, a transferee of shares of the Corporation shall
not be a record holder of such share entitled to the rights and benefits
associated therewith unless and until the share transfer has been recorded on
the share transfer books of the Corporation. No
17
<PAGE>
transfer shall be made if it would be inconsistent with the provisions of
Article 8 of the Pennsylvania Uniform Commercial Code.
Article 27
LOST CERTIFICATES
Section 27.1 Where a shareholder of the Corporation alleges the
loss, theft or destruction of one or more certificates for shares of the
Corporation and requests the issuance of a substitute certificate therefor, the
Board of Directors may direct a new certificate of the same tenor and for the
same number of shares to be issued to such person upon such person's making of
an affidavit in form satisfactory to the Board of Directors setting forth the
facts in connection therewith, provided that prior to the receipt of such
request the Corporation shall not have either registered a transfer of such
certificate or received notice that such certificate has been acquired by a bona
fide purchaser. When authorizing such issue of a new certificate the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate, or his
heirs or legal representatives, as the case may be, to advertise the same in
such manner as it shall require and/or give the Corporation a bond in such form
and sum and with surety or sureties, with fixed or open penalty, as shall be
satisfactory to the Board of Directors, as indemnity for any liability or
expense which it may incur by reason of the original certificate remaining
outstanding.
Article 28
FINANCIAL REPORT TO SHAREHOLDERS
Section 28.1 Except as otherwise agreed in a writing (that is
separate from the Articles of Incorporation these Bylaws and the share
certificate) between a shareholder and the Corporation and then only with
respect to that shareholder, the Corporation shall furnish to its shareholders
financial statements, including at least a balance sheet as of the end of the
fiscal year and a statement of income and expenses for the fiscal year. The
financial statements shall be prepared in accordance with generally accepted
accounting principles, if the Corporation prepares financial statements for the
fiscal year on that basis for any purpose, and shall be mailed to each
shareholder within 120 days after the close of each fiscal year.
If the Corporation's financial statements are audited or reviewed by
a public accountant, the report of the accountant shall be mailed to
shareholders together with the financial statements. If the Corporation's
financial statements are not audited or reviewed by a public accountant, the
financial
18
<PAGE>
statements shall be accompanied by the report of the controller or other person
in charge of the Corporation's financial records stating such person's
reasonable belief as to whether or not the financial statements were prepared in
accordance with generally accepted accounting principles and, if not, describing
the basis of presentation and describing any material respects in which the
financial statements were not prepared on a basis consistent with those prepared
for the previous year.
Article 29
FISCAL YEAR
Section 29.1. The fiscal year of the Corporation shall be determined
by the Board of Directors.
Article 30
MANNER OF GIVING WRITTEN NOTICE: WAIVERS OF NOTICE
Section 30.1. Whenever written notice is required to be given to any
person under the provisions of these Bylaws, it may be given to the person
either personally or by sending a copy thereof by first class or express mail,
postage prepaid, or by telegram (with messenger service specified), telex or TWX
(with answerback received) or courier service, charges prepaid, or by
telecopier, to his address (or to his telex, TWX, telecopier or telephone
number) appearing on the books of the Corporation or, in the case of written
notice to directors, supplied by each director to the Corporation for the
purpose of the notice. If the notice is sent by mail, telegraph or courier
service, it shall be deemed to have been given to the person entitled thereto
when deposited in the United States mail or with a telegraph office or courier
service for delivery to that person or, in the case of telex or TWX or
telecopier, when dispatched.
Section 30.2 Any written notice required to be given to any person
under the provision of statute, the Corporation's Articles of Incorporation or
these Bylaws may be waived in a writing signed by the person entitled to such
notice whether before or after the time stated therein. Except as otherwise
required by statute, and except in the case of a special meeting, neither the
business to be transacted at, nor the purpose of, a meeting need be specified in
the waiver of notice. In the case of a special meeting of shareholders, the
waiver of notice shall specify the general nature of the business to be
transacted. Attendance of any person, whether in person or by proxy, at any
meeting shall constitute a waiver of notice of such meeting, except where a
person attends a meeting for the express purpose of objecting, at the beginning
of the meeting, to the transaction of any business because the meeting was not
lawfully called or convened
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Article 31
AMENDMENTS
Section 31.1 Except as provided for in Section 17.6 and 24.9 hereof,
these Bylaws may be amended or repealed, and new Bylaws adopted, by the
affirmative vote of a majority of the votes cast by the shareholders at any
regular or special meeting duly convened after written notice to the
shareholders that the purpose, or one of the purposes, of the meeting is to
consider the amendment or repeal of these Bylaws and the adoption of new Bylaws.
There shall be included in, or enclosed with, the notice, a copy of the proposed
amendment or a summary of the changes to be effected thereby.
Section 31.2 Except as provided in Sections 17.6 and 24.9 hereof,
and except as provided in section 1504(b) of the BCL, these Bylaws may be
amended or repealed, and new Bylaws adopted, by the affirmative vote of a
majority of the members of the Board of Directors at any regular or special
meeting duly convened, subject to the power of the shareholders to change such
action of the Board of Directors.
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Exhibit 3.42.1
SECOND AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
SERVICO HILTON HEAD, INC.
Pursuant to Sections 33-10-106 and 33-10-107 of the South Carolina
Business Corporation Act (the "Act"), SERVICO HILTON HEAD, INC., a South
Carolina corporation (the "Corporation"), hereby certifies that these Second
Amended and Restated Articles of Incorporation (the "Amended Articles"), which
contain amendments requiring shareholder approval, were duly adopted by the
Board of Directors of the Corporation and by the sole shareholder of the
Corporation by written consent without a meeting, pursuant to Sections 33-7-104
and 33-8-210 of the Act, as of July ___, 1999. The number of outstanding shares
of common stock of the Corporation is 1,000, and the number of votes cast was
sufficient for approval. The original Articles of Incorporation were filed with
the Secretary of State of the State of South Carolina on May 16, 1996. These
Amended Articles supersede the original Articles of Incorporation and all
amendments thereto and shall be effective upon filing these Amended Articles
with the Department of State. The amendments adopted by the Corporation, set
forth in full, are as follows:
ARTICLE I
(a) The name of the Corporation is SERVICO HILTON HEAD, INC.
ARTICLE II
The Corporation's registered office is c/o CT Corporation System, 75
Beattle Place, Two Insignia Financial Plaza, Greenville, South Carolina, 29601,
and the name of its registered agent at that office is CT Corporation System.
ARTICLE III
The Corporation is authorized to issue a single class of shares; the
total number od shares authorized is One Thousand (1,000) shares of common
stock, $0.01 par value.
ARTICLE IV
(a) The purpose for which the Corporation is organized is limited to:
(i) acquiring, owning, leasing, operating, using and managing that certain real
property commonly known as the Four Points Hotel Hilton Head, located at 36
South Forest Beach Drive, Hilton Head, South Carolina 29938 (the "Property");
(ii) entering into and performing its obligations under the credit agreement,
among Lodgian Financing Corp., as borrower, Lodgian, Inc., its parent, Impac
Hotel Group, LLC, Servico, Inc. and other affiliated entities, as affiliate
guarantors, the initial lenders and initial issuing bank named therein, the
collateral agent, the
<PAGE>
administrative agent, Morgan Stanley Senior Funding, Inc., as co-lead arranger,
joint-book manager and syndication agent and Lehman Brothers, as co-lead
arranger, joint-book manager and documentation agent relating to the financing
or refinancing of the Property (the "Loan Agreement") which provides the lender
thereunder with a first priority lien on the Property, any promissory-note
evidencing indebtedness incurred pursuant to the Loan Agreement, any mortgage
securing such indebtedness and encumbering the Property (the "Mortgage") and any
other documents securing such indebtedness and any related collateral documents,
each as amended (or pursuant to a consent obtained in accordance with the terms
thereof) (collectively, the "Loan Documents"); (iii) entering into and
performing its obligations under the Indenture (the "Indenture"), among Lodgian
Financing Corp, as issuer, Lodgian, Inc., the Subsidiary Guarantors defined
therein and Bankers Trust Company, as trustee, relating to the issuance of the
12 1/4% Senior Subordinated Notes due 2009 and the Guarantee in favor of the
holders of the Notes and (iv) transacting any and all lawful business that is
incident and necessary or appropriate to the ownership and to the management of
the Property for which a corporation may be incorporated under the laws of the
State of South Carolina.
(b) Notwithstanding any other provision of these Amended Articles and
any provision of law that otherwise so empowers the Corporation, until such time
as the Property is released from the lien of the Mortgage, the Corporation shall
not, without the unanimous affirmative vote of the members of its Board of
Directors, (i) amend, alter, change, repeal or adopt any resolution setting
forth a proposed amendment to, any provision of these Articles of Incorporation,
(ii) dissolve or liquidate, in whole or in part, consolidate or merge with or
into any other entity or convey, sell or transfer its properties and assets
substantially as an entirety to any entity, (iii) file a voluntary petition or
otherwise initiate, or consent to, proceedings for the Corporation to be
adjudicated insolvent or seeking an order for relief as a debtor under the
United States Bankruptcy Code, as amended (11 U.S.C. Sections 101 ET SEQ.), or
(iv) file any petition, or consent to any petition, seeking any composition,
reorganization, readjustment, liquidation, dissolution or similar relief under
the present or any future federal bankruptcy laws or any other present or future
applicable federal, state or other statute or law relative to bankruptcy,
insolvency or other relief for debtors; or (v) seek or consent to the
appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, or liquidator (or other similar official) of the Corporation or of
all or any substantial part of the properties and assets of the Corporation, or
(vi) make any general assignment for the benefit of creditors, or (vii) admit in
writing its inability to pay its debts generally as they become due, or (viii)
declare or effect a moratorium on its debt or take any corporate action in
furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all times until
the Property is released from the lien of the Mortgage, include an independent
director (the "Independent Director"). The Independent Director shall be a
person who is not at the time of appointment and who has not at any time during
the prior five years been and who is not while serving as the Independent
Director (i) a director, stockholder, officer or employee of the Corporation or
any affiliates thereof, other than with respect to such person's service as an
Independent Director of the Corporation and such person's service in similar
"Independent Director" positions for affiliates of the Corporation; (ii) a
creditor, customer, supplier, independent contractor, manager or any other
person who derives more than 10% of its gross revenues from its activities with
the Corporation or any affiliates thereof; (iii) a person controlling any such
stockholder, creditor, customer, supplier, independent contractor, manager
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<PAGE>
or other person; (iv) the legal or beneficial owner, at any time while serving
as director of the Corporation, of any beneficial interest in the Corporation;
or (v) a member of the immediate family of any such stockholder, officer,
employee, creditor, customer, supplier, director, independent contractor,
manager or any other person of the Corporation. As used herein, the term
"affiliate" means any person controlling, under common control wit, or
controlled by the person in question, and the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through ownership
of voting securities, by contact or otherwise. In the event of the death,
incapacity, or resignation of an Independent Director, or the vacancy of the
Independent Director's seat on the Corporation's Board of Directors for any
reason, a successor Independent Director shall be appointed by the remaining
directors.
(d) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(ix) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall not (i)
commingle its assets with those of, or pledge its assets for the benefit of, any
other person or entity; (ii) assume, guarantee or become obligated, or hold out
its credit as being available to satisfy, the liabilities or obligations of any
other person or entity; (iii) reduce its capital below an amount which is
adequate in light of its contemplated business operations; (iv) acquire
obligations or securities of, or make loans or advances to, any affiliate; (v)
incur or assume any indebtedness other than (A) the indebtedness underlying the
Loan Agreement (B) the indebtedness underlying the Indenture, and (C)
liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article IV and the last sentence of
Article VII of these Amended Articles; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in these Amended Articles. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
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<PAGE>
ARTICLE V
The Board of Directors of the Corporation is expressly authorized to
adopt, alter, amend or repeal the Bylaws of the Corporation subject to the
limitations set forth in these Amended Articles. Election of directors need not
be by written ballot unless and to the extent provided in the Bylaws of the
Corporation.
ARTICLE VI
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duties as a director, except for liability (I)( for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not on good faith or which involve intentional misconduct or a knowing
violation of law, or (iii) for any transaction from which the director derived
an improper personal benefit. If the South Carolina Business Corporation Act is
amended after the date of these Amended Articles to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of a director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the South Carolina Business Corporation Act, as so
amended.
The rights and authority conferred in this Article VI shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, provision of these Amended Articles or Bylaws of the
Corporation, agreement, vote of stockholders or disinterested directors, or
otherwise.
ARTICLE VII
The Corporation shall indemnify any officer or director, or any former
officer or director of the Corporation, to the fullest extent permitted by law.
The foregoing right of indemnification shall not be exclusive of any other
rights to which any director, officer, employee or agent may be entitled as a
matter of law or which he may be lawfully granted. The Corporation's obligation
to indemnify its officers and directors pursuant to this Article shall be
subordinate in all respects to the obligations of the Corporation arising out of
the Loan Documents and shall not constitute a claim against the Corporation to
the extent that the Corporation is unable to pay any amounts it is obligated to
pay under the Loan Documents.
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<PAGE>
IN WITNESS WHEREOF, the undersigned has executed these Second Amended
and Restated Articles of Incorporation this ____ day of July, 1999.
SERVICO HILTON HEAD, INC.
By: /s/ Thomas S. Gryboski
----------------------------
Name: Tom Gyboski
Title: Assistant Secretary
<PAGE>
EXHIBIT 3.42.2
SERVICO HILTON HEAD, INC.
*****
BY - LAWS
*****
ARTICLE I
OFFICES
Section 1. The registered office shall be located in Greenville,
South Carolina.
Section 2. The corporation may also have offices at such other
places both within and without the State of South Carolina as the board of
directors may from time to rune determine or the business of the corporation may
require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of
directors shall be held within or outside the State of South Carolina as may be
fixed from time to time by the board of directors and stated in the notice of
the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of shareholders, commencing with the year
1997, shall be held on the Second Monday in January unless that day is a legal
holiday, and if a legal holiday, then on the next secular day following, at
10:00 a.m., at which they shall elect by a plurality vote a board of directors,
and transact such other business as may properly be brought before the meeting.
<PAGE>
Section 3. Written or printed notice of the annual meeting stating
the place, day and hour of the meeting shall be delivered not less than ten nor
more than fifty days before the date of the meeting, either personally or by
mail, by or at the direction of the president, the secretary, or the officer or
persons calling the meeting, to each shareholder of record entitled to vote at
such meeting.
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. Special meetings of shareholders for any purpose other
than the election of directors may be held at such time and place within or
without the State of South Carolina as shall be stated in the notice of the
meeting or in a duly executed waiver of notice thereof.
Section 2. Special meetings of the shareholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the articles of
incorporation, may be called by the president, the board of directors, or the
holder of not less than one-tenth of all the shares entitled to vote at the
meeting.
Section 3. Written or printed notice of a special meeting stating
the place, day and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than fifty days
before the date of the meeting, either personally or by mail, by or at the
direction of the president, the secretary, or the officer or persons calling
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<PAGE>
the meeting, to each shareholder of record entitled to vote at such meeting.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of stock issued
and outstanding and entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by statute or by the articles of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the shareholders, the shareholders present in person or
represented by proxy shall have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented any business may be transacted which might have
been transacted at the meeting as originally notified.
Section 2. If a quorum is present, the affirmative vote of a
majority of the shares of stock represented at the meeting shall be the act of
the shareholders unless the vote of a greater number of shares of stock is
required by law or the articles of incorporation.
Section 3. Each outstanding share of stock, having voting power,
shall be entitled to one vote on each matter submitted to vote at a meeting of
shareholders. A shareholder may vote either
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<PAGE>
in person or by proxy executed in writing by the shareholder or by his duly
authorized attorney-in-fact.
Unless the articles of incorporation otherwise provide, every
shareholder entitled to vote has the right to cumulate his votes in an election
for directors.
Section 4. Any action required to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the shareholders entitled
to vote with respect to the subject matter thereof.
If the articles of incorporation provide that a consent may be
signed by fewer than all of the shareholders having voting power on any
question, then the consent need be signed only by shareholders holding that
proportion of the total voting power on the question which is required by the
articles of incorporation or by law, whichever requirement is higher. The
consent, together with a certificate by the secretary of the corporation to the
effect that the subscribers to the consent constitute all or the required
proportion of the shareholders entitled to vote on the particular question,
shall be filed with the records of proceedings of the shareholders. If the
consent is signed by fewer than all of the shareholders having voting power on
the question, prompt notice shall be given to all of the shareholders of the
action taken pursuant to the consent.
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<PAGE>
ARTICLE V
DIRECTORS
Section 1. The Board of Directors of the Corporation shall consist
of one (1) member. The number of directors may be either increased or decreased
from time to time by resolution of the Board of Directors, but shall never be
less than one (1). Directors need not be residents of the State of South
Carolina nor shareholders of the corporation. The directors, other than the
first board of directors, shall be elected at the annual meeting of the
shareholders, and each directors elected shall serve until the next succeeding
annual meeting and until his successor shall have been elected and qualified.
The first board of directors shall hold office until the first annual meeting of
shareholders.
Section 2. Vacancies and newly created directorships resulting from
increase in the number of directors may be filled by election at an annual
meeting or at a special meeting of shareholders called for that purpose. A
director elected to fill a vacancy, or newly created directorship, shall hold
office until the next succeeding annual meeting of shareholders and until his
successor shall have been elected and qualified.
In addition vacancies and newly created directorships resulting from
any increase in the number of directors may be filled by a majority of the
directors then in office, though less than a quorum, and the directors so chosen
shall hold office until the next annual election and until their successors are
duly elected and shall qualify.
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<PAGE>
Section 3. The business affairs of the corporation shall be managed
by its board of directors which may exercise all such powers of the corporation
and do all such lawful acts and things as are not by statute or by the articles
of incorporation or by these by-laws directed or required to be exercised or
done by the shareholders.
Section 4. The directors may keep the books of the corporation,
except such as are required by law to be kept within the state, outside of the
State of South Carolina, at such place or places as they may from time to time
determine.
Section 5. The board of directors, by the affirmative vote of a
majority of the directors them in office, and irrespective of any personal
interest to any of its members, shall have authority to establish reasonable
compensation of all directors for services to the corporation as directors,
officers or otherwise.
ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular or special,
may be held either within or without the State of South Carolina.
Section 2. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the vote of
the shareholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting provided a quorum shall be
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<PAGE>
present, or it may convene at such place and time as shall be fixed by the
consent in writing of all the directors.
Section 3. Regular meetings of the board of directors may be held
upon such notice, or without notice, and at such time and at such place as shall
from time to time be determined by the board.
Section 4. Special meetings of the board of directors may be called
by the president on two days' notice to each director, either personally or by
mail or by telegram, special meeting shall be called by the president or
secretary in like manner and on like notice on the written request of two
directors.
Section 5. Attendance of a director at any meeting shall constitute
a waiver of notice of such meeting, except where a director attends for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the board
of directors need be specified in the notice or waiver of notice of such
meeting.
Section 6. A majority of the directors shall constitute a quorum for
the transaction of business unless greater number is required by law or by the
articles of incorporation. The act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the board of directors,
unless the act of a greater number is required by statute or by the articles of
incorporation. If a quorum shall not be present at any meeting of directors, the
directors present thereat may adjourn the meeting
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<PAGE>
from time to time, without notice other than announcement at the meeting, until
a quorum shall be present.
Section 7. Any action required or permitted to be taken at a meeting
of the directors may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the directors entitled to
vote with respect to the subject matter thereof.
Section 8. Unless otherwise restricted by the articles of
incorporation or these by-laws, members of the board of directors may
participate in a meeting of the board of directors, by means of conference
telephone or similar communications equipment provided all persons participating
in the meeting can hear and communicate with each other, and such participation
in a meeting shall constitute presence in person at the meeting, except where a
person participates in the meeting for the express purpose of objecting to the
transaction of any business on the grounds that the meeting is not lawfully
called or convened.
ARTICLE VII
EXECUTIVE COMMITTEE
Section 1. The board of directors, by resolution adopted by a
majority of the number of directors fixed by the by-laws or otherwise, may
designate two or more directors to constitute an executive committee, which
committee, to the extent provided in such resolution, shall have and exercise
all of the authority of the board of directors in the management of the
corporation, except
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<PAGE>
as otherwise required by law. Vacancies in the membership of the committee shall
be filled by the board of directors at a regular or special meeting of the board
of directors. The executive committee shall keep regular minutes of its
proceedings and report the same to the board when required.
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes of the
articles of incorporation or of these bylaws, notice is required to be given to
any director or shareholder, it shall not be construed to mean personal notice,
but such notice may be given in writing, by mail, addressed to such director or
shareholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telegram.
Section 2. Whenever any notice whatever is required to be given
under the provisions of the statutes or under the provisions of the articles of
incorporation or these by-laws, a waiver thereof in writing signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
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<PAGE>
ARTICLE IX
OFFICERS
Section 1. The officers of the corporation shall be chosen by the
board of directors and shall be a president, a vice-president, a secretary and a
treasurer. The board of directors may also choose additional vice-presidents,
and one or more assistant secretaries and assistant treasurers. Any two or more
offices may be held by the same person except the offices of President and
Secretary.
Section 2. The board of directors at its first meeting after each
annual meeting at shareholders shall choose a president, one or more
vice-presidents, a secretary and a treasurer, none of whom need be a member of
the board.
Section 3. The board of directors may appoint such other officers
and agents as it shall deem necessary who shall hold their offices for such
terms and shall exercise such powers and perform such duties as shall exercise
such powers and perform such duties as shall be determined from time to time by
the board of directors.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by the
board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
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<PAGE>
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the shareholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
THE VICE-PRESIDENTS
Section 8. The vice-president, or if there shall be more than one,
the vice-presidents, in the order determined by the board of directors, shall,
in the absence or disability of the president, perform the duties and exercise
the powers of the president and shall perform such other duties and have other
powers as the board of directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the shareholders and record all the proceedings of
the meetings of the corporation and of the
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<PAGE>
board of directors in a book to be kept for that purpose and shall perform like
duties for the standing committees when required. He shall give, or cause to be
given, notice of all meetings of the shareholders and special meetings of the
board of directors, and shall perform such other duties as may be prescribed by
the board of directors or president, under whose supervision he shall be. He
shall have custody of the corporate seal of the corporation and he, or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature or by the
signature of such assistance secretary. The board of directors may give general
authority to any other officer to affect the affixing by his signature.
Section 10. The assistant secretary, or if there be more than one,
the assistant secretaries in the order determined by the board of directors,
shall, in the absence or disability of the secretary, perform the duties and
exercise the powers of the secretary and shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
THE TREASURER AND ASSISTANT TREASURES
Section 11. The treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects
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<PAGE>
in the name and to the credit of the corporation in such depositories as may be
designated by the board of directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind of his possession or under
his control belonging to the corporation.
Section 14. The assistant treasurer, or, if there shall be more than
one, the assistant treasurers in order determined by the board of directors,
shall, in the absence or disability of the treasurer, perform the duties and
exercise the powers of the treasurer and shall perform such other duties and
have such other powers as the board of directors may from time to tome
prescribe.
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<PAGE>
ARTICLE X
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by
certificates signed by the president or a vice-president and the secretary or an
assistant secretary of the corporation, and may be sealed with the seal of the
corporation or a facsimile thereof. When the corporation is authorized to issue
shares of more than one class there shall be set forth upon the face or back of
the certificate, or the certificate shall have a statement that the corporation
will furnish to any shareholder upon request and without charge, a full
statement of the designations, preferences, limitations, and relative rights of
the shares of each class authorized to be issued and, if the corporation is
authorized to issue any preferred or special class in series, the variations in
the relative rights and preferences between the shares of each such series so
far as the same have been fixed and determined and the relative rights and
preferences of subsequent series.
Section 2. The signatures of the offices of the corporation upon a
certificate may be facsimiles of the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the corporation itself or an
employee of the corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer, before such certificate is issued, it may be
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<PAGE>
issued by the corporation with the same effect as if he were such officer at the
date of its issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate to be
issued in place of any certificate therefore issued by the corporation alleged
to have been lost or destroyed. When authorizing such issue of a new
certificate, the board of directors, in its discretion and as a condition
precedent to the issuance thereof, may prescribe such terms and conditions as
its deems expedient, and may require such indemnities as its deems adequate, to
protect the corporation from any claim that may be made against it with respect
to any such certificate alleged to have been lost or destroyed.
TRANSFERS OF SHARES
Section 4. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate representing shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, a new certificate shall be issued to the person entitled thereto, and
the old certificate cancelled and the transaction recorded upon the books of the
corporation.
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<PAGE>
FIXING OF RECORD DATE
Section 5. For the purpose of determining shareholders entitled to
notice of and to vote at any meeting, or to receive a dividend, or to receive or
exercise subscription or other rights, or to participate in a reclassification
of stock, or in order to make a determination of shareholders for any other
proper purpose, the board of directors may fix in advance a record date for
determination of shareholders for such purpose, such date to be not more than
seventy days and, if fixed for the purpose of determining shareholders entitled
to notice of and to vote at a meeting, not less than ten days, prior to the date
on which the action requiring the determination of shareholders is to be taken.
If no record date is fixed, the record date for determining
shareholders entitled to notice of or to vote at a meeting of shareholders shall
be at four o'clock in the afternoon on the day before the day on which notice is
given, or, if notice is waived, at the commencement of the meeting. If no record
date is fixed, the record date for determining shareholders entitled to express
consent to corporate action in writing without meeting shall be the time of the
day on which the first written consent is served on the corporation as provided
by law.
A determination of shareholders of record entitled to notice of or
to vote at a meeting of shareholders shall apply to any adjournment of the
meeting; provided, however, that the board of directors may fix a new record
date for the adjournment meeting and
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<PAGE>
further provided that the adjourment or adjournments do not exceed thirty days
in the aggregate.
REGISTERED SHAREHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
South Carolina.
LIST OF SHAREHOLDERS
Section 7. The officer or agent having charge of the transfer books
for shares shall make a complete list of the shareholders entitled to vote at
such meeting, arranged in alphabetical order, with the address of each and the
number of shares held by each, which list shall be kept on file at the principal
office of the corporation and shall be subject to inspection by any shareholder
at any time during usual business hours. Such list shall also be produced and
kept open at the time and place of the meeting and shall be subject to the
inspection of any shareholders during the whole time of the meeting.
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<PAGE>
VOTING RECORD
Section 8. The officer or agent having charge of the stock transfer
books for shares shall make, before each meeting of shareholders, a complete
record of the shareholders entitled to vote at shareholder's meeting or any
adjournment thereof, arranged in alphabetical order, with the address of each
and the number of shares held by each. Such record shall be produced and kept
open at the time and place of the meeting and shall be subject to the inspection
of any shareholder during the whole time of the meeting for the purposes
thereof.
ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the articles of
incorporation relating thereto, if any, dividends may be declared by the board
of directors at any regular or special meeting, pursuant to law. Dividends may
be paid in cash, in property or in shares of the capital stock, subject to any
provisions of the articles or incorporation.
Section 2. Before payment of any dividend, there may be set aside
out of any funds of the corporation available for dividends such sum as the
directors from time to time, in their absolute discretion think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
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<PAGE>
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 2. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
FISCAL YEAR
Section 3. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 4. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its organization and the words "Corporate Seal,
South Carolina." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
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<PAGE>
ARTICLE XII
AMENDMENTS
Section 1. These by-laws may be altered, amended, or repealed or new
by-laws may be adopted at any regular or special meeting of shareholders at
which a quorum is present or represented, by the affirmative vote of a majority
of the stock entitled to vote, provided notice of the proposed alteration,
amendment or repeal be contained in the notice of such meeting.
Dated: May 16, 1996
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<PAGE>
Exhibit 3.43.1
SECOND AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
SERVICO AUSTIN, INC.
Pursuant to Sections 4.04 and 4.07 of the Texas Business
Corporation Act (the "Act"), SERVICO AUSTIN, INC., a Texas corporation (the
"Corporation"), hereby certifies that these Second Amended and Restated Articles
of Incorporation (the "Amended Articles"), which contain amendments requiring
shareholder approval, were duly adopted by the Board of Directors of the
Corporation and by the sole shareholder of the Corporation by written consent
without a meeting, pursuant to Section 9.10 of the Act, as of July 22, 1999. The
number of outstanding shares of common stock of the Corporation is 1,000, and
the number of votes cast was sufficient for approval. The Amended Articles
accurately copy the Articles of Incorporation of the Corporation and all
amendments thereto that are in effect to date, as further amended by these
Amended Articles as hereinafter set forth and contain no other change in any
provision thereof. The original Articles of Incorporation were filed with by the
Secretary of State of the State of Texas on March 29, 1996. These Amended
Articles supersede the original Articles of Incorporation and all amendments
thereto and shall be deemed to be the Articles of Incorporation of the
Corporation. The Articles shall be amended to read as herein set forth in full,
which amendments have been effected in conformity with the provisions of the
Act:
ARTICLE I
The name of the Corporation is SERVICO AUSTIN, INC.
ARTICLE II
The period of duration is perpetual.
ARTICLE III
(a) The purpose for which the Corporation is organized is limited to:
(i) acquiring, owning, leasing, operating, using and managing that certain real
property commonly known as the Holiday Inn Austin South, located at 3401 South
I-35, Austin, Texas 78741 (the "Property"); (ii) entering into and performing
its obligations under the credit agreement, among Lodgian Financing Corp., as
borrower, Lodgian, Inc., its parent, Impac Hotel Group, LLC, Servico, Inc. and
other affiliated entities, as affiliate guarantors, the initial lenders and
initial issuing bank named therein, the collateral agent, the administrative
agent, Morgan Stanley Senior Funding, Inc., as co-lead arranger, joint-book
manager and syndication agent and Lehman Brothers, as co-lead arranger,
joint-book manager and documentation agent relating to the financing or
refinancing of the Property (the "Loan Agreement") which provides the lender
thereunder with a first priority lien on the Property, any promissory-note
evidencing indebtedness incurred pursuant to the Loan Agreement, any mortgage
securing such
<PAGE>
indebtedness and encumbering the Property (the "Mortgage") and any other
documents securing such indebtedness and any related collateral documents, each
as amended (or pursuant to a consent obtained in accordance with the terms
thereof) (collectively, the "Loan Documents"); (iii) entering into and
performing its obligations under the Indenture (the "Indenture"), among Lodgian
Financing Corp, as issuer, Lodgian, Inc., the Subsidiary Guarantors defined
therein and Bankers Trust Company, as trustee, relating to the issuance of the
12 1/4% Senior Subordinated Notes due 2009 and the Guarantee in favor of the
holders of the Notes and (iv) transacting any and all lawful business that is
incident and necessary or appropriate to the ownership and to the management of
the Property for which a corporation may be incorporated under the laws of the
State of Texas.
(b) Notwithstanding any other provision of these Amended Articles and
any provision of law that otherwise so empowers the Corporation, until such time
as the Property is released from the lien of the Mortgage, the Corporation shall
not, without the unanimous affirmative vote of the members of its Board of
Directors, (i) amend, alter, change, repeal or adopt any resolution setting
forth a proposed amendment to, any provision of these Articles of Incorporation,
(ii) dissolve or liquidate, in whole or in part, consolidate or merge with or
into any other entity or convey, sell or transfer its properties and assets
substantially as an entirety to any entity, (iii) file a voluntary petition or
otherwise initiate, or consent to, proceedings for the Corporation to be
adjudicated insolvent or seeking an order for relief as a debtor under the
United States Bankruptcy Code, as amended (11 U.S.C. Section 101 ET SEQ.), or
(iv) file any petition, or consent to any petition, seeking any composition,
reorganization, readjustment, liquidation, dissolution or similar relief under
the present or any future federal bankruptcy laws or any other present or future
applicable federal, state or other statute or law relative to bankruptcy,
insolvency or other relief for debtors; or (v) seek or consent to the
appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, or liquidator (or other similar official) of the Corporation or of
all or any substantial part of the properties and assets of the Corporation, or
(vi) make any general assignment for the benefit of creditors, or (vii) admit in
writing its inability to pay its debts generally as they become due, or (viii)
declare or effect a moratorium on its debt or take any corporate action in
furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all times until
the Property is released from the lien of the Mortgage, include an independent
director (the "Independent Director"). The Independent Director shall be a
person who is not at the time of appointment and who has not at any time during
the prior five years been and who is not while serving as the Independent
Director (i) a director, stockholder, officer or employee of the Corporation or
any affiliates thereof, other than with respect to such person's service as an
Independent Director of the Corporation and such person's service in similar
"Independent Director" positions for affiliates of the Corporation; (ii) a
creditor, customer, supplier, independent contractor, manager or any other
person who derives more than 10% of its gross revenues from its activities with
the Corporation or any affiliates thereof; (iii) a person controlling any such
stockholder, creditor, customer, supplier, independent contractor, manager or
other person; (iv) the legal or beneficial owner, at any time while serving as
director of the Corporation, of any beneficial interest in the Corporation; or
(v) a member of the immediate family of any such stockholder, officer, employee,
creditor, customer, supplier, director, independent contractor, manager or any
other person of the Corporation. As used herein, the term "affiliate" means any
person controlling, under common control wit, or controlled by the
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person in question, and the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a person, whether through ownership of voting securities, by contact
or otherwise. In the event of the death, incapacity, or resignation of an
Independent Director, or the vacancy of the Independent Director's seat on the
Corporation's Board of Directors for any reason, a successor Independent
Director shall be appointed by the remaining directors.
(d) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(ix) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall not (i)
commingle its assets with those of, or pledge its assets for the benefit of, any
other person or entity; (ii) assume, guarantee or become obligated, or hold out
its credit as being available to satisfy, the liabilities or obligations of any
other person or entity; (iii) reduce its capital below an amount which is
adequate in light of its contemplated business operations; (iv) acquire
obligations or securities of, or make loans or advances to, any affiliate; (v)
incur or assume any indebtedness other than (A) the indebtedness underlying the
Loan Agreement (B) the indebtedness underlying the Indenture, and (C)
liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article III and the last sentence of
Article X of these Amended Articles; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in these Amended Articles. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
ARTICLE IV
The total number of shares of stock which the Corporation shall have
authority to issue is One Thousand (1,000) shares of common stock, One Cent
($0.01) par value per share, divided into one class.
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<PAGE>
ARTICLE V
The Corporation commenced business when it received for the issuance of
its shares consideration of the value of One Thousand Dollars ($1,000),
consisting of money, labor done or property actually received.
ARTICLE VI
The Corporation's registered office is c/o CT Corporation System, 350
N. St. Paul Street, Dallas, Texas, 75201, and the name of its registered agent
at that office is CT Corporation System.
ARTICLE VII
The number of directors of the Corporation may be fixed by the Bylaws
of the Corporation. The number of directors constituting the Board of Directors
shall be at least one (1), and the name and address of the director of the
Corporation to serve until the next annual meeting of the shareholders until a
successor is elected and qualified is:
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
Robert Flanders 3445 Peachtree Road, N.E.
Two Live Oak Center, Suite 700
Atlanta, Georgia 30326
</TABLE>
ARTICLE VIII
The Board of Directors of the Corporation is expressly authorized to
adopt, alter, amend or repeal the Bylaws of the Corporation subject to the
limitations set forth in these Amended Articles. Election of directors need not
be by written ballot unless and to the extent provided in the Bylaws of the
Corporation.
ARTICLE IX
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duties as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not on good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 2.41 of the Texas Business Corporation
Act, or (iv) for any transaction from which the director derived an improper
personal benefit. If the Texas Business Corporation Act is amended after the
date of these Amended Articles to authorize corporate action further eliminating
or limiting the personal liability of directors, then the liability of a
director of the Corporation shall be eliminated or limited to the fullest extent
permitted by the Texas Business Corporation Act, as so amended.
The rights and authority conferred in this Article IX shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, provision of these
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<PAGE>
Amended Articles or Bylaws of the Corporation, agreement, vote of stockholders
or disinterested directors, or otherwise.
ARTICLE X
The Corporation shall indemnify any officer or director, or any former
officer or director of the Corporation, to the fullest extent permitted by law.
The foregoing right of indemnification shall not be exclusive of any other
rights to which any director, officer, employee or agent may be entitled as a
matter of law or which he may be lawfully granted. The Corporation's obligation
to indemnify its officers and directors pursuant to this Article shall be
subordinate in all respects to the obligations of the Corporation arising out of
the Loan Documents and shall not constitute a claim against the Corporation to
the extent that the Corporation is unable to pay any amounts it is obligated to
pay under the Loan Documents.
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<PAGE>
IN WITNESS WHEREOF, the undersigned has executed these Second
Amended and Restated Articles of Incorporation this 23 day of July, 1999.
SERVICO AUSTIN, INC.
By: /s/ Thomas S. Gryboski
--------------------------
Name: Tom Gyboski
Title: Assistant Secretary
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<PAGE>
Exhibit 3.43.2
SERVICO AUSTIN, INC.
a Texas corporation
*************
BY - LAWS
*************
<PAGE>
SERVICO AUSTIN, INC.
*************
BY - LAWS
*************
ARTICLE I
OFFICES
Section 1. The registered office shall be located at 350 N. St. Paul
Street, Dallas, Texas 75201.
Section 2. The corporation may also have offices at such other
places both within and without the State of Texas as the board of directors may
from time to time determine or the business of the corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of
directors shall be held on such day and at such hour as may be fixed from time
to time by the board of directors. Said meetings may also be held at such other
place either within or without the State of Texas as shall be designated from
time to time by the board of directors and stated in the notice of the meeting.
Section 2. Annual meetings of shareholders, commencing with the year
1997, shall be held on the Second Monday in January unless that day is a legal
holiday, and if a legal holiday, then on the next secular day following, at
10:00 a.m., at which they shall elect by a plurality vote a board of directors,
and transact such other business as may properly be brought before the meeting.
Section 3. Written or printed notice of the annual meeting stating
the place, day and hour of the meeting shall be delivered not less than ten nor
more than fifty days before the date of the meeting, either personally or by
mail, by or at the direction of the president, the secretary, or the officer or
persons calling the meeting, to each shareholder of record entitled to vote at
such meeting.
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. Special meetings of shareholders for any purpose other
than the election of directors may be held at such time and place within or
without the state of Texas as shall be
<PAGE>
stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
Section 2. Special meetings of the shareholders, for any purpose,
unless otherwise prescribed by statute or by the articles of incorporation, may
be called by the president, the board of directors, or the holder of not less
than one-tenth of all the shares entitled to vote at the meeting.
Section 3. Written or printed notice of a special meeting stating
the place, day and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than fifty days
before the date of the meeting, either personally or by mail, by or at the
direction of the president, the secretary, or the officer or persons calling the
meeting, to each shareholder of record entitled to vote at such meeting.
Section 4. The business transacted at any special meeting of
shareholders shall be limited to the purposes stated in the notice.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of stock issued
and outstanding and entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by statute or by the articles of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the shareholders, the shareholders present in person or
represented by proxy shall have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented any business may be transacted which might have
been transacted at the meeting as originally notified.
Section 2. If a quorum is present, the affirmative vote of a
majority of the shares of stock represented at the meeting shall be the act of
the shareholders unless the vote of a greater number of shares of stock is
required by law or the articles of incorporation.
Section 3. Each outstanding share of stock, having voting power,
shall be entitled to one vote on each matter submitted to vote at a meeting of
shareholders. A shareholder may vote either in person or by proxy executed in
writing by the shareholder or by his duly authorized attorney-in-fact.
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<PAGE>
Section 4. Any action required to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the shareholders entitled
to vote with respect to the subject matter thereof.
ARTICLE V
DIRECTORS
Section 1. The Board of Directors of the Corporation shall consist
of one (1) member. The number of directors may be either increased or decreased
from time to time by resolution of the Board of Directors, but shall never be
less than one (1). Directors need not be residents of the State of Texas nor
shareholders of the corporation. The directors, other than the first board of
directors, shall be elected at the annual meeting of the shareholders, and each
directors elected shall serve until the next succeeding annual meeting and until
his successor shall have been elected and qualified. The first board of
directors shall hold office until the first annual meeting of shareholders.
Section 2. Any vacancy occurring in the board of directors may be
filled by the shareholders at an annual or a special meeting or by the
affirmative vote of a majority of the remaining directors though less than a
quorum of the board of directors. A director elected to fill a vacancy shall be
elected for the unexpired portion of the terms of his predecessor in office.
Any directorship to be filled by reason of an increase in the number
of directors may be filled by election at an annual meeting or at a special
meeting of shareholders called for that purpose. A director elected to fill a
newly created directorship shall serve until the next succeeding annual meeting
of shareholders and until his successor shall have been elected and qualified.
Any directorship to be filled by reason of an increase in the number of
directors may also be filled by the board of directors for a term of office
until the next election of directors by shareholders; provide no more than two
directorships may be so filled during a period between any two successive annual
meetings of shareholders.
Whenever the holders of any class or series of shares are entitled
to elect one or more directors by the provisions of the articles of
incorporation, any vacancies in such directorships and any newly created
directorships of such class of series to be filled by reason of an increase in
the number of such directors may be filled by the affirmative vote of a majority
of the directors elected by such class or series then in office or by a sole
remaining director so elected, or by the vote of the holders of the outstanding
shares of such class or series, and such directorships
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<PAGE>
shall not in any case be filled by the vote of the remaining directors or the
holders of the outstanding shares as a whole unless otherwise provided in the
articles of incorporation.
Section 3. The business affairs of the corporation shall be managed
by its board of directors which may exercise all such powers of the corporation
and do all such lawful acts and things as are not by statute or by the articles
of incorporation or by these by-laws directed or required to be exercised or
done by the shareholders.
Section 4. The directors may keep the books of the corporation,
except such as are required by law to be kept within the state, outside of the
State of Texas, at such place or places as they may from time to time determine.
Section 5. The board of directors, by the affirmative vote of a
majority of the directors then in office, and irrespective of any personal
interest to any of its members, shall have authority to establish reasonable
compensation of all directors for services to the corporation as directors,
officers or otherwise.
ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular or special,
may be held either within or without the State of Texas.
Section 2. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the vote of
the shareholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting provided a quorum shall be present, or it may convene at such place and
time as shall be fixed by the consent in writing of all the directors.
Section 3. Regular meetings of the board of directors may be held
upon such notice, or without notice, and at such time and at such place as shall
from time to time be determined by the board.
Section 4. Special meetings of the board of directors may be called
by the president on two days' notice to each director, either personally or by
mail or by telegram; special meeting shall be called by the president or
secretary in like manner and on like notice on the written request of two
directors.
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Section 5. Attendance of a director at any meeting shall constitute
a waiver of notice of such meeting except where a director attends for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Nether the business to be transacted
at, nor the purpose of, any regular or special meeting of the board of directors
need be specified in the notice or waiver of notice of such meeting.
Section 6. A majority of the directors shall constitute a quorum for
the transaction of business unless greater number is required by law or by the
articles of incorporation. The act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the board of directors,
unless the act of a greater number is required by statute or by the articles of
incorporation. If a quorum shall not be present at any meeting of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 7. Unless otherwise restricted by the articles of
incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting, if all members of the board of committee, as the case may be,
consent thereto in writing which shall set forth the action taken and be signed
by all members of the board of directors or of the committee as the case may be.
ARTICLE VII
COMMITTEES OF DIRECTORS
Section 1. The board of directors, by resolution adopted by a
majority of the full board of directors, may designate from among its members an
executive committee and one or more other committees, each of which shall be
comprised of one or more members and, to the extent provided in the resolution,
shall have and may exercise all of the authority of the board of directors,
except that no such committee shall have the authority of the board of directors
in reference to amending the articles of incorporation, approving a plan of
merger or consolidation, recommending to the shareholders the sale, lease, or
exchange of all or substantially all of the property and assets of the
corporation otherwise than in the usual and regular course of its business,
recommending to the shareholders a voluntary dissolution of the corporation or a
revocation thereof, amending, altering, or repealing the by-laws of the
corporation or adopting new by-laws for the corporation, filling vacancies in
the board of directors to be filled by reason of an increase in the number of
directors, electing or removing officers or members of an committee, fixing the
compensation of any member of a
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committee, or altering or repealing any resolution of the board of directors
which by its terms provides that it shall not be so amendable or repealable;
and, unless the resolution expressly so provides, no committee shall have the
power of authority to declare a dividend or to authorize the issuance of shares
of the corporation.
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes of the
articles of incorporation or of these by-laws, notice is required to be given to
any director or shareholder, it shall not be construed to mean personal notice,
but such notice may be given in writing, by mail, addressed to such director or
shareholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telegram.
Section. 2. Whenever any notice whatever is required to be given
under the provisions of the statutes or under the provisions of the articles of
incorporation or these by-laws, a waiver thereof in writing signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
ARTICLE IX
OFFICERS
Section 1. The offices of the corporation shall be chosen by the
board of directors and shall be a president and a secretary. The board of
directors may also elect or appoint such other officers, including assistant
officers and agents as may be deemed necessary.
Section 2. The board of directors at its first meeting after each
annual meeting at shareholders shall choose a president and a secretary neither
of whom need be a member of the board.
Section 3. The board of directors may also appoint such other
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall
exercise such powers and perform such duties as shall be determined from time to
time by the board of directors.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
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Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officers elected or appointed by
the board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the shareholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
THE VICE-PRESIDENTS
Section 8. The vice-president, if there is one, or if there shall be
more than one, the vice-presidents in the order determined by the board of
directors, shall, in the absence of disability of the president, perform the
duties and exercise the powers of the president and shall perform such other
duties and have other powers as the board of directors may from time to time
prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the shareholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the shareholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he, or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such assistant
secretary. The board of directors may give general authority to any other
officer to affect the affixing by his signature.
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Section 10. The assistant secretary, if there is one, or if there be
more than one, the assistant secretaries in the order determined by the board of
directors, shall, in the absence or disability of the secretary, perform the
duties and exercise the powers of the secretary and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer, if there is one, shall have the custody
of the corporate funds and securities and shall keep full and accurate accounts
of receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the board of
directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind of his possession or under
his control belonging to the corporation.
Section 14. The assistant treasurer, if there is one, or, if there
shall be more than one, the assistant treasurers in order determined by the
board of directors, shall, in the absence or disability of the treasurer,
perform the duties and exercise the powers of the treasurer and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
ARTICLE X
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by
certificates signed by the president or such other officers as may be elected or
appointed, and may be sealed with the seal of the corporation or a facsimile
thereof.
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When the corporation is authorized to issue shares of more than one
class there shall be set forth upon the face or back of the certificate, or the
certificate shall have a statement that the corporation will furnish to any
shareholder upon request and without charge, a full statement of the
designations, preferences, limitations and relative rights of the shares of each
class authorized to be issued and, if the corporation is authorized to issue any
preferred or special class in series, the variations in the relative rights and
preferences between the shares of each such series so far as the same have been
fixed and determined and the relative rights and preferences of subsequent
series. When the corporation is authorized to issue shares of more than one
class, every certificate shall also set forth upon the face or the back of such
certificate a statement that there is set forth in the articles of incorporation
on file in the office of the Secretary of State a full statement of all the
designations, preferences, limitations and relative rights, including voting
rights, or the shares of each class authorized to be issued and the corporation
at its principal place of business or registered office. Every certificate shall
have noted thereon any information required to be set forth by the Texas
Business Corporation Act and such information shall be set forth in the manner
provided in said Act.
Section 2. The signatures of the offices of the corporation upon a
certificate may be facsimiles of the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the corporation itself or an
employee of the corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer, before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of its
issue
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate to be
issued in place of any certificate therefore issued by the corporation alleged
to have been lost or destroyed. When authorizing such issue of a new
certificate, the board of directors, in its discretion and as a condition
precedent to the issuance thereof, may prescribe such terms and conditions as
its deems expedient, and may require such indemnities as its deems adequate, to
protect the corporation from any claim that may be made against it with respect
to any such certificate alleged to have been lost or destroyed.
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<PAGE>
TRANSFERS OF SHARES
Section 4. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate representing shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, a new certificate shall be issued to the person entitled thereto, and
the old certificate canceled and the transaction recorded upon the books of the
corporation.
CLOSING OF TRANSFER BOOKS
Section 5. For the purpose of determining shareholders entitled to
notice of or to vote at any meeting of shareholders, or any adjournment thereof
or entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose the board of
directors may provide that the stock transfer books shall be closed for a stated
period but not to exceed, in any case, fifty days. If the stock transfer books
shall be closed for the purpose of determining shareholders entitled to notice
of or to vote at a meeting of shareholders, such books shall be closed for at
least ten days immediately preceding such meeting. In lieu of closing the stock
transfer books, the board of directors may fix in advance a date as the record
date for any such determination of shareholder, such date in any case to be not
more than fifty days and, incase of a meeting of shareholders, not less than ten
days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of shareholders, or
shareholders entitled to receive payment of a dividend, the date on which notice
of the meeting is mailed or the date on which the resolution of the board of
directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof.
REGISTERED SHAREHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Texas.
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<PAGE>
LIST OF SHAREHOLDERS
Section 7. The officer or agent having charge of the transfer books
for shares shall make, at least ten days before each meeting of shareholders, a
complete list of the shareholders entitled to vote at such meeting, arranged in
alphabetical order, with the address of each and the number of shares held by
each, which list, for a period of ten days prior to such meeting, shall be kept
on file at the registered office of the corporation and shall be subject to
inspection by any shareholder at any time during usual business hours. Such list
shall also be produced and kept open at the time and place of the meeting and
shall be subject to the inspection of any shareholders during the whole time of
the meeting. The original share ledger or transfer book, or a duplicate thereof,
shall be prima facie evidence as to who are the shareholders entitled to examine
such list or share ledger or transfer book or to vote at any meeting of the
shareholders.
ARTICLE II
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the articles of
incorporation relating thereto, if any, dividends may be declared by the board
of directors at any regular or special meeting, pursuant to law. Dividends may
be paid in cash, in property or in shares of the capital stock, subject to any
provisions of the articles or incorporation.
Section 2. Before payment of any dividend, there may be set aside
out of any funds of the corporation available for dividends such sum as the
directors from time to time, in their absolute discretion think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time delegate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
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SEAL
Section 5. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its organization and the words "Corporate Seal,
Texas." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
ARTICLE XII
AMENDMENTS
Section 1. These by-laws maybe altered, amended, or repealed or new
by-laws may be adopted by the affirmative vote of a majority of the board of
directors at any regular or special meeting of the board subject to repeal or
change at any regular or special meeting of shareholders at which a quorum is
present or represented, by the affirmative vote a majority of the stock entitled
to vote, provided notice of the proposed repeal or change be contained in the
notice of such meeting.
ARTICLE XIII
AMENDMENTS
Section 1. These by-laws maybe altered, amended or repealed or new
by-laws may be adopted at any regular or special meeting of shareholders at
which a quorum is present or represented, by the affirmative vote of a majority
of the stock entitled to vote, provided notice of the proposed alteration,
amendment or repeal be contained in the notice of such meeting.
Dated: March __, 1996
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<PAGE>
Exhibit 3.44.1
SECOND AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
SERVICO HOUSTON, INC.
Pursuant to Sections 4.04 and 4.07 of the Texas Business Corporation
Act (the "Act"), SERVICO HOUSTON, INC., a Texas corporation (the "Corporation"),
hereby certifies that these Second Amended and Restated Articles of
Incorporation (the "Amended Articles"), which contain amendments requiring
shareholder approval, were duly adopted by the Board of Directors of the
Corporation and by the sole shareholder of the Corporation by written consent
without a meeting, pursuant to Section 9.10 of the Act, as of July 22, 1999. The
number of outstanding shares of common stock of the Corporation is 1,000, and
the number of votes cast was sufficient for approval. The Amended Articles
accurately copy the Articles of Incorporation of the Corporation and all
amendments thereto that are in effect to date, as further amended by these
Amended Articles as hereinafter set forth and contain no other change in any
provision thereof. The original Articles of Incorporation were filed with by the
Secretary of State of the State of Texas on October 13, 1997. These Amended
Articles supersede the original Articles of Incorporation and all amendments
thereto and shall be deemed to be the Articles of Incorporation of the
Corporation. The Articles shall be amended to read as herein set forth in full,
which amendments have been effected in conformity with the provisions of the
Act:
ARTICLE I
The name of the Corporation is SERVICO HOUSTON, INC.
ARTICLE II
The period of duration is perpetual.
ARTICLE III
(a) The purpose for which the Corporation is organized is limited to:
(i) acquiring, owning, leasing, operating, using and managing that certain real
property commonly known as the Ramada Plaza Houston Hotel, located at 12801 N.W.
Freeway US 290, Houston, Texas 77040 (the "Property"); (ii) entering into and
performing its obligations under the credit agreement, among Lodgian Financing
Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel Group, LLC, Servico,
Inc. and other affiliated entities, as affiliate guarantors, the initial lenders
and initial issuing bank named therein, the collateral agent, the administrative
agent, Morgan Stanley Senior Funding, Inc., as co-lead arranger, joint-book
manager and syndication agent and Lehman Brothers, as co-lead arranger,
joint-book manager and documentation agent relating to the financing or
refinancing of the Property (the "Loan Agreement") which provides the lender
thereunder with a first priority lien on the Property, any promissory-note
evidencing indebtedness incurred pursuant to the Loan Agreement, any mortgage
securing such
<PAGE>
indebtedness and encumbering the Property (the "Mortgage") and any other
documents securing such indebtedness and any related collateral documents, each
as amended (or pursuant to a consent obtained in accordance with the terms
thereof) (collectively, the "Loan Documents"); (iii) entering into and
performing its obligations under the Indenture (the "Indenture"), among Lodgian
Financing Corp, as issuer, Lodgian, Inc., the Subsidiary Guarantors defined
therein and Bankers Trust Company, as trustee, relating to the issuance of the
12 1/4% Senior Subordinated Notes due 2009 and the Guarantee in favor of the
holders of the Notes and (iv) transacting any and all lawful business that is
incident and necessary or appropriate to the ownership and to the management of
the Property for which a corporation may be incorporated under the laws of the
State of Texas.
(b) Notwithstanding any other provision of these Amended Articles and
any provision of law that otherwise so empowers the Corporation, until such time
as the Property is released from the lien of the Mortgage, the Corporation shall
not, without the unanimous affirmative vote of the members of its Board of
Directors, (i) amend, alter, change, repeal or adopt any resolution setting
forth a proposed amendment to, any provision of these Articles of Incorporation,
(ii) dissolve or liquidate, in whole or in part, consolidate or merge with or
into any other entity or convey, sell or transfer its properties and assets
substantially as an entirety to any entity, (iii) file a voluntary petition or
otherwise initiate, or consent to, proceedings for the Corporation to be
adjudicated insolvent or seeking an order for relief as a debtor under the
United States Bankruptcy Code, as amended (11 U.S.C. Section 101 ET SEQ.), or
(iv) file any petition, or consent to any petition, seeking any composition,
reorganization, readjustment, liquidation, dissolution or similar relief under
the present or any future federal bankruptcy laws or any other present or future
applicable federal, state or other statute or law relative to bankruptcy,
insolvency or other relief for debtors; or (v) seek or consent to the
appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, or liquidator (or other similar official) of the Corporation or of
all or any substantial part of the properties and assets of the Corporation, or
(vi) make any general assignment for the benefit of creditors, or (vii) admit in
writing its inability to pay its debts generally as they become due, or (viii)
declare or effect a moratorium on its debt or take any corporate action in
furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all times until
the Property is released from the lien of the Mortgage, include an independent
director (the "Independent Director"). The Independent Director shall be a
person who is not at the time of appointment and who has not at any time during
the prior five years been and who is not while serving as the Independent
Director (i) a director, stockholder, officer or employee of the Corporation or
any affiliates thereof, other than with respect to such person's service as an
Independent Director of the Corporation and such person's service in similar
"Independent Director" positions for affiliates of the Corporation; (ii) a
creditor, customer, supplier, independent contractor, manager or any other
person who derives more than 10% of its gross revenues from its activities with
the Corporation or any affiliates thereof; (iii) a person controlling any such
stockholder, creditor, customer, supplier, independent contractor, manager or
other person; (iv) the legal or beneficial owner, at any time while serving as
director of the Corporation, of any beneficial interest in the Corporation; or
(v) a member of the immediate family of any such stockholder, officer, employee,
creditor, customer, supplier, director, independent contractor, manager or any
other person of the Corporation. As used herein, the term "affiliate" means any
person controlling, under common control wit, or controlled by the
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person in question, and the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a person, whether through ownership of voting securities, by contact
or otherwise. In the event of the death, incapacity, or resignation of an
Independent Director, or the vacancy of the Independent Director's seat on the
Corporation's Board of Directors for any reason, a successor Independent
Director shall be appointed by the remaining directors.
(d) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(ix) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall not (i)
commingle its assets with those of, or pledge its assets for the benefit of, any
other person or entity; (ii) assume, guarantee or become obligated, or hold out
its credit as being available to satisfy, the liabilities or obligations of any
other person or entity; (iii) reduce its capital below an amount which is
adequate in light of its contemplated business operations; (iv) acquire
obligations or securities of, or make loans or advances to, any affiliate; (v)
incur or assume any indebtedness other than (A) the indebtedness underlying the
Loan Agreement (B) the indebtedness underlying the Indenture, and (C)
liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article III and the last sentence of
Article VIII of these Amended Articles; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in these Amended Articles. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
ARTICLE IV
The aggregate number of shares of stock which the Corporation shall
have authority to issue is One Thousand (1,000) of the par value of One Dollar
and No Cents ($1.00) each.
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ARTICLE V
The Corporation commenced business when it received for the issuance of
its shares consideration of the value of One Thousand Dollars ($1,000),
consisting of money, labor done or property actually received.
ARTICLE VI
The Corporation's registered office is c/o CT Corporation System, 350
N. St. Paul Street, Dallas, Texas, 75201, and the name of its registered agent
at that office is CT Corporation System.
ARTICLE VII
The number of directors of the Corporation may be fixed by the Bylaws
of the Corporation. The number of directors constituting the Board of Directors
shall be at least one (1), and the name and address of the director of the
Corporation to serve until the next annual meeting of the shareholders until a
successor is elected and qualified is:
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
Robert Flanders 3445 Peachtree Road, N.E.
Two Live Oak Center, Suite 700
Atlanta, Georgia 30326
</TABLE>
ARTICLE VIII
The Corporation shall indemnify any officer or director, or any former
officer or director of the Corporation, to the fullest extent permitted by law.
The foregoing right of indemnification shall not be exclusive of any other
rights to which any director, officer, employee or agent may be entitled as a
matter of law or which he may be lawfully granted. The Corporation's obligation
to indemnify its officers and directors pursuant to this Article shall be
subordinate in all respects to the obligations of the Corporation arising out of
the Loan Documents and shall not constitute a claim against the Corporation to
the extent that the Corporation is unable to pay any amounts it is obligated to
pay under the Loan Documents.
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IN WITNESS WHEREOF, the undersigned has executed these Second Amended
and Restated Articles of Incorporation this 23 day of July, 1999.
SERVICO HOUSTON, INC.
By: /s/ Thomas S. Gryboski
--------------------------
Name: Tom Gyboski
Title: Assistant Secretary
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<PAGE>
Exhibit 3.44.2
SERVICO HOUSTON, INC.
*****
BY - LAWS
*****
ARTICLE I
OFFICES
Section 1. The registered office shall be located at C T CORPORATION
SYSTEM. 350 N ST PAUL STREET, DALLAS, TEXAS 75201.
Section 2. The corporation may also have offices at such other
places both within and without the State of Texas as the board of directors may
from time to time determine or the business of the corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of
directors shall be held on such day and at such hour as may be fixed from time
to time by the board of directors. Said meetings may also be held at such other
place either within or without the State of Texas as shall be designated from
time to time by the board of directors and stated in the notice of the meeting.
Section 2. Annual meetings of shareholders, commencing with the year
1998, shall be held on the Second Monday in January unless that day is a legal
holiday, and if a legal holiday, then on the next secular day following, at
10:00 a.m., at which they shall elect by a plurality vote a board of directors,
and transact such other business as may properly be brought before the meeting.
Section 3. Written or printed notice of the annual meeting stating
the place, day and hour of the meeting shall be delivered not less than ten nor
more than fifty days before the date of the meeting, either personally or by
mail, by or at the direction of the president, the secretary, or the officer or
persons calling the meeting, to each shareholder of record entitled to vote at
such meeting.
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. Special meetings of shareholders for any purpose other
than the election of directors may be held at such time and place within or
without the state of Texas as shall be stated in the notice of the meeting or in
a duly executed waiver of notice thereof.
Section 2. Special meetings of the shareholders, for any purpose,
unless otherwise prescribed by statute or by the articles of incorporation, may
be called by the president, the board of
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directors, or the holder of not less than one-tenth of all the shares entitled
to vote at the meeting.
Section 3. Written or printed notice of a special meeting stating
the place, day and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than fifty days
before the date of the meeting, either personally or by mail, by or at the
direction of the president, the secretary, or the officer or persons calling the
meeting, to each shareholder of record entitled to vote at such meeting.
Section 4. The business transacted at any special meeting of
shareholders shall be limited to the purposes stated in the notice.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of stock issued
and outstanding and entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by statute or by the articles of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the shareholders, the shareholders present in person or
represented by proxy shall have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented any business may be transacted which might have
been transacted at the meeting as originally notified.
Section 2. If a quorum is present, the affirmative vote of a
majority of the shares of stock represented at the meeting shall be the act of
the shareholders unless the vote of a greater number of shares of stock is
required by law or the articles of incorporation.
Section 3. Each outstanding share of stock, having voting power,
shall be entitled to one vote on each matter submitted to vote at a meeting of
shareholders. A shareholder may vote either in person or by proxy executed in
writing by the shareholder or by his duly authorized attorney-in-fact.
Section 4. Any action required to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the shareholders entitled
to vote with respect to the subject matter thereof.
ARTICLE V
DIRECTORS
Section 1. The Board of Directors of the Corporation shall consist
of one (1) member. The number of directors may be either increased or decreased
from time to time by
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resolution of the Board of Directors, but shall never be less than one (1).
Directors need not be residents of the State of Texas nor shareholders of the
corporation. The directors, other than the first board of directors, shall be
elected at the annual meeting of the shareholders, and each directors elected
shall serve until the next succeeding annual meeting and until his successor
shall have been elected and qualified. The first board of directors shall hold
office until the first annual meeting of shareholders.
Section 2. Any vacancy occurring in the board of directors may be
filled by the shareholders at an annual or a special meeting or by the
affirmative vote of a majority of the remaining directors though less than a
quorum of the board of directors. A director elected to fill a vacancy shall be
elected for the unexpired portion of the terms of his predecessor in office.
Any directorship to be filled by reason of an increase in the number
of directors may be filled by election at an annual meeting or at a special
meeting of shareholders called for that purpose. A director elected to fill a
newly created directorship shall serve until the next succeeding annual meeting
of shareholders and until his successor shall have been elected and qualified.
Any directorship to filled by reason of an increase in the number of directors
may also be filled by the board of directors for a term of office until the next
election of directors by shareholders, provide no more than two directorships
may be so filled during a period between any two successive annual meetings of
shareholders.
Whenever the holders of any class or series of shares are entitled
to elect one or more directors by the provisions of the articles of
incorporation, any vacancies in such directorships and any newly created
directorships of such class of series to be filled by reason of an increase in
the number of such directors may be filled by the affirmative vote of a majority
of the directors elected by such class or series then in office or by a sole
remaining director so elected, or by the vote of the holders of the outstanding
shares of such class or series, and such directorships shall not in any case be
filled by the vote of the remaining directors or the holders of the outstanding
shares as a whole unless otherwise provided in the articles of incorporation.
Section 3. The business affairs of the corporation shall be managed
by its board of directors which may exercise all such powers of the corporation
and do all such lawful acts and things as are not by statute or by the articles
of incorporation or by these by-laws directed or required to be exercised or
done by the shareholders.
Section 4. The directors may keep the books of the corporation,
except such as are required by law to be kept within the state, outside of the
State of Texas, at such place or places as they may from time to time determine.
Section 5. The board of directors, by the affirmative vote of a
majority of the directors then in office, and irrespective of any personal
interest to any of its members, shall have authority to establish reasonable
compensation of all directors for services to the corporation as directors,
officers or otherwise.
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ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular or special,
may be held either within or without the State of Texas.
Section 2. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the vote of
the shareholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting provided a quorum shall be present, or it may convene at such place and
time as shall be fixed by the consent in writing of all the directors.
Section 3. Regular meetings of the board of directors may be held
upon such notice, or without notice, and at such time and at such place as shall
from time to time be determined by the board.
Section 4. Special meetings of the board of directors may be called
by the president on two days' notice to each director, either personally or by
mail or by telegram; special meeting shall be called by the president or
secretary in like manner and on like notice on the written request of two
directors.
Section 5. Attendance of a director at any meeting shall constitute
a waiver of notice of such meeting except where a director attends for the
express purpose of objecting to the transaction of any business because the
meeting os not lawfully called or convened. Nether the business to be transacted
at, nor the purpose of, any regular or special meeting of the board of directors
need be specified in the notice or waiver of notice of such meeting.
Section 6. A majority of the directors shall constitute a quorum for
the transaction of business unless greater number is required by law or by the
articles of incorporation. The act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the board of directors,
unless the act of a greater number is required by statute or by the articles of
incorporation. If a quorum shall not be present at any meeting of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 7. Unless otherwise restricted by the articles of
incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting, if all members of the board of committee, as the case may be,
consent thereto in writing which shall set forth the action taken ad be signed
by all members of the board of directors or of the committee as the case may be.
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ARTICLE VII
COMMITTEES OF DIRECTORS
Section 1. The board of directors, by resolution adopted by a
majority of the full board of directors, may designate from among its members an
executive committee and one or more other committees, each of which shall be
comprised of one or more members and, to the extent provided in the resolution,
shall have and may exercise all of the authority of the board of directors,
except that no such committee shall have the authority of the board of directors
in reference to amending the articles of incorporation, approving a plan of
merger or consolidation, recommending to the shareholders the sale, lease, or
exchange of all or substantially all of the property and assets of the
corporation otherwise than in the usual and regular course of its business,
recommending to the shareholders a voluntary dissolution of the corporation or a
revocation thereof, amending, altering, or repealing the by-laws of the
corporation or adopting new by-laws for the corporation, filling vacancies in
the board of directors to be filled by reason of an increase in the number of
directors, electing or removing officers or members of an committee, fixing the
compensation of any member of a committee, or altering or repealing any
resolution of the board of directors which by its terms provides that it shall
not be so amendable or repealable; and, unless the resolution expressly so
provides, no committee shall have the power of authority to declare a dividend
or to authorize the issuance of shares of the corporation.
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes of the
articles of incorporation or of these by-laws, notice is required to be given to
any director or shareholder, it shall not be construed to mean personal notice,
but such notice may be given in writing, by mail, addressed to such director or
shareholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telegram.
Section 2. Whenever any notice whatever is required to be given
under the provisions of the statutes or under the provisions of the articles of
incorporation or these by-laws, a waiver thereof in writing signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
ARTICLE IX
OFFICERS
Section 1. The offices of the corporation shall be chosen by the
board of directors and shall be a president and a secretary. The board of
directors may also elect or appoint such other officers, including assistant
officers and agents as may be deemed necessary.
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Section 2. The board of directors at its first meeting after each
annual meeting at shareholders shall choose a president and a secretary neither
of whom need be a member of the board.
Section 3. The board of directors may also appoint such other
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall
exercise such powers and perform such duties as shall be determined from time to
time by the board of directors.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officers elected or appointed by
the board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the shareholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
THE VICE PRESIDENTS
Section 8. The vice-president, if there is one, or if there shall be
more than one, the vice-presidents in the order determined by the board of
directors, shall, in the absence of disability of the president, perform the
duties and exercise the powers of the president and shall perform such other
duties and have other powers as the board of directors may from time to time
prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the shareholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the shareholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He
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shall have custody of the corporate seal of the corporation and he, or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature or by the
signature of such assistance secretary. The board of directors may give general
authority to any other officer to affect the affixing by his signature.
Section 10. The assistant secretary, if there is one, or if there be
more than one, the assistant secretaries in the order determined by the board of
directors, shall, in the absence or disability of the secretary, perform the
duties and exercise the powers of the secretary and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
THE TREASURER AND ASSISTANT TREASURES
Section 11. The treasurer, if there is one, shall have the custody
of the corporate funds and securities and shall keep full and accurate accounts
of receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the board of
directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind of his possession or under
his control belonging to the corporation.
Section 14. The assistant treasurer, if there is one, or, if there
shall be more than one, the assistant treasurers in order determined by the
board of directors, shall, in the absence or disability of the treasurer,
perform the duties and exercise the powers of the treasurer and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
ARTICLE X
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by
certificates signed by the president or such other officers as may be elected or
appointed, and may be sealed with the seal of the corporation or a facsimile
thereof.
When the corporation is authorized to issue shares of more than one
class there shall
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be set forth upon the face or back of the certificate, or the certificate shall
have a statement that the corporation will furnish to any shareholder upon
request and without charge, a full statement of the designations, preferences,
limitations and relative rights of the shares of each class authorized to be
issued and, if the corporation is authorized to issue any preferred or special
class in series, the variations in the relative rights and preferences between
the shares of each such series so far as the same have been fixed and determined
and the relative rights and preferences of subsequent series. When the
corporation is authorized to issue shares of more than one class, every
certificate shall also set forth upon the face or the back of such certificate a
statement that there is set forth in the articles of incorporation on file in
the office of the Secretary of State a full statement of all the designations,
preferences, limitations and relative rights, including voting rights, or the
shares of each class authorized to be issued and the corporation at its
principal place of business or registered office. Every certificate shall have
noted thereon any information required to be set forth by the Texas Business
Corporation Act and such information shall be set forth in the manner provided
in said Act.
Section 2. The signatures of the offices of the corporation upon a
certificate may be facsimiles of the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the corporation itself or an
employee of the corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer, before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of its
issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate to be
issued in place of any certificate therefore issued by the corporation alleged
to have been lost or destroyed. When authorizing such issue of a new
certificate, the board of directors, in its discretion and as a condition
precedent to the issuance thereof, may prescribe such terms and conditions as
its deems expedient, and may require such indemnities as its deems adequate, to
protect the corporation from any claim that may be made against it with respect
to any such certificate alleged to have been lost or destroyed.
TRANSFERS OF SHARES
Section 4. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate representing shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, a new certificate shall be issued to the person entitled thereto, and
the old certificate canceled and the transaction recorded upon the books of the
corporation.
CLOSING OF TRANSFER BOOKS
Section 5. For the purpose of determining shareholders entitled to
notice of or to vote at any meeting of shareholders, or any adjournment thereof
or entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose the board of
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directors may provide that the stock transfer books shall be closed for a stated
period but not to exceed, in any case, fifty days. If the stock transfer books
shall be closed for the purpose of determining shareholders entitled to notice
of or to vote at a meeting of shareholders, such books shall be closed for at
least ten days immediately preceding such meeting. In lieu of closing the stock
transfer books, the board of directors may fix in advance a date as the record
date for any such determination of shareholder, such date in any case to be not
more than fifty days and, incase of a meeting of shareholders, not less than ten
days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of shareholders, or
shareholders entitled to receive payment of a dividend, the date on which notice
of the meeting is mailed or the date on which the resolution of the board of
directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof.
REGISTERED SHAREHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize and equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Texas.
LIST OF SHAREHOLDERS
Section 7. The officer or agent having charge of the transfer books
for shares shall make, at least ten days before each meeting of shareholders, a
complete list of the shareholders entitled to vote at such meeting, arranged in
alphabetical order, with the address of each and the number of shares held by
each, which list, for a period of ten days prior to such meeting, shall be kept
on file at the registered office of the corporation and shall be subject to
inspection by any shareholder at any time during usual business hours. Such list
shall also be produced and kept open at the time and place of the meeting and
shall be subject to the inspection of any shareholders during the whole time of
the meeting. The original share ledger or transfer book, or a duplicate thereof,
shall be prima facie evidence as to who are the shareholders entitled to examine
such list or share ledger or transfer book or to vote at any meeting of the
shareholders.
ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the articles of
incorporation relating thereto, if any, dividends may be declared by the board
of directors at any regular or special meeting, pursuant
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to law. Dividends may be paid in cash, in property or in shares of the capital
stock, subject to any provisions of the articles or incorporation.
Section 2. Before payment of any dividend, there may be set aside
out of any funds of the corporation available for dividends such sum as the
directors from time to time, in their absolute discretion think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conductive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time delegate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its organization and the words "Corporate Seal,
Texas." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
ARTICLE XII
AMENDMENTS
Section 1. The by-laws maybe altered, amended, or repealed or new
by-laws may be adopted by the affirmative vote of a majority of the board of
directors at any regular or special meeting of the board subject to repeal or
change at any regular or special meeting of shareholders at which a quorum is
present or represented, by the affirmative vote of a majority of the stock
entitled to vote, provided notice of the proposed repeal or change be contained
in the notice of such meeting.
ARTICLE XIII
AMENDMENTS
Section 1. These by-laws maybe altered, amended or repealed or new
by-laws may be adopted at any regular or special meeting of shareholders at
which quorum is present or represented, by the affirmative vote of a majority of
the stock entitled to vote, provided notice of the proposed alteration,
amendment or repeal be contained in the notice of such meeting.
Dated: July __, 1997
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Exhibit 3.45.1
SECOND AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
SERVICO MARKET CENTER, INC.
Pursuant to Sections 4.04 and 4.07 of the Texas Business Corporation
Act (the "Act"), SERVICO MARKET CENTER, INC., a Texas corporation (the
"Corporation"), hereby certifies that these Second Amended and Restated Articles
of Incorporation (the "Amended Articles"), which contain amendments requiring
shareholder approval, were duly adopted by the Board of Directors of the
Corporation and by the sole shareholder of the Corporation by written consent
without a meeting, pursuant to Section 9.10 of the Act, as of July 22, 1999. The
number of outstanding shares of common stock of the Corporation is 1,000, and
the number of votes cast was sufficient for approval. The Amended Articles
accurately copy the Articles of Incorporation of the Corporation and all
amendments thereto that are in effect to date, as further amended by these
Amended Articles as hereinafter set forth and contain no other change in any
provision thereof. The original Articles of Incorporation were filed with by the
Secretary of State of the State of Texas on May 28, 1997. These Amended Articles
supersede the original Articles of Incorporation and all amendments thereto and
shall be deemed to be the Articles of Incorporation of the Corporation. The
Articles shall be amended to read as herein set forth in full, which amendments
have been effected in conformity with the provisions of the Act:
ARTICLE I
The name of the Corporation is SERVICO MARKET CENTER, INC.
ARTICLE II
The period of duration is perpetual.
ARTICLE III
(a) The purpose for which the Corporation is organized is limited to:
(i) acquiring, owning, leasing, operating, using and managing that certain real
property commonly known as the Holiday Inn Market Center Dallas, located at 1955
Market Center Blvd., Dallas, Texas 75207 (the "Property"); (ii) entering into
and performing its obligations under the credit agreement, among Lodgian
Financing Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel Group, LLC,
Servico, Inc. and other affiliated entities, as affiliate guarantors, the
initial lenders and initial issuing bank named therein, the collateral agent,
the administrative agent, Morgan Stanley Senior Funding, Inc., as co-lead
arranger, joint-book manager and syndication agent and Lehman Brothers, as
co-lead arranger, joint-book manager and documentation agent relating to the
financing or refinancing of the Property (the "Loan Agreement") which provides
the lender thereunder with a first priority lien on the Property, any
promissory-note evidencing indebtedness incurred pursuant to the Loan Agreement,
any mortgage securing such
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indebtedness and encumbering the Property (the "Mortgage") and any other
documents securing such indebtedness and any related collateral documents, each
as amended (or pursuant to a consent obtained in accordance with the terms
thereof) (collectively, the "Loan Documents"); (iii) entering into and
performing its obligations under the Indenture (the "Indenture"), among Lodgian
Financing Corp, as issuer, Lodgian, Inc., the Subsidiary Guarantors defined
therein and Bankers Trust Company, as trustee, relating to the issuance of the
12 1/4% Senior Subordinated Notes due 2009 and the Guarantee in favor of the
holders of the Notes and (iv) transacting any and all lawful business that is
incident and necessary or appropriate to the ownership and to the management of
the Property for which a corporation may be incorporated under the laws of the
State of Texas.
(b) Notwithstanding any other provision of these Amended Articles and
any provision of law that otherwise so empowers the Corporation, until such time
as the Property is released from the lien of the Mortgage, the Corporation shall
not, without the unanimous affirmative vote of the members of its Board of
Directors, (i) amend, alter, change, repeal or adopt any resolution setting
forth a proposed amendment to, any provision of these Articles of Incorporation,
(ii) dissolve or liquidate, in whole or in part, consolidate or merge with or
into any other entity or convey, sell or transfer its properties and assets
substantially as an entirety to any entity, (iii) file a voluntary petition or
otherwise initiate, or consent to, proceedings for the Corporation to be
adjudicated insolvent or seeking an order for relief as a debtor under the
United States Bankruptcy Code, as amended (11 U.S.C. Section 101 ET SEQ.), or
(iv) file any petition, or consent to any petition, seeking any composition,
reorganization, readjustment, liquidation, dissolution or similar relief under
the present or any future federal bankruptcy laws or any other present or future
applicable federal, state or other statute or law relative to bankruptcy,
insolvency or other relief for debtors; or (v) seek or consent to the
appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, or liquidator (or other similar official) of the Corporation or of
all or any substantial part of the properties and assets of the Corporation, or
(vi) make any general assignment for the benefit of creditors, or (vii) admit in
writing its inability to pay its debts generally as they become due, or (viii)
declare or effect a moratorium on its debt or take any corporate action in
furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all times until
the Property is released from the lien of the Mortgage, include an independent
director (the "Independent Director"). The Independent Director shall be a
person who is not at the time of appointment and who has not at any time during
the prior five years been and who is not while serving as the Independent
Director (i) a director, stockholder, officer or employee of the Corporation or
any affiliates thereof, other than with respect to such person's service as an
Independent Director of the Corporation and such person's service in similar
"Independent Director" positions for affiliates of the Corporation; (ii) a
creditor, customer, supplier, independent contractor, manager or any other
person who derives more than 10% of its gross revenues from its activities with
the Corporation or any affiliates thereof; (iii) a person controlling any such
stockholder, creditor, customer, supplier, independent contractor, manager or
other person; (iv) the legal or beneficial owner, at any time while serving as
director of the Corporation, of any beneficial interest in the Corporation; or
(v) a member of the immediate family of any such stockholder, officer, employee,
creditor, customer, supplier, director, independent contractor, manager or any
other person of the Corporation. As used herein, the term "affiliate" means any
person controlling, under common control wit, or controlled by the
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person in question, and the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a person, whether through ownership of voting securities, by contact
or otherwise. In the event of the death, incapacity, or resignation of an
Independent Director, or the vacancy of the Independent Director's seat on the
Corporation's Board of Directors for any reason, a successor Independent
Director shall be appointed by the remaining directors.
(d) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall (i)
observe all corporate formalities, including the maintenance of current minute
books; (ii) maintain its own separate and distinct books of account and
corporate records from any other person or entity; (iii) cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Corporation
and its assets and liabilities from any other person or entity; (iv) pay all its
liabilities out of its own funds; (v) in all dealings, identify itself, and
conduct its own business and hold itself out under its own name and as a
separate and distinct entity and correct any misunderstandings regarding its
status as a separate entity; (vi) independently make decisions with respect to
its business and daily operations; (vii) maintain an arm's length relationship
with its affiliates; (viii) pay the salaries of its employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(ix) allocate fairly and reasonably any overhead for shared office space; and
(x) use separate stationery, invoices and checks.
(e) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall not (i)
commingle its assets with those of, or pledge its assets for the benefit of, any
other person or entity; (ii) assume, guarantee or become obligated, or hold out
its credit as being available to satisfy, the liabilities or obligations of any
other person or entity; (iii) reduce its capital below an amount which is
adequate in light of its contemplated business operations; (iv) acquire
obligations or securities of, or make loans or advances to, any affiliate; (v)
incur or assume any indebtedness other than (A) the indebtedness underlying the
Loan Agreement (B) the indebtedness underlying the Indenture, and (C)
liabilities (including, but not limited to, trade payables) arising in the
ordinary course of the Corporation's business relating to the acquisition,
ownership, operation, lease, use or management of the Property; (vi) amend,
alter, change or repeal any provision of Article III and the last sentence of
Article X of these Amended Articles; (vii) engage in any dissolution or
liquidation, in whole or in part, consolidation or merger with or into any other
entity or conveyance, sale or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in these Amended Articles. Notwithstanding
anything contained herein to the contrary, nothing herein shall be deemed to
prohibit or otherwise limit any dividends or other distributions from the
Corporation to its shareholders.
ARTICLE IV
The total number of shares of stock which the Corporation shall have
authority to issue is One Thousand (1,000) of the par value of One Dollar
($1.00) each. The aggregate number of shares which the Corporation is authorized
to issue is One Thousand (1,000) divided into one (1) class.
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<PAGE>
The designation of each class, the number of shares of each
class, and the par value, if any, of the shares of each class, or a statement
that the shares of any class are without par value, are as follows:
<TABLE>
<CAPTION>
Par Value per Share or
Number Series Statement that the Shares are
of Shares Class (if any) Without Par Value
--------- ----- -------- -----------------------------
<S> <C> <C> <C>
1,000 Common None $1.00
</TABLE>
ARTICLE V
The Corporation commenced business when it received for the issuance of
its shares consideration of the value of One Thousand Dollars ($1,000),
consisting of money, labor done or property actually received.
ARTICLE VI
The Corporation's registered office is c/o CT Corporation System, 350
N. St. Paul Street, Dallas, Texas, 75201, and the name of its registered agent
at that office is CT Corporation System.
ARTICLE VII
The number of directors of the Corporation may be fixed by the Bylaws
of the Corporation. The number of directors constituting the Board of Directors
shall be at least one (1), and the name and address of the director of the
Corporation to serve until the next annual meeting of the shareholders until a
successor is elected and qualified is:
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
Robert Flanders 3445 Peachtree Road, N.E.
Two Live Oak Center, Suite 700
Atlanta, Georgia 30326
</TABLE>
ARTICLE VIII
The Board of Directors of the Corporation is expressly authorized to
adopt, alter, amend or repeal the Bylaws of the Corporation subject to the
limitations set forth in these Amended Articles. Election of directors need not
be by written ballot unless and to the extent provided in the Bylaws of the
Corporation.
ARTICLE IX
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duties as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not on good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 2.41 of the Texas Business Corporation
Act, or (iv) for any
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<PAGE>
transaction from which the director derived an improper personal benefit. If the
Texas Business Corporation Act is amended after the date of these Amended
Articles to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Texas Business Corporation Act, as so amended.
The rights and authority conferred in this Article IX shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, provision of these Amended Articles or Bylaws of the
Corporation, agreement, vote of stockholders or disinterested directors, or
otherwise.
ARTICLE X
The Corporation shall indemnify any officer or director, or any former
officer or director of the Corporation, to the fullest extent permitted by law.
The foregoing right of indemnification shall not be exclusive of any other
rights to which any director, officer, employee or agent may be entitled as a
matter of law or which he may be lawfully granted. The Corporation's obligation
to indemnify its officers and directors pursuant to this Article shall be
subordinate in all respects to the obligations of the Corporation arising out of
the Loan Documents and shall not constitute a claim against the Corporation to
the extent that the Corporation is unable to pay any amounts it is obligated to
pay under the Loan Documents.
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<PAGE>
IN WITNESS WHEREOF, the undersigned has executed these Second
Amended and Restated Articles of Incorporation this 23 day of July, 1999.
SERVICO MARKET CENTER, INC.
By: /s/ Thomas S. Gryboski
--------------------------
Name: Tom Gyboski
Title: Assistant Secretary
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<PAGE>
EXHIBIT 3.45.2
SERVICO MARKET CENTER, INC.
*********
BY - LAWS
*********
ARTICLE I OFFICES
Section 1. The registered office shall be located at 350 N. St. Paul
Street, Dallas, Texas 75201.
Section 2. The corporation may also have offices at such other
places both within and without the State of Texas as the board of directors may
from time to rune determine or the business of the corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of
directors shall be held on such day and at such hour as may be fixed from time
to time by the board of directors. Said meetings may also be held at such other
place either within or without the State of Texas as shall be designated from
time to time by the board of directors and stated in the notice of the meeting.
Section 2. Annual meetings of shareholders, commencing with the year
1998, shall be held on the Second Monday in January unless that day is a legal
holiday, and if a legal holiday, then on the next secular day following, at
10:00 a.m., at which they shall elect by a plurality vote a board of directors,
and transact such other business as may properly be brought before the meeting.
Section 3. Written or printed notice of the annual meeting stating
the place, day and hour of the meeting shall be delivered not less than ten nor
more than fifty days before the date of the meeting, either personally or by
mail, by or at the direction of the president, the secretary, or the officer or
persons calling the meeting, to each shareholder of record entitled to vote at
such meeting.
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. Special meetings of shareholders for any purpose other
than the election of directors may be held at such time and place within or
without the state of Texas as shall be stated in the notice of the meeting or in
a duly executed waiver of notice thereof.
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Section 2. Special meetings of the shareholders, for any purpose,
unless otherwise prescribed by statute or by the articles of incorporation, may
be called by the president, the board of directors, or the holders of not less
than one-tenth of all the shares entitled to vote at the meeting.
Section 3. Written or printed notice of a special meeting stating
the place, day and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than fifty days
before the date of the meeting, either personally or by mail, by or at the
direction of the president, the secretary, or the officer or persons calling the
meeting, to each shareholder of record entitled to vote at such meeting.
Section 4. The business transacted at any special meeting of
shareholders shall be limited to the purposes stated in the notice.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of stock issued
and outstanding and entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by statute or by the articles of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the shareholders, the shareholders present in person or
represented by proxy shall have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented any business may be transacted which might have
been transacted at the meeting as originally notified.
Section 2. If a quorum is present, the affirmative vote of a
majority of the shares of stock represented at the meeting shall be the act of
the shareholders unless the vote of a greater number of shares of stock is
required by law or the articles of incorporation.
Section 3. Each outstanding share of stock, having voting power,
shall be entitled to one vote on each matter submitted to vote at a meeting of
shareholders. A shareholder may vote either in person or by proxy executed in
writing by the shareholder or by his duly authorized attorney-in-fact.
Section 4. Any action required to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in
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writing, setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof.
ARTICLE V
DIRECTORS
Section 1. The Board of Directors of the Corporation shall consist
of one (1) member. The number of directors may be either increased or decreased
from time to time by resolution of the Board of Directors, but shall never be
less than one (1). Directors need not be residents of the State of Texas nor
shareholders of the corporation. The directors, other than the first board of
directors, shall be elected at the annual meeting of the shareholders, and each
directors elected shall serve until the next succeeding annual meeting and until
his successor shall have been elected and qualified. The first board of
directors shall hold office until the first annual meeting of shareholders.
Section 2. Any vacancy occurring in the board of directors may be
filled by the shareholders at an annual or a special meeting or by the
affirmative vote of a majority of the remaining directors though less than a
quorum of the board of directors. A director elected to fill a vacancy shall be
elected for the unexpired portion of the terms of his predecessor in office.
Any directorship to be filled by reason of an increase in the number
of directors may be filled by election at an annual meeting or at a special
meeting of shareholders called for that purpose. A director elected to fill a
newly created directorship shall serve until the next succeeding annual meeting
of shareholders and until his successor shall have been elected and qualified.
Any directorship to filled by reason of an increase in the number of directors
may also be filled by the board of directors for a term of office until the next
election of directors by shareholders provide no more than two directorships may
be so filled during a period between any two successive annual meetings of
shareholders.
Whenever the holders of any class or series of shares are entitled
to elect one or more directors by the provisions of the articles of
incorporation, any vacancies in such directorships and any newly created
directorships of such class of series to be filled by reason of an increase in
the number of such directors may be filled by the affirmative vote of a majority
of the directors elected by such class or series then in office or by a sole
remaining director so elected, or by the vote of the holders of the outstanding
shares of such class or series, and such directorships shall not in any case be
filled by the vote of the remaining directors or the holders of the outstanding
shares as a whole
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unless otherwise provided in the articles of incorporation.
Section 3. The business affairs of the corporation shall be managed
by its board of directors which may exercise all such powers of the corporation
and do all such lawful acts and things as are not by statute or by the articles
of incorporation or by these by-laws directed or required to be exercised or
done by the shareholders.
Section 4. The directors may keep the books of the corporation,
except such as are required by law to be kept within the state, outside of the
State of Texas, at such place or places as they may from time to time determine.
Section 5. The board of directors, by the affirmative vote of a
majority of the directors them in office, and irrespective of any personal
interest to any of its members, shall have authority to establish reasonable
compensation of all directors for services to the corporation as directors,
officers or otherwise.
ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular or special,
may be held either within or without the State of Texas.
Section 2. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the vote of
the shareholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting provided a quorum shall be present, or it may convene at such place and
time as shall be fixed by the consent in writing of all the directors.
Section 3. Regular meetings of the board of directors may be held
upon such notice, or without notice, and at such time and at such place as shall
from time to time be determined by the board.
Section 4. Special meetings of the board of directors may be called
by the president on two days' notice to each director, either personally or by
mail or by telegram, special meeting shall be called by the president or
secretary in like manner and on like notice on the written request of two
directors.
Section 5. Attendance of a director at any meeting shall constitute
a waiver of notice of such meeting except where a director attends for the
express purpose of objecting to the
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transaction of any business because the meeting os not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the board of directors need be specified in the
notice or waiver of notice of such meeting.
Section 6. A majority of the directors shall constitute a quorum for
the transaction of business unless greater number is required by law or by the
articles of incorporation. The act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the board of directors,
unless the act of a greater number is required by statute or by the articles of
incorporation. If a quorum shall not be present at any meeting of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 7. Unless otherwise restricted by the articles of
incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting, if all members of the board of committee, as the case may be,
consent thereto in writing which shall set forth the action taken ad be signed
by all members of the board of directors or of the committee as the case may be.
ARTICLE VII
COMMITTEES OF DIRECTORS
Section 1. The board of directors, by resolution adopted by a
majority of the full board of directors, may designate from among its members an
executive committee and one or more other committees, each of which shall be
comprised of one or more members and, to the extent provided in the resolution,
shall have and may exercise all of the authority of the board of directors,
except that no such committee shall have the authority of the board of directors
in reference to amending the articles of incorporation, approving a plan of
merger or consolidation, recommending to the shareholders the sale, lease, or
exchange of all or substantially all of the property and assets of the
corporation otherwise than in the usual and regular course of its business,
recommending to the shareholders a voluntary dissolution of the corporation or a
revocation thereof, amending, altering, or repealing the by-laws of the
corporation or adopting new by-laws for the corporation, filling vacancies in
the board of directors to be filled by reason of an increase in the number of
directors, electing or removing officers or members of an committee, fixing the
compensation of any member of a committee, or altering or repealing any
resolution of the board of directors which by its terms provides that it shall
not be so amendable or repealable; and, unless the resolution
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<PAGE>
expressly so provides, no committee shall have the power of authority to declare
a dividend or to authorize the issuance of shares of the corporation.
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes of the
articles of incorporation or of these by-laws, notice is required to be given to
any director or shareholder, it shall not be construed to mean personal notice,
but such notice may be given in writing, by mail, addressed to such director or
shareholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telegram.
Section. 2. Whenever any notice whatever is required to be given
under the provisions of the statutes or under the provisions of the articles of
incorporation or these by-laws, a waiver thereof in writing signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
ARTICLE IX
OFFICERS
Section 1. The offices of the corporation shall be chosen by the
board of directors and shall be a president and a secretary. The board of
directors may also elect or appoint such other officers, including assistant
officers and agents as may be deemed necessary.
Section 2. The board of directors at its first meeting after each
annual meeting at shareholders shall choose a president and a secretary neither
of whom need be a member of the board.
Section 3. The board of directors may also appoint such other
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall
exercise such powers and perform such duties as shall be determined from time to
time by the board of directors.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officers
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elected or appointed by the board of directors may be removed at any time by the
affirmative vote of a majority of the board of directors. Any vacancy occurring
in any office of the corporation shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the shareholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
THE VICE PRESIDENTS
Section 8. The vice-president, if there is one, or if there shall be
more than one, the vice-presidents in the order determined by the board of
directors, shall, in the absence of disability of the president, perform the
duties and exercise the powers of the president and shall perform such other
duties and have other powers as the board of directors may from time to time
prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the shareholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the shareholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he, or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such assistance
secretary. The board of directors may give general authority to any other
officer to affect the affixing by his signature.
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Section 10. The assistant secretary, if there is one, or if there be
more than one, the assistant secretaries in the order determined by the board of
directors, shall, in the absence or disability of the secretary, perform the
duties and exercise the powers of the secretary and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
THE TREASURER AND ASSISTANT TREASURES
Section 11. The treasurer, if there is one, shall have the custody
of the corporate funds and securities and shall keep full and accurate accounts
of receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the board of
directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind of his possession or under
his control belonging to the corporation.
Section 14. The assistant treasurer, if there is one, or, if there
shall be more than one, the assistant treasurers in order determined by the
board of directors, shall, in the absence or disability of the treasurer,
perform the duties and exercise the powers of the treasurer and shall perform
such other duties and have such other powers as the board of directors may from
time to tome prescribe.
ARTICLE X
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by
certificates signed by the president or such other officers as may be elected or
appointed, and may be sealed with the seal of the corporation or a facsimile
thereof.
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When the corporation is authorized to issue shares of more than one
class there shall be set forth upon the face or back of the certificate, or the
certificate shall have a statement that the corporation will furnish to any
shareholder upon request and without charge, a full statement of the
designations, preferences, limitations and relative rights of the shares of each
class authorized to be issued and, if the corporation is authorized to issue any
preferred or special class in series, the variations in the relative rights and
preferences between the shares of each such series so far as the same have been
fixed and determined and the relative rights and preferences of subsequent
series. When the corporation is authorized to issue shares of more than one
class, every certificate shall also set forth upon the face or the back of such
certificate a statement that there is set forth in the articles of incorporation
on file in the office of the Secretary of State a full statement of all the
designations, preferences, limitations and relative rights, including voting
rights, or the shares of each class authorized to be issued and the corporation
at its principal place of business or registered office. Every certificate shall
have noted thereon any information required to be set forth by the Texas
Business Corporation Act and such information shall be set forth in the manner
provided in said Act.
Section 2. The signatures of the offices of the corporation upon a
certificate may be facsimiles of the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the corporation itself or an
employee of the corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer, before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of its
issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate to be
issued in place of any certificate therefore issued by the corporation alleged
to have been lost or destroyed. When authorizing such issue of a new
certificate, the board of directors, in its discretion and as a condition
precedent to the issuance thereof, may prescribe such terms and conditions as
its deems expedient, and may require such indemnities as its deems adequate, to
protect the corporation from any claim that may be made against it with respect
to any such certificate alleged to have been lost or destroyed.
TRANSFERS OF SHARES
Section 4. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate representing shares duly endorsed or
accompanied by proper evidence of
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succession, assignment or authority to transfer, a new certificate shall be
issued to the person entitled thereto, and the old certificate canceled and the
transaction recorded upon the books of the corporation.
CLOSING OF TRANSFER BOOKS
Section 5. For the purpose of determining shareholders entitled to
notice of or to vote at any meeting of shareholders, or any adjournment thereof
or entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose the board of
directors may provide that the stock transfer books shall be closed for a stated
period but not to exceed, in any case, fifty days. If the stock transfer books
shall be closed for the purpose of determining shareholders entitled to notice
of or to vote at a meeting of shareholders, such books shall be closed for at
least ten days immediately preceding such meeting. In lieu of closing the stock
transfer books, the board of directors may fix in advance a date as the record
date for any such determination of shareholder, such date in any case to be not
more than fifty days and, incase of a meeting of shareholders, not less than ten
days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of shareholders, or
shareholders entitled to receive payment of a dividend, the date on which notice
of the meeting is mailed or the date on which the resolution of the board of
directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof.
REGISTERED SHAREHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize and equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Texas.
LIST OF SHAREHOLDERS
Section 7. The officer or agent having charge of the transfer books
for shares shall make, at least ten days before each meeting of shareholders, a
complete list of the shareholders
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entitled to vote at such meeting, arranged in alphabetical order, with the
address of each and the number of shares held by each, which list, for a period
of ten days prior to such meeting, shall be kept on file at the registered
office of the corporation and shall be subject to inspection by any shareholder
at any time during usual business hours. Such list shall also be produced and
kept open at the time and place of the meeting and shall be subject to the
inspection of any shareholders during the whole time of the meeting. The
original share ledger or transfer book, or a duplicate thereof, shall be prima
facie evidence as to who are the shareholders entitled to examine such list or
share ledger or transfer book or to vote at any meeting of the shareholders.
ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the articles of
incorporation relating thereto, if any, dividends may be declared by the board
of directors at any regular or special meeting, pursuant to law. Dividends may
be paid in cash, in property or in shares of the capital stock, subject to any
provisions of the articles of incorporation.
Section 2. Before payment of any dividend, there may be set aside
out of any funds of the corporation available for dividends such sum as the
directors from time to time, in their absolute discretion think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conductive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time delegate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its organization
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and the words "Corporate Seal, Texas." The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or in any manner reproduced.
ARTICLE XII
AMENDMENTS
Section 1. The by-laws maybe altered, amended, or repealed or new
by-laws may be adopted by the affirmative vote of a majority of the board of
directors at any regular or special meeting of the board subject to repeal or
change at any regular or special meeting of shareholders at which a quorum is
present or represented, by the affirmative vote a majority of the stock entitled
to vote, provided notice of the proposed repeal or change be contained in the
notice of such meeting.
ARTICLE XIII
AMENDMENTS
Section 1. These by-laws maybe altered, amended or repealed or new
by-laws may be adopted at any regular or special meeting of shareholders at
which quorum is present or represented, by the affirmative vote of a majority of
the stock entitled to vote, provided notice of the proposed alteration,
amendment or repeal be contained in the notice of such meeting.
Dated: July __, 1997
12
<PAGE>
Exhibit 3.46.1
SECOND AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
PALM BEACH MOTEL ENTERPRISES, INC.
Pursuant to Sections 607.1006 and 607.1007 of the Florida General
Corporation Act (the "Act"), PALM BEACH MOTEL ENTERPRISES, INC. a Florida
corporation (the "Corporation"), hereby executes and submits for filing with the
Department of State, State of Florida, these Second Amended and Restated
Articles of Incorporation (the "Amended Articles"), to read as follows:
ARTICLE I
The name of the Corporation is PALM BEACH MOTEL ENTERPRISES,
INC.
ARTICLE II
(a) The purpose for which the Corporation is organized is limited to
acting as a general partner of Servico Centre Associates, Ltd., a Florida
limited partnership (the "Partnership"), which shall include: (i) owning and
holding partnership interests in the Partnership pursuant to the terms and
conditions of the Second Amended and Restated Agreement of Limited Partnership
of the Partnership, as may be amended from time to time (the "Partnership
Agreement"); (ii) operating, using and managing, as general partner of the
Partnership, that certain real property owned by the Partnership commonly known
as Omni Hotel West Palm Beach, 1601 Belvedere Road, West Palm Beach, Florida
33406 (the "Property"); (iii) entering into and performing its obligations on
behalf of the Partnership under the credit agreement, among Lodgian Financing
Corp., as borrower, Lodgian, Inc., its parent, Impac Hotel Group, LLC, Servico,
Inc. and other affiliated entities, as affiliate guarantors, the initial lenders
and initial issuing bank named therein, the collateral agent, the administrative
agent, Morgan Stanley Senior Funding, Inc., as co-lead arranger, joint-book
manager and syndication agent and Lehman Brothers, as co-lead arranger,
joint-book manager and documentation agent relating to the financing or
refinancing of the Property (the "Loan Agreement") which provides the lender
thereunder with a first priority lien on the Property, any promissory-note
evidencing indebtedness incurred pursuant to the Loan Agreement, any mortgage
securing such indebtedness and encumbering the Property (the "Mortgage") and any
other documents securing such indebtedness and any related collateral documents,
each as amended (or pursuant to a consent obtained in accordance with the terms
thereof) (collectively, the "Loan Documents"); (iv) entering into and performing
its obligations on behalf of the Partnership under the Indenture (the
"Indenture"), among Lodgian Financing Corp, as issuer, Lodgian, Inc., the
Subsidiary Guarantors defined therein and Bankers Trust Company, as trustee,
relating to the issuance of the 12 1/4% Senior Subordinated Notes due 2009 and
the Guarantee in favor of the holders of the Notes; and (v) transacting any and
all lawful business that is incident and necessary or appropriate to the
ownership of a partnership interest in the Partnership and to the management
<PAGE>
of the Property for which a corporation may be incorporated under the laws of
the State of Florida.
(b) Notwithstanding any other provision of these Amended Articles
and any provision of law that otherwise so empowers the Corporation, until
such time as the Property is released from the lien of the Mortgage, the
Corporation shall not, without the unanimous affirmative vote of the members
of its Board of Directors, (i) withdraw as general partner from the
Partnership; or (ii) file, or cause the Partnership to file a voluntary
petition or otherwise initiate, or consent to, or cause the Partnership to
initiate or consent to, proceedings for the Corporation or the Partnership to
be adjudicated insolvent or seeking an order for relief as a debtor under the
United States Bankruptcy Code, as amended (11 U.S.C. Sections 101 ET seq.);
or (iii) file, or cause the Partnership to file, any petition, or consent or
to cause the Partnership to consent to any petition seeking any composition,
reorganization, readjustment, liquidation, dissolution or similar relief
under the present or any future federal bankruptcy laws or any other present
or future applicable federal, state or other statute or law relative to
bankruptcy, insolvency or other relief for debtors; or (iv) seek or consent
to the appointment of any trustee, receiver, conservator, assignee,
sequestrator, custodian, or liquidator (or other similar official) of the
Corporation or the Partnership or of all or any substantial part of the
properties and assets of the Corporation or the Partnership; or (v) make, or
cause the Partnership to make, any general assignment for the benefit of
creditors; or (vi) admit in writing or cause the Partnership to admit in
writing, its inability to pay its debts generally as they become due; or
(viii) declare or effect, or cause the Partnership to declare or effect, a
moratorium on its debt or take any corporate action, or cause the Partnership
to take any partnership action, in furtherance of any such action.
(c) The Board of Directors of the Corporation shall, at all times until
the Property is released from the lien of the Mortgage, include an independent
director (the "Independent Director"). The Independent Director shall be a
person who is not at the time of appointment and who has not at any time during
the prior five years been and who is not while serving as the Independent
Director (i) a director, stockholder, officer or employee of the Corporation,
the Partnership or any affiliates thereof, other than with respect to such
person's service as an Independent Director of the Corporation and such person's
service in similar "Independent Director" positions for affiliates of the
Corporation; (ii) a creditor, customer, supplier, independent contractor,
manager or any other person who derives more than 10% of its gross revenues from
its activities with the Corporation, the Partnership or any affiliates thereof;
(iii) a person controlling any such stockholder, creditor, customer, supplier,
independent contractor, manager or other person; (iv) the legal or beneficial
owner, at any time while serving as director of the Corporation, of any
beneficial interest in the Corporation or the Partnership; or (v) a member of
the immediate family of any such stockholder, officer, employee, creditor,
customer, supplier, director, independent contractor, manager or any other
person of the Corporation or the Partnership. As used herein, the term
"affiliate" means any person controlling, under common control wit, or
controlled by the person in question, and the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through ownership
of voting securities, by contact or otherwise. In the event of the death,
incapacity, or resignation of an Independent Director, or the vacancy of the
Independent Director's seat on the Corporation's Board of Directors for any
reason, a successor Independent Director shall be appointed by the remaining
directors.
-2-
<PAGE>
(d) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall, and
shall cause the Partnership to, (i) observe all corporate formalities, including
the maintenance of current minute books; (ii) maintain its own separate and
distinct books of account and corporate records from any other person or entity;
(iii) cause its financial statements to be prepared in accordance with generally
accepted accounting principles in a manner that indicates the separate existence
of the Corporation or Partnership, as applicable, and its assets and liabilities
from any other person or entity; (iv) pay all its liabilities out of its own
funds; (v) in all dealings, identify itself, and conduct its own business and
hold itself out under its own name and as a separate and distinct entity and
correct any misunderstandings regarding its status as a separate entity; (vi)
independently make decisions with respect to its business and daily operations;
(vii) maintain an arm's length relationship with its affiliates; (viii) pay the
salaries of its employees and maintain a sufficient number of employees in light
of its contemplated business operations; (ix) allocate fairly and reasonably any
overhead for shared office space; and (x) use separate stationery, invoices and
checks.
(e) Except as otherwise permitted by the Loan Documents, so long as the
Property is subject to the lien of the Mortgage, the Corporation shall not, and
shall not permit the Partnership to, (i) commingle its assets with those of, or
pledge its assets for the benefit of, any other person or entity; (ii) assume,
guarantee or become obligated, or hold out its credit as being available to
satisfy, the liabilities or obligations of any other person or entity; (iii)
reduce its capital below an amount which is adequate in light of its
contemplated business operations; (iv) acquire obligations or securities of, or
make loans or advances to, any affiliate; (v) incur or assume any indebtedness
other than (A) the indebtedness underlying the Loan Agreement (B) the
indebtedness underlying the Indenture, and (C) liabilities (including, but not
limited to, trade payables) arising in the ordinary course of the Corporation's
business relating to the acquisition, ownership, operation, lease, use or
management of the Property; (vi) amend, alter, change or repeal any provision of
Article II and the last sentence of Article VII of these Amended Articles; (vii)
engage in any dissolution or liquidation, in whole or in part, consolidation or
merger with or into any other entity or conveyance, sale or transfer of its
properties and assets substantially as an entirety to any entity, or cause the
Partnership to dissolve, wind up or liquidate, in whole or in part, or cause the
Partnership to consolidate or merge with or into any other entity, or cause the
Partnership to convey, sell or transfer of its properties and assets
substantially as an entirety to any entity; or (viii) engage in any business or
activity other than as set forth in these Amended Articles, or cause the
Partnership to engage in any business or activity other than as set forth in
these Partnership Agreement. Notwithstanding anything contained herein to the
contrary, nothing herein shall be deemed to prohibit or otherwise limit any
dividends or other distributions from the Corporation to its shareholders or
distributions from the Partnership to its partners, as applicable.
ARTICLE III
The total number of shares of stock which may be issued by the
Corporation is Sixty (60) shares of Common Stock, each of which to be without
par value.
-3-
<PAGE>
ARTICLE IV
The Corporation is to have perpetual existence.
ARTICLE V
The post office address of the registered office of the Corporation
shall be c/o CT Corporation System, 1200 South Pine Island Road, Suite 250, City
of Plantation, Florida 33324, and the name of the registered agent of the
Corporation at that address is CT Corporation System.
ARTICLE VI
The number of directors of the Corporation shall be at least One (1),
which may be changed in accordance with the Bylaws of the Corporation.
ARTICLE VII
The Corporation shall indemnify any officer or director, or any former
officer or director of the Corporation, to the fullest extent permitted by law.
The foregoing right of indemnification shall not be exclusive of any other
rights to which any director, officer, employee or agent may be entitled as a
matter of law or which he may be lawfully granted. The Corporation's obligation
to indemnify its officers and directors pursuant to this Article shall be
subordinate in all respects to the obligations of the Corporation arising out of
the Loan Documents and shall not constitute a claim against the Corporation to
the extent that the Corporation is unable to pay any amounts it is obligated to
pay under the Loan Documents.
The foregoing Second Amended and Restated Articles of Incorporation
were duly adopted and approved by the sole shareholder and the Board of
Directors of the Corporation by unanimous written consent in lieu of a meeting,
pursuant to Sections 607.0704 and 607.0821 of the Florida General Corporation
Act, as of July 23, 1999. The number of votes cast was sufficient for approval.
-4-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed these Second Amended
and Restated Articles of Incorporation this 23rd day of July, 1999.
PALM BEACH MOTEL ENTERPRISES, INC.
By:/s/ THOMAS S. GRYBOSKI
------------------------------------
Name: Thomas S. Gryboski
Title: Assistant Secretary
<PAGE>
Exhibit 4.1
================================================================================
LODGIAN FINANCING CORP.,
Issuer
LODGIAN, INC.,
THE SUBSIDIARY GUARANTORS
(AS DEFINED HEREIN)
and
BANKERS TRUST COMPANY,
Trustee
----------
Indenture
Dated as of July 23, 1999
----------
12 1/4% Senior Subordinated Notes due 2009
================================================================================
<PAGE>
CROSS-REFERENCE TABLE
TIA Sections Indenture Sections
- ------------ ------------------
ss. 310(a)(1)......................................... 7.10
(a)(2)........................................... 7.10
(b).............................................. 7.03; 7.08
ss. 311(a)............................................ 7.03
(b).............................................. 7.03
ss. 312(a)............................................ 2.04
(b).............................................. 13.02
(c).............................................. 13.02
ss. 313(a)............................................ 7.06
(b)(2)........................................... 7.07
(c).............................................. 7.05; 7.06; 13.02
(d).............................................. 7.06
ss. 314(a)............................................ 7.05; 13.02
(a)(4)........................................... 4.17; 13.02
(c)(1)........................................... 13.03
(c)(2)........................................... 13.03
(e).............................................. 4.17; 13.04
ss. 315(a)............................................ 7.02
(b).............................................. 7.05; 13.02
(c).............................................. 7.02
(d).............................................. 7.02
(e).............................................. 6.11
ss. 316(a)(1)(A)...................................... 6.05
(a)(1)(B)........................................ 6.04
(b).............................................. 6.07
(c).............................................. 9.03
ss. 317(a)(1)......................................... 6.08
(a)(2)........................................... 6.09
(b).............................................. 2.05
ss. 318(a)............................................ 10.01
(c).............................................. 10.01
Note: The Cross-Reference Table shall not for any purpose be deemed to be a part
of the Indenture.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions...................................................1
SECTION 1.02. Incorporation by Reference of Trust Indenture Act............24
SECTION 1.03. Rules of Construction........................................24
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating..............................................25
SECTION 2.02. Restrictive Legends..........................................26
SECTION 2.03. Execution, Authentication and Denominations..................28
SECTION 2.04. Registrar and Paying Agent...................................29
SECTION 2.05. Paying Agent to Hold Money in Trust..........................30
SECTION 2.06. Transfer and Exchange........................................30
SECTION 2.07. Book-Entry Provisions for Global Notes.......................31
SECTION 2.08. Special Transfer Provisions..................................33
SECTION 2.09. Replacement Notes............................................36
SECTION 2.10. Outstanding Notes............................................37
SECTION 2.11. Temporary Notes..............................................37
SECTION 2.12. Cancellation.................................................38
SECTION 2.13. CUSIP Numbers................................................38
SECTION 2.14. Defaulted Interest...........................................38
SECTION 2.15. Issuance of Additional Notes.................................38
ARTICLE THREE
REDEMPTION
SECTION 3.01. Right of Redemption..........................................39
SECTION 3.02. Notices to Trustee...........................................39
SECTION 3.03. Selection of Notes to Be Redeemed............................39
SECTION 3.04. Notice of Redemption.........................................40
SECTION 3.05. Effect of Notice of Redemption...............................41
SECTION 3.06. Deposit of Redemption Price..................................41
- ----------
Note: The Table of Contents shall not for any purposes be deemed to be a part of
the Indenture.
<PAGE>
ii
SECTION 3.07. Payment of Notes Called for Redemption.......................41
SECTION 3.08. Notes Redeemed in Part.......................................42
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes.............................................42
SECTION 4.02. Maintenance of Office or Agency..............................42
SECTION 4.03. Limitation on Indebtedness...................................43
SECTION 4.04. Limitation on Senior Subordinated Indebtedness...............46
SECTION 4.05. Limitation on Restricted Payments............................46
SECTION 4.06. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries............................50
SECTION 4.07. Limitation on the Issuance and Sale of Capital Stock of
Restricted Subsidiaries......................................52
SECTION 4.08. Limitation on Issuances of Guarantees by Restricted
Subsidiaries ................................................53
SECTION 4.09. Limitation on Transactions with Shareholders and Affiliates..54
SECTION 4.10. Limitation on Liens..........................................55
SECTION 4.11. Limitation on Asset Sales....................................55
SECTION 4.12. Repurchase of Notes upon a Change of Control.................57
SECTION 4.13. Existence....................................................57
SECTION 4.14. Payment of Taxes and Other Claims............................57
SECTION 4.15. Maintenance of Properties and Insurance......................57
SECTION 4.16. Notice of Defaults...........................................58
SECTION 4.17. Compliance Certificates......................................58
SECTION 4.18. Commission Reports and Reports to Holders....................59
SECTION 4.19. Waiver of Stay, Extension or Usury Laws......................59
SECTION 4.20. Guarantee by Impac Hotel I L.L.C.............................59
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. When Company May Merge, Etc..................................59
SECTION 5.02. Successor Substituted........................................60
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default............................................61
SECTION 6.02. Acceleration.................................................63
<PAGE>
iii
SECTION 6.03. Other Remedies...............................................64
SECTION 6.04. Waiver of Past Defaults......................................64
SECTION 6.05. Control by Majority..........................................64
SECTION 6.06. Limitation on Suits..........................................64
SECTION 6.07. Rights of Holders to Receive Payment.........................65
SECTION 6.08. Collection Suit by Trustee...................................65
SECTION 6.09. Trustee May File Proofs of Claim.............................65
SECTION 6.10. Priorities...................................................66
SECTION 6.11. Undertaking for Costs........................................66
SECTION 6.12. Restoration of Rights and Remedies...........................66
SECTION 6.13. Rights and Remedies Cumulative...............................67
SECTION 6.14. Delay or Omission Not Waiver.................................67
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. General......................................................67
SECTION 7.02. Certain Rights of Trustee....................................67
SECTION 7.03. Individual Rights of Trustee.................................68
SECTION 7.04. Trustee's Disclaimer.........................................69
SECTION 7.05. Notice of Default............................................69
SECTION 7.06. Reports by Trustee to Holders................................69
SECTION 7.07. Compensation and Indemnity...................................69
SECTION 7.08. Replacement of Trustee.......................................70
SECTION 7.09. Successor Trustee by Merger, Etc.............................71
SECTION 7.10. Eligibility..................................................71
SECTION 7.11. Money Held in Trust..........................................72
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. Termination of Company's Obligations.........................72
SECTION 8.02. Defeasance and Discharge of Indenture........................73
SECTION 8.03. Defeasance of Certain Obligations............................75
SECTION 8.04. Application of Trust Money...................................76
SECTION 8.05. Repayment to Company.........................................76
SECTION 8.06. Reinstatement................................................77
<PAGE>
iv
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders...................................77
SECTION 9.02. With Consent of Holders......................................78
SECTION 9.03. Revocation and Effect of Consent.............................79
SECTION 9.04. Notation on or Exchange of Notes.............................79
SECTION 9.05. Trustee to Sign Amendments, Etc..............................80
SECTION 9.06. Conformity with Trust Indenture Act..........................80
ARTICLE TEN
NOTE GUARANTEES
SECTION 10.01 Note Guarantee...............................................80
SECTION 10.02 Obligations Unconditional....................................83
SECTION 10.03 Release of Note Guarantees...................................83
SECTION 10.04 Notice to Trustee............................................83
SECTION 10.05 This Article Not to Prevent Events of Default................83
ARTICLE ELEVEN
SUBORDINATION OF NOTES
SECTION 11.01. Notes Subordinated to Senior Indebtedness...................83
SECTION 11.02. No Payment on Notes in Certain Circumstances................84
SECTION 11.03. Payment over Proceeds upon Dissolution, Etc.................85
SECTION 11.04. Subrogation.................................................87
SECTION 11.05. Obligations of Company Unconditional........................87
SECTION 11.06. Notice to Trustee...........................................88
SECTION 11.07. Reliance on Judicial Order or Certificate of Liquidating
Agent ......................................................89
SECTION 11.08. Trustee's Relation to Senior Indebtedness...................89
SECTION 11.09. Subordination Rights Not Impaired by Acts or Omissions
of the Company or Holders of Senior Indebtedness............89
SECTION 11.10. Holders Authorize Trustee to Effectuate Subordination
of Notes ...................................................89
SECTION 11.11. Not to Prevent Events of Default............................90
SECTION 11.12. Trustee's Compensation Not Prejudiced.......................90
<PAGE>
v
SECTION 11.13. No Waiver of Subordination Provisions.......................90
SECTION 11.14. Payments May Be Paid Prior to Dissolution...................90
SECTION 11.15. Consent of Holders of Senior Indebtedness...................91
SECTION 11.16. Trust Moneys Not Subordinated...............................91
ARTICLE TWELVE
SUBORDINATION OF NOTE GUARANTEES
SECTION 12.01. Note Guarantees Subordinated to Guarantor Senior
Indebtedness ...............................................91
SECTION 12.02. No Payment on Note Guarantees in Certain Circumstances......91
SECTION 12.03. Payment over Proceeds upon Dissolution, Etc.................93
SECTION 12.04. Subrogation.................................................94
SECTION 12.05. Obligations of Guarantor Unconditional......................95
SECTION 12.06. Notice to Trustee...........................................95
SECTION 12.07. Reliance on Judicial Order or Certificate of Liquidating
Agent ......................................................96
SECTION 12.08. Trustee's Relation to Guarantor Senior Indebtedness.........97
SECTION 12.09. Subordination Rights Not Impaired by Acts or Omissions
of a Guarantor or Holders of Guarantor Senior Indebtedness..97
SECTION 12.10. Holders Authorize Trustee to Effectuate Subordination
of Note Guarantees..........................................97
SECTION 12.11. Not to Prevent Events of Default............................98
SECTION 12.12. Trustee's Compensation Not Prejudiced.......................98
SECTION 12.13. No Waiver of Subordination Provisions.......................98
SECTION 12.14. Payments May Be Paid Prior to Dissolution...................98
SECTION 12.15. Consent of Holders of Guarantor Senior Indebtedness.........98
ARTICLE THIRTEEN
MISCELLANEOUS
SECTION 13.01. Trust Indenture Act of 1939.................................99
SECTION 13.02. Notices.....................................................99
SECTION 13.03. Certificate and Opinion as to Conditions Precedent.........100
SECTION 13.04. Statements Required in Certificate or Opinion..............100
SECTION 13.05. Rules by Trustee, Paying Agent or Registrar................101
SECTION 13.06. Payment Date Other Than a Business Day.....................101
SECTION 13.07. Governing Law..............................................101
SECTION 13.08. No Adverse Interpretation of Other Agreements..............101
SECTION 13.09. No Recourse Against Others.................................102
<PAGE>
vi
SECTION 13.10. Successors.................................................102
SECTION 13.11. Duplicate Originals........................................102
SECTION 13.12. Separability...............................................102
SECTION 13.13. Table of Contents, Headings, Etc...........................102
SECTION 13.14. Counterparts...............................................102
<PAGE>
vii
SCHEDULE I Initial Subsidiary Guarantors
EXHIBIT A Form of Note.................................................A-1
EXHIBIT B Form of Certificate..........................................B-1
EXHIBIT C Form of Certificate to Be Delivered in Connection with
Transfers Pursuant to Non-QIB Accredited Investors.....C-1
EXHIBIT D Form of Certificate to Be Delivered in Connection with
Transfers Pursuant to Regulation S.....................D-1
<PAGE>
INDENTURE, dated as of July 23, 1999, between LODGIAN FINANCING CORP., a
Delaware corporation (the "Company"), LODGIAN, INC. ("Lodgian"), a Delaware
corporation and the sole stockholder of the Company, and the SUBSIDIARY
GUARANTORS listed in Schedule I thereto, as guarantors (the "Subsidiary
Guarantors," and together with Lodgian, the "Guarantors"), and BANKERS TRUST
COMPANY, a New York banking corporation, as trustee (the "Trustee").
RECITALS
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance initially of up to $200,000,000 aggregate
principal amount of the Company's 12 1/4% Senior Subordinated Notes due 2009
(the "Notes") issuable as provided in this Indenture. All things necessary to
make this Indenture a valid agreement of the Company and each Guarantor, in
accordance with its terms, have been done, and the Company and each Guarantor
have done all things necessary to make the Notes, when executed by the Company
and authenticated and delivered by the Trustee hereunder and duly issued by the
Company, valid obligations of the Company as hereinafter provided.
This Indenture is subject to, and shall be governed by, the provisions of
the Trust Indenture Act of 1939, as amended, that are required to be a part of
and to govern indentures qualified under the Trust Indenture Act of 1939, as
amended.
AND THIS INDENTURE FURTHER WITNESSETH
For and in consideration of the premises and the purchase of the Notes by
the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders, as follows.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acquired Indebtedness" means Indebtedness of a Person existing at the
time such Person becomes a Restricted Subsidiary or assumed in connection with
an Asset Acquisition by a Restricted Subsidiary; provided that Indebtedness of
such Person which is redeemed, defeased, retired or otherwise repaid at the time
of or immediately upon consummation of the transactions by which such Person
becomes a Restricted Subsidiary or such Asset Acquisition shall not be Acquired
Indebtedness.
"Adjusted Consolidated Net Income" means, for any period, the aggregate
net income (or loss) of Lodgian and its Restricted Subsidiaries for such period
determined in conformity with GAAP; provided
<PAGE>
2
that the following items shall be excluded in computing Adjusted Consolidated
Net Income (without duplication):
(1) the net income (or loss) of any Person that is not a Restricted
Subsidiary;
(2) the net income (or loss) of any Person accrued prior to the date
it becomes a Restricted Subsidiary or is merged into or consolidated with
Lodgian or any of its Restricted Subsidiaries or all or substantially all
of the property and assets of such Person are acquired by Lodgian or any
of its Restricted Subsidiaries;
(3) the net income of any Restricted Subsidiary to the extent that
the declaration or payment of dividends or similar distributions by such
Restricted Subsidiary of such net income is not at the time permitted by
the operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation
applicable to such Restricted Subsidiary;
(4) any gains or losses (on an after-tax basis) attributable to
sales of assets outside the ordinary course of business of Lodgian and its
Restricted Subsidiaries;
(5) solely for purposes of calculating the amount of Restricted
Payments that may be made pursuant to clause (C) of the first paragraph of
Section 4.05, (a) any amount paid or accrued as dividends on Preferred
Stock of Lodgian owned by Persons other than Lodgian and any of its
Restricted Subsidiaries and (b) any amount paid as interest on the
Convertible Debentures or dividends on the CRESTS; and
(6) all extraordinary gains and, for purposes of calculating the
Fixed Charge Coverage Ratio only, extraordinary losses.
"Adjusted Consolidated Net Tangible Assets" means the total amount of
assets of Lodgian and its Restricted Subsidiaries (less applicable depreciation,
amortization and other valuation reserves), except to the extent resulting from
write-ups of capital assets (excluding write-ups in connection with accounting
for acquisitions in conformity with GAAP), after deducting therefrom (1) all
current liabilities of Lodgian and its Restricted Subsidiaries (excluding
intercompany items) and (2) all goodwill, trade names, trademarks, patents,
unamortized debt discount and expense and other like intangibles, all as set
forth on the most recent quarterly or annual consolidated balance sheet of
Lodgian and its Restricted Subsidiaries, prepared in conformity with GAAP and
filed with the SEC or provided to the Trustee.
"Affiliate" means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common
<PAGE>
3
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.
"Agent" means any Registrar, Co-Registrar, Paying Agent or authenticating
agent.
"Agent Members" has the meaning provided in Section 2.07(a).
"Asset Acquisition" means (1) an investment by Lodgian or any of its
Restricted Subsidiaries in any other Person pursuant to which such Person shall
become a Restricted Subsidiary or shall be merged into or consolidated with
Lodgian or any of its Restricted Subsidiaries; provided that such Person's
primary business is related, ancillary or complementary to the businesses of
Lodgian and its Restricted Subsidiaries on the date of such investment or (2) an
acquisition by Lodgian or any of its Restricted Subsidiaries of the property and
assets of any Person other than Lodgian or any of its Restricted Subsidiaries
that constitute substantially all of a division or line of business of such
Person; provided that the property and assets acquired are related, ancillary or
complementary to the businesses of Lodgian and its Restricted Subsidiaries on
the date of such acquisition.
"Asset Disposition" means the sale or other disposition by Lodgian or any
of its Restricted Subsidiaries (other than to Lodgian or another Restricted
Subsidiary) of (1) all or substantially all of the Capital Stock of any
Restricted Subsidiary or (2) all or substantially all of the assets that
constitute a division or line of business of Lodgian or any of its Restricted
Subsidiaries.
"Asset Sale" means any sale, transfer or other disposition (including by
way of merger, consolidation or sale-leaseback transaction) in one transaction
or a series of related transactions by Lodgian or any of its Restricted
Subsidiaries to any Person other than Lodgian or any of its Restricted
Subsidiaries of (1) all or any of the Capital Stock of any Restricted
Subsidiary, (2) all or substantially all of the property and assets of an
operating unit or business of Lodgian or any of its Restricted Subsidiaries or
(3) any other property and assets (other than the Capital Stock or other
Investment in an Unrestricted Subsidiary) of Lodgian or any of its Restricted
Subsidiaries outside the ordinary course of business of Lodgian or such
Restricted Subsidiary and, in each case, that is not governed by the provisions
of Article Five; provided that "Asset Sale" shall not include (a) sales or other
dispositions of inventory, receivables and other current assets or (b) sales,
transfers or other dispositions of assets with a fair market value not in excess
of $1.0 million in any transaction or series of related transactions, (c) sales,
transfers or other dispositions of assets constituting a Permitted Investment or
a Restricted Payment permitted to be made under Section 4.05, or (d) any sale,
transfer, assignment or other disposition of any property or equipment that has
become damaged, worn out, obsolete or otherwise unsuitable for use in connection
with the business of Lodgian or its Restricted Subsidiaries.
<PAGE>
4
"Average Life" means, at any date of determination with respect to any
debt security, the quotient obtained by dividing (1) the sum of the products of
(a) the number of years from such date of determination to the dates of each
successive scheduled principal payment of such debt security and (b) the amount
of such principal payment by (2) the sum of all such principal payments.
"Bank Agent" means the agent for the lenders under the Credit Agreement or
its successors as agent for the lenders under the Credit Agreement.
"Board of Directors" means the Board of Directors of the Company or any
committee of such Board of Directors duly authorized to act under this
Indenture.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in The City of New York, or in the city of the Corporate
Trust Office of the Trustee, are authorized by law to close.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participating or other equivalents (however designated, whether
voting or non-voting) in equity of such Person, whether outstanding on the
Closing Date or issued thereafter, including, without limitation, all Common
Stock and Preferred Stock.
"Capitalized Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) of which the discounted present value
of the rental obligations of such Person as lessee, in conformity with GAAP, is
required to be capitalized on the balance sheet of such Person.
"Capitalized Lease Obligations" means the discounted present value of the
rental obligations under a Capitalized Lease.
"Change of Control" means such time as (1) a "person" or "group" (within
the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) becomes the
ultimate "beneficial owner" (as defined in Rule 3d-3 under the Exchange Act) of
more than 35% of the total voting power of the Voting Stock of Lodgian on a
fully diluted basis; or (2) individuals who on the Closing Date constitute the
Board of Directors (together with any new directors whose election by the Board
of Directors or whose nomination by the Board of Directors for election by
Lodgian's stockholders was approved by a vote of at least a majority of the
members of the Board of Directors then in office who either were members of the
Board of Directors on the Closing Date or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the members of the Board of Directors then in office.
<PAGE>
5
"Closing Date" means the date on which the Notes are originally issued
under this Indenture.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the TIA, then the body performing such duties at
such time.
"Company" means the party named as such in the first paragraph of this
Indenture until a successor replaces it pursuant to Article Five of this
Indenture and thereafter means the successor.
"Company Order" means a written request or order signed in the name of the
Company (i) by its Chairman, a Vice Chairman, its President or a Vice President
and (ii) by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary and delivered to the Trustee; provided, however, that such written
request or order may be signed by any two of the officers or directors listed in
clause (i) above in lieu of being signed by one of such officers or directors
listed in such clause (i) and one of the officers listed in clause (ii) above.
"Consolidated EBITDA" means, for any period, Adjusted Consolidated Net
Income for such period plus, to the extent such amount was deducted in
calculating such Adjusted Consolidated Net Income:
(1) Consolidated Interest Expense and accrued but unpaid interest on
the Convertible Debentures or accrued but unpaid dividends on the CRESTS;
(2) income taxes;
(3) depreciation expense;
(4) amortization expense; and
(5) all other non-cash items reducing Adjusted Consolidated Net
Income (other than items that will require cash payments and for which an
accrual or reserve is, or is required by GAAP to be, made), less all
non-cash items increasing Adjusted Consolidated Net Income, all as
determined on a consolidated basis for Lodgian and its Restricted
Subsidiaries in conformity with GAAP;
provided that, if any Restricted Subsidiary is not a Wholly Owned Restricted
Subsidiary, Consolidated EBITDA shall be reduced (to the extent not otherwise
reduced in accordance with GAAP) by an amount equal to (a) the amount of the
Adjusted Consolidated Net Income attributable to such Restricted Subsidiary
<PAGE>
6
multiplied by (b) the percentage ownership interest in the income of such
Restricted Subsidiary not owned on the last day of such period by Lodgian or any
of its Restricted Subsidiaries.
"Consolidated Interest Expense" means, for any period, (1) the aggregate
amount of interest in respect of Indebtedness (including, without limitation,
amortization of original issue discount on any Indebtedness and the interest
portion of any deferred payment obligation, calculated in accordance with the
effective interest method of accounting; all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing; the net costs associated with Interest Rate Agreements; and
Indebtedness that is Guaranteed or secured by Lodgian or any of its Restricted
Subsidiaries) paid or accrued by Lodgian and its Restricted Subsidiaries during
such period, (2) all but the principal component of rentals in respect of
Capitalized Lease Obligations paid, accrued or scheduled to be paid or to be
accrued by Lodgian and its Restricted Subsidiaries during such period and (3)
solely for calculating the Fixed Charge Coverage Ratio, the aggregate amount of
interest on the Convertible Debentures or dividends on the CRESTS paid by
Lodgian and its Restricted Subsidiaries during such period for such period to
the extent paid under clause (8) of Section 4.05; excluding, however, (1) any
amount of such interest of any Restricted Subsidiary if the net income of such
Restricted Subsidiary is excluded in the calculation of Adjusted Consolidated
Net Income pursuant to clause (3) of the definition thereof (but only in the
same proportion as the net income of such Restricted Subsidiary is excluded from
the calculation of Adjusted Consolidated Net Income pursuant to clause (3) of
the definition thereof) and (2) any premiums, fees and expenses (and any
amortization thereof) payable in connection with the offering of the Notes, the
establishment of the Credit Agreement and any concurrent repayment of
Indebtedness, all as determined on a consolidated basis (without taking into
account Unrestricted Subsidiaries) in conformity with GAAP.
"Consolidated Net Worth" means, at any date of determination,
stockholders' equity plus, to the extent not included, any Preferred Stock of
Lodgian as set forth on the most recently available quarterly or annual
consolidated balance sheet of Lodgian and its Restricted Subsidiaries (which
shall be as of a date not more than 90 days prior to the date of such
computation, and which shall not take into account Unrestricted Subsidiaries),
less any amounts attributable to Disqualified Stock or any equity security
convertible into or exchangeable for Indebtedness, the cost of treasury stock
and the principal amount of any promissory notes receivable from the sale of the
Capital Stock of Lodgian or any of its Restricted Subsidiaries, each item to be
determined in conformity with GAAP (excluding the effects of foreign currency
exchange adjustments under Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 52).
"Consolidated Operating Rental Expense" of any Person means, for any
period, the aggregate amount of rental expense with respect to any Operating
Leases deducted in computing net income of such Person during such period.
<PAGE>
7
"Convertible Debentures" means the 7% Convertible Debentures due 2010
issued pursuant to the indenture dated June 17, 1998 among Servico, Inc., as
issuer, Lodgian, and Wilmington Trust Company, as trustee, as amended (including
any amendment and restatement thereof), supplemented, extended, renewed,
replaced or otherwise modified from time to time and including any agreement
extending the maturity of, refinancing or otherwise restructuring all or any
portion of the Indebtedness under such indenture or any successor agreement, as
such agreement may be amended, renewed, extended, substituted, replaced,
restated or otherwise modified from time to time.
"Corporate Trust Office" means the office of the Trustee at which the
corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date of this Indenture,
located at Bankers Trust Company, 4 Albany Street, 4th Floor, New York, New York
10006; Attention: Corporate Trust and Agency Services.
"Credit Agreement" means the credit agreement to be dated as of the
Closing Date among the Company, the guarantors named therein and Morgan Stanley
Senior Funding, Inc. and any other lenders and parties thereto, together with
any agreements, instruments and documents executed or delivered pursuant to or
in connection with such credit agreement (including, without limitation, any
Guarantees and security documents), in each case as such credit agreement or
such agreements, instruments or documents may be amended (including any
amendment and restatement thereof), supplemented, extended, renewed, replaced or
otherwise modified from time to time and including any agreement extending the
maturity of, refinancing or otherwise restructuring (including, but not limited
to, the inclusion of additional borrowers thereunder that are Subsidiaries of
Lodgian) all or any portion of the Indebtedness under such agreement or any
successor agreement, as such agreement may be amended, renewed, extended,
substituted, replaced, restated or otherwise modified from time to time.
"CRESTS" means the 7% Convertible Redeemable Equity Structured Trust
Securities of Lodgian Capital Trust.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Depositary" means The Depository Trust Company, its nominees, and their
respective successors.
"Designated Senior Indebtedness" means (1) any Indebtedness under the
Credit Agreement (except that any Indebtedness which represents a partial
refinancing of Indebtedness theretofore outstanding pursuant to the Credit
Agreement, rather than a complete refinancing thereof, shall only constitute
Designated Senior Indebtedness if such partial refinancing meets the
requirements of clause (2) below) and
<PAGE>
8
(2) any other Indebtedness constituting Senior Indebtedness that, at the date of
determination, has an aggregate principal amount outstanding of at least $25
million and that is specifically designated, in the instrument creating or
evidencing such Senior Indebtedness as "Designated Senior Indebtedness."
"Disqualified Stock" means any class or series of Capital Stock of any
Person that by its terms or otherwise is (1) required to be redeemed prior to
the Stated Maturity of the Notes, (2) redeemable at the option of the holder of
such class or series of Capital Stock at any time prior to the Stated Maturity
of the Notes or (3) convertible into or exchangeable for Capital Stock referred
to in clause (1) or (2) above or Indebtedness having a scheduled maturity prior
to the Stated Maturity of the Notes; provided that any Capital Stock that would
not constitute Disqualified Stock but for provisions thereof giving holders
thereof the right to require such Person to repurchase or redeem such Capital
Stock upon the occurrence of an "asset sale" or "change of control" occurring
prior to the Stated Maturity of the Notes shall not constitute Disqualified
Stock if the "asset sale" or "change of control" provisions applicable to such
Capital Stock are no more favorable to the holders of such Capital Stock than
the provisions contained in Section 4.11 and Section 4.12 and such Capital Stock
specifically provides that such Person will not repurchase or redeem any such
stock pursuant to such provision prior to the Company's repurchase of such Notes
as are required to be repurchased pursuant to Section 4.11 and Section 4.12.
"Event of Default" has the meaning provided in Section 6.01.
"Excess Proceeds" has the meaning provided in Section 4.11.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means any securities of the Company containing terms
identical to the Notes (except that such Exchange Notes shall be registered
under the Securities Act) that are issued and exchanged for the Notes pursuant
to the Registration Rights Agreement and this Indenture.
"fair market value" means the price that would be paid in an arm's-length
transaction between an informed and willing seller under no compulsion to sell
and an informed and willing buyer under no compulsion to buy, as determined in
good faith by the Board of Directors, whose determination shall be conclusive if
evidenced by a Board Resolution.
"Fixed Charge Coverage Ratio" means, on any Transaction Date, the ratio of
(1) the aggregate amount of Consolidated EBITDA and one-third of Consolidated
Operating Rental Expense for the then most recent four fiscal quarters prior to
such Transaction Date for which reports have been filed with the SEC or provided
to the Trustee (the "Four Quarter Period") to (2) the aggregate Consolidated
Interest Expense and one-third of Consolidated Operating Rental Expense during
such Four Quarter Period. In making the foregoing calculation, (A) pro forma
effect shall be given to any Indebtedness Incurred or repaid during the period
(the "Reference Period") commencing on the first day of the Four Quarter Period
<PAGE>
9
and ending on the Transaction Date (other than Indebtedness Incurred under a
revolving credit or similar arrangement to the extent of the commitment
thereunder (or under any predecessor revolving credit or similar arrangement) in
effect on the last day of such Four Quarter Period unless any portion of such
Indebtedness is projected, in the reasonable judgment of the senior management
of Lodgian, to remain outstanding for a period in excess of 12 months from the
date of the Incurrence thereof), in each case as if such Indebtedness had been
Incurred or repaid on the first day of the Reference Period; (B) pro forma
effect shall be given to any Operating Leases entered into during such Reference
Period as if they had been entered into on the first day of such Reference
Period; (C) Consolidated Interest Expense attributable to interest on any
Indebtedness (whether existing or being Incurred) computed on a pro forma basis
and bearing a floating interest rate shall be computed as if the rate in effect
on the Transaction Date (taking into account any Interest Rate Agreement
applicable to such Indebtedness if such Interest Rate Agreement has a remaining
term in excess of 12 months or, if shorter, at least equal to the remaining term
of such Indebtedness) had been the applicable rate for the entire period; (D)
pro forma effect shall be given to Asset Dispositions and Asset Acquisitions
(including giving pro forma effect to the application of proceeds of any Asset
Disposition) that occur during such Reference Period as if they had occurred and
such proceeds had been applied on the first day of such Reference Period; and
(E) pro forma effect shall be given to asset dispositions and asset acquisitions
(including giving pro forma effect to the application of proceeds of any asset
disposition) that have been made by any Person that has become a Restricted
Subsidiary or has been merged with or into Lodgian or any Restricted Subsidiary
during such Reference Period and that would have constituted Asset Dispositions
or Asset Acquisitions had such transactions occurred when such Person was a
Restricted Subsidiary as if such asset dispositions or asset acquisitions were
Asset Dispositions or Asset Acquisitions that occurred on the first day of such
Reference Period; provided that to the extent that clause (D) or (E) of this
sentence requires that pro forma effect be given to an Asset Acquisition or
Asset Disposition, such pro forma calculation shall be based upon the four full
fiscal quarters immediately preceding the Transaction Date of the Person, or
division or line of business of the Person, that is acquired or disposed for
which financial information is available.
"Foreign Subsidiary" means any Subsidiary of Lodgian that is an entity
which is a controlled foreign corporation under Section 957 of the Internal
Revenue Code.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Closing Date, including, without limitation,
those set forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations contained or referred to in
this Indenture shall be computed in conformity with GAAP applied on a consistent
basis, except that calculations made for purposes of determining compliance with
the terms of the covenants and with other provisions of this Indenture shall be
made without giving effect to (i) the amortization of any expenses incurred in
connection with the offering of the Notes, the establishment of the Credit
Agreement and any concurrent repayment of Indebtedness and (ii) except as
<PAGE>
10
otherwise provided, the amortization of any amounts required or permitted by
Accounting Principles Board Opinion Nos. 16 and 17.
"Global Notes" has the meaning provided in Section 2.01.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (1) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness of
such other Person (whether arising by virtue of partnership arrangements, or by
agreements to keep-well, to purchase assets, goods, securities or services
(unless such purchase arrangements are on arm's-length terms and are entered
into in the ordinary course of business), to take-or-pay, or to maintain
financial statement conditions or otherwise) or (2) entered into for purposes of
assuring in any other manner the obligee of such Indebtedness of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Guarantee Payment Blockage Period" has the meaning provided in Section
12.02.
"Guarantor" means Lodgian, an Initial Subsidiary Guarantor or any other
Restricted Subsidiary that provides a Guarantee of the Company's obligations
under this Indenture and the Notes.
"Guarantor Senior Indebtedness" means, with respect to any Guarantor, the
Senior Indebtedness of such Guarantor.
"Holder" or "Noteholder" means the registered holder of any Note.
"Impac I Debt" means the loan in the aggregate principal amount of
$132.359 million extended by Nomura Asset Capital Corporation to Impac Hotel I,
L.L.C. in March 1997.
"Incur" means, with respect to any Indebtedness, to incur, create, issue,
assume, Guarantee or otherwise become liable for or with respect to, or become
responsible for, the payment of, contingently or otherwise, such Indebtedness,
including an "Incurrence" of Acquired Indebtedness; provided that neither the
accrual of interest nor the accretion of original issue discount shall be
considered an Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person at any date of
determination (without duplication):
(1) all indebtedness of such Person for borrowed money;
<PAGE>
11
(2) all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments;
(3) all obligations of such Person in respect of letters of credit
or other similar instruments (including reimbursement obligations with
respect thereto, but excluding obligations with respect to letters of
credit (including trade letters of credit) securing obligations (other
than obligations described in (1) or (2) above or (5), (6) or (7) below)
entered into in the ordinary course of business of such Person to the
extent such letters of credit are not drawn upon or, if drawn upon, to the
extent such drawing is reimbursed no later than the third Business Day
following receipt by such Person of a demand for reimbursement);
(4) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services, which purchase price is due more
than six months after the date of placing such property in service or
taking delivery and title thereto or the completion of such services,
except Trade Payables;
(5) all Capitalized Lease Obligations;
(6) all Indebtedness of other Persons secured by a Lien on any asset
of such Person, whether or not such Indebtedness is assumed by such
Person; provided that the amount of such Indebtedness shall be the lesser
of (A) the fair market value of such asset at such date of determination
and (B) the amount of such Indebtedness;
(7) all Indebtedness of other Persons Guaranteed by such Person to
the extent such Indebtedness is Guaranteed by such Person; and
(8) to the extent not otherwise included in this definition,
obligations under Currency Agreements and Interest Rate Agreements (other
than Currency Agreements and Interest Rate Agreements designed solely to
protect Lodgian or its Restricted Subsidiaries against fluctuations in
foreign currency exchange rates or interest rates and that do not increase
the Indebtedness of the obligor outstanding at any time other than as a
result of fluctuations in foreign currency exchange rates or interest
rates or by reason of fees, indemnities and compensation payable
thereunder).
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and,
with respect to contingent obligations, the maximum liability upon the
occurrence of the contingency giving rise to the obligation, provided (A) that
the amount outstanding at any time of any Indebtedness issued with original
issue discount is the face amount of such Indebtedness less the remaining
unamortized portion of the original issue discount of such Indebtedness at such
time as determined in conformity with GAAP, (B) that money borrowed and set
aside at the time of the Incurrence of any Indebtedness in order to prefund the
payment of the interest on such Indebtedness
<PAGE>
12
shall not be deemed to be "Indebtedness" and (C) that Indebtedness shall not
include (x) any liability for federal, state, local or other taxes, (y)
performance, surety or appeal bonds provided in the ordinary course of business
or (z) agreements providing for indemnification, adjustment of purchase price or
similar obligations, or Guarantees or letters of credit, surety bonds or
performance bonds securing any obligations of Lodgian or any of its Restricted
Subsidiaries pursuant to such agreements, in any case Incurred in connection
with the disposition of any business, assets or Restricted Subsidiary (other
than Guarantees of Indebtedness Incurred by any Person acquiring all or any
portion of such business, assets or Restricted Subsidiary for the purpose of
financing such acquisition), so long as the principal amount does not to exceed
the gross proceeds actually received by Lodgian or any Restricted Subsidiary in
connection with such disposition.
"Indenture" means this Indenture as originally executed or as it may be
amended or supplemented from time to time by one or more indentures supplemental
to this Indenture entered into pursuant to the applicable provisions of this
Indenture.
"Initial Subsidiary Guarantors" means each wholly-owned subsidiary of
Lodgian Financing Corp.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"Interest Payment Date" means each semiannual interest payment date on
January 15 and July 15 of each year, commencing January 15, 2000.
"Interest Rate Agreement" means any interest rate protection agreement,
interest rate future agreement, interest rate option agreement, interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedge agreement, option or future contract or other similar
agreement or arrangement.
"Investment" in any Person means any direct or indirect advance, loan or
other extension of credit (including, without limitation, by way of Guarantee or
similar arrangement; but excluding advances to customers or suppliers in the
ordinary course of business that are, in conformity with GAAP, recorded as
accounts receivable, prepaid expenses or deposits on the balance sheet of
Lodgian or its Restricted Subsidiaries and endorsements for collection or
deposit arising in the ordinary course of business) or capital contribution to
(by means of any transfer of cash or other property to others or any payment for
property or services for the account or use of others), or any purchase or
acquisition of Capital Stock, bonds, notes, debentures or other similar
instruments issued by, such Person and shall include (1) the designation of a
Restricted Subsidiary as an Unrestricted Subsidiary and (2) the retention of the
Capital Stock (or any other Investment) by Lodgian or any of its Restricted
Subsidiaries, of (or in) any Person that has ceased to be a Restricted
Subsidiary, including, without limitation, by reason of any transaction
permitted by clause (3) of Section 4.07. For purposes of the definition of
"Unrestricted Subsidiary" and Section 4.05, (a) the
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13
amount of or a reduction in an Investment shall be equal to the fair market
value thereof at the time such Investment is made or reduced and (b) in the
event Lodgian or a Restricted Subsidiary makes an Investment by transferring
assets to any Person and as part of such transaction receives Net Cash Proceeds,
the amount of such Investment shall be the fair market value of the assets less
the amount of Net Cash Proceeds so received, provided that the Net Cash Proceeds
are applied in accordance with clause (A) or (B) of Section 4.11.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including, without limitation, any conditional sale or other
title retention agreement or lease in the nature thereof or any agreement to
give any security interest).
"Lodgian" means the party named as such in the first paragraph of this
Indenture until a successor replaces it pursuant to Article Five of this
Indenture and thereafter means the successor.
"Lodgian Capital Trust" means Lodgian Capital Trust I, a statutory
business trust formed under the laws of the State of Delaware.
"Lodgian Capital Trust Declaration" means the amended and restated
declaration of trust dated June 17, 1998 among Lodgian (as successor of Servico,
Inc.) as sponsor, David Buddemeyer, Phillip R. Hale and Charles M. Diaz as the
initial regular trustees, Wilmington Trust Company as the initial property
trustee and initial Delaware trustee, Lodgian and the holders, from time to
time, of undivided beneficial ownership interest in the trust, as in effect on
the Closing Date.
"Lodgian Capital Trust Guarantee" means the Guarantee by Lodgian (as
successor of the original guarantor Servico, Inc.) of Lodgian Capital Trust's
obligations under the CRESTS, as in effect on the Closing Date.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means:
(a) with respect to any Asset Sale, the proceeds of such Asset Sale
in the form of cash or cash equivalents, including payments in respect of
deferred payment obligations (to the extent corresponding to the
principal, but not interest, component thereof) when received in the form
of cash or cash equivalents and proceeds from the conversion of other
property received when converted to cash or cash equivalents, net of:
(1) brokerage commissions and other fees and expenses
(including fees and expenses of counsel and investment bankers)
related to such Asset Sale;
<PAGE>
14
(2) provisions for all taxes (whether or not such taxes will
actually be paid or are payable) as a result of such Asset Sale
without regard to the consolidated results of operations of Lodgian
and its Restricted Subsidiaries, taken as a whole;
(3) payments made to repay Indebtedness or any other
obligation outstanding at the time of such Asset Sale that either
(x) is secured by a Lien on the property or assets sold or (y) is
required to be paid as a result of such sale; and
(4) appropriate amounts to be provided by Lodgian or any
Restricted Subsidiary as a reserve against any liabilities
associated with such Asset Sale, including, without limitation,
pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale, all as
determined in conformity with GAAP; and
(b) with respect to any issuance or sale of Capital Stock, the
proceeds of such issuance or sale in the form of cash or cash equivalents,
including payments in respect of deferred payment obligations (to the
extent corresponding to the principal, but not interest, component
thereof) when received in the form of cash or cash equivalents and
proceeds from the conversion of other property received when converted to
cash or cash equivalents, net of attorneys' fees, accountants' fees,
underwriters' or placement agents' fees, discounts or commissions and
brokerage, consultant and other fees incurred in connection with such
issuance or sale and net of taxes paid or payable as a result thereof.
"Non-U.S. Person" means a person who is not a "U.S. person" (as defined in
Regulation S).
"Note Guarantee" means any Guarantee of the obligations of the Company
under this Indenture and the Notes by any Guarantor.
"Notes" means any of the securities, as defined in the first paragraph of
the recitals hereof, that are authenticated and delivered under this Indenture.
For all purposes of this Indenture, the term "Notes" shall include the Notes
initially issued on the Closing Date, any Exchange Notes to be issued and
exchanged for any Notes pursuant to the Registration Rights Agreement and this
Indenture and any other Notes issued after the Closing Date under this
Indenture. For purposes of this Indenture, all Notes shall vote together as one
series of Notes under this Indenture.
"Offer to Purchase" means an offer to purchase Notes by the Company from
the Holders commenced by mailing a notice to the Trustee and each Holder
stating:
(1) the covenant pursuant to which the offer is being made and that
all Notes validly tendered will be accepted for payment on a pro rata
basis;
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15
(2) the purchase price and the date of purchase (which shall be a
Business Day no earlier than 30 days nor later than 60 days from the date
such notice is mailed) (the "Payment Date");
(3) that any Note not tendered will continue to accrue interest
pursuant to its terms;
(4) that, unless the Company defaults in the payment of the purchase
price, any Note accepted for payment pursuant to the Offer to Purchase
shall cease to accrue interest on and after the Payment Date;
(5) that Holders electing to have a Note purchased pursuant to the
Offer to Purchase will be required to surrender the Note, together with
the form entitled "Option of the Holder to Elect Purchase" on the reverse
side of the Note completed, to the Paying Agent at the address specified
in the notice prior to the close of business on the Business Day
immediately preceding the Payment Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the third
Business Day immediately preceding the Payment Date, a telegram, facsimile
transmission or letter setting forth the name of such Holder, the
principal amount of Notes delivered for purchase and a statement that such
Holder is withdrawing his election to have such Notes purchased; and
(7) that Holders whose Notes are being purchased only in part will
be issued new Notes equal in principal amount to the unpurchased portion
of the Notes surrendered; provided that each Note purchased and each new
Note issued shall be in a principal amount of $1,000 or integral multiples
of $1,000.
On the Payment Date, the Company shall (a) accept for payment on a pro rata
basis Notes or portions thereof tendered pursuant to an Offer to Purchase; (b)
deposit with the Paying Agent money sufficient to pay the purchase price of all
Notes or portions thereof so accepted; and (c) deliver, or cause to be
delivered, to the Trustee all Notes or portions thereof so accepted together
with an Officers' Certificate specifying the Notes or portions thereof accepted
for payment by the Company. The Paying Agent shall promptly mail to the Holders
of Notes so accepted payment in an amount equal to the purchase price, and the
Trustee shall promptly authenticate and mail to such Holders a new Note equal in
principal amount to any unpurchased portion of the Note surrendered; provided
that each Note purchased and each new Note issued shall be in a principal amount
of $1,000 or integral multiples of $1,000. The Company will publicly announce
the results of an Offer to Purchase as soon as practicable after the Payment
Date. The Trustee shall act as the Paying Agent for an Offer to Purchase. The
Company will comply with Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
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16
regulations are applicable, in the event that the Company is required to
repurchase Notes pursuant to an Offer to Purchase.
"Officer" means (i) the Chairman of the Board, the Chief Executive
Officer, the President, any Vice President or the Chief Financial Officer, and
(ii) the Treasurer or any Assistant Treasurer, or the Secretary or any Assistant
Secretary.
"Officers' Certificate" means a certificate signed by one Officer listed
in clause (i) of the definition thereof and one Officer listed in clause (ii) of
the definition thereof or two officers listed in clause (i) of the definition
thereof. Each Officers' Certificate (other than certificates provided pursuant
to TIA Section 314(a)(4)) shall include the statements provided for in TIA
Section 314(e).
"Offshore Global Note" has the meaning provided in Section 2.01.
"Offshore Physical Notes" has the meaning provided in Section 2.01.
"Operating Lease" means any lease of any property (whether real, personal
or mixed) other than a Capitalized Lease.
"Opinion of Counsel" means a written opinion signed by legal counsel, who
may be an employee of or counsel to Lodgian, that meets the requirements of
Section 10.04 hereof. Each such Opinion of Counsel shall include the statements
provided for in TIA Section 314(e).
"Pari Passu Indebtedness" has the meaning provided in Section 4.11.
"Paying Agent" has the meaning provided in Section 2.04, except that, for
the purposes of Article Eight, the Paying Agent shall not be Lodigan or a
Subsidiary of Lodgian or an Affiliate of any of them. The term "Paying Agent"
includes any additional Paying Agent.
"Payment Blockage Period" has the meaning provided in Section 11.02.
"Payment Date" has the meaning provided in the definition of Offer to
Purchase.
"Permanent Offshore Global Notes" has the meaning provided in Section
2.01.
"Permitted Investment" means:
(1) an Investment in Lodgian or a Restricted Subsidiary or a Person
which will, upon the making of such Investment, become a Restricted
Subsidiary or be merged or consolidated with or into or transfer or convey
all or substantially all its assets to, Lodgian or a Restricted
Subsidiary;
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17
provided that (a) such person's primary business is related, ancillary or
complementary to the businesses of Lodgian and its Restricted Subsidiaries
on the date of such Investment and (b) none of the Company, Lodgian or any
Subsidiary Guarantor will transfer any hotel properties to a Restricted
Subsidiary other than a Subsidiary Guarantor and no Restricted Subsidiary
other than the Company or a Subsidiary Guarantor will acquire or otherwise
develop any hotels other than hotels held by such Subsidiary on the
Closing Date;
(2) Temporary Cash Investments;
(3) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as expenses
in accordance with GAAP;
(4) stock, obligations or securities received in satisfaction of
judgments;
(5) an Investment in an Unrestricted Subsidiary consisting solely of
an Investment in another Unrestricted Subsidiary;
(6) Interest Rate Agreements and Currency Agreements designed solely
to protect Lodgian or its Restricted Subsidiaries against fluctuations in
interest rates or foreign currency exchange rates; and
(7) Investments in any Person the primary business of which is
related, ancillary or complementary to the business of Lodgian and its
Restricted Subsidiaries on the date of such Investment; provided that the
aggregate amount of such Investments under this clause (7) does not exceed
(a) $20 million plus (b) the net reduction in Investments made pursuant to
this clause (7) resulting from distributions on or repayments of such
Investments, including payments of interest on Indebtedness, dividends,
repayments of loans or advances, or other distributions or other transfers
of assets, in each case to Lodgian or any Restricted Subsidiary, or from
the Net Cash Proceeds from the sale or other disposition of any such
Investment (except, in each case, to the extent of any gain on such sale
or disposition that would be included in the calculation of Adjusted
Consolidated Net Income), from the release of any Guarantee or from
redesignations of Unrestricted Subsidiaries as Restricted Subsidiaries
(valued in each case as provided in the definition of "Investments");
provided that the net reduction in any such Investments shall not exceed
the amount of such Investments in such Person.
"Person" means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Physical Notes" has the meaning provided in Section 2.01.
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18
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person's preferred or preference equity, whether
outstanding on the Closing Date or issued thereafter, including, without
limitation, all series and classes of such preferred or preference stock.
"principal" of a debt security, including the Notes, means the principal
amount due on the Stated Maturity as shown on such debt security.
"Private Placement Legend" means the legend initially set forth on the
Notes in the form set forth in Section 2.02.
"Purchase Money Indebtedness" means any Indebtedness, including
Capitalized Leases, which is Incurred to finance the acquisition, construction,
installation or improvement of any Replacement Assets and which is Incurred
concurrently with, or within six months following, such acquisition,
construction, installation or improvement.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Redemption Date" means, when used with respect to any Note to be
redeemed, the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price" means, when used with respect to any Note to be
redeemed, the price at which such Note is to be redeemed pursuant to this
Indenture.
"Registrar" has the meaning provided in Section 2.04.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated July 20, 1999, between the Company, the Guarantors and Morgan Stanley &
Co. Incorporated, Lehman Brothers Inc. and Bear, Stearns & Co. Inc. and certain
permitted assigns specified therein.
"Registration Statement" means the Registration Statement as defined and
described in the Registration Rights Agreement.
"Regular Record Date" for the interest payable on any Interest Payment
Date means the January 1 or July 1 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act.
<PAGE>
19
"Replacement Assets" means, on any date, property or assets (other than
current assets) of a nature or type or that are used in a business (or an
Investment in a company having property or assets of a nature or type, or
engaged in a business) similar or related to the nature or type of the property
and assets of, or the business of, Lodgian and its Restricted Subsidiaries
existing on such date.
"Responsible Officer", when used with respect to the Trustee, means any
officer assigned to the Corporate Trust Office, including any managing director,
principal, vice president, assistant vice president, assistant treasurer,
assistant secretary or any other officer of the Trustee customarily performing
functions which are similar to those performed by any of the above designated
officers having direct responsibility for the administration of this Indenture
and also with respect to other similar matters.
"Restricted Payments" has the meaning provided in Section 4.05.
"Restricted Subsidiary" means any Subsidiary of Lodgian other than an
Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and its successors.
"Secured Indebtedness" has the meaning provided in Section 4.10.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Register" has the meaning provided in Section 2.04.
"Senior Indebtedness" means the following obligations of Lodgian, the
Company or any Subsidiary Guarantor, whether outstanding on the Closing Date or
thereafter Incurred: (1) all Indebtedness and all other monetary obligations
(including, without limitation, expenses, fees, principal, interest,
reimbursement obligations under letters of credit and indemnities payable in
connection therewith) under (or in respect of) the Credit Agreement or any
Interest Rate Agreement or Currency Agreement relating to the Indebtedness under
the Credit Agreement and (2) all Indebtedness and all other monetary obligations
of Lodgian, the Company or any Subsidiary Guarantor (other than the Notes and
any Note Guarantee and the Convertible Debentures), including principal and
interest on such Indebtedness, unless such Indebtedness, by its terms or by the
terms of any agreement or instrument pursuant to which such Indebtedness is
issued, is pari passu with, or subordinated in right of payment to, the Notes or
any Note Guarantee; provided that the term "Senior Indebtedness" shall not
include (a) any Indebtedness of Lodgian, the Company or any Subsidiary Guarantor
that, when Incurred, was without recourse to Lodgian, the Company or such
Subsidiary Guarantor, (b) any Indebtedness of Lodgian, the Company or any
Subsidiary Guarantor to a Subsidiary of Lodgian, or to a joint venture in which
Lodgian or any Restricted Subsidiary has an interest, (c) any
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20
Indebtedness of Lodgian, the Company or any Subsidiary Guarantor, to the extent
not permitted by Section 4.03 or Section 4.04; provided that Indebtedness under
the Credit Agreement shall be deemed Senior Indebtedness if Lodgian, the Company
or any Subsidiary Guarantor, as the case may be, believed in good faith at the
time of incurrence that it was permitted to incur such Indebtedness under this
Indenture and delivers an officers' certificate to the lenders under the Credit
Agreement to such effect, (d) any repurchase, redemption or other obligation in
respect of Disqualified Stock, (e) any Indebtedness to any employee of Lodgian
or any of its Subsidiaries, (f) any liability for taxes owed or owing by
Lodgian, the Company or any Subsidiary Guarantor, or (g) any Trade Payables.
"Senior Subordinated Obligations" means any principal of, premium, if any,
or interest on the Notes payable pursuant to the terms of the Notes or any Note
Guarantee or upon acceleration, including any amounts received upon the exercise
of rights of rescission or other rights of action (including claims for damages)
or otherwise, to the extent relating to the purchase price of the Notes or
amounts corresponding to such principal, premium, if any, or interest on the
Notes.
"Shelf Registration Statement" means the Shelf Registration Statement as
defined in the Registration Rights Agreement.
"Significant Subsidiary" means, at any date of determination, any
Restricted Subsidiary that, together with its Subsidiaries, (i) for the most
recent fiscal year of Lodgian, accounted for more than 10% of the consolidated
revenues of Lodgian and its Restricted Subsidiaries or (ii) as of the end of
such fiscal year, was the owner of more than 10% of the consolidated assets of
Lodgian and its Restricted Subsidiaries, all as set forth on the most recently
available consolidated financial statements of Lodgian for such fiscal year.
"Stated Maturity" means (1) with respect to any debt security, the date
specified in such debt security as the fixed date on which the final installment
of principal of such debt security is due and payable and (2) with respect to
any scheduled installment of principal of or interest on any debt security, the
date specified in such debt security as the fixed date on which such installment
is due and payable.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the voting power
of the outstanding Voting Stock is owned, directly or indirectly, by such Person
and one or more other Subsidiaries of such Person.
"Subsidiary Guarantee" has the meaning provided in Section 4.08.
"Subsidiary Guarantor" means any Initial Subsidiary Guarantor and any
other Restricted Subsidiary which provides a Guarantee of the Company's
obligations under this Indenture and the Notes pursuant to Section 4.07 or
Section 4.20.
<PAGE>
21
"Temporary Cash Investment" means any of the following:
(1) direct obligations of the United States of America or any agency
thereof or obligations fully and unconditionally guaranteed by the United
States of America or any agency thereof, in each case maturing within one
year;
(2) time deposit accounts, certificates of deposit and money market
deposits maturing within 180 days of the date of acquisition thereof
issued by a bank or trust company which is organized under the laws of the
United States of America, any state thereof or any foreign country
recognized by the United States of America, and which bank or trust
company has capital, surplus and undivided profits aggregating in excess
of $100 million (or the foreign currency equivalent thereof) and has
outstanding debt which is rated "A" (or such similar equivalent rating) or
higher by at least one nationally recognized statistical rating
organization (as defined in Rule 436 under the Securities Act) or any
money-market fund sponsored by a registered broker dealer or mutual fund
distributor;
(3) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (1) above entered
into with a bank or trust company meeting the qualifications described in
clause (2) above;
(4) commercial paper, maturing not more than one year after the date
of acquisition, issued by a corporation (other than an Affiliate of the
Company) organized and in existence under the laws of the United States of
America, any state thereof or any foreign country recognized by the United
States of America with a rating at the time as of which any investment
therein is made of "P-1" (or higher) according to Moody's or "A-1" (or
higher) according to S&P;
(5) securities with maturities of six months or less from the date
of acquisition issued or fully and unconditionally guaranteed by any
state, commonwealth or territory of the United States of America, or by
any political subdivision or taxing authority thereof, and rated at least
"A" by S&P or Moody's; and
(6) any mutual fund that has at least 95% of its assets continuously
invested in investments of the types described in clauses (1) through (5)
above.
"Temporary Offshore Global Notes" has the meaning provided in Section
2.01.
"TIA" or "Trust Indenture Act" means the Trust Indenture Act of 1939 (15
U.S. Code ss.ss. 77aaa-77bbbb), as in effect on the date this Indenture was
executed, except as provided in Section 9.06.
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22
"Trade Payables" means, with respect to any Person, any accounts payable
or any other indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by such Person or any of its Subsidiaries arising in the
ordinary course of business in connection with the acquisition of goods or
services.
"Transaction Date" means, with respect to the Incurrence of any
Indebtedness, the date such Indebtedness is to be Incurred and, with respect to
any Restricted Payment, the date such Restricted Payment is to be made.
"Trustee" means the party named as such in the first paragraph of this
Indenture until a successor replaces it in accordance with the provisions of
Article Seven of this Indenture and thereafter means such successor.
"United States Bankruptcy Code" means the Bankruptcy Reform Act of 1978,
as amended and as codified in Title 11 of the United States Code, as amended
from time to time hereafter, or any successor federal bankruptcy law.
"Unrestricted Subsidiary" means (1) any Subsidiary of Lodgian other than
the Company that at the time of determination shall be designated an
Unrestricted Subsidiary by the Board of Directors in the manner provided below;
and (2) any Subsidiary of an Unrestricted Subsidiary. The Board of Directors may
designate any Restricted Subsidiary (including any newly acquired or newly
formed Subsidiary of Lodgian) to be an Unrestricted Subsidiary unless such
Subsidiary owns any Capital Stock of, or owns or holds any Lien on any property
of, Lodgian or any Restricted Subsidiary; provided that (a) any Guarantee by
Lodgian or any Restricted Subsidiary of any Indebtedness of the Subsidiary being
so designated shall be deemed an "Incurrence" of such Indebtedness and an
"Investment" by Lodgian or such Restricted Subsidiary (or both, if applicable)
at the time of such designation; (b) either (x) the Subsidiary to be so
designated has total assets of $1,000 or less or (y) if such Subsidiary has
assets greater than $1,000, such designation would be permitted under Section
4.05 and (c) if applicable, the Incurrence of Indebtedness and the Investment
referred to in clause (a) of this proviso would be permitted under Section 4.03
and Section 4.05. The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that (i) no Default or Event
of Default shall have occurred and be continuing at the time of or after giving
effect to such designation and (ii) all Liens and Indebtedness of such
Unrestricted Subsidiary outstanding immediately after such designation would, if
Incurred at such time, have been permitted to be Incurred (and shall be deemed
to have been Incurred) for all purposes of this Indenture. Any such designation
by the Board of Directors shall be evidenced to the Trustee by promptly filing
with the Trustee a copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions.
"U.S. Global Notes" has the meaning provided in Section 2.01.
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23
"U.S. Government Obligations" means securities that are (1) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (2) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof at any time prior
to the Stated Maturity of the Notes, and shall also include a depository receipt
issued by a bank or trust company as custodian with respect to any such U.S.
Government Obligation or a specific payment of interest on or principal of any
such U.S. Government Obligation held by such custodian for the account of the
holder of a depository receipt; provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or the specific payment of interest on
or principal of the U.S. Government Obligation evidenced by such depository
receipt.
"U.S. Physical Notes" means the Notes issued in the form of permanent
certificated Notes in registered form in substantially the form set forth in
Exhibit A to Institutional Accredited Investors which are not QIBs (excluding
Non-U.S. Persons) in accordance with Section 2.08(a).
"Voting Stock" means with respect to any Person, Capital Stock of any
class or kind ordinarily having the power to vote for the election of directors,
managers or other voting members of the governing body of such Person.
"Wholly Owned" means, with respect to any Subsidiary of any Person, the
ownership of all of the outstanding Capital Stock of such Subsidiary (other than
any director's qualifying shares or Investments by foreign nationals mandated by
applicable law) by such Person or one or more Wholly Owned Subsidiaries of such
Person.
SECTION 1.02. Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder or a Noteholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
and
"obligor" on the indenture securities means the Company or any other
obligor on the Notes.
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24
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by a rule of the
Commission and not otherwise defined herein have the meanings assigned to them
therein.
SECTION 1.03. Rules of Construction. Unless the context otherwise
requires:
(I) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and words in the
plural include the singular;
(v) provisions apply to successive events and transactions;
(vi) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or
other subdivision;
(vii) all ratios and computations based on GAAP contained in this
Indenture shall be computed in accordance with the definition of GAAP set
forth in Section 1.01; and
(viii) all references to Sections or Articles refer to Sections or
Articles of this Indenture unless otherwise indicated.
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating. The Notes and the Trustee's certificate of
authentication shall be substantially in the form annexed hereto as Exhibit A
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Indenture. The Notes may have notations,
legends or endorsements required by law, stock exchange agreements to which the
Company or any Guarantor is subject or usage. The Company shall approve the form
of the Notes and any notation, legend or endorsement on the Notes. Each Note
shall be dated the date of its authentication.
The terms and provisions contained in the form of the Notes annexed hereto
as Exhibit A shall constitute, and are hereby expressly made, a part of this
Indenture. To the extent applicable, the Company,
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25
each Guarantor and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
Notes offered and sold in reliance on Rule 144A shall be issued initially
in the form of one or more permanent global Notes in registered form,
substantially in the form set forth in Exhibit A (the "U.S. Global Notes"),
registered in the name of the nominee of the Depositary, deposited with the
Trustee, as custodian for the Depositary, duly executed by the Company and
authenticated by the Trustee as hereinafter provided. The aggregate principal
amount of the U.S. Global Notes may from time to time be increased or decreased
by adjustments made on the records of the Trustee, as custodian for the
Depositary, or its nominee, in accordance with the instructions given by the
Holder thereof, as hereinafter provided.
Notes offered and sold in offshore transactions in reliance on Regulation
S shall be issued initially in the form of one or more temporary global Notes in
registered form substantially in the form set forth in Exhibit A (the "Temporary
Offshore Global Notes"), registered in the name of the nominee of the
Depositary, deposited with the Trustee, as custodian for the Depositary, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. At any time on or after September 1, 1999, upon receipt by the Trustee
and the Company of a certificate substantially in the form of Exhibit B hereto,
one or more permanent global Notes in registered form substantially in the form
set forth in Exhibit A hereto (the "Permanent Offshore Global Notes"; and
together with the Temporary Offshore Global Notes, the "Offshore Global Notes"),
duly executed by the Company and authenticated by the Trustee as hereinafter
provided shall be deposited with the Trustee, as custodian for the Depositary,
or its nominee, and the Registrar shall reflect on its books and records the
date and a decrease in the principal amount of the Temporary Offshore Global
Notes in an amount equal to the principal amount of the beneficial interest in
the Temporary Offshore Global Notes transferred.
Notes issued pursuant to Section 2.07 in exchange for interests in the
U.S. Global Notes and the Offshore Global Notes shall be in the form of
permanent certificated Notes in registered form substantially in the form set
forth in Exhibit A hereto (the "U.S. Physical Notes" and the "Offshore Physical
Notes", respectively).
The Offshore Physical Notes and U.S. Physical Notes are sometimes
collectively herein referred to as the "Physical Notes." The U.S. Global Notes
and the Offshore Global Notes are sometimes referred to herein as the "Global
Notes."
The definitive Notes shall be typed, printed, lithographed or engraved or
produced by any combination of these methods or may be produced in any other
manner permitted by the rules of any securities exchange on which the Notes may
be listed, all as determined by the Officers executing such Notes, as evidenced
by their execution of such Notes.
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26
SECTION 2.02. Restrictive Legends. Unless and until a Note is exchanged
for an Exchange Note or sold in connection with an effective Registration
Statement pursuant to the Registration Rights Agreement, (i) the U.S. Global
Notes and U.S. Physical Notes shall bear the legend set forth below on the face
thereof and (ii) the Offshore Physical Notes, until at least the 41st day after
the Closing Date and receipt by the Company and the Trustee of a certificate
substantially in the form of Exhibit B hereto, and the Temporary Offshore Global
Notes shall bear the legend set forth below on the face thereof.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF,
U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR
(B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT, WITHIN
THE TIME PERIOD REFERRED TO UNDER RULE 144(k) UNDER THE SECURITIES ACT AS
IN EFFECT ON THE DATE OF TRANSFER OF THIS NOTE, RESELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF,
(B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER
THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE
A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING
TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN
BE OBTAINED FROM THE TRUSTEE), AND, IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000, AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION
IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN
THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE
BOX SET FORTH ON THE
<PAGE>
27
REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS
CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL
ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO
THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE
TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE
FOREGOING RESTRICTIONS.
Each Global Note, whether or not an Exchange Note, shall also bear the
following legend on the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION 2.08 OF THE INDENTURE.
SECTION 2.03. Execution, Authentication and Denominations. Subject to
Article Four and applicable law, the aggregate principal amount of Notes which
may be authenticated and delivered under this Indenture is unlimited. The Notes
shall be executed by two Officers of the Company. The signature of these
Officers on the Notes may be by facsimile or manual signature in the name and on
behalf of the Company.
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28
If an Officer whose signature is on a Note no longer holds that office at
the time the Trustee or authenticating agent authenticates the Note, the Note
shall be valid nevertheless.
A Note shall not be valid until the Trustee or authenticating agent
manually signs the certificate of authentication on the Note. The signature
shall be conclusive evidence that the Note has been authenticated under this
Indenture.
At any time and from time to time after the execution of this Indenture,
the Trustee or an authenticating agent shall, upon receipt of a Company Order,
authenticate for original issue Notes in the aggregate principal amount
specified in such Company Order; provided that the Trustee shall be entitled to
receive an Officers' Certificate and an Opinion of Counsel of the Company in
connection with such authentication of Notes. Such Company Order shall specify
the amount of Notes to be authenticated and the date on which the original issue
of Notes is to be authenticated and, in case of an issuance of Notes pursuant to
Section 2.15, shall certify that such issuance is in compliance with Article
Four.
The Trustee may appoint an authenticating agent to authenticate Notes. An
authenticating agent may authenticate Notes whenever the Trustee may do so. Each
reference in this Indenture to authentication by the Trustee includes
authentication by such authenticating agent. An authenticating agent has the
same rights as an Agent to deal with the Company or an Affiliate of the Company.
The Notes shall be issuable only in registered form without coupons and
only in denominations of $1,000 in principal amount and any integral multiple
thereof.
SECTION 2.04. Registrar and Paying Agent. The Company shall maintain an
office or agency where Notes may be presented for registration of transfer or
for exchange (the "Registrar"), an office or agency where Notes may be presented
for payment (the "Paying Agent") and an office or agency where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served, which shall be in the Borough of Manhattan, The City of New York. The
Company shall cause the Registrar to keep a register of the Notes and of their
transfer and exchange (the "Security Register"). The Security Register shall be
in written form or any other form capable of being converted into written form
within a reasonable time. The Company may have one or more co-Registrars and one
or more additional Paying Agents.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall give
prompt written notice to the Trustee of the name and address of any such Agent
and any change in the address of such Agent. If the Company fails to maintain a
Registrar, Paying Agent and/or agent for service of notices and demands, the
Trustee shall act as such Registrar, Paying Agent and/or agent for service of
notices and demands. The Company may remove any Agent upon written notice to
such Agent and the Trustee; provided that no such removal shall become effective
until (i) the acceptance of an
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29
appointment by a successor Agent to such Agent as evidenced by an appropriate
agency agreement entered into by the Company and such successor Agent and
delivered to the Trustee or (ii) notification to the Trustee that the Trustee
shall serve as such Agent until the appointment of a successor Agent in
accordance with clause (i) of this proviso. The Company, any Subsidiary of the
Company, or any Affiliate of any of them may act as Paying Agent, Registrar or
co-Registrar, and/or agent for service of notice and demands.
The Company initially appoints the Trustee as Registrar, Paying Agent,
authenticating agent and agent for service of notice and demands. The Trustee
shall preserve in as current a form as is reasonably practicable the most recent
list available to it of the names and addresses of Holders and shall otherwise
comply with TIA ss. 312(a). If the Trustee is not the Registrar, the Company
shall furnish to the Trustee as of each Regular Record Date and at such other
times as the Trustee may reasonably request the names and addresses of Holders
as they appear in the Security Register, including the aggregate principal
amount of Notes held by each Holder.
SECTION 2.05. Paying Agent to Hold Money in Trust. Not later than 11:00
a.m. (New York City time) on each due date of the principal, premium, if any,
and interest on any Notes, the Company shall deposit with the Paying Agent money
in immediately available funds sufficient to pay such principal, premium, if
any, and interest so becoming due. The Company shall require each Paying Agent
other than the Trustee to agree in writing that such Paying Agent shall hold in
trust for the benefit of the Holders or the Trustee all money held by the Paying
Agent for the payment of principal of, premium, if any, and interest on the
Notes (whether such money has been paid to it by the Company or any other
obligor on the Notes), and such Paying Agent shall promptly notify the Trustee
of any default by the Company (or any other obligor on the Notes) in making any
such payment. The Company at any time may require a Paying Agent to pay all
money held by it to the Trustee and account for any funds disbursed, and the
Trustee may at any time during the continuance of any payment default, upon
written request to a Paying Agent, require such Paying Agent to pay all money
held by it to the Trustee and to account for any funds disbursed. Upon doing so,
the Paying Agent shall have no further liability for the money so paid over to
the Trustee. If the Company or any Subsidiary of the Company or any Affiliate of
any of them acts as Paying Agent, it will, on or before each due date of any
principal of, premium, if any, or interest on the Notes, segregate and hold in a
separate trust fund for the benefit of the Holders a sum of money sufficient to
pay such principal, premium, if any, or interest so becoming due until such sum
of money shall be paid to such Holders or otherwise disposed of as provided in
this Indenture, and will promptly notify the Trustee of its action or failure to
act.
SECTION 2.06. Transfer and Exchange. The Notes are issuable only in
registered form. A Holder may transfer a Note only by written application to the
Registrar stating the name of the proposed transferee and otherwise complying
with the terms of this Indenture. No such transfer shall be effected until, and
such transferee shall succeed to the rights of a Holder only upon, final
acceptance and registration of the transfer by the Registrar in the Security
Register. Prior to the registration of any transfer by a Holder
<PAGE>
30
as provided herein, the Company, the Trustee, and any agent of the Company shall
treat the person in whose name the Note is registered as the owner thereof for
all purposes whether or not the Note shall be overdue, and neither the Company,
the Trustee, nor any such agent shall be affected by notice to the contrary.
Furthermore, any Holder of a Global Note shall, by acceptance of such Global
Note, agree that transfers of beneficial interests in such Global Note may be
effected only through a book entry system maintained by the Holder of such
Global Note (or its agent) and that ownership of a beneficial interest in the
Note shall be required to be reflected in a book entry. When Notes are presented
to the Registrar or a co-Registrar with a request to register the transfer or to
exchange them for an equal principal amount of Notes of other authorized
denominations (including an exchange of Notes for Exchange Notes), the Registrar
shall register the transfer or make the exchange as requested if its
requirements for such transactions are met (including that such Notes are duly
endorsed or accompanied by a written instrument of transfer in form satisfactory
to the Trustee and Registrar duly executed by the Holder thereof or by an
attorney who is authorized in writing to act on behalf of the Holder); provided
that no exchanges of Notes for Exchange Notes shall occur until a Registration
Statement shall have been declared effective by the Commission and that any
Notes that are exchanged for Exchange Notes shall be cancelled by the Trustee.
To permit registrations of transfers and exchanges, the Company shall execute
and the Trustee shall authenticate Notes at the Registrar's request. No service
charge shall be made for any registration of transfer or exchange or redemption
of the Notes, but the Company may require payment of a sum sufficient to cover
any transfer tax or similar governmental charge payable in connection therewith
(other than any such transfer taxes or other similar governmental charge payable
upon exchanges pursuant to Section 2.11, 3.08 or 9.04).
The Registrar shall not be required (i) to issue, register the transfer of
or exchange any Note during a period beginning at the opening of business 15
days before the day of the mailing of a notice of redemption of Notes selected
for redemption under Section 3.03 and ending at the close of business on the day
of such mailing, or (ii) to register the transfer of or exchange any Note so
selected for redemption in whole or in part, except the unredeemed portion of
any Note being redeemed in part.
SECTION 2.07. Book-Entry Provisions for Global Notes. (a) The U.S. Global
Notes and Offshore Global Notes initially shall (i) be registered in the name of
the Depositary for such Global Notes or the nominee of such Depositary, (ii) be
delivered to the Trustee as custodian for such Depositary and (iii) bear legends
as set forth in Section 2.02.
Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Indenture with respect to any Global Note held on
their behalf by the Depositary, or the Trustee as its custodian, or under such
Global Note, and the Depositary may be treated by the Company, the Trustee and
any agent of the Company or the Trustee as the absolute owner of such Global
Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein
shall prevent the Company, the Trustee or any agent of the Company or the
Trustee, from giving effect to any written certification, proxy or other
<PAGE>
31
authorization furnished by the Depositary or impair, as between the Depositary
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a holder of any Note.
(b) Transfers of a Global Note shall be limited to transfers of such
Global Note in whole, but not in part, to the Depositary, its successors or
their respective nominees. Interests of beneficial owners in Global Notes may be
transferred in accordance with the rules and procedures of the Depositary and
the provisions of Section 2.08. In addition, U.S. Physical Notes and Offshore
Physical Notes shall be transferred to all beneficial owners in exchange for
their beneficial interests in the U.S. Global Notes or the Offshore Global
Notes, as the case may be, if (i) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for the U.S. Global Notes or the
Offshore Global Notes, as the case may be, and a successor depositary is not
appointed by the Company within 90 days of such notice, (ii) an Event of Default
has occurred and is continuing and the Registrar has received a request from the
Depositary or (iii) in accordance with the rules and procedures of the
Depositary and the provisions of Section 2.08.
(c) Any beneficial interest in one of the Global Notes that is transferred
to a person who takes delivery in the form of an interest in another Global Note
will, upon transfer, cease to be an interest in such Global Note and become an
interest in such other Global Note and, accordingly, will thereafter be subject
to all transfer restrictions, if any, and other procedures applicable to
beneficial interests in such other Global Note for as long as it remains such an
interest.
(d) In connection with any transfer of a portion of the beneficial
interests in a Global Note to beneficial owners pursuant to paragraph (b) of
this Section 2.07, the Registrar shall reflect on its books and records the date
and a decrease in the principal amount of such Global Note in an amount equal to
the principal amount of the beneficial interest in such Global Note to be
transferred, and the Company shall execute, and the Trustee shall authenticate
and deliver, one or more U.S. Physical Notes or Offshore Physical Notes, as the
case may be, of like tenor and amount.
(e) In connection with the transfer of the U.S. Global Notes or the
Offshore Global Notes, in whole, to beneficial owners pursuant to paragraph (b)
of this Section 2.07, the U.S. Global Notes or Offshore Global Notes, as the
case may be, shall be deemed to be surrendered to the Trustee for cancellation,
and the Company shall execute, and the Trustee shall authenticate and deliver,
to each beneficial owner identified by the Depositary in exchange for its
beneficial interest in the U.S. Global Notes or Offshore Global Notes, as the
case may be, an equal aggregate principal amount of U.S. Physical Notes or
Offshore Physical Notes, as the case may be, of authorized denominations.
(f) Any U.S. Physical Note delivered in exchange for an interest in the
U.S. Global Notes pursuant to paragraph (b), (d) or (e) of this Section 2.07
shall, except as otherwise provided by paragraph (f) of Section 2.08, bear the
legend regarding transfer restrictions applicable to the U.S. Physical Note set
forth in Section 2.02.
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32
(g) Any Offshore Physical Note delivered in exchange for an interest in
the Offshore Global Notes pursuant to paragraph (b), (d) or (e) of this Section
2.07 shall, except as otherwise provided by paragraph (f) of Section 2.08, bear
the legend regarding transfer restrictions applicable to the Offshore Physical
Note set forth in Section 2.02.
(h) The registered holder of a Global Note may grant proxies and otherwise
authorize any person, including Agent Members and persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.
SECTION 2.08. Special Transfer Provisions. Unless and until a Note is
exchanged for an Exchange Note or sold in connection with an effective
Registration Statement pursuant to the Registration Rights Agreement, the
following provisions shall apply:
(a) Transfers to Non-QIB Institutional Accredited Investors. The following
provisions shall apply with respect to the registration of any proposed transfer
of a Note to any Institutional Accredited Investor which is not a QIB (excluding
Non-U.S. Persons):
(i) The Registrar shall register the transfer of any Note, whether
or not such Note bears the Private Placement Legend, if (x) the requested
transfer is after the time period referred to in Rule 144(k) under the
Securities Act or (y) the proposed transferee has delivered to the
Registrar (A) a certificate substantially in the form of Exhibit C hereto
and (B) if the aggregate principal amount of the Notes being transferred
is less than $100,000, an opinion of counsel acceptable to the Company
that such transfer is in compliance with the Securities Act.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Notes, upon receipt by the
Registrar of (x) the documents, if any, required by paragraph (i) above
and (y) instructions given in accordance with the Depositary's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and a decrease in the principal amount of the U.S. Global
Notes in an amount equal to the principal amount of the beneficial
interest in the U.S. Global Notes to be transferred, and the Company shall
execute, and the Trustee shall authenticate and deliver, one or more U.S.
Physical Notes of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply with respect
to the registration of any proposed transfer of a Note to a QIB (excluding
Non-U.S. Persons):
(i) If the Note to be transferred consists of (x) either Offshore
Physical Notes prior to the removal of the Private Placement Legend or
U.S. Physical Notes, the Registrar shall register the transfer if such
transfer is being made by a proposed transferor who has checked the box
provided for on the form of Note stating, or has otherwise advised the
Company and the Registrar
<PAGE>
33
in writing, that the sale has been made in compliance with the provisions
of Rule 144A to a transferee who has signed the certification provided for
on the form of Note stating, or has otherwise advised the Company and the
Registrar in writing, that it is purchasing the Note for its own account
or an account with respect to which it exercises sole investment
discretion and that it and any such account is a QIB within the meaning of
Rule 144A and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding
the Company and the Guarantor as it has requested pursuant to Rule 144A or
has determined not to request such information and that it is aware that
the transferor is relying upon its foregoing representations in order to
claim the exemption from registration provided by Rule 144A or (y) an
interest in the U.S. Global Notes, the transfer of such interest may be
effected only through the book entry system maintained by the Depositary.
(ii) If the proposed transferee is an Agent Member, and the Note to
be transferred consists of either Offshore Physical Notes prior to removal
of the Private Placement Legend or U.S. Physical Notes, upon receipt by
the Registrar of the documents referred to in paragraph (i) above and
instructions given in accordance with the Depositary's and the Registrar's
procedures, the Registrar shall reflect on its books and records the date
and an increase in the principal amount of U.S. Global Notes in an amount
equal to the principal amount of the Offshore Physical Notes or U.S.
Physical Notes to be transferred, and the Trustee shall cancel the
Offshore Physical Notes or U.S. Physical Notes so transferred.
(c) Transfers of Interests in the Temporary Offshore Global Notes. The
following provisions shall apply with respect to registration of any proposed
transfer of an interest in a Temporary Offshore Global Notes:
(i) The Registrar shall register the transfer of any Note (x) if the
proposed transferee is a Non-U.S. Person and the proposed transferor has
delivered to the Registrar a certificate substantially in the form of
Exhibit D hereto or (y) if the proposed transferee is a QIB and the
proposed transferor has checked the box provided for on the form of Note
stating, or has otherwise advised the Company and the Registrar in
writing, that the sale has been made in compliance with the provisions of
Rule 144A to a transferee who has signed the certification provided for on
the form of Note stating, or has otherwise advised the Company and the
Registrar in writing, that it is purchasing the Note for its own account
or an account with respect to which it exercises sole investment
discretion and that it and any such account is a QIB within the meaning of
Rule 144A, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding
the Company and the Guarantors as it has requested pursuant to Rule 144A
or has determined not to request such information and that it is aware
that the transferor is relying upon its foregoing representations in order
to claim the exemption from registration provided by Rule 144A.
<PAGE>
34
(ii) If the proposed transferee is an Agent Member, upon receipt by
the Registrar of the documents referred to in clause (i)(y) above and
instructions given in accordance with the Depositary's and the Registrar's
procedures, the Registrar shall reflect on its books and records the date
and an increase in the principal amount of the U.S. Global Notes in an
amount equal to the principal amount of the Temporary Offshore Global
Notes to be transferred, and the Trustee shall decrease the amount of the
Temporary Offshore Global Notes.
(d) Transfers of Interests in the Permanent Offshore Global Notes or
Unlegended Offshore Physical Notes. The following provisions shall apply with
respect to any transfer of interests in Permanent Offshore Global Notes or
unlegended Offshore Physical Notes. The Registrar shall register the transfer of
any such Note without requiring any additional certification.
(e) Transfers to Non-U.S. Persons at Any Time. The following provisions
shall apply with respect to any transfer of a Note to a Non-U.S. Person:
(i) Prior to September 1, 1999, the Registrar shall register any
proposed transfer of a Note to a Non-U.S. Person upon receipt of a
certificate substantially in the form of Exhibit D hereto from the
proposed transferor.
(ii) On and after September 1, 1999, the Registrar shall register
any proposed transfer to any Non-U.S. Person if the Note to be transferred
is a U.S. Physical Note or an interest in U.S. Global Notes, upon receipt
of a certificate substantially in the form of Exhibit D hereto from the
proposed transferor.
(iii) (a) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Notes, upon receipt by the
Registrar of (x) the documents, if any, required by paragraph (ii) and (y)
instructions in accordance with the Depositary's and the Registrar's
procedures, the Registrar shall reflect on its books and records the date
and a decrease in the principal amount of the U.S. Global Notes in an
amount equal to the principal amount of the beneficial interest in the
U.S. Global Notes to be transferred, and (b) if the proposed transferee is
an Agent Member, upon receipt by the Registrar of instructions given in
accordance with the Depositary's and the Registrar's procedures, the
Registrar shall reflect on its books and records the date and an increase
in the principal amount of the Offshore Global Notes in an amount equal to
the principal amount of the U.S. Physical Notes or the U.S. Global Notes,
as the case may be, to be transferred, and the Trustee shall cancel the
Physical Note, if any, so transferred or decrease the amount of the U.S.
Global Notes.
(f) Private Placement Legend. Upon the transfer, exchange or replacement
of Notes not bearing the Private Placement Legend, the Registrar shall deliver
Notes that do not bear the Private Placement Legend. Upon the transfer, exchange
or replacement of Notes bearing the Private Placement
<PAGE>
35
Legend, the Registrar shall deliver only Notes that bear the Private Placement
Legend unless (i) the Private Placement Legend is no longer required by Section
2.02, (ii) the circumstances contemplated by paragraph (a)(i)(x) of this Section
2.08 exist or (iii) there is delivered to the Registrar an Opinion of Counsel
reasonably satisfactory to the Company and the Trustee to the effect that
neither such legend nor the related restrictions on transfer are required in
order to maintain compliance with the provisions of the Securities Act.
(g) General. By its acceptance of any Note bearing the Private Placement
Legend, each Holder of such a Note acknowledges the restrictions on transfer of
such Note set forth in this Indenture and in the Private Placement Legend and
agrees that it will transfer such Note only as provided in this Indenture. The
Registrar shall not register a transfer of any Note unless such transfer
complies with the restrictions on transfer of such Note set forth in this
Indenture. In connection with any transfer of Notes, each Holder agrees by its
acceptance of the Notes to furnish the Registrar or the Company such
certifications, legal opinions or other information as either of them may
reasonably require to confirm that such transfer is being made pursuant to an
exemption from, or a transaction not subject to, the registration requirements
of the Securities Act; provided that the Registrar shall not be required to
determine (but may rely on a determination made by the Company with respect to)
the sufficiency of any such certifications, legal opinions or other information.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.07 or this Section 2.08.
The Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable written notice to the Registrar.
SECTION 2.09. Replacement Notes. If a mutilated Note is surrendered to the
Trustee or if the Holder claims that the Note has been lost, destroyed or
wrongfully taken, then, in the absence of notice to the Company or the Trustee
that such Note has been acquired by a bona fide purchaser, the Company shall
issue and the Trustee shall authenticate a replacement Note of like tenor and
principal amount and bearing a number not contemporaneously outstanding;
provided that the requirements of this Section 2.09 are met. If required by the
Trustee or the Company, an indemnity bond must be furnished that is sufficient
in the judgment of both the Trustee and the Company to protect the Company, the
Trustee or any Agent from any loss that any of them may suffer if a Note is
replaced. The Company may charge such Holder for its expenses and the expenses
of the Trustee in replacing a Note. In case any such mutilated, lost, destroyed
or wrongfully taken Note has become or is about to become due and payable, the
Company in its discretion may pay such Note instead of issuing a new Note in
replacement thereof.
Every replacement Note is an additional obligation of the Company and
shall be entitled to the benefits of this Indenture.
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36
SECTION 2.10. Outstanding Notes. Notes outstanding at any time are all
Notes that have been authenticated by the Trustee except for those cancelled by
it, those delivered to it for cancellation and those described in this Section
2.10 as not outstanding.
If a Note is replaced pursuant to Section 2.09, it ceases to be
outstanding unless and until the Trustee and the Company receive proof
satisfactory to them that the replaced Note is held by a bona fide purchaser.
If the Paying Agent (other than the Company or an Affiliate of the
Company) holds on the maturity date money sufficient to pay Notes payable on
that date, then on and after that date such Notes cease to be outstanding and
interest on them shall cease to accrue.
A Note does not cease to be outstanding because the Company or one of its
Affiliates holds such Note, provided, however, that in determining whether the
Holders of the requisite principal amount of the outstanding Notes have given
any request, demand, authorization, direction, notice, consent or waiver
hereunder, Notes owned by the Company or any other obligor upon the Notes or any
Affiliate of the Company or of such other obligor shall be disregarded and
deemed not to be outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Notes which the Trustee has actual
knowledge to be so owned shall be so disregarded. Notes so owned which have been
pledged in good faith may be regarded as outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act with respect to
such Notes and that the pledgee is not the Company or any other obligor upon the
Notes or any Affiliate of the Company or of such other obligor.
SECTION 2.11. Temporary Notes. Until definitive Notes are ready for
delivery, the Company may prepare and execute and the Trustee shall authenticate
temporary Notes. Temporary Notes shall be substantially in the form of
definitive Notes but may have insertions, substitutions, omissions and other
variations determined to be appropriate by the Officers executing the temporary
Notes, as evidenced by their execution of such temporary Notes. If temporary
Notes are issued, the Company will cause definitive Notes to be prepared without
unreasonable delay. After the preparation of definitive Notes, the temporary
Notes shall be exchangeable for definitive Notes upon surrender of the temporary
Notes at the office or agency of the Company designated for such purpose
pursuant to Section 4.02, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Notes the Company shall execute and
the Trustee shall authenticate and deliver in exchange therefor a like principal
amount of definitive Notes of authorized denominations. Until so exchanged, the
temporary Notes shall be entitled to the same benefits under this Indenture as
definitive Notes.
SECTION 2.12. Cancellation. The Company at any time may deliver to the
Trustee for cancellation any Notes previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and may
deliver to the Trustee for cancellation any Notes previously
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37
authenticated hereunder which the Company has not issued and sold. The Registrar
and the Paying Agent shall forward to the Trustee any Notes surrendered to them
for transfer, exchange or payment. The Trustee shall cancel all Notes
surrendered for transfer, exchange, payment or cancellation and shall destroy
them in accordance with its normal procedure.
SECTION 2.13. CUSIP Numbers. The Company in issuing the Notes may use
"CUSIP", "CINS" or "ISIN" numbers (if then generally in use), and the Company
and the Trustee shall use CUSIP, CINS or ISIN numbers, as the case may be, in
notices of redemption or exchange as a convenience to Holders; provided that any
such notice shall state that no representation is made as to the correctness of
such numbers either as printed on the Notes or as contained in any notice of
redemption or exchange and that reliance may be placed only on the other
identification numbers printed on the Notes. The Company shall promptly notify
the Trustee of any change in "CUSIP", "CINS" or "ISIN" numbers for the Notes.
SECTION 2.14. Defaulted Interest. If the Company defaults in a payment of
interest on the Notes, it shall pay, or shall deposit with the Paying Agent
money in immediately available funds sufficient to pay, the defaulted interest,
plus (to the extent lawful) any interest payable on the defaulted interest, to
the Persons who are Holders on a subsequent special record date. A special
record date, as used in this Section 2.14 with respect to the payment of any
defaulted interest, shall mean the 15th day next preceding the date fixed by the
Company for the payment of defaulted interest, whether or not such day is a
Business Day. At least 15 days before the subsequent special record date, the
Company shall mail to each Holder and to the Trustee a notice that states the
subsequent special record date, the payment date and the amount of defaulted
interest to be paid.
SECTION 2.15. Issuance of Additional Notes. The Company may, subject to
Article Four of this Indenture and applicable law, issue additional Notes under
this Indenture. The Notes issued on the Closing Date and any additional Notes
subsequently issued shall be treated as a single class for all purposes under
this Indenture.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Right of Redemption. (a) The Notes are redeemable, at the
Company's option, in whole or in part, at any time or from time to time, on or
after July 15, 2004 and prior to maturity, upon not less than 30 nor more than
60 days' prior notice mailed by first-class mail to each Holder's last address,
as it appears in the Security Register, at the following Redemption Prices
(expressed in percentages of principal amount), plus accrued and unpaid interest
to the Redemption Date (subject to the right of Holders of record on the
relevant Regular Record Date that is prior to the Redemption Date to receive
interest due
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38
on an Interest Payment Date), if redeemed during the 12-month period commencing
May 1 of the years set forth below:
Redemption
Year Price
---- ----------
2004.................... 106.125%
2005.................... 104.083%
2006.................... 102.042%
2007 and thereafter .... 100.000%
(b) In addition, at any time prior to July 15, 2002, the Company may
redeem up to 35% of the aggregate principal amount of the Notes with the Net
Cash Proceeds of one or more sales of Capital Stock (other than Disqualified
Stock), at any time as a whole or from time to time in part, at a Redemption
Price (expressed as a percentage of principal amount) of 112.250%, plus accrued
and unpaid interest to the Redemption Date (subject to the rights of Holders of
record on the relevant Regular Record Date that is prior to the Redemption Date
to receive interest due on an Interest Payment Date); provided that (i) at least
65% of the aggregate principal amount of Notes originally issued on the Closing
Date remains outstanding after each such redemption and (ii) notice of such
redemption is mailed within 60 days after such sale of Capital Stock.
SECTION 3.02. Notices to Trustee. If the Company elects to redeem Notes
pursuant to Section 3.01, it shall notify the Trustee in writing of the
Redemption Date and the principal amount of Notes to be redeemed and the
provision of the Note pursuant to which redemption shall occur.
The Company shall give each notice provided for in this Section 3.02 in an
Officers' Certificate at least 45 days before the Redemption Date (unless a
shorter period shall be satisfactory to the Trustee).
SECTION 3.03. Selection of Notes to Be Redeemed. If less than all of the
Notes are to be redeemed at any time, the Trustee shall select the Notes to be
redeemed in compliance with the requirements, as certified to it by the Company,
of the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not listed on a national securities exchange or
automated quotation system, by lot or by such other method as the Trustee in its
sole discretion shall deem fair and appropriate; provided that no Note of $1,000
in principal amount or less shall be redeemed in part.
The Trustee shall make the selection from the Notes outstanding and not
previously called for redemption. Notes in denominations of $1,000 in principal
amount may only be redeemed in whole. The Trustee may select for redemption
portions (equal to $1,000 in principal amount or any integral multiple thereof)
of Notes that have denominations larger than $1,000 in principal amount.
Provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
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39
The Trustee shall notify the Company and the Registrar promptly in writing of
the Notes or portions of Notes to be called for redemption.
SECTION 3.04. Notice of Redemption. With respect to any redemption of
Notes pursuant to Section 3.01, at least 30 days but not more than 60 days
before a Redemption Date, the Company shall mail a notice of redemption by
first-class mail to each Holder whose Notes are to be redeemed.
The notice shall identify the Notes to be redeemed and shall state:
(i) the Redemption Date;
(ii) the Redemption Price plus the amount of any accrued interest;
if any;
(iii) the name and address of the Paying Agent;
(iv) that Notes called for redemption must be surrendered to the
Paying Agent in order to collect the Redemption Price;
(v) that, unless the Company defaults in making the redemption
payment, interest on Notes called for redemption ceases to accrue on and
after the Redemption Date and the only remaining right of the Holders is
to receive payment of the Redemption Price plus accrued interest to the
Redemption Date upon surrender of the Notes to the Paying Agent;
(vi) that, if any Note is being redeemed in part, the portion of the
principal amount (equal to $1,000 in principal amount or any integral
multiple thereof) of such Note to be redeemed and that, on and after the
Redemption Date, upon surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion thereof will be reissued;
and
(vii) that, if any Note contains a CUSIP, CINS or ISIN number as
provided in Section 2.13, no representation is being made as to the
correctness of the CUSIP, CINS or ISIN number either as printed on the
Notes or as contained in the notice of redemption and that reliance may be
placed only on the other identification numbers printed on the Notes.
At the Company's request (which request may be revoked by the Company at
any time prior to the time at which the Trustee shall have given such notice to
the Holders), made in writing to the Trustee at least 45 days (or such shorter
period as shall be satisfactory to the Trustee) before a Redemption Date, the
Trustee shall give the notice of redemption in the name and at the expense of
the Company. If, however, the Company gives such notice to the Holders, the
Company shall concurrently deliver to the Trustee an Officers' Certificate
stating that such notice has been given.
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40
SECTION 3.05. Effect of Notice of Redemption. Once notice of redemption is
mailed, Notes called for redemption become due and payable on the Redemption
Date and at the Redemption Price. Upon surrender of any Notes to the Paying
Agent, such Notes shall be paid at the Redemption Price, plus accrued interest,
if any, to the Redemption Date.
Notice of redemption shall be deemed to be given when mailed, whether or
not the Holder receives the notice. In any event, failure to give such notice,
or any defect therein, shall not affect the validity of the proceedings for the
redemption of Notes held by Holders to whom such notice was properly given.
SECTION 3.06. Deposit of Redemption Price. On or prior to any Redemption
Date, the Company shall deposit with the Paying Agent (or, if the Company is
acting as its own Paying Agent, shall segregate and hold in trust as provided in
Section 2.05) on or prior to 11:00 a.m. New York time money sufficient to pay
the Redemption Price of, and accrued interest, if any, on all Notes to be
redeemed on that date other than Notes or portions thereof called for redemption
on that date that have been delivered by the Company to the Trustee for
cancellation.
SECTION 3.07. Payment of Notes Called for Redemption. If notice of
redemption has been given in the manner provided above, the Notes or portion of
Notes specified in such notice to be redeemed shall become due and payable on
the Redemption Date at the Redemption Price stated therein, together with
accrued interest to such Redemption Date, and on and after such date (unless the
Company shall default in the payment of such Notes at the Redemption Price and
accrued interest to the Redemption Date, in which case the principal, until
paid, shall bear interest from the Redemption Date at the rate prescribed in the
Notes), such Notes shall cease to accrue interest. Upon surrender of any Note
for redemption in accordance with a notice of redemption, such Note shall be
paid and redeemed by the Company at the Redemption Price, together with accrued
interest, if any, to the Redemption Date; provided that installments of interest
whose Stated Maturity is on or prior to the Redemption Date shall be payable to
the Holders registered as such at the close of business on the relevant Regular
Record Date.
SECTION 3.08. Notes Redeemed in Part. Upon surrender of any Note that is
redeemed in part, the Company shall execute and the Trustee shall authenticate
and deliver to the Holder without service charge, a new Note equal in principal
amount to the unredeemed portion of such surrendered Note.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes. The Company shall pay the principal of,
premium, if any, and interest on the Notes on the dates and in the manner
provided in the Notes and this Indenture. An installment of principal, premium,
if any, or interest shall be considered paid on the date due if the Trustee or
Paying Agent (other than the Company, a Subsidiary of the Company, or any
Affiliate of any of them)
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41
holds on that date money designated for and sufficient to pay the installment.
If the Company or any Subsidiary of the Company or any Affiliate of any of them
acts as Paying Agent, an installment of principal, premium, if any, or interest
shall be considered paid on the due date if the entity acting as Paying Agent
complies with the last sentence of Section 2.05. As provided in Section 6.09,
upon any bankruptcy or reorganization procedure relative to the Company, the
Trustee shall serve as the Paying Agent, if any, for the Notes.
The Company shall pay interest on overdue principal and premium, if any,
and interest on overdue installments of interest, to the extent lawful, at the
rate per annum specified in the Notes.
SECTION 4.02. Maintenance of Office or Agency. The Company will maintain
in the Borough of Manhattan, The City of New York, an office or agency where
Notes may be surrendered for registration of transfer or exchange or for
presentation for payment and where notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The Company will give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the address of the Trustee set forth in Section 13.02.
The Company may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided that no
such designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in the Borough of Manhattan, The City
of New York, for such purposes. The Company shall give prompt written notice to
the Trustee of any such designation or rescission and of any change in the
location of any such other office or agency.
The Company hereby initially designates the Corporate Trust Office of the
Trustee as such office of the Company in accordance with Section 2.04.
SECTION 4.03. Limitation on Indebtedness. (a) Lodgian will not, and will
not permit any of its Restricted Subsidiaries to, Incur any Indebtedness (other
than the Notes, the Note Guarantees and other Indebtedness existing on the
Closing Date); provided that Lodgian, the Company or any Subsidiary Guarantor
may Incur Indebtedness if, after giving effect to the Incurrence of such
Indebtedness and the receipt and application of the proceeds therefrom, the
Fixed Charge Coverage Ratio would be greater than (x) 1.85:1, for Indebtedness
Incurred based on any four fiscal quarters ended no later than September 30,
1999 and (y) 2.0:1, for Indebtedness Incurred on or before June 30, 2001, (II)
2.25:1 for Indebtedness Incurred after June 30, 2001 and on or before December
31, 2002 and (III) 2.5:1 for Indebtedness Incurred after December 31, 2002.
<PAGE>
42
Notwithstanding the foregoing, Lodgian and the Company and, as specified
below, any other Restricted Subsidiary may Incur each and all of the following:
(1) Indebtedness outstanding under the Credit Agreement in an
aggregate principal amount (together with refinancings thereof) at any
time not to exceed $300 million minus the amount of Impac I Debt then
outstanding and the amount of such Indebtedness permanently repaid as
provided under Section 4.11;
(2) Indebtedness owed (A) to Lodgian, the Company or any Subsidiary
Guarantor evidenced by a promissory note or (B) to any other Restricted
Subsidiary; provided that any event which results in any such Restricted
Subsidiary ceasing to be a Restricted Subsidiary or any subsequent
transfer of such Indebtedness (other than to Lodgian or another Restricted
Subsidiary) shall be deemed, in each case, to constitute an Incurrence of
such Indebtedness not permitted by this clause (2);
(3) Indebtedness issued in exchange for, or the net proceeds of
which are used to refinance or refund, then outstanding Indebtedness
(other than Indebtedness outstanding under clause (2) or (9) or the
Convertible Debentures and CRESTS) and any refinancings thereof in an
amount not to exceed the amount so refinanced or refunded (plus premiums,
accrued interest, fees and expenses); provided that
(a) Indebtedness the proceeds of which are used to refinance
or refund the Notes or Indebtedness that is pari passu with, or
subordinated in right of payment to, the Notes or a Note Guarantee
shall only be permitted under this clause (3) if (x) in case the
Notes are refinanced in part or the Indebtedness to be refinanced is
pari passu with the Notes or a Note Guarantee, such new
Indebtedness, by its terms or by the terms of any agreement or
instrument pursuant to which such new Indebtedness is outstanding,
is expressly made pari passu with, or subordinate in right of
payment to, the remaining Notes or the Note Guarantee, or (y) in
case the Indebtedness to be refinanced is subordinated in right of
payment to the Notes or a Note Guarantee, such new Indebtedness, by
its terms or by the terms of any agreement or instrument pursuant to
which such new Indebtedness is issued or remains outstanding, is
expressly made subordinate in right of payment to the Notes or the
Note Guarantee at least to the extent that the Indebtedness to be
refinanced is subordinated to the Notes or the Note Guarantee,
(b) such new Indebtedness, determined as of the date of
Incurrence of such new Indebtedness, does not mature prior to the
Stated Maturity of the Indebtedness to be refinanced or refunded,
and the Average Life of such new Indebtedness is at least equal to
the remaining Average Life of the Indebtedness to be refinanced or
refunded, and
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43
(c) such new Indebtedness is Incurred by the Company or a
Guarantor or by the Restricted Subsidiary who is the obligor on the
Indebtedness to be refinanced or refunded;
(4) Indebtedness of Lodgian or the Company, to the extent the net
proceeds thereof are promptly (a) used to purchase Notes tendered in an
Offer to Purchase made as a result of a Change in Control or (b) deposited
to defease the Notes as described under Section 8.02 or 8.03;
(5) Guarantees of the Notes and Guarantees of Indebtedness of
Lodgian, the Company or any Subsidiary Guarantor by any Restricted
Subsidiary provided the Guarantee of such Indebtedness is permitted by and
made in accordance with Section 4.08;
(6) Indebtedness of any Restricted Subsidiary in an aggregate
principal amount outstanding at any time (together with refinancings
thereof) not to exceed $18 million, less any amount of such Indebtedness
permanently repaid as provided under Section 4.11;
(7) Purchase Money Indebtedness of Lodgian, the Company or any
Subsidiary Guarantor in an aggregate amount outstanding at any time
(together with refinancings thereof) not to exceed $10 million;
(8) Indebtedness of Lodgian or the Company issued in exchange for,
or the net proceeds of which are used to repurchase the Convertible
Debentures and CRESTS; provided that either:
(a) after giving effect to the Incurrence of such Indebtedness and
the receipt and application of the proceeds therefrom, (x) the Fixed
Charge Coverage Ratio would be greater than 2.0:1 and (y) Lodgian or the
Company could Incur at least $1.00 of Indebtedness under the first
paragraph of this Section 4.03; provided, however, that such Indebtedness
(1) is expressly made subordinate in right of payment to the Notes or
Lodgian's Note Guarantee, as the case may be, at least to the extent that
the Convertible Debentures are subordinated to Lodgian's Note Guarantee on
the Closing Date and (2) does not mature prior to the Stated Maturity of
the Convertible Debentures, and the Average Life of such new Indebtedness
is at least equal to the remaining Average Life of the Convertible
Debentures, determined as of the date of Incurrence of such Indebtedness;
or
(b) such Indebtedness (w) is expressly made subordinate in right of
payment to the Notes or Lodgian's Note Guarantee, as the case may be, at
least to the extent that the Convertible Debentures are subordinated to
Lodgian's Note Guarantee on the Closing Date, (x) does not mature prior to
the Stated Maturity of the Convertible Debentures and the Average Life of
such new Indebtedness is at least equal to the remaining Average Life of
the Convertible Debentures,
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44
determined as of the date of the Incurrence of such Indebtedness, (y)
permits interest on such Indebtedness to be deferred on terms at least as
favorable to the Holders as the Convertible Debentures and (z) on a pro
forma basis does not cause the Fixed Charge Coverage Ratio to be less than
the Fixed Charge Coverage Ratio prior to the exchange or repurchase,
assuming that the interest on the Convertible Debentures constituted
Consolidated Interest Expense;
(9) performance or completion guarantees arising in the ordinary
course of business in an aggregate amount outstanding at any time not to
exceed 5% of Adjusted Consolidated Net Tangible Assets (determined as of
the last day of the last fiscal quarter preceding the date of such
guarantee for which reports have been filed with the SEC or provided to
the Trustee); and
(10) Indebtedness of Lodgian, the Company or any Subsidiary
Guarantor (in addition to Indebtedness permitted under clauses (1) through
(9) above) in an aggregate principal amount outstanding at any time
(together with refinancings thereof) not to exceed $10 million, less any
amount of such Indebtedness permanently repaid as provided under Section
4.11.
(b) Notwithstanding any other provision of this Section 4.03, the maximum
amount of Indebtedness that may be Incurred pursuant to this Section 4.03 will
not be deemed to be exceeded, with respect to any outstanding Indebtedness due
solely to the result of fluctuations in the exchange rates of currencies.
(c) For purposes of determining any particular amount of Indebtedness
under this Section 4.03, (x) Indebtedness Incurred under the Credit Agreement on
or prior to the Closing Date shall be treated as Incurred pursuant to clause (1)
of the second paragraph of clause (a) of this Section 4.03, (y) Guarantees,
Liens or obligations with respect to letters of credit supporting Indebtedness
otherwise included in the determination of such particular amount shall not be
included and (z) any Liens granted pursuant to the equal and ratable provisions
referred to in Section 4.10 shall not be treated as Indebtedness. For purposes
of determining compliance with this Section 4.03, in the event that an item of
Indebtedness meets the criteria of more than one of the types of Indebtedness
described above (other than Indebtedness referred to in clause (x) of the
preceding sentence), including under the first paragraph of part (a), Lodgian,
in its sole discretion, shall classify, and from time to time may reclassify,
such item of Indebtedness.
(d) Notwithstanding the foregoing, neither Lodgian nor any Restricted
Subsidiary will issue any Indebtedness in exchange for, or the net proceeds of
which will be used to, refinance or refund the Convertible Debentures or the
CRESTS unless (x) such Indebtedness is expressly made subordinate in right of
payment to Lodgian's Note Guarantees or the Note Guarantee at least to the
extent as the Convertible Debentures are subordinated to Lodgian's Note
Guarantee and (y) such new Indebtedness, determined as of the date of Incurrence
of such Indebtedness, does not mature prior to the Stated Maturity of the
Convertible Debentures, and the Average Life of such new Indebtedness is at
least equal to the remaining Average Life of the Convertible Debentures.
<PAGE>
45
SECTION 4.04. Limitation on Senior Subordinated Indebtedness. Lodgian will
not, and will not permit the Company or any Subsidiary Guarantor to, Incur any
Indebtedness that is subordinate in right of payment to any Senior Indebtedness
unless such Indebtedness is pari passu with, or subordinated in right of payment
to, the Notes or any Note Guarantee; provided that the foregoing limitation
shall not apply to distinctions between categories of Senior Indebtedness that
exist by reason of any Liens or Guarantees arising or created in respect of some
but not all such Senior Indebtedness.
SECTION 4.05. Limitation on Restricted Payments. Lodgian will not, and
will not permit any Restricted Subsidiary to, directly or indirectly, (1)
declare or pay any dividend or make any distribution on or with respect to its
Capital Stock (other than dividends or distributions payable solely in shares of
its Capital Stock (other than Disqualified Stock) or in options, warrants or
other rights to acquire shares of such Capital Stock) held by Persons other than
Lodgian or any of its Restricted Subsidiaries or make any payment on the
Convertible Debentures or the CRESTS (including payments pursuant to the Lodgian
Capital Trust Guarantee), (2) purchase, call for redemption or redeem, retire or
otherwise acquire for value any shares of Capital Stock of (A) Lodgian, the
Company, Lodgian Capital Trust or any Subsidiary Guarantor (including options,
warrants or other rights to acquire such shares of Capital Stock) held by any
Person or (B) a Restricted Subsidiary other than the Company or a Subsidiary
Guarantor (including options, warrants or other rights to acquire such shares of
Capital Stock) held by any Affiliate of Lodgian (other than a Wholly Owned
Restricted Subsidiary) or any holder (or any Affiliate of such holder) of 5% or
more of the Capital Stock of Lodgian, (3) make any voluntary or optional
principal payment, or voluntary or optional redemption, repurchase, defeasance,
or other acquisition or retirement for value, of Indebtedness of the Company
that is subordinated in right of payment to the Notes or any Indebtedness of
Lodgian or a Subsidiary Guarantor that is subordinated in right of payment to a
Note Guarantee or (4) make any Investment, other than a Permitted Investment, in
any Person (such payments or any other actions described in clauses (1) through
(4) above being collectively "Restricted Payments") if, at the time of, and
after giving effect to, the proposed Restricted Payment:
(A) a Default or Event of Default shall have occurred and be
continuing,
(B) Lodgian could not Incur at least $1.00 of Indebtedness under the
first paragraph of part (a) of Section 4.03 or
(C) the aggregate amount of all Restricted Payments (the amount, if
other than in cash, to be determined in good faith by the Board of
Directors, whose determination shall be conclusive and evidenced by a
Board Resolution) made after April 1, 1999 shall exceed the sum of:
(1) the excess of (x) 100% of the aggregate amount of
Consolidated EBITDA accrued on a cumulative basis during the period
(taken as one accounting period) beginning on April 1, 1999 and
ending on the last day of the last fiscal quarter preceding the
Transaction Date for which reports have been filed with the SEC or
provided to the
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46
Trustee over (y) 2.0 times the aggregate amount of Consolidated
Interest Expense accrued on a cumulative basis during the period
(taken as one accounting period) beginning on April 1, 1999 and
ending on the last day of the last fiscal quarter preceding the
Transaction Date for which reports have been filed with the SEC or
provided to the Trustee plus
(2) the aggregate Net Cash Proceeds received by Lodgian after
the Closing Date from the issuance and sale permitted by this
Indenture of its Capital Stock (other than Disqualified Stock) to a
Person who is not a Subsidiary of Lodgian, including an issuance or
sale permitted by this Indenture of Indebtedness of Lodgian or any
Restricted Subsidiary for cash subsequent to the Closing Date upon
the conversion of such Indebtedness into Capital Stock (other than
Disqualified Stock) of Lodgian, or from the issuance to a Person who
is not a Subsidiary of Lodgian of any options, warrants or other
rights to acquire Capital Stock of Lodgian (in each case, exclusive
of any Disqualified Stock or any options, warrants or other rights
that are redeemable at the option of the holder, or are required to
be redeemed, prior to the Stated Maturity of the Notes) plus
(3) an amount equal to the net reduction in Investments (other
than reductions in Permitted Investments) in any Person resulting
from payments of interest on Indebtedness, dividends, repayments of
loans or advances, or other transfers of assets, in each case to
Lodgian or any Restricted Subsidiary or from the Net Cash Proceeds
from the sale of any such Investment (except, in each case, to the
extent any such payment or proceeds are included in the calculation
of Adjusted Consolidated Net Income), from the release of any
Guarantee or from redesignations of Unrestricted Subsidiaries as
Restricted Subsidiaries (valued in each case as provided in the
definition of "Investments"), not to exceed, in each case, the
amount of Investments previously made by Lodgian or any Restricted
Subsidiary in such Person or Unrestricted Subsidiary.
The foregoing provision shall not be violated by reason of:
(1) the payment of any dividend or redemption of any Capital Stock
within 60 days after the related date of declaration or call for
redemption if, at said date of declaration or call for redemption, such
payment or redemption would comply with the preceding paragraph;
(2) the redemption, repurchase, defeasance or other acquisition or
retirement for value of Indebtedness that is subordinated in right of
payment to the Notes or any Note Guarantee including premium, if any, and
accrued interest, with the proceeds of, or in exchange for, Indebtedness
Incurred under clause (3) of the second paragraph of part (a) of Section
4.03;
(3) the repurchase, redemption or other acquisition of Capital Stock
of Lodgian, the Company, Lodgian Capital Trust or a Subsidiary Guarantor
(or options, warrants or other rights
<PAGE>
47
to acquire such Capital Stock) in exchange for, or out of the proceeds of
a substantially concurrent offering of, shares of Capital Stock (other
than Disqualified Stock) of Lodgian or the Company (or options, warrants
or other rights to acquire such Capital Stock; provided that such options,
warrants or other rights are not redeemable prior to the Stated Maturity
of the Notes);
(4) the making of any principal payment or the repurchase,
redemption, retirement, defeasance or other acquisition for value of
Indebtedness which is subordinated in right of payment to the Notes or any
Note Guarantee in exchange for, or out of the proceeds of, a substantially
concurrent offering of, shares of the Capital Stock (other than
Disqualified Stock) of Lodgian or the Company (or options, warrants or
other rights to acquire such Capital Stock; provided that such options,
warrants or other rights are not redeemable prior to the Stated Maturity
of the Notes);
(5) payments or distributions, to dissenting stockholders pursuant
to applicable law, pursuant to or in connection with a consolidation,
merger or transfer of assets that complies with the provisions of this
Indenture applicable to mergers, consolidations and transfers of all or
substantially all of the property and assets of Lodgian;
(6) Investments acquired in exchange for, or out of the proceeds of
a substantially concurrent offering of, Capital Stock (other than
Disqualified Stock) of Lodgian;
(7) the declaration or payment of dividends on Capital Stock (other
than Disqualified Stock) of Lodgian in an aggregate annual amount not to
exceed 6% of the Net Cash Proceeds received by Lodgian after the Closing
Date from the sale of such Capital Stock;
(8) the payment of interest or liquidated damages on the Convertible
Debentures or the declaration or payment of dividends or liquidated
damages on the CRESTS; provided that the time of any such payment, Lodgian
could not defer any such payment;
(9) any purchase of any fractional shares of Common Stock in
connection with the conversion of the Convertible Debentures or CRESTS;
(10) Investments in any Person the primary business of which is
related, ancillary or complementary to the business of Lodgian and its
Restricted Subsidiaries on the date of such Investment; provided that the
aggregate amount of such Investments under this clause (10) does not
exceed (a) 10% of Adjusted Consolidated Net Tangible Assets (determined as
of the last day of the last fiscal quarter preceding the date of such
Investment for which reports have been filed with the SEC or provided to
the Trustee), plus (b) the net reduction in Investments made pursuant to
this clause (10) resulting from distributions on or repayments of such
Investments, including payments of interest on Indebtedness, dividends,
repayments of loans or advances, or other
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48
distributions or other transfers of assets, in each case to Lodgian or any
Restricted Subsidiary, or from the Net Cash Proceeds from the sale or
other disposition of any such Investment (except, in each case, to the
extent of any gain on such sale or disposition that would be included in
the calculation of Adjusted Consolidated Net Income), from the release of
any Guarantee or from redesignations of Unrestricted Subsidiaries as
Restricted Subsidiaries (valued in each case as provided in the definition
of "Investments"); provided that the net reduction in any such Investments
shall not exceed the amount of such Investments in such Person;
(11) the repurchase or other acquisition of Convertible Debentures
and CRESTS with the proceeds of, or in exchange for, Indebtedness Incurred
under clause (8) of Section 4.03 or Preferred Stock of a Restricted
Subsidiary issued under clause (5) of Section 4.07; or
(12) other Restricted Payments in an aggregate amount not to exceed
$10 million;
provided that, except in the case of clauses (1) and (3), no Default or Event of
Default shall have occurred and be continuing or occur as a consequence of the
actions or payments set forth therein.
Each Restricted Payment permitted pursuant to the preceding paragraph
(other than the Restricted Payment referred to in clause (2) thereof, an
exchange of Capital Stock for Capital Stock or Indebtedness referred to in
clause (3) or (4) thereof, an Investment acquired in exchange for Capital Stock
referred to in clause (6) thereof and the repurchase or other acquisition of
Convertible Debentures and CRESTS referred to clause (11) thereof), and the Net
Cash Proceeds from any issuance of Capital Stock referred to in clauses (3), (4)
and (6), shall be included in calculating whether the conditions of clause (C)
of the first paragraph of this Section 4.05 have been met with respect to any
subsequent Restricted Payments. In the event the proceeds of an issuance of
Capital Stock of Lodgian are used for the redemption, repurchase or other
acquisition of the Notes, or Indebtedness that is pari passu with the Notes or
any Note Guarantee, then the Net Cash Proceeds of such issuance shall be
included in clause (C) of the first paragraph of this Section 4.05 only to the
extent such proceeds are not used for such redemption, repurchase or other
acquisition of Indebtedness. For purposes of determining compliance with this
Section 4.05, in the event that a Restricted Payment meets the criteria of more
than one of the types of Restricted Payments described in the above clauses,
including the first paragraph of this Section 4.05, Lodgian, in its sole
discretion, may order and classify, and from time to time may reclassify, such
Restricted Payment if it would have been permitted at the time such Restricted
Payment was made and at the time of such reclassification.
SECTION 4.06. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries. Lodgian will not, and will not permit any
Restricted Subsidiary to, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of any Restricted Subsidiary to (1) pay dividends or make any other
distributions permitted by applicable law on any Capital Stock of such
Restricted Subsidiary owned by Lodgian or any other Restricted
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49
Subsidiary, (2) pay any Indebtedness owed to Lodgian or any other Restricted
Subsidiary, (3) make loans or advances to Lodgian or any other Restricted
Subsidiary or (4) transfer any of its property or assets to Lodgian or any other
Restricted Subsidiary.
The foregoing provisions shall not restrict any encumbrances or
restrictions:
(1) existing on the Closing Date in the Credit Agreement, this
Indenture or any other agreements in effect on the Closing Date, and any
extensions, refinancings, renewals or replacements of such agreements;
provided that the encumbrances and restrictions in any such extensions,
refinancings, renewals or replacements taken as a whole are no less
favorable in any material respect to the Holders than those encumbrances
or restrictions that are then in effect and that are being extended,
refinanced, renewed or replaced;
(2) existing under or by reason of applicable law;
(3) with respect to any Person or the property or assets of such
Person acquired by Lodgian or any Restricted Subsidiary, existing at the
time of such acquisition and not incurred in contemplation thereof, which
encumbrances or restrictions are not applicable to any Person or the
property or assets of any Person other than such Person or the property or
assets of such Person so acquired;
(4) in the case of clause (4) of the first paragraph of this Section
4.06, (A) that restrict in a customary manner the subletting, assignment
or transfer of any property or asset that is a lease, license, conveyance
or contract or similar property or asset, (B) existing by virtue of any
transfer of, agreement to transfer, option or right with respect to, or
Lien on, any property or assets of Lodgian or any Restricted Subsidiary
not otherwise prohibited by this Indenture or (C) arising or agreed to in
the ordinary course of business, not relating to any Indebtedness, and
that do not, individually or in the aggregate, detract from the value of
property or assets of Lodgian or any Restricted Subsidiary in any manner
material to Lodgian or any Restricted Subsidiary;
(5) with respect to a Restricted Subsidiary and imposed pursuant to
an agreement that has been entered into for the sale or disposition of all
or substantially all of the Capital Stock of, or property and assets of,
such Restricted Subsidiary;
(6) contained in the terms of any Indebtedness or any agreement
pursuant to which such Indebtedness was issued if:
(A) the encumbrance or restriction applies only in the event
of a payment default or a default with respect to a financial
covenant contained in such Indebtedness or agreement,
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(B) the encumbrance or restriction is not materially more
disadvantageous to the Holders of the Notes than is customary in
comparable financings (as determined by Lodgian in good faith) and
(C) Lodgian determines that any such encumbrance or
restriction will not materially affect the Company's ability to make
principal or interest payments on the Notes; or
(7) relating to a Subsidiary Guarantor and contained in the terms of
any Indebtedness or any agreement pursuant to which such Indebtedness was
issued if:
(A) the encumbrance or restriction is not materially more
disadvantageous to the Holders of the Notes than is customary in
comparable financings (as determined by Lodgian in good faith) and
(B) Lodgian determines that any such encumbrance or
restriction will not materially affect the Company's ability to make
principal or interest payments on the Notes.
Nothing contained in this Section 4.06 shall prevent Lodgian or any Restricted
Subsidiary from (1) creating, incurring, assuming or suffering to exist any
Liens otherwise permitted in Section 4.10 or (2) restricting the sale or other
disposition of property or assets of Lodgian or any of its Restricted
Subsidiaries that secure Indebtedness of Lodgian or any of its Restricted
Subsidiaries.
SECTION 4.07. Limitation on the Issuance and Sale of Capital Stock of
Restricted Subsidiaries. Lodgian will not sell, and will not permit any
Restricted Subsidiary, directly or indirectly, to issue or sell, any shares of
Capital Stock of a Restricted Subsidiary (including options, warrants or other
rights to purchase shares of such Capital Stock) except:
(1) to Lodgian or a Wholly Owned Restricted Subsidiary;
(2) issuances of director's qualifying shares or sales to foreign
nationals of shares of Capital Stock of foreign Restricted Subsidiaries,
to the extent required by applicable law;
(3) if, immediately after giving effect to such issuance or sale,
such Restricted Subsidiary would no longer constitute a Restricted
Subsidiary and any Investment in such Person remaining after giving effect
to such issuance or sale would have been permitted to be made under
Section 4.05 if made on the date of such issuance or sale;
(4) sales of Common Stock (including options, warrants or other
rights to purchase shares of such Common Stock) of a Restricted Subsidiary
by Lodgian or a Restricted Subsidiary,
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51
provided that Lodgian or such Restricted Subsidiary applies the Net Cash
Proceeds of any such sale in accordance with clause (A) or (B) of Section
4.11 described below; or
(5) sales of Preferred Stock of a Restricted Subsidiary whose sole
assets consist of Indebtedness of Lodgian or the Company, in exchange for
or the proceeds of which are used to repurchase the Convertible Debentures
and CRESTS, provided such Indebtedness (a) is expressly made subordinate
in right of payment to the Notes or Lodgian's Note Guarantee, as the case
may be, at least to the extent that the Convertible Debentures are
subordinated to Lodgian's Note Guarantee on the Closing Date, (b) does not
mature prior to the Stated Maturity of the Convertible Debentures and the
Average Life of such new Indebtedness is at least equal to the remaining
Average Life of the Convertible Debentures, (c) on a pro forma basis does
not cause the Fixed Charge Coverage Ratio to be less than the Fixed Charge
Coverage Ratio prior to such sale, assuming the interest on such
Indebtedness and the Convertible Debentures constituted Consolidated
Interest Expense and (d) permits interest on such Indebtedness to be
deferred on terms at least as favorable to the Holders as the Convertible
Debentures.
SECTION 4.08. Limitation on Issuances of Guarantees by Restricted
Subsidiaries. Lodgian will not permit any Restricted Subsidiary which is not a
Subsidiary Guarantor, directly or indirectly, to Guarantee any Indebtedness of
Lodgian, the Company or any other Restricted Subsidiary (other than a Foreign
Subsidiary), unless (1) such Restricted Subsidiary simultaneously executes and
delivers a supplemental indenture to this Indenture providing for a Guarantee (a
"Subsidiary Guarantee") of payment of the Notes by such Restricted Subsidiary
and (2) such Restricted Subsidiary waives and will not in any manner whatsoever
claim or take the benefit or advantage of, any rights of reimbursement,
indemnity or subrogation or any other rights against Lodgian or any other
Restricted Subsidiary as a result of any payment by such Restricted Subsidiary
under its Subsidiary Guarantee; provided that this covenant shall not apply to
any Guarantee existing on the Closing Date of the Company's obligations under
the Credit Agreement by a Restricted Subsidiary existing on the Closing Date.
The Subsidiary Guarantee may be subordinated to the Senior Indebtedness of the
Subsidiary Guarantor to the same extent as the Notes are subordinated to the
Senior Indebtedness of the Company.
Notwithstanding the foregoing, any Subsidiary Guarantee by a Restricted
Subsidiary may provide by its terms that it shall be automatically and
unconditionally released and discharged upon (x) any sale, exchange or transfer,
to any Person not an Affiliate of Lodgian, of all of Lodgian's and each
Restricted Subsidiary's Capital Stock in, or all or substantially all the assets
of, such Restricted Subsidiary (which sale, exchange or transfer is not
prohibited by this Indenture) or (y) the release or discharge of the Guarantee
which resulted in the creation of such Subsidiary Guarantee, except a discharge
or release by or as a result of payment under such Guarantee.
SECTION 4.09. Limitation on Transactions with Shareholders and Affiliates.
Lodgian will not, and will not permit any Restricted Subsidiary to, directly or
indirectly, enter into, renew or extend any
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52
transaction (including, without limitation, the purchase, sale, lease or
exchange of property or assets, or the rendering of any service) with any holder
(or any Affiliate of such holder) of 5% or more of any class of Capital Stock of
Lodgian or with any Affiliate of Lodgian or any Restricted Subsidiary, except
upon fair and reasonable terms no less favorable to Lodgian or such Restricted
Subsidiary than could be obtained, at the time of such transaction or, if such
transaction is pursuant to a written agreement, at the time of the execution of
the agreement providing therefor, in a comparable arm's-length transaction with
a Person that is not such a holder or an Affiliate.
The foregoing limitation does not limit, and shall not apply to:
(1) transactions (A) approved by a majority of the disinterested
members of the Board of Directors or (B) for which Lodgian or a Restricted
Subsidiary delivers to the Trustee a written opinion of a nationally
recognized investment banking, accounting, valuation or appraisal firm
stating that the transaction is fair to Lodgian or such Restricted
Subsidiary from a financial point of view;
(2) any transaction solely between Lodgian and any of its Wholly
Owned Restricted Subsidiaries or solely among Wholly Owned Restricted
Subsidiaries;
(3) the payment of reasonable and customary regular fees to
directors of Lodgian who are not employees of Lodgian and indemnification
arrangements entered into by Lodgian in the ordinary course of business
and consistent with past practices of Lodgian;
(4) any payments or other transactions pursuant to any tax-sharing
agreement between Lodgian and any other Person with which Lodgian files a
consolidated tax return or with which Lodgian is part of a consolidated
group for tax purposes;
(5) any sale of shares of Capital Stock (other than Disqualified
Stock) of Lodgian or the Company;
(6) development, management and administrative services and
performance and completion guarantees provided in the ordinary course of
business by Lodgian or any Restricted Subsidiary to any Person in which
Lodgian or any Restricted Subsidiary has an Investment; or
(7) any Permitted Investments or any Restricted Payments not
prohibited by Section 4.05.
Notwithstanding the foregoing, any transaction or series of related transactions
covered by the first paragraph of this Section 4.09 and not covered by clauses
(2) through (7) of this paragraph, (a) the aggregate amount of which exceeds $1
million in value, must be approved or determined to be fair in the
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53
manner provided for in clause (1)(A) or (B) above and (b) the aggregate amount
of which exceeds $5 million in value, must be determined to be fair in the
manner provided for in clause (1)(B) above.
SECTION 4.10. Limitation on Liens. Lodgian will not, and will not permit
the Company or any Subsidiary Guarantor to, Incur any Indebtedness secured by a
Lien ("Secured Indebtedness") which is not Senior Indebtedness unless
contemporaneously therewith effective provision is made to secure the Notes or
the Note Guarantee equally and ratably with (or, if the Secured Indebtedness is
subordinated in right of payment to the Notes or the Note Guarantees, prior to)
such Secured Indebtedness for so long as such Secured Indebtedness is secured by
a Lien.
The foregoing limitation does not apply to:
(1) Liens (including extensions and renewals thereof) upon real or
personal property acquired after the Closing Date; provided that such Lien
is created solely for the purpose of securing Indebtedness Incurred, in
accordance with Section 4.03, to finance the cost (including the cost of
improvement or construction) of the item of property or assets subject
thereto and such Lien is created prior to, at the time of or within six
months after the later of the acquisition, the completion of construction
or the commencement of full operation of such property;
(2) any interest or title of a lessor in the property subject to any
Capitalized Lease;
(3) Liens on shares of Capital Stock of any Unrestricted Subsidiary
to secure Indebtedness of such Unrestricted Subsidiary; and
(4) Liens on cash set aside at the time of the Incurrence of any
Indebtedness, or government securities purchased with such cash, in either
case to the extent that such cash or government securities prefund the
payment of interest on such Indebtedness and are held in an escrow account
or similar arrangements to be applied for such purpose.
SECTION 4.11. Limitation on Asset Sales. Lodgian will not, and will not
permit any Restricted Subsidiary to, consummate any Asset Sale, unless (1) the
consideration received by Lodgian or such Restricted Subsidiary is at least
equal to the fair market value of the assets sold or disposed of and (2) at
least 75% of the consideration received consists of (a) cash or Temporary Cash
Investments, (b) the assumption of Indebtedness of Lodgian or any Restricted
Subsidiary (other than Indebtedness to Lodgian or any Restricted Subsidiary),
provided that Lodgian or such Restricted Subsidiary is irrevocably and
unconditionally released from all liability under such Indebtedness or (c)
Replacement Assets.
In the event and to the extent that the Net Cash Proceeds received by
Lodgian or any of its Restricted Subsidiaries from one or more Asset Sales
occurring on or after the Closing Date in any period of 12 consecutive months
exceed 10% of Adjusted Consolidated Net Tangible Assets (determined as of
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54
the date closest to the commencement of such 12-month period for which a
consolidated balance sheet of Lodgian and its Subsidiaries has been filed with
the SEC or provided to the Trustee), then Lodgian shall or shall cause the
relevant Restricted Subsidiary to:
(1) within twelve months after the date Net Cash Proceeds so
received exceed 10% of Adjusted Consolidated Net Tangible Assets,
(A) apply an amount equal to such excess Net Cash Proceeds to
permanently repay Senior Indebtedness of Lodgian, the Company or of
any Subsidiary Guarantor or Indebtedness of any other Restricted
Subsidiary, in each case owing to a Person other than Lodgian or any
of its Restricted Subsidiaries, or
(B) invest an equal amount, or the amount not so applied
pursuant to clause (A) (or enter into a definitive agreement
committing to so invest within 12 months after the date of such
agreement), in Replacement Assets, and
(2) apply (no later than the end of the 12-month period referred to
in clause (1)) such excess Net Cash Proceeds (to the extent not applied
pursuant to clause (1)) as provided in the following paragraph of this
Section 4.11.
The amount of such excess Net Cash Proceeds required to be applied (or to be
committed to be applied) during such 12-month period as set forth in clause (1)
of the preceding sentence and not applied as so required by the end of such
period shall constitute "Excess Proceeds."
If, as of the first day of any calendar month, the aggregate amount of
Excess Proceeds not theretofore subject to an Offer to Purchase pursuant to this
Section 4.11 totals at least $5 million, the Company must commence, not later
than the fifteenth Business Day of such month, and consummate an Offer to
Purchase from the Holders (and if required by the terms of any Indebtedness that
is pari passu with the Notes ("Pari Passu Indebtedness"), from the holders of
such Pari Passu Indebtedness) on a pro rata basis an aggregate principal amount
of Notes (and Pari Passu Indebtedness) equal to the Excess Proceeds on such
date, at a purchase price equal to 100% of the principal amount thereof, plus,
in each case, accrued interest (if any) to the Payment Date.
SECTION 4.12. Repurchase of Notes upon a Change of Control. The Company
shall commence, within 30 days of the occurrence of a Change of Control, and
consummate an Offer to Purchase for all Notes then outstanding, at a purchase
price equal to 101% of the principal amount thereof, plus accrued interest, if
any, to the Payment Date.
SECTION 4.13. Existence. Subject to Articles Four and Five of this
Indenture, Lodgian will do or cause to be done all things necessary to preserve
and keep in full force and effect its existence and the
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55
existence of each of its Restricted Subsidiaries in accordance with the
respective organizational documents of Lodgian and each Restricted Subsidiary
and the rights (whether pursuant to charter, partnership certificate, agreement,
statute or otherwise), licenses and franchises of Lodgian and each Restricted
Subsidiary; provided that Lodgian shall not be required to preserve any such
right, license or franchise, or the existence of any Restricted Subsidiary, if
the maintenance or preservation thereof is no longer desirable in the conduct of
the business of Lodgian and its Restricted Subsidiaries taken as a whole.
SECTION 4.14. Payment of Taxes and Other Claims. Lodgian will pay or
discharge and shall cause each of its Subsidiaries to pay or discharge, or cause
to be paid or discharged, before the same shall become delinquent (i) all
material taxes, assessments and governmental charges levied or imposed upon (a)
Lodgian or any such Subsidiary, (b) the income or profits of any such Subsidiary
which is a corporation or (c) the property of Lodgian or any such Subsidiary and
(ii) all material lawful claims for labor, materials and supplies that, if
unpaid, might by law become a lien upon the property of Lodgian or any such
Subsidiary; provided that Lodgian shall not be required to pay or discharge, or
cause to be paid or discharged, any such tax, assessment, charge or claim the
amount, applicability or validity of which is being contested in good faith by
appropriate proceedings and for which adequate reserves have been established.
SECTION 4.15. Maintenance of Properties and Insurance. Lodgian will cause
all properties used or useful in the conduct of its business or the business of
any of its Restricted Subsidiaries to be maintained and kept in good condition,
repair and working order and supplied with all necessary equipment and will
cause to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of Lodgian may be necessary so that
the business carried on in connection therewith may be properly and
advantageously conducted at all times; provided that nothing in this Section
4.15 shall prevent Lodgian or any Restricted Subsidiary from discontinuing the
use, operation or maintenance of any of such properties or disposing of any of
them, if such discontinuance or disposal is, in the judgment of Lodgian,
desirable in the conduct of the business of Lodgian or such Restricted
Subsidiary.
Lodgian will provide or cause to be provided, for itself and its
Restricted Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds customarily insured against by corporations
similarly situated and owning like properties, including, but not limited to,
products liability insurance and public liability insurance, with reputable
insurers or with the government of the United States of America, or an agency or
instrumentality thereof, in such amounts, with such deductibles and by such
methods as shall be customary for corporations similarly situated in the
industry in which Lodgian or any such Restricted Subsidiary, as the case may be,
is then conducting business.
SECTION 4.16. Notice of Defaults. In the event that any Officer of Lodgian
becomes aware of any Default or Event of Default, Lodgian shall promptly deliver
to the Trustee an Officers' Certificate specifying such Default or Event of
Default.
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56
SECTION 4.17. Compliance Certificates. (a) Lodgian shall deliver to the
Trustee, within 45 days after the end of each fiscal quarter (90 days after the
end of the last fiscal quarter of each year), an Officers' Certificate stating
whether or not the signers know of any Default or Event of Default that occurred
during such fiscal quarter. In the case of the Officers' Certificate delivered
within 90 days after the end of Lodgian's fiscal year, such certificate shall
contain a certification from the principal executive officer, principal
financial officer or principal accounting officer of Lodgian that a review has
been conducted of the activities of Lodgian and its Restricted Subsidiaries and
Lodgian's and its Restricted Subsidiaries' performance under this Indenture and
that Lodgian has complied with all conditions and covenants under this
Indenture. For purposes of this Section 4.17, such compliance shall be
determined without regard to any period of grace or requirement of notice
provided under this Indenture. If any of the officers of Lodgian signing such
certificate has knowledge of such a Default or Event of Default, the certificate
shall describe any such Default or Event of Default and its status. The first
certificate to be delivered pursuant to this Section 4.17(a) shall be for the
first fiscal quarter beginning after the execution of this Indenture.
(b) Lodgian shall deliver to the Trustee, within 90 days after the end of
each fiscal year, beginning with the fiscal year in which this Indenture was
executed, a certificate signed by Lodgian's independent certified public
accountants stating (i) that their audit examination has included a review of
the terms of this Indenture and the Notes as they relate to accounting matters,
(ii) that they have read the most recent Officers' Certificate delivered to the
Trustee pursuant to paragraph (a) of this Section 4.17 and (iii) whether, in
connection with their audit examination, anything came to their attention that
caused them to believe that Lodgian was not in compliance with any of the terms,
covenants, provisions or conditions of Article Four and Section 5.01 of this
Indenture as they pertain to accounting matters and, if any Default or Event of
Default has come to their attention, specifying the nature and period of
existence thereof; provided that such independent certified public accountants
shall not be liable in respect of such statement by reason of any failure to
obtain knowledge of any such Default or Event of Default that would not be
disclosed in the course of an audit examination conducted in accordance with
generally accepted auditing standards in effect at the date of such examination.
SECTION 4.18. Commission Reports and Reports to Holders. Whether or not
Lodgian is then required to file reports with the SEC, Lodgian shall file with
the SEC all such reports and other information as it would be required to file
with the SEC by Section 13(a) or 15(d) under the Securities Exchange Act of 1934
if it were subject thereto. Lodgian shall supply to the Trustee and to each
Holder or shall supply to the Trustee for forwarding to each such Holder,
without cost to such Holder, copies of such reports and other information.
Lodgian and the Company also shall comply with the other provisions of TIA
Section 314(a).
SECTION 4.19. Waiver of Stay, Extension or Usury Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury law or other law
that would prohibit or forgive the Company from paying all or any portion of the
principal of, premium,
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57
if any, or interest on the Notes as contemplated herein, wherever enacted, now
or at any time hereafter in force, or that may affect the covenants or the
performance of this Indenture; and (to the extent that it may lawfully do so)
the Company hereby expressly waives all benefit or advantage of any such law and
covenants that it will not hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
SECTION 4.20. Guarantee by Impac Hotel I L.L.C. Upon repayment of the
Impac I Debt, Lodgian shall cause Impac Hotel I L.L.C., or the Restricted
Subsidiaries owning the hotel properties held by Impac Hotel I L.L.C. on the
Closing Date, to execute and deliver a supplemental indenture to this Indenture
providing for a Note Guarantee pursuant to Article Ten.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. When Company May Merge, Etc. Neither Lodgian nor the Company
will consolidate with, merge with or into, or sell, convey, transfer, lease or
otherwise dispose of all or substantially all of its property and assets (as an
entirety or substantially an entirety in one transaction or a series of related
transactions) to, any Person or permit any Person to merge with or into it,
unless:
(1) it shall be the continuing Person, or the Person (if other than
it) formed by such consolidation or into which it is merged or that
acquired or leased such property and assets (the "Surviving Person") shall
be a corporation organized and validly existing under the laws of the
United States of America or any jurisdiction thereof and shall expressly
assume, by a supplemental indenture, executed and delivered to the
Trustee, all of its obligations under this Indenture and the Notes;
(2) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;
(3) immediately after giving effect to such transaction on a pro
forma basis, Lodgian or the Company or the Surviving Person, as the case
may be, shall have a Consolidated Net Worth equal to or greater than the
Consolidated Net Worth of Lodgian or the Company, as the case may be,
immediately prior to such transaction;
(4) immediately after giving effect to such transaction on a pro
forma basis, Lodgian or the Company or the Surviving Person, as the case
may be, could Incur at least $1.00 of Indebtedness under the first
paragraph of Section 4.03; provided that this clause (4) shall not apply
to a consolidation, merger or sale of all (but not less than all) of the
assets of Lodgian or the Company, as the case may be, if all Liens and
Indebtedness of Lodgian or the Company or the
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Surviving Person, as the case may be, and its Restricted Subsidiaries
outstanding immediately after such transaction would have been permitted
(and all such Liens and Indebtedness, other than Liens and Indebtedness of
Lodgian and its Restricted Subsidiaries outstanding immediately prior to
the transaction, shall be deemed to have been Incurred) for all purposes
of this Indenture;
(5) it delivers to the Trustee an Officers' Certificate (attaching
the arithmetic computations to demonstrate compliance with clauses (3) and
(4)) and Opinion of Counsel, in each case stating that such consolidation,
merger or transfer and such supplemental indenture complies with this
provision and that all conditions precedent provided for herein relating
to such transaction have been complied with; and
(6) each Guarantor, unless such Guarantor is the Person with which
Lodgian or the Company has entered into a transaction under this Section
5.01, shall have by amendment to its Note Guarantee confirmed that its
Note Guarantee shall apply to the obligations of the Company or the
Surviving Person in accordance with the Notes and this Indenture;
provided, however, that clauses (3) and (4) above do not apply if, in the good
faith determination of the Board of Directors of Lodgian, whose determination
shall be evidenced by a Board Resolution, the principal purpose of such
transaction is to change the state of incorporation of Lodgian or the Company
and any such transaction shall not have as one of its purposes the evasion of
the foregoing limitations.
SECTION 5.02. Successor Substituted. Upon any consolidation or merger, or
any sale, conveyance, transfer, lease or other disposition of all or
substantially all of the property and assets of Lodgian or the Company in
accordance with Section 5.01 of this Indenture, the successor Person formed by
such consolidation or into which Lodgian or the Company is merged or to which
such sale, conveyance, transfer, lease or other disposition is made shall
succeed to, and be substituted for, and may exercise every right and power of,
Lodgian or the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; provided that neither
Lodgian nor the Company shall be released from its obligation to pay the
principal of, premium, if any, or interest on the Notes or under the Notes
Guarantee in the case of a lease of all or substantially all of its property and
assets.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default. Any of the following events shall
constitute an "Event of Default" hereunder:
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(a) default in the payment of principal of (or premium, if any, on)
any Note when the same becomes due and payable at maturity, upon
acceleration, redemption or otherwise, whether or not such payment is
prohibited by the provisions described under Article Eleven;
(b) default in the payment of interest on any Note when the same
becomes due and payable, and such default continues for a period of 30
days, whether or not such payment is prohibited by the provisions
described under Article Eleven;
(c) default in the performance or breach of the provisions of
Article Four or the failure by the Company to make or consummate an Offer
to Purchase in accordance with Section 4.11 or Section 4.12;
(d) Lodgian, the Company or any Subsidiary Guarantor defaults in the
performance of or breaches any other covenant or agreement in this
Indenture or under the Notes (other than a default specified in clause
(a), (b) or (c) above) and such default or breach continues for a period
of 30 consecutive days after written notice by the Trustee or the Holders
of 25% or more in aggregate principal amount of the Notes;
(e) there occurs with respect to any issue or issues of Indebtedness
of Lodgian, the Company, any Subsidiary Guarantor or any Significant
Subsidiary having an outstanding principal amount of $5 million or more in
the aggregate for all such issues of all such Persons, whether such
Indebtedness now exists or shall hereafter be created, (I) an event of
default that has caused the holder thereof to declare such Indebtedness to
be due and payable prior to its Stated Maturity and such Indebtedness has
not been discharged in full or such acceleration has not been rescinded or
annulled within 30 days of such acceleration and/or (II) the failure to
make a principal payment at the final (but not any interim) fixed maturity
and such defaulted payment shall not have been made, waived or extended
within 30 days of such payment default;
(f) any final judgment or order (not covered by insurance) for the
payment of money in excess of $5 million in the aggregate for all such
final judgments or orders against all such Persons (treating any
deductibles, self-insurance or retention as not so covered) shall be
rendered against Lodgian, the Company, any Subsidiary Guarantor or any
Significant Subsidiary and shall not be paid or discharged, and there
shall be any period of 30 consecutive days following entry of the final
judgment or order that causes the aggregate amount for all such final
judgments or orders outstanding and not paid or discharged against all
such Persons to exceed $5 million during which a stay of enforcement of
such final judgment or order, by reason of a pending appeal or otherwise,
shall not be in effect;
(g) a court having jurisdiction in the premises enters a decree or
order for (A) relief in respect of Lodgian, the Company, any Subsidiary
Guarantor or any Significant Subsidiary in an
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involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, (B) appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official
of Lodgian, the Company, any Subsidiary Guarantor or any Significant
Subsidiary or for all or substantially all of the property and assets of
Lodgian, the Company, any Subsidiary Guarantor or any Significant
Subsidiary or (C) the winding up or liquidation of the affairs of Lodgian,
the Company, any Subsidiary Guarantor or any Significant Subsidiary and,
in each case, such decree or order shall remain unstayed and in effect for
a period of 30 consecutive days;
(h) Lodgian, the Company, any Subsidiary Guarantor or any
Significant Subsidiary (A) commences a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
consents to the entry of an order for relief in an involuntary case under
any such law, (B) consents to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of Lodgian, the Company, any Subsidiary Guarantor or any
Significant Subsidiary or for all or substantially all of the property and
assets of Lodgian, the Company, any Subsidiary Guarantor or any
Significant Subsidiary or (C) effects any general assignment for the
benefit of creditors; or
(i) Lodgian or any Subsidiary Guarantor repudiates its obligations
under its Note Guarantee or, except as permitted by this Indenture, any
Note Guarantee is determined to be unenforceable or invalid or shall for
any reason cease to be in full force and effect.
SECTION 6.02. Acceleration. If an Event of Default (other than an Event of
Default specified in clause (g) or (h) of Section 6.01 that occurs with respect
to Lodgian, the Company or any Subsidiary Guarantor) occurs and is continuing
under this Indenture, the Trustee or the Holders of at least 25% in aggregate
principal amount of the Notes then outstanding, by written notice to the Company
(and to the Trustee if such notice is given by the Holders), may, and the
Trustee at the request of such Holders shall, declare the principal of, premium,
if any, and accrued interest on the Notes to be immediately due and payable.
Upon a declaration of acceleration, such principal, premium, if any, and accrued
interest shall be immediately due and payable; provided that any such
declaration of acceleration shall not become effective until the earlier of (x)
five Business Days after receipt of the acceleration notice by the Bank Agent
and the Company or (y) acceleration of the Indebtedness under the Credit
Agreement; provided further that such acceleration shall automatically be
rescinded and annulled without any further action required on the part of the
Holders in the event that any and all Events of Default specified in the
acceleration notice under this Indenture shall have been cured, waived or
otherwise remedied as provided in this Indenture prior to the expiration of the
period referred to in the preceding clauses (x) and (y). In the event of a
declaration of acceleration because an Event of Default set forth in clause (e)
of Section 6.01 has occurred and is continuing, such declaration of acceleration
shall be automatically rescinded and annulled if the event of default triggering
such Event of Default pursuant to clause (e) shall be remedied or cured by
Lodgian, the Company or the relevant Significant Subsidiary or waived by the
holders of the relevant Indebtedness within 60 days after the declaration of
acceleration with respect thereto. If an Event of Default specified
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in clause (g) or (h) of Section 6.01 occurs with respect to Lodgian, the Company
or any Subsidiary Guarantor, the principal of, premium, if any, and accrued
interest on the Notes then outstanding shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder.
At any time after such declaration of acceleration, but before a judgment
or decree for the payment of the money due has been obtained by the Trustee, the
Holders of at least a majority in principal amount of the outstanding Notes by
written notice to the Company and to the Trustee, may waive all past Defaults
and rescind and annul a declaration of acceleration and its consequences if (a)
the Company has paid or deposited with the Trustee a sum sufficient to pay (i)
all sums paid or advanced by the Trustee hereunder and the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, (ii) all overdue interest on all Notes, (iii) the principal of and
premium, if any, on any Notes that have become due otherwise than by such
declaration or occurrence of acceleration and interest thereon at the rate
prescribed therefor by such Notes, and (iv) to the extent that payment of such
interest is lawful, interest upon overdue interest, if any, at the rate
prescribed therefor by such Notes, (b) all existing Events of Default, other
than the non-payment of the principal of, premium, if any, and accrued interest
on the Notes that have become due solely by such declaration of acceleration,
have been cured or waived and (c) the rescission would not conflict with any
judgment or decree of a court of competent jurisdiction.
SECTION 6.03. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may, and at the direction of the Holders of at least a
majority in principal amount of the outstanding Notes shall, pursue any
available remedy by proceeding at law or in equity to collect the payment of
principal of, premium, if any, or interest on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding.
SECTION 6.04. Waiver of Past Defaults. Subject to Sections 6.02, 6.07 and
9.02, the Holders of at least a majority in principal amount of the outstanding
Notes, by notice to the Trustee, may waive an existing Default or Event of
Default and its consequences, except a Default in the payment of principal of,
premium, if any, or interest on any Note as specified in clause (a) or (b) of
Section 6.01 or in respect of a covenant or provision of this Indenture which
cannot be modified or amended without the consent of the Holder of each
outstanding Note affected. Upon any such waiver, such Default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Indenture; but no such waiver shall extend to
any subsequent or other Default or Event of Default or impair any right
consequent thereto.
SECTION 6.05. Control by Majority. The Holders of at least a majority in
aggregate principal amount of the outstanding Notes may direct the time, method
and place of conducting any proceeding for
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any remedy available to the Trustee or exercising any trust or power conferred
on the Trustee; provided that the Trustee may refuse to follow any direction
that conflicts with law or this Indenture, that may involve the Trustee in
personal liability, or that the Trustee determines in good faith may be unduly
prejudicial to the rights of Holders of Notes not joining in the giving of such
direction; and provided further that the Trustee may take any other action it
deems proper that is not inconsistent with any such direction received from
Holders of Notes.
SECTION 6.06. Limitation on Suits. A Holder may not institute any
proceeding, judicial or otherwise, with respect to this Indenture or the Notes,
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless:
(i) the Holder has previously given the Trustee written notice of a
continuing Event of Default;
(ii) the Holders of at least 25% in aggregate principal amount of
outstanding Notes shall have made a written request to the Trustee to
pursue such remedy;
(iii) such Holder or Holders offer the Trustee indemnity reasonably
satisfactory to the Trustee against any costs, liability or expense;
(iv) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of indemnity; and
(v) during such 60-day period, the Holders of a majority in
aggregate principal amount of the outstanding Notes do not give the
Trustee a direction that is inconsistent with the request.
For purposes of Section 6.05 of this Indenture and this Section 6.06, the
Trustee shall comply with TIA Section 316(a) in making any determination of
whether the Holders of the required aggregate principal amount of outstanding
Notes have concurred in any request or direction of the Trustee to pursue any
remedy available to the Trustee or the Holders with respect to this Indenture or
the Notes or otherwise under the law.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over such other Holder.
SECTION 6.07. Rights of Holders to Receive Payment. Notwithstanding any
other provision of this Indenture, the right of any Holder of a Note to receive
payment of the principal of, premium, if any, or interest on, such Note or to
bring suit for the enforcement of any such payment, on or after the due date
expressed in the Notes, shall not be impaired or affected without the consent of
such Holder.
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SECTION 6.08. Collection Suit by Trustee. If an Event of Default in
payment of principal, premium or interest specified in clause (a), (b) or (c) of
Section 6.01 occurs and is continuing, the Trustee may recover judgment in its
own name and as trustee of an express trust against the Company or any other
obligor of the Notes for the whole amount of principal, premium, if any, and
accrued interest remaining unpaid, together with interest on overdue principal,
premium, if any, and, to the extent that payment of such interest is lawful,
interest on overdue installments of interest, in each case at the rate specified
in the Notes, and such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file such
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due the Trustee under Section
7.07) and the Holders allowed in any judicial proceedings relative to the
Company (or any other obligor of the Notes), its creditors or its property and
shall be entitled and empowered to collect and receive any monies, securities or
other property payable or deliverable upon conversion or exchange of the Notes
or upon any such claims and to distribute the same, and any custodian, receiver,
assignee, trustee, liquidator, sequestrator or other similar official in any
such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.07. Nothing herein contained shall be deemed to empower
the Trustee to authorize or consent to, or accept or adopt on behalf of any
Holder, any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. Priorities. If the Trustee collects any money or other
property pursuant to this Article Six, it shall pay out such money or other
property in the following order:
First: to the Trustee for all amounts due under Section 7.07;
Second: to the holders of Senior Indebtedness, as and to the extent
required by Article Eleven or Twelve;
Third: to Holders for amounts then due and unpaid for principal of,
premium, if any, and interest on the Notes in respect of which or for the
benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and
payable on such Notes for principal, premium, if any, and interest,
respectively; and
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Fourth: to the Company or any other obligors of the Notes, as their
interests may appear, or as a court of competent jurisdiction may direct.
The Trustee, upon prior written notice to the Company, may fix a record
date and payment date for any payment to Holders pursuant to this Section 6.10.
SECTION 6.11. Undertaking for Costs. In any suit for the enforcement of
any right or remedy under this Indenture or in any suit against the Trustee for
any action taken or omitted by it as Trustee, a court may require any party
litigant in such suit to file an undertaking to pay the costs of the suit, and
the court may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section 6.11
does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section
6.07, or a suit by Holders of more than 10% in principal amount of the
outstanding Notes.
SECTION 6.12. Restoration of Rights and Remedies. If the Trustee or any
Holder has instituted any proceeding to enforce any right or remedy under this
Indenture and such proceeding has been discontinued or abandoned for any reason,
or has been determined adversely to the Trustee or to such Holder, then, and in
every such case, subject to any determination in such proceeding, the Company,
the Trustee and the Holders shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of the
Company, Trustee and the Holders shall continue as though no such proceeding had
been instituted.
SECTION 6.13. Rights and Remedies Cumulative. Except as otherwise provided
with respect to the replacement or payment of mutilated, destroyed, lost or
wrongfully taken Notes in Section 2.09, no right or remedy herein conferred upon
or reserved to the Trustee or to the Holders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent permitted
by law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
SECTION 6.14. Delay or Omission Not Waiver. No delay or omission of the
Trustee or of any Holder to exercise any right or remedy accruing upon any Event
of Default shall impair any such right or remedy or constitute a waiver of any
such Event of Default or an acquiescence therein. Every right and remedy given
by this Article Six or by law to the Trustee or to the Holders may be exercised
from time to time, and as often as may be deemed expedient, by the Trustee or by
the Holders, as the case may be.
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ARTICLE SEVEN
TRUSTEE
SECTION 7.01. General. The duties and responsibilities of the Trustee
shall be as provided by the TIA and as set forth herein. Notwithstanding the
foregoing, no provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it. Whether or not herein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Article Seven.
SECTION 7.02. Certain Rights of Trustee. Subject to TIA Sections 315(a)
through (d):
(i) the Trustee may rely, and shall be protected in acting or
refraining from acting, upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper person;
(ii) before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel, which shall conform to
Section 10.04. The Trustee shall not be liable for any action it takes or
omits to take in good faith in reliance on such certificate or opinion;
(iii) the Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any attorney or
agent appointed with due care by it hereunder;
(iv) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or
direction of any of the Holders, unless such Holders shall have offered to
the Trustee reasonable security or indemnity against the costs, expenses
and liabilities that might be incurred by it in compliance with such
request or direction;
(v) the Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within its
rights or powers, provided that the Trustee's conduct does not constitute
negligence or bad faith;
(vi) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
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(vii) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company or any Guarantor personally or by agent or
attorney; and
(viii) the Trustee shall not be responsible for the filing of any
financing statements or continuation statements in connection with the
Notes.
SECTION 7.03. Individual Rights of Trustee. The Trustee, in its individual
or any other capacity, may become the owner or pledgee of Notes and may
otherwise deal with Lodgian, the Company or its Affiliates with the same rights
it would have if it were not the Trustee. Any Agent may do the same with like
rights. However, the Trustee is subject to TIA Sections 310(b) and 311.
SECTION 7.04. Trustee's Disclaimer. The Trustee (i) makes no
representation as to the validity or adequacy of this Indenture or the Notes,
(ii) shall not be accountable for the Company's use or application of the
proceeds from the Notes and (iii) shall not be responsible for any statement in
the Notes other than its certificate of authentication.
SECTION 7.05. Notice of Default. If any Default or any Event of Default
occurs and is continuing and if such Default or Event of Default is known to the
Trustee, the Trustee shall mail to each Holder in the manner and to the extent
provided in TIA Section 313(c) notice of the Default or Event of Default within
45 days after it occurs, unless such Default or Event of Default has been cured;
provided, however, that, except in the case of a default in the payment of the
principal of, premium, if any, or interest on any Note, the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determine that the withholding of such
notice is in the interest of the Holders.
SECTION 7.06. Reports by Trustee to Holders. Within 60 days after each May
15, beginning with May 15, 2000, the Trustee shall mail to each Holder as
provided in TIA Section 313(c) a brief report dated as of such May 15, if
required by TIA Section 313(a).
A copy of each report at the time of its mailing to the Holders of
Securities shall be mailed to the Company and filed with the Commission and each
stock exchange on which the Securities are listed in accordance with TIA Section
313(d). The Company shall promptly notify the Trustee when the Securities are
listed on any stock exchange or of any delisting thereof.
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SECTION 7.07. Compensation and Indemnity. The Company and each Guarantor,
jointly and severally, shall pay to the Trustee such compensation as shall be
agreed upon in writing for its services hereunder. The compensation of the
Trustee shall not be limited by any law on compensation of a trustee of an
express trust. The Company and each Guarantor, jointly and severally, shall
reimburse the Trustee upon request for all reasonable disbursements, expenses
and advances incurred or made by the Trustee without negligence or bad faith on
its part. Such expenses shall include the reasonable compensation and expenses
of the Trustee's agents and counsel.
The Company and each Guarantor, jointly and severally, shall indemnify the
Trustee for, and hold it harmless against, any loss or liability or expense
incurred by it without negligence or bad faith on its part in connection with
the acceptance or administration of this Indenture and its duties under this
Indenture and the Notes, including the costs and expenses of defending itself
against any claim or liability and of complying with any process served upon it
or any of its officers in connection with the exercise or performance of any of
its powers or duties under this Indenture and the Notes. The Trustee shall
notify the Company promptly of any claim for which it may seek indemnity.
Failure by the Trustee to so notify the Company shall not relieve the Company of
its obligations hereunder, unless the Company is materially prejudiced thereby.
The Company need not pay for any settlement made without its consent, which
consent shall not be unreasonably withheld.
To secure the Company's payment obligations in this Section 7.07, the
Company, the Guarantors and the Holders agree that the Trustee shall have a lien
prior to the Notes on all money or property held or collected by the Trustee, in
its capacity as Trustee, except money or property held in trust to pay principal
of, premium, if any, and interest on particular Notes.
If the Trustee incurs expenses or renders services after the occurrence of
an Event of Default specified in clause (g) or (h) of Section 6.01, the expenses
and the compensation for the services will be intended to constitute expenses of
administration under Title 11 of the United States Bankruptcy Code or any
applicable federal or state law for the relief of debtors.
The provisions of this Section 7.07 shall survive the termination of this
Indenture and the replacement of the Trustee under Section 7.08.
The Trustee shall comply with the provisions of TIA Section 313(b)(2) to
the extent applicable.
SECTION 7.08. Replacement of Trustee. A resignation or removal of the
Trustee and appointment of a successor Trustee shall become effective only upon
the successor Trustee's acceptance of appointment as provided in this Section
7.08.
The Trustee may resign at any time by so notifying the Company in writing
at least 30 days prior to the date of the proposed resignation. The Holders of a
majority in principal amount of the outstanding
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Notes may remove the Trustee by so notifying the Trustee in writing and may
appoint a successor Trustee with the consent of the Company. The Company may
remove the Trustee if: (i) the Trustee is no longer eligible under Section 7.10;
(ii) the Trustee is adjudged a bankrupt or an insolvent; (iii) a receiver or
other public officer takes charge of the Trustee or its property; or (iv) the
Trustee becomes incapable of acting.
If the Trustee resigns or is removed, or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company. If
the successor Trustee does not deliver its written acceptance required by the
next succeeding paragraph of this Section 7.08 within 30 days after the retiring
Trustee resigns or is removed, the retiring Trustee, the Company or the Holders
of a majority in principal amount of the outstanding Notes may, at the expense
of the Company, petition any court of competent jurisdiction for the appointment
of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Immediately after the delivery of
such written acceptance, subject to the lien provided in Section 7.07, (i) the
retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, (ii) the resignation or removal of the retiring Trustee shall
become effective and (iii) the successor Trustee shall have all the rights,
powers and duties of the Trustee under this Indenture. A successor Trustee shall
mail notice of its succession to each Holder. No successor Trustee shall accept
its appointment unless at the time of such acceptance such successor Trustee
shall be qualified and eligible under this Article.
If the Trustee is no longer eligible under Section 7.10 or shall fail to
comply with TIA Section 310(b), any Holder who satisfies the requirements of TIA
Section 310(b) may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee. If at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section 7.08, the Trustee shall resign immediately in the manner and with the
effect provided in this Section.
The Company shall give notice of any resignation and any removal of the
Trustee and each appointment of a successor Trustee to all Holders. Each notice
shall include the name of the successor Trustee and the address of its Corporate
Trust Office.
Notwithstanding replacement of the Trustee pursuant to this Section 7.08,
the Company's obligation under Section 7.07 shall continue for the benefit of
the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger, Etc. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business to, another corporation or national banking
association, the resulting, surviving or transferee corporation or national
banking association without any further act shall be the successor Trustee with
the same effect as if the successor
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Trustee had been named as the Trustee herein, provided such corporation shall be
otherwise qualified and eligible under this Article.
SECTION 7.10. Eligibility. This Indenture shall always have a Trustee who
satisfies the requirements of TIA Section 310(a)(1). The Trustee shall have a
combined capital and surplus of at least $25 million as set forth in its most
recent published annual report of condition that is subject to the requirements
of applicable Federal or state supervising or examining authority. If at any
time the Trustee shall cease to be eligible in accordance with the provisions of
this Section, the Trustee shall resign immediately in the manner and with the
effect specified in this Article.
SECTION 7.11. Money Held in Trust. The Trustee shall not be liable for
interest on any money received by it except as the Trustee may agree with the
Company. Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law and except for money held in trust
under Article Eight of this Indenture.
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. Termination of Company's Obligations. Except as otherwise
provided in this Section 8.01, the Company may terminate its obligations under
the Notes and this Indenture if:
(i) all Notes previously authenticated and delivered (other than
destroyed, lost or stolen Notes that have been replaced or Notes that are
paid pursuant to Section 4.01 or Notes for whose payment money or
securities have theretofore been held in trust and thereafter repaid to
the Company, as provided in Section 8.05) have been delivered to the
Trustee for cancellation and the Company has paid all sums payable by it
hereunder; or
(ii) (A) the Notes mature within one year or all of them are to be
called for redemption within one year under arrangements satisfactory to
the Trustee for giving the notice of redemption, (B) the Company
irrevocably deposits in trust with the Trustee during such one-year
period, under the terms of an irrevocable trust agreement in form and
substance satisfactory to the Trustee, as trust funds solely for the
benefit of the Holders for that purpose, money or U.S. Government
Obligations sufficient (in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee), without consideration of any
reinvestment of any interest thereon, to pay principal, premium, if, any,
and interest on the Notes to maturity or redemption, as the case may be,
and to pay all other sums payable by it hereunder, (C) no Default or Event
of Default with respect to the Notes shall have occurred and be continuing
on the date of such deposit, (D) such deposit will not result in a breach
or violation of, or constitute a default under, this Indenture or any
other agreement or instrument
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to which the Company is a party or by which it is bound and (E) the
Company has delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, in each case stating that all conditions precedent
provided for herein relating to the satisfaction and discharge of this
Indenture have been complied with.
With respect to the foregoing clause (i), the Company's obligations under
Section 7.07 shall survive. With respect to the foregoing clause (ii), the
Company's obligations in Sections 2.02, 2.03, 2.04, 2.05, 2.06, 4.01, 4.02,
7.07, 7.08, 8.04, 8.05 and 8.06 shall survive until the Notes are no longer
outstanding. Thereafter, only the Company's obligations in Sections 7.07, 8.04,
8.05 and 8.06 and Article Eleven (with respect to payments in respect of Senior
Subordinated Obligations other than with the assets held in trust as described
in clause (ii) above) shall survive. After any such irrevocable deposit, the
Trustee upon request shall acknowledge in writing the discharge of the Company's
obligations under the Notes and this Indenture except for those surviving
obligations specified above.
SECTION 8.02. Defeasance and Discharge of Indenture. The Company will be
deemed to have paid and will be discharged from any and all obligations in
respect of the Notes on the 123rd day after the date of the deposit referred to
in clause (A) of this Section 8.02, and the provisions of this Indenture will no
longer be in effect with respect to the Notes, and the Trustee, at the expense
of the Company, shall execute proper instruments acknowledging the same if:
(A) with reference to this Section 8.02, the Company has, in
addition to making all payment then payable to the Trustee under Section
7.07, irrevocably deposited or caused to be irrevocably deposited with the
Trustee (or another trustee satisfying the requirements of Section 7.10,
and conveyed all right, title and interest to the Trustee for the benefit
of the Holders, under the terms of an irrevocable trust agreement in form
and substance satisfactory to the Trustee as trust funds in trust,
specifically pledged to the Trustee for the benefit of the Holders as
security for payment of the principal of, premium, if any, and interest,
if any, on the Notes, and dedicated solely to, the benefit of the Holders,
in and to (1) money in an amount, (2) U.S. Government Obligations that,
through the payment of interest, premium, if any, and principal in respect
thereof in accordance with their terms, will provide, not later than one
day before the due date of any payment referred to in this clause (A),
money in an amount or (3) a combination thereof in an amount sufficient,
in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay and discharge, without consideration of the reinvestment
of such interest and after payment of all federal, state and local taxes
or other charges and assessments in respect thereof payable by the
Trustee, the principal of, premium, if any, and interest on the
outstanding Notes on the Stated Maturity of such principal or interest;
provided that the Trustee shall have been irrevocably instructed to apply
such money or the proceeds of such U.S. Government Obligations to the
payment of such principal, premium, if any, and interest with respect to
the Notes;
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(B) the Company has delivered to the Trustee (1) either (x) an
Opinion of Counsel to the effect that Holders will not recognize income,
gain or loss for federal income tax purposes as a result of the Company's
exercise of its option under this Section 8.02 and will be subject to
federal income tax on the same amount and in the same manner and at the
same times as would have been the case if such option had not been
exercised, which Opinion of Counsel shall be based upon (and accompanied
by a copy of) a ruling of the Internal Revenue Service to the same effect
unless there has been a change in applicable federal income tax law after
the Closing Date such that a ruling is no longer required or (y) a ruling
directed to the Trustee received from the Internal Revenue Service to the
same effect as the aforementioned Opinion of Counsel and (2) an Opinion of
Counsel to the effect that the creation of the defeasance trust does not
violate the Investment Company Act of 1940 and that after the passage of
123 days following the deposit (except, with respect to any trust funds
for the account of any Holder who may be deemed to be an "insider" for
purposes of the United States Bankruptcy Code, after one year following
the deposit), the trust funds will not be subject to the effect of Section
547 of the United States Bankruptcy Code or Section 15 of the New York
Debtor and Creditor Law in a case commenced by or against the Company
under either such statute, and either (I) the trust funds will no longer
remain the property of the Company (and therefore will not be subject to
the effect of any applicable bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally) or (II) if a court
were to rule under any such law in any case or proceeding that the trust
funds remained property of the Company, (a) assuming such trust funds
remained in the possession of the Trustee prior to such court ruling to
the extent not paid to the Holders, the Trustee will hold, for the benefit
of the Holders, a valid and perfected security interest in such trust
funds that is not avoidable in bankruptcy or otherwise except for the
effect of Section 552(b) of the United States Bankruptcy Code on interest
on the trust funds accruing after the commencement of a case under such
statute and (b) the Holders will be entitled to receive adequate
protection of their interests in such trust funds if such trust funds are
used in such case or proceeding;
(C) immediately after giving effect to such deposit, on a pro forma
basis, no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or during the period ending on the
123rd day after such date of such deposit, and such deposit shall not
result in a breach or violation of, or constitute a default under, this
Indenture or any other agreement or instrument to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound and is permitted by Article Thirteen;
(D) the Company is not prohibited from making payments in respect of
the Notes by the provisions described under Article Eleven;
(E) if the Notes are then listed on a national securities exchange,
the Company has delivered to the Trustee an Opinion of Counsel to the
effect that the Notes will not be delisted as a result of such deposit,
defeasance and discharge; and
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72
(F) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, in each case stating that all
conditions precedent provided for herein relating to the defeasance
contemplated by this Section 8.02 have been complied with.
Notwithstanding the foregoing, prior to the end of the 123-day (or one
year) period referred to in clause (B)(2) of this Section 8.02, none of the
Company's obligations under this Indenture shall be discharged. Subsequent to
the end of such 123-day (or one year) period with respect to this Section 8.02,
the Company's obligations in Sections 2.02, 2.03, 2.04, 2.05, 2.06, 4.01, 4.02,
8.04, 8.05, 8.06 and the rights, powers, trusts, duties and immunities of the
Trustee hereunder and Article Eleven (with respect to payments in respect of
Senior Subordinated Obligations other than with the assets held in trust as
described in this Section 8.02) shall survive until the Notes are no longer
outstanding. Thereafter, only the Company's obligations in Sections 7.07, 8.04,
8.05 and 8.06 shall survive. If and when a ruling from the Internal Revenue
Service or an Opinion of Counsel referred to in clause (B)(1) of this Section
8.02 is able to be provided specifically without regard to, and not in reliance
upon, the continuance of the Company's obligations under Section 4.01, then the
Company's obligations under such Section 4.01 shall cease upon delivery to the
Trustee of such ruling or Opinion of Counsel and compliance with the other
conditions precedent provided for herein relating to the defeasance contemplated
by this Section 8.02.
After any such irrevocable deposit, the Trustee upon request shall
acknowledge in writing the discharge of the Company's obligations under the
Notes and this Indenture except for those surviving obligations in the
immediately preceding paragraph.
SECTION 8.03. Defeasance of Certain Obligations. The Company may omit to
comply with any term, provision or condition set forth in clauses (iii) and (iv)
of Section 5.01 and Sections 4.03 through 4.11 and 4.20 and clause (c) of
Section 6.01 with respect to clauses (iii) and (iv) of Section 5.01, clause (d)
of Section 6.01 with respect to Sections 4.01, 4.02 and 4.12 through 4.20 and
clauses (e) and (f) of Section 6.01 shall be deemed not to be Events of Default
and Article Eleven shall not apply to the money and/or U.S. Government
Obligations held by the trust referred to in clause (i) below, in each case with
respect to the outstanding Notes if:
(i) the conditions precedent provided for in clauses (A), (C), (D)
and (E) of Section 8.02 have been complied with;
(ii) the Company has delivered to the Trustee an Opinion of Counsel
to the effect that (A) the creation of the defeasance trust does not
violate the Investment Company Act of 1940, (B) after the passage of 123
days following the deposit (except, with respect to any trust funds for
the account of any Holder who may be deemed to be an "insider" for
purposes of the United States Bankruptcy Code, after one year following
the deposit), the trust funds will not be subject to the effect of Section
547 of the United States Bankruptcy Code or Section 15 of the New York
Debtor and Creditor Law in a case commenced by or against the Company
under either such
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73
statute, and either (1) the trust funds will no longer remain the property
of the Company (and therefore will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally) or (2) if a court were to rule
under any such law in any case or proceeding that the trust funds remained
property of the Company, (x) assuming such trust funds remained in the
possession of the Trustee prior to such court ruling to the extent not
paid to the Holders, the Trustee will hold, for the benefit of the
Holders, a valid and perfected security interest in such trust funds that
is not avoidable in bankruptcy or otherwise (except for the effect of
Section 552(b) of the United States Bankruptcy Code on interest on the
trust funds accruing after the commencement of a case under such statute)
and (y) the Holders will be entitled to receive adequate protection of
their interests in such trust funds if such trust funds are used in such
case or proceeding, (C) the Holders will not recognize income, gain or
loss for federal income tax purposes as a result of such deposit and
defeasance of certain covenants and Events of Default and will be subject
to federal income tax on the same amount and in the same manner and at the
same times as would have been the case if such deposit and defeasance had
not occurred and (D) the Trustee, for the benefit of the Holders, has a
valid first-priority security interest in the trust funds; and
(iii) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, in each case stating that all
conditions precedent provided for herein relating to the defeasance
contemplated by this Section 8.03 have been complied with.
SECTION 8.04. Application of Trust Money. Subject to Section 8.06, the
Trustee or Paying Agent shall hold in trust money or U.S. Government Obligations
deposited with it pursuant to Section 8.01, 8.02 or 8.03, as the case may be,
and shall apply the deposited money and the money from U.S. Government
Obligations in accordance with the Notes and this Indenture to the payment of
principal of, premium, if any, and interest on the Notes; but such money need
not be segregated from other funds except to the extent required by law.
SECTION 8.05. Repayment to Company. Subject to Sections 7.07, 8.01, 8.02
and 8.03, the Trustee and the Paying Agent shall promptly pay to the Company
upon request set forth in an Officers' Certificate any excess money held by them
at any time and thereupon shall be relieved from all liability with respect to
such money. The Trustee and the Paying Agent shall pay to the Company upon
request any money held by them for the payment of principal, premium, if any, or
interest that remains unclaimed for two years; provided that the Trustee or
Paying Agent before being required to make any payment may cause to be published
at the expense of the Company once in a newspaper of general circulation in The
City of New York or mail to each Holder entitled to such money at such Holder's
address (as set forth in the Security Register) notice that such money remains
unclaimed and that after a date specified therein (which shall be at least 30
days from the date of such publication or mailing) any unclaimed balance of such
money then remaining will be repaid to the Company. After payment to the
Company, Holders entitled to such money must look to the Company for payment as
general creditors unless an applicable law
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74
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is unable to
apply any money or U.S. Government Obligations in accordance with Section 8.01,
8.02 or 8.03, as the case may be, by reason of any legal proceeding or by reason
of any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, the Company's obligations
under this Indenture and the Notes shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.01, 8.02 or 8.03, as the case may be,
until such time as the Trustee or Paying Agent is permitted to apply all such
money or U.S. Government Obligations in accordance with Section 8.01, 8.02 or
8.03, as the case may be; provided that, if the Company has made any payment of
principal of, premium, if any, or interest on any Notes because of the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money or U.S.
Government Obligations held by the Trustee or Paying Agent.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders. The Company, when authorized by
a resolution of its Board of Directors (as evidenced by a Board Resolution
delivered to the Trustee), and the Trustee may amend or supplement this
Indenture or the Notes without notice to or the consent of any Holder:
(1) to cure any ambiguity, defect or inconsistency in this
Indenture; provided that such amendments or supplements shall not, in the
good faith opinion of the Board of Directors as evidenced by a Board
Resolution, adversely affect the interests of the Holders in any material
respect;
(2) to comply with Article Five;
(3) to comply with any requirements of the Commission in connection
with the qualification of this Indenture under the TIA;
(4) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee; or
(5) to make any change that, in the good faith opinion of the Board
of Directors as evidenced by a Board Resolution, does not materially and
adversely affect the rights of any Holder.
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75
SECTION 9.02. With Consent of Holders. Subject to Sections 6.04 and 6.07
and without prior notice to the Holders, the Company, when authorized by its
Board of Directors (as evidenced by a Board Resolution delivered to the
Trustee), and the Trustee may amend this Indenture and the Notes with the
written consent of the Holders of a majority in aggregate principal amount of
the Notes then outstanding, and the Holders of a majority in aggregate principal
amount of the Notes then outstanding by written notice to the Trustee may waive
future compliance by the Company with any provision of this Indenture or the
Notes.
Notwithstanding the provisions of this Section 9.02, without the consent
of each Holder affected, an amendment or waiver, including a waiver pursuant to
Section 6.04, may not:
(i) change the Stated Maturity of the principal of, or any
installment of interest on, any Note;
(ii) change the optional redemption dates or optional redemption
prices of the Notes from that stated under Section 3.01;
(iii) reduce the principal amount of, premium, if any, or interest
on any Note;
(iv) change any place or currency of payment of principal of,
premium, if any, or interest on, any Note;
(v) impair the right to institute suit for the enforcement of any
payment on or after the Stated Maturity (or, in the case of redemption, on
or after the Redemption Date) on any Note;
(vi) waive a default in the payment of principal of, premium, if
any, or interest on, any Note;
(vii) release any Guarantor from its Note Guarantee except as
provided in this Indenture;
(viii) modify any of the provisions of Article Eleven or Article
Twelve in a manner adverse to the Holders; or
(ix) reduce the percentage or principal amount of outstanding Notes
the consent of whose Holders is necessary to modify or amend this
Indenture or to waive compliance with certain provisions of or certain
Defaults under this Indenture.
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It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 9.02 becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. The Company will mail
supplemental indentures to Holders upon request. Any failure of the Company to
mail such notice, or any defect therein, shall not, however, in any way impair
or affect the validity of any such supplemental indenture or waiver.
SECTION 9.03. Revocation and Effect of Consent. Until an amendment or
waiver becomes effective, a consent to it by a Holder is a continuing consent by
the Holder and every subsequent Holder of a Note or portion of a Note that
evidences the same debt as the Note of the consenting Holder, even if notation
of the consent is not made on any Note. However, any such Holder or subsequent
Holder may revoke the consent as to its Note or portion of its Note. Such
revocation shall be effective only if the Trustee receives the notice of
revocation before the date the amendment, supplement or waiver becomes
effective. An amendment, supplement or waiver shall become effective on receipt
by the Trustee of written consents from the Holders of the requisite percentage
in principal amount of the outstanding Notes.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then, notwithstanding the last
two sentences of the immediately preceding paragraph, those persons who were
Holders at such record date (or their duly designated proxies) and only those
persons shall be entitled to consent to such amendment, supplement or waiver or
to revoke any consent previously given, whether or not such persons continue to
be Holders after such record date. No such consent shall be valid or effective
for more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall bind
every Holder unless it is of the type described in the second paragraph of
Section 9.02. In case of an amendment or waiver of the type described in the
second paragraph of Section 9.02, the amendment or waiver shall bind each Holder
who has consented to it and every subsequent Holder of a Note that evidences the
same indebtedness as the Note of the consenting Holder.
SECTION 9.04. Notation on or Exchange of Notes. If an amendment,
supplement or waiver changes the terms of a Note, the Trustee may require the
Holder to deliver such Note to the Trustee. At the Company's expense, the
Trustee may place an appropriate notation on the Note about the changed terms
and return it to the Holder and the Trustee may place an appropriate notation on
any Note thereafter authenticated. Alternatively, if the Company or the Trustee
so determines, the Company in exchange for the Note shall issue and the Trustee
shall authenticate a new Note that reflects the changed terms. Failure
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77
to make the appropriate notation, or issue a new Note, shall not affect the
validity and effect of such amendment, supplement or waiver.
SECTION 9.05. Trustee to Sign Amendments, Etc. The Trustee shall be
entitled to receive, and shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of any amendment, supplement or waiver
authorized pursuant to this Article Nine is authorized or permitted by this
Indenture, that it will be valid and binding upon the Company and that all
conditions precedent therewith have been satisfied. Subject to the preceding
sentence, the Trustee shall sign such amendment, supplement or waiver if the
same does not adversely affect the rights, duties, liabilities or immunities of
the Trustee. The Trustee may, but shall not be obligated to, execute any such
amendment, supplement or waiver that affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.06. Conformity with Trust Indenture Act. Every supplemental
indenture executed pursuant to this Article Nine shall conform to the
requirements of the TIA as then in effect.
ARTICLE TEN
NOTE GUARANTEES
SECTION 10.01 Note Guarantee. By its execution hereof, each of the
Guarantors acknowledges and agrees that it receives substantial benefits from
the Company and that such party is providing its Guarantee for good and valuable
consideration, including, without limitation, such substantial benefits and
services. Accordingly, subject to the provisions of this Article Ten, each of
the Guarantors hereby, jointly and severally, fully and unconditionally
Guarantees, to the extent permitted by law, to each Holder of Notes hereunder
and to the Trustee on behalf of the Holders: (I) the due and punctual payment of
the principal of, premium, if any, on and interest on each Note, when and as the
same shall become due and payable, whether at maturity, by acceleration or
otherwise, the due and punctual payment of interest on the overdue principal of
and interest, if any, on the Notes, to the extent lawful, and the due and
punctual performance of all other obligations of the Company to the Holders or
the Trustee, all in accordance with the terms of such Note and this Indenture
and (ii) in the case of any extension of time of payment or renewal of any Notes
or any of such other obligations, that the same will be promptly paid in full
when due or performed in accordance with the terms of the extension or renewal,
at Stated Maturity, by acceleration or otherwise, subject, however, in the case
of clauses (I) and (ii) above, to the limitations set forth in the second
succeeding paragraph.
Each Note Guarantee shall be Guaranteed on a senior subordinated basis in
accordance with Article Twelve hereof.
Each Guarantor and by its acceptance hereof each Holder hereby confirms
that it is the intention of all such parties that the Guarantee by such
Guarantor pursuant to its Note Guarantee not constitute a
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fraudulent transfer or conveyance for purposes of the United States Bankruptcy
Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act
or any similar Federal or state law. To effectuate the foregoing intention, the
Holders and such Guarantor hereby irrevocably agree that the obligations of such
Guarantor under its Note Guarantee shall be limited to the maximum amount as
will, after giving effect to all other contingent and fixed liabilities of such
Guarantor and after giving effect to any collections from or payments made by or
on behalf of any other Guarantor in respect of the obligations of such other
Guarantor under its Note Guarantee or pursuant to the following paragraph,
result in the obligations of such Guarantor under its Note Guarantee not
constituting such fraudulent transfer or conveyance.
In order to provide for just and equitable contribution among the
Guarantors, the Guarantors agree, inter se, that in the event any payment or
distribution is made by any Guarantor (a "Funding Guarantor") under its Note
Guarantee, such Funding Guarantor shall be entitled to a contribution from all
other Guarantors in a pro rata amount based on the Adjusted Net Assets of each
Guarantor (including the Funding Guarantor) for all payments, damages and
expenses incurred by that Funding Guarantor in discharging the Company's
obligations with respect to the Notes or any other Guarantor's obligations with
respect to its Note Guarantee. "Adjusted Net Assets" of such Guarantor at any
date shall mean the lesser of the amount by which (x) the fair value of the
property of such Guarantor exceeds the total amount of liabilities, including,
without limitation, contingent liabilities (after giving effect to all other
fixed and contingent liabilities incurred or assumed on such date), but
excluding liabilities under the Note Guarantee, of such Guarantor at such date
and (y) the present fair salable value of the assets of such Guarantor at such
date exceeds the amount that will be required to pay the probable liability of
such Guarantor on its debts (after giving effect to all other fixed and
contingent liabilities incurred or assumed on such date and after giving effect
to any collection from any Subsidiary of such Guarantor in respect of the
obligations of such Guarantor under the Note Guarantee of such Guarantor),
excluding debt in respect of its Note Guarantee, as they become absolute and
matured.
Each of the Guarantors hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of merger or bankruptcy of
the Company, any right to require a proceeding first against the Company, the
benefit of discussion, protest or notice with respect to any such Note or the
debt evidenced thereby and all demands whatsoever (except as specified above),
and covenants that this Note Guarantee will not be discharged as to any such
Note except by payment in full of the principal thereof and interest thereon and
as provided in Sections 8.01, 8.02 and 8.03. In the event of any declaration of
acceleration of such obligations as provided in Article Six, such obligations
(whether or not due and payable) shall forthwith become due and payable by the
Guarantors for the purposes of this Article Ten. In addition, without limiting
the foregoing provisions, upon the effectiveness of an acceleration under
Article Six, the Trustee shall promptly make a demand for payment on the Notes
under the Note Guarantee provided for in this Article Ten.
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79
The obligations of each Guarantor under its Note Guarantee are independent
of the obligations Guaranteed by such Guarantor hereunder, and a separate action
or actions may be brought and prosecuted by the Trustee on behalf of, or by, the
Holders, subject to the terms and conditions set forth in this Indenture,
against a Guarantor to enforce this Guarantee, irrespective of whether any
action is brought against the Company or whether the Company is joined in any
such action or actions.
If the Trustee or the Holder is required by any court or otherwise to
return to the Company or any Guarantor, or any custodian, receiver, liquidator,
trustee, sequestrator or other similar official acting in relation to Company or
such Guarantor, any amount paid to the Trustee or such Holder in respect of a
Note, this Note Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. Each of the Guarantors further agrees, to
the fullest extent that it may lawfully do so, that, as between it, on the one
hand, and the Holders and the Trustee, on the other hand, the maturity of the
obligations Guaranteed hereby may be accelerated as provided in Article Six
hereof for the purposes of this Note Guarantee, notwithstanding any stay,
injunction or other prohibition extant under any applicable bankruptcy law
preventing such acceleration in respect of the obligations Guaranteed hereby.
Each of the Guarantors hereby irrevocably waives any claim or other rights
which it may now or hereafter acquire against the Company or any other Guarantor
that arise from the existence, payment, performance or enforcement of its
obligations under this Note Guarantee and this Indenture, including, without
limitation, any right of subrogation, reimbursement, exoneration, contribution,
indemnification, any right to participate in any claim or remedy of the Holders
against the Company or any Guarantor or any collateral which any such Holder or
the Trustee on behalf of such Holder hereafter acquires, whether or not such
claim, remedy or right arises in equity, or under contract, statute or common
law, including, without limitation, the right to take or receive from the
Company or a Guarantor, directly or indirectly, in cash or other property or by
set-off or in any other manner, payment or security on account of such claim or
other rights. If any amount shall be paid to a Guarantor in violation of the
preceding sentence and the principal of, premium, if any, and accrued interest
on the Notes shall not have been paid in full, such amount shall be deemed to
have been paid to such Guarantor for the benefit of, and held in trust for the
benefit of, the Holders, and shall forthwith be paid to the Trustee for the
benefit of the Holders to be credited and applied upon the principal of,
premium, if any, and accrued interest on the Notes. Each of the Guarantors
acknowledges that it will receive direct and indirect benefits from the issuance
of the Notes pursuant to this Indenture and that the waivers set forth in this
Section 10.01 are knowingly made in contemplation of such benefits
The Note Guarantee set forth in this Section 10.01 shall not be valid or
become obligatory for any purpose with respect to a Note until the certificate
of authentication on such Note shall have been signed by or on behalf of the
Trustee.
SECTION 10.02 Obligations Unconditional. Nothing contained in this Article
Ten or elsewhere in this Indenture or in the Notes is intended to or shall
impair, as among any Guarantor and the holders of
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the Notes, the obligation of such Guarantor, which is absolute and
unconditional, upon failure by the Company, to pay to the holders of the Notes
the principal of, premium, if any, and interest on the Notes as and when the
same shall become due and payable in accordance with their terms, or is intended
to or shall affect the relative rights of the Holders and creditors of such
Guarantor, nor shall anything herein or therein prevent any Holder or the
Trustee on their behalf from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture.
Without limiting the foregoing, nothing contained in this Article Ten will
restrict the right of the Trustee or the Holders to take any action to declare
the Note Guarantee to be due and payable prior to the Stated Maturity of any
Notes pursuant to Section 6.02 or to pursue any rights or remedies hereunder.
SECTION 10.03 Release of Note Guarantees. The Note Guarantee issued by any
Subsidiary Guarantor will be automatically and unconditionally released and
discharged upon (I) any sale, exchange or transfer to any Person (other than an
Affiliate of the Company) of all of the Capital Stock of such Subsidiary
Guarantor or (ii) the designation of such Subsidiary Guarantor as an
Unrestricted Subsidiary, in each case in compliance with the terms of this
Indenture.
SECTION 10.04 Notice to Trustee. A Guarantor shall give prompt written
notice to the Trustee of any fact known to such Guarantor which would prohibit
the making of any payment to or by the Trustee in respect of the Note Guarantee
pursuant to the provisions of this Article Ten.
SECTION 10.05 This Article Not to Prevent Events of Default. The failure
to make a payment on account of principal of, premium, if any, or interest on
the Notes by reason of any provision of this Article Ten will not be construed
as preventing the occurrence of an Event of Default.
ARTICLE ELEVEN
SUBORDINATION OF NOTES
SECTION 11.01. Notes Subordinated to Senior Indebtedness. The Company and
the Trustee each covenants and agrees, and each Holder, by its acceptance of a
Note, likewise covenants and agrees that all Notes shall be issued subject to
the provisions of this Article Eleven; and each Person holding any Note, whether
upon original issue or upon transfer, assignment or exchange thereof, accepts
and agrees that Senior Subordinated Obligations shall, to the extent and in the
manner set forth in this Article Eleven, be subordinated in right of payment to
the prior payment in full, in cash or cash equivalents, of all existing and
future Senior Indebtedness of the Company.
SECTION 11.02. No Payment on Notes in Certain Circumstances. (a) No direct
or indirect payment by or on behalf of the Company of Senior Subordinated
Obligations (other than with the money, securities or proceeds held under any
defeasance trust established in accordance with this Indenture),
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whether pursuant to the terms of the Notes or upon acceleration or otherwise
shall be made if, at the time of such payment, there exists a default in the
payment of all or any portion of the obligations on any Senior Indebtedness of
the Company and such default shall not have been cured or waived or the benefits
of this sentence waived by or on behalf of the holders of such Senior
Indebtedness.
(b) During the continuance of any other event of default with respect to
any Designated Senior Indebtedness pursuant to which the maturity thereof may be
accelerated, upon receipt by the Trustee of written notice from the trustee or
other representative for the holders of such Designated Senior Indebtedness (or
the holders of at least a majority in principal amount of such Designated Senior
Indebtedness then outstanding), no payment of Senior Subordinated Obligations
(other than with the money, securities or proceeds held under any defeasance
trust established in accordance with this Indenture) may be made by or on behalf
of the Company upon or in respect of the Notes for a period (a "Payment Blockage
Period") commencing on the date of receipt of such notice and ending 179 days
thereafter (unless, in each case, such Payment Blockage Period shall be
terminated by written notice to the Trustee from such trustee of, or other
representatives for, such holders or by payment in full in cash or cash
equivalents of such Designated Senior Indebtedness or such event of default has
been cured or waived). Not more than one Payment Blockage Period may be
commenced with respect to the Notes during any period of 360 consecutive days.
Notwithstanding anything in this Indenture to the contrary, there must be 180
consecutive days in any 360-day period in which no Payment Blockage Period is in
effect. No event of default (other than an event of default pursuant to the
financial maintenance covenants under the Credit Agreement) that existed or was
continuing (it being acknowledged that any subsequent action that would give
rise to an event of default pursuant to any provision under which an event of
default previously existed or was continuing shall constitute a new event of
default for this purpose) on the date of the commencement of any Payment
Blockage Period with respect to the Designated Senior Indebtedness initiating
such Payment Blockage Period shall be, or shall be made, the basis for the
commencement of a second Payment Blockage Period by the representative for, or
the holders of, such Designated Senior Indebtedness, whether or not within a
period of 360 consecutive days, unless such event of default shall have been
cured or waived for a period of not less than 90 consecutive days.
(c) In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee or any Holder when such payment is prohibited by Section
10.02(a) or 10.02(b) of this Indenture, the Trustee shall promptly notify the
holders of Senior Indebtedness of such prohibited payment and such payment shall
be held in trust for the benefit of, and shall be paid over or delivered to, the
holders of Senior Indebtedness (pro rata to such holders on the basis of such
respective amount of Senior Indebtedness held by such holders) or their
respective representatives, or to the trustee or trustees under any indenture
pursuant to which any of such Senior Indebtedness may have been issued, as their
respective interests may appear, but only to the extent that, upon notice from
the Trustee to the holders of Senior Indebtedness that such prohibited payment
has been made, the holders of the Senior Indebtedness (or their representative
or representatives of a trustee) within 30 days of receipt of such notice from
the Trustee notify the Trustee
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of the amounts then due and owing on the Senior Indebtedness, if any, and only
the amounts specified in such notice to the Trustee shall be paid to the holders
of Senior Indebtedness.
SECTION 11.03. Payment over Proceeds upon Dissolution, Etc. (a) Upon any
payment or distribution of assets or securities of the Company of any kind or
character, whether in cash, property or securities (other than with the money,
securities or proceeds held under any defeasance trust established in accordance
with this Indenture), in connection with any dissolution or winding up or total
or partial liquidation or reorganization of the Company, whether voluntary or
involuntary, or in bankruptcy, insolvency, receivership or other proceedings or
other marshalling of assets for the benefit of creditors, all amounts due or to
become due upon all Senior Indebtedness shall first be paid in full, in cash or
cash equivalents, before the Holders or the Trustee on their behalf shall be
entitled to receive any payment by (or on behalf of) the Company on account of
Senior Subordinated Obligations, or any payment to acquire any of the Notes for
cash, property or securities, or any distribution with respect to the Notes of
any cash, property or securities. Before any payment may be made by, or on
behalf of, the Company on any Senior Subordinated Obligations (other than with
the money, securities or proceeds held under any defeasance trust established in
accordance with this Indenture), in connection with any such dissolution,
winding up, liquidation or reorganization, any payment or distribution of assets
or securities for the Company of any kind or character, whether in cash,
property or securities, to which the Holders or the Trustee on their behalf
would be entitled, but for the provisions of this Article Eleven, shall be made
by the Company or by any receiver, trustee in bankruptcy, liquidating trustee,
agent or other similar Person making such payment or distribution or by the
Holders or the Trustee if received by them or it, directly to the holders of
Senior Indebtedness (pro rata to such holders on the basis of the respective
amounts of Senior Indebtedness held by such holders) or their representatives or
to any trustee or trustees under any other indenture pursuant to which any such
Senior Indebtedness may have been issued, as their respective interests appear,
to the extent necessary to pay all such Senior Indebtedness in full, in cash or
cash equivalents after giving effect to any concurrent payment, distribution or
provision therefor to or for the holders of such Senior Indebtedness.
(b) To the extent any payment of Senior Indebtedness (whether by or on
behalf of the Company, as proceeds of security or enforcement of any right of
setoff or otherwise) is declared to be fraudulent or preferential, set aside or
required to be paid to any receiver, trustee in bankruptcy, liquidating trustee,
agent or other similar Person under any bankruptcy, insolvency, receivership,
fraudulent conveyance or similar law, then if such payment is recovered by, or
paid over to, such receiver, trustee in bankruptcy, liquidating trustee or other
similar Person, the Senior Indebtedness or part thereof originally intended to
be satisfied shall be deemed to be reinstated and outstanding as if such payment
had not occurred. To the extent the obligation to repay any Senior Indebtedness
is declared to be fraudulent, invalid, or otherwise set aside under any
bankruptcy, insolvency, receivership, fraudulent conveyance or similar law, then
the obligation so declared fraudulent, invalid or otherwise set aside (and all
other amounts that would come due with respect thereto had such obligation not
been so affected) shall be deemed to be
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reinstated and outstanding as Senior Indebtedness for all purposes hereof as if
such declaration, invalidity or setting aside had not occurred.
(c) In the event that, notwithstanding the foregoing provision prohibiting
such payment or distribution, any payment or distribution of assets or
securities of the Company of any kind or character, whether in cash, property or
securities, shall be received by the Trustee or any Holder at a time when such
payment or distribution is prohibited by Section 11.03(a) of this Indenture and
before all obligations in respect of Senior Indebtedness are paid in full, in
cash or cash equivalents, such payment or distribution shall be received and
held in trust for the benefit of, and shall be paid over or delivered to, the
holders of Senior Indebtedness (pro rata to such holders on the basis of such
respective amount of Senior Indebtedness held by such holders) or their
respective representatives, or to the trustee or trustees under any indenture
pursuant to which any such Senior Indebtedness may have been issued, as their
respective interests appear, for application to the payment of Senior
Indebtedness remaining unpaid until all such Senior Indebtedness has been paid
in full, in cash or cash equivalents, after giving effect to any concurrent
payment, distribution or provision therefor to or for the holders of such Senior
Indebtedness.
(d) For purposes of this Section 11.03, the words "cash, property or
securities" shall not be deemed to include, so long as the effect of this clause
is not to cause the Notes to be treated in any case or proceeding or similar
event described in this Section 11.03 as part of the same class of claims as the
Senior Indebtedness or any class of claims pari passu with, or senior to, the
Senior Indebtedness for any payment or distribution, securities of the Company
or any other corporation provided for by a plan of reorganization or
readjustment that are subordinated, at least to the extent that the Notes are
subordinated, to the payment of all Senior Indebtedness then outstanding;
provided that (1) if a new corporation results from such reorganization or
readjustment, such corporation assumes the Senior Indebtedness and (2) the
rights of the holders of the Senior Indebtedness are not, without the consent of
such holders, altered by such reorganization or readjustment. The consolidation
of the Company with, or the merger of the Company with or into, another
corporation or the liquidation or dissolution of the Company following the sale,
conveyance, transfer, lease or other disposition of all or substantially all of
its property and assets to another corporation upon the terms and conditions
provided in Article Five of this Indenture shall not be deemed a dissolution,
winding up, liquidation or reorganization for the purposes of this Section 11.03
if such other corporation shall, as a part of such consolidation, merger, sale,
conveyance, transfer, lease or other disposition, comply (to the extent
required) with the conditions stated in Article Five of this Indenture.
SECTION 11.04. Subrogation. (a) Upon the payment in full of all Senior
Indebtedness in cash or cash equivalents, the Holders shall be subrogated to the
rights of the holders of Senior Indebtedness to receive payments or
distributions of cash, property or securities of the Company made on such Senior
Indebtedness until the principal of, premium, if any, and interest on the Notes
shall be paid in full; and, for the purposes of such subrogation, no payments or
distributions to the holders of the Senior Indebtedness of any cash, property or
securities to which the Holders or the Trustee on their behalf would be entitled
except for the provisions of this Article Eleven, and no payment pursuant to the
provisions of this Article
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Eleven to the holders of Senior Indebtedness by Holders or the Trustee on their
behalf shall, as between the Company, its creditors other than holders of Senior
Indebtedness, and the Holders, be deemed to be a payment by the Company to or on
account of the Senior Indebtedness. It is understood that the provisions of this
Article Eleven are intended solely for the purpose of defining the relative
rights of the Holders, on the one hand, and the holders of the Senior
Indebtedness, on the other hand.
(b) If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article Eleven shall have been
applied, pursuant to the provisions of this Article Eleven, to the payment of
all amounts payable under Senior Indebtedness, then, and in such case, the
Holders shall be entitled to receive from the holders of such Senior
Indebtedness any payments or distributions received by such holders of Senior
Indebtedness in excess of the amount required to make payment in full, in cash
or cash equivalents, of such Senior Indebtedness of such holders.
SECTION 11.05. Obligations of Company Unconditional. (a) Nothing contained
in this Article Eleven or elsewhere in this Indenture or in the Notes is
intended to or shall impair, as among the Company and the Holders, the
obligation of the Company, which is absolute and unconditional, to pay to the
Holders the principal of, premium, if any, and interest on the Notes as and when
the same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the Holders and creditors of
the Company other than the holders of the Senior Indebtedness, nor shall
anything herein or therein prevent the Holders or the Trustee on their behalf
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to the rights, if any, under this Article Eleven
of the holders of the Senior Indebtedness.
(b) Without limiting the generality of the foregoing, nothing contained in
this Article Eleven will restrict the right of the Trustee or the Holders to
take any action to declare the Notes to be due and payable prior to their Stated
Maturity pursuant to Section 6.01 of this Indenture or to pursue any rights or
remedies hereunder; provided, however, that all Senior Indebtedness then due and
payable or thereafter declared to be due and payable shall first be paid in
full, in cash or cash equivalents, before the Holders or the Trustee are
entitled to receive any direct or indirect payment from the Company of Senior
Subordinated Obligations.
SECTION 11.06. Notice to Trustee. (a) The Company shall give prompt
written notice to the Trustee of any fact known to the Company that would
prohibit the making of any payment to or by the Trustee in respect of the Notes
pursuant to the provisions of this Article Eleven. The Trustee shall not be
charged with the knowledge of the existence of any default or event of default
with respect to any Senior Indebtedness or of any other facts that would
prohibit the making of any payment to or by the Trustee unless and until the
Trustee shall have received notice in writing at its Corporate Trust Office to
that effect signed by an Officer of the Company, or by a holder of Senior
Indebtedness or trustee or agent thereof; and prior to the receipt of any such
written notice, the Trustee shall, subject to Article Seven, be entitled to
assume that no such facts exist; provided that, if the Trustee shall not have
received the notice provided
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for in this Section 11.06 at least two Business Days prior to the date upon
which, by the terms of this Indenture, any monies shall become payable for any
purpose (including, without limitation, the payment of the principal of,
premium, if any, or interest on any Note), then, notwithstanding anything herein
to the contrary, the Trustee shall have full power and authority to receive any
monies from the Company and to apply the same to the purpose for which they were
received, and shall not be affected by any notice to the contrary that may be
received by it on or after such prior date except for an acceleration of the
Notes prior to such application. Nothing contained in this Section 11.06 shall
limit the right of the holders of Senior Indebtedness to recover payments as
contemplated by this Article Eleven. The foregoing shall not apply if the Paying
Agent is the Company. The Trustee shall be entitled to rely on the delivery to
it of a written notice by a Person representing himself or itself to be a holder
of any Senior Indebtedness (or a trustee on behalf of, or other representative
of, such holder) to establish that such notice has been given by a holder of
such Senior Indebtedness or a trustee or representative on behalf of any such
holder.
(b) In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article Eleven, the Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Trustee as to the amount of Senior
Indebtedness held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article Eleven and, if such evidence is not
furnished to the Trustee, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
SECTION 11.07. Reliance on Judicial Order or Certificate of Liquidating
Agent. Upon any payment or distribution of assets or securities referred to in
this Article Eleven, the Trustee and the Holders shall be entitled to rely upon
any order or decree made by any court of competent jurisdiction in which
bankruptcy, dissolution, winding up, liquidation or reorganization proceedings
are pending, or upon a certificate of the receiver, trustee in bankruptcy,
liquidating trustee, agent or other similar Person making such payment or
distribution, delivered to the Trustee or to the Holders for the purpose of
ascertaining the persons entitled to participate in such distribution, the
holders of the Senior Indebtedness and other Indebtedness of the Company, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article Eleven.
SECTION 11.08. Trustee's Relation to Senior Indebtedness. (a) The Trustee
and any Paying Agent shall be entitled to all the rights set forth in this
Article Eleven with respect to any Senior Indebtedness that may at any time be
held by it in its individual or any other capacity to the same extent as any
other holder of Senior Indebtedness and nothing in this Indenture shall deprive
the Trustee or any Paying Agent of any of its rights as such holder.
(b) With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article Eleven, and
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no implied covenants or obligations with respect to the holders of Senior
Indebtedness shall be read into this Indenture against the Trustee. The Trustee
shall not be deemed to owe any fiduciary duty to the holders of Senior
Indebtedness (except as provided in Sections 11.02(c) and 11.03(c) of this
Indenture) and shall not be liable to any such holders if the Trustee shall in
good faith mistakenly pay over or distribute to Holders of Notes or to the
Company or to any other person cash, property or securities to which any holders
of Senior Indebtedness shall be entitled by virtue of this Article Eleven or
otherwise.
SECTION 11.09. Subordination Rights Not Impaired by Acts or Omissions of
the Company or Holders of Senior Indebtedness. No right of any present or future
holders of any Senior Indebtedness to enforce subordination as provided in this
Article Eleven will at any time in any way be prejudiced or impaired by any act
or failure to act on the part of the Company or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by the Company with the
terms of this Indenture, regardless of any knowledge thereof that any such
holder may have or otherwise be charged with. The provisions of this Article
Eleven are intended to be for the benefit of, and shall be enforceable directly
by, the holders of Senior Indebtedness.
SECTION 11.10. Holders Authorize Trustee to Effectuate Subordination of
Notes. Each Holder by his or her acceptance of any Notes authorizes and
expressly directs the Trustee on his or her behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article Eleven, and appoints the Trustee his attorney-in-fact for such purposes,
including, in the event of any dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency, receivership,
reorganization or similar proceedings or upon an assignment for the benefit of
creditors or otherwise) tending towards liquidation of the property and assets
of the Company, the filing of a claim for the unpaid balance of its Notes in the
form required in those proceedings. If the Trustee does not file a proper claim
or proof in indebtedness in the form required in such proceeding at least 30
days before the expiration of the time to file such claim or claims, each holder
of Senior Indebtedness is hereby authorized to file an appropriate claim for and
on behalf of the Holders.
SECTION 11.11. Not to Prevent Events of Default. The failure to make a
payment on account of principal of, premium, if any, or interest on the Notes by
reason of any provision of this Article Eleven will not be construed as
preventing the occurrence of an Event of Default.
SECTION 11.12. Trustee's Compensation Not Prejudiced. Nothing in this
Article Eleven will apply to amounts due to the Trustee pursuant to other
sections of this Indenture, including Section 7.07.
SECTION 11.13. No Waiver of Subordination Provisions. Without in any way
limiting the generality of Section 11.09, the holders of Senior Indebtedness
may, at any time and from time to time, without the consent of or notice to the
Trustee or the Holders, without incurring responsibility to the Holders and
without impairing or releasing the subordination provided in this Article Eleven
or the obligations hereunder of the Holders to the holders of Senior
Indebtedness, do any one or more of the following:
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(a) change the manner, place or terms of payment or extend the time of payment
of, or renew or alter, Senior Indebtedness or any instrument evidencing the same
or any agreement under which Senior Indebtedness is outstanding or secured; (b)
sell, exchange, release or otherwise deal with any property pledged, mortgaged
or otherwise securing Senior Indebtedness; (c) release any Person liable in any
manner for the collection of Senior Indebtedness; and (d) exercise or refrain
from exercising any rights against the Company and any other Person.
SECTION 11.14. Payments May Be Paid Prior to Dissolution. Nothing
contained in this Article Eleven or elsewhere in this Indenture shall prevent
(i) the Company, except under the conditions described in Section 11.02 or
11.03, from making payments of principal of, premium, if any, and interest on
the Notes, or from depositing with the Trustee any money for such payments, or
(ii) the application by the Trustee of any money deposited with it for the
purpose of making such payments of principal of, premium, if any, and interest
on the Notes to the holders entitled thereto unless, at least two Business Days
prior to the date upon which such payment becomes due and payable, the Trustee
shall have received the written notice provided for in Section 11.02(b) of this
Indenture (or there shall have been an acceleration of the Notes prior to such
application) or in Section 11.06 of this Indenture. The Company shall give
prompt written notice to the Trustee of any dissolution, winding up, liquidation
or reorganization of the Company.
SECTION 11.15. Consent of Holders of Senior Indebtedness. The provisions
of this Article Eleven (including the definitions contained in this Article and
references to this Article contained in this Indenture) shall not be amended in
a manner that would adversely affect the rights of the holders of Senior
Indebtedness, and no such amendment shall become effective unless the holders of
Senior Indebtedness shall have consented (in accordance with the provisions of
the relevant agreements governing such Senior Indebtedness to such amendment.
The Trustee shall be entitled to receive and rely on an Officers' Certificate
stating that such consent has been given.
SECTION 11.16. Trust Moneys Not Subordinated. Notwithstanding anything
contained herein to the contrary, payments from money or the proceeds of U.S.
Government Obligations held in trust under Article Eight by the Trustee for the
payment of principal of, premium, if any, and interest on the Notes shall not be
subordinated to the prior payment of any Senior Indebtedness (provided that, at
the time deposited, such deposit did not violate any then outstanding Senior
Indebtedness), and none of the Holders shall be obligated to pay over any such
amount to any holder of Senior Indebtedness.
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ARTICLE TWELVE
SUBORDINATION OF NOTE GUARANTEES
SECTION 12.01. Note Guarantees Subordinated to Guarantor Senior
Indebtedness. Each Guarantor and the Trustee each covenants and agrees, and each
Holder, by its acceptance of a Note Guarantee, likewise covenants and agrees
that all Note Guarantees shall be issued subject to the provisions of this
Article Twelve; and each Person holding any Note, whether upon original issue or
upon transfer, assignment or exchange thereof, accepts and agrees that Senior
Subordinated Obligations shall, to the extent and in the manner set forth in
this Article Twelve, be subordinated in right of payment to the prior payment in
full, in cash or cash equivalents, of all existing and future Guarantor Senior
Indebtedness of such Guarantor.
SECTION 12.02. No Payment on Note Guarantees in Certain Circumstances. (a)
No direct or indirect payment by or on behalf of any Guarantor of Senior
Subordinated Obligations (other than with the money, securities or proceeds held
under any defeasance trust established in accordance with this Indenture),
whether pursuant to the terms of the Note Guarantees or upon acceleration or
otherwise shall be made if, at the time of such payment, there exists a default
in the payment of all or any portion of the obligations on any Guarantor Senior
Indebtedness of such Guarantor and such default shall not have been cured or
waived or the benefits of this sentence waived by or on behalf of the holders of
such Guarantor Senior Indebtedness.
(b) During the continuance of any other event of default with respect to
any Designated Guarantor Senior Indebtedness pursuant to which the maturity
thereof may be accelerated, upon receipt by the Trustee of written notice from
the trustee or other representative for the holders of such Designated Guarantor
Senior Indebtedness (or the holders of at least a majority in principal amount
of such Designated Guarantor Senior Indebtedness then outstanding), no payment
of Senior Subordinated Obligations (other than with the money, securities or
proceeds held under any defeasance trust established in accordance with this
Indenture) may be made by or on behalf of any Guarantor upon or in respect of
the Note Guarantees for a period (a "Guarantee Payment Blockage Period")
commencing on the date of receipt of such notice and ending 179 days thereafter
(unless, in each case, such Guarantee Payment Blockage Period has been
terminated by written notice to the Trustee from such trustee of, or other
representatives for, such holders or by payment in full in cash or cash
equivalents of such Designated Guarantor Senior Indebtedness or such event of
default has been cured or waived). Not more than one Guarantee Payment Blockage
Period may be commenced with respect to the Note Guarantees during any period of
360 consecutive days. Notwithstanding anything in this Indenture to the
contrary, there must be 180 consecutive days in any 360-day period in which no
Guarantee Payment Blockage Period is in effect. No event of default (other than
an event of default pursuant to the financial maintenance covenants under the
Credit Agreement) that existed or was continuing (it being acknowledged that any
subsequent action that would give rise to an event of default pursuant to any
provision under which an event of default previously existed or was continuing
shall constitute a new event of default for this purpose) on the date of the
commencement of any
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Guarantee Payment Blockage Period with respect to the Designated Guarantor
Senior Indebtedness initiating such Guarantee Payment Blockage Period shall be,
or shall be made, the basis for the commencement of a second Guarantee Payment
Blockage Period by the trustee or other representative for the holders of such
Designated Guarantor Senior Indebtedness, whether or not within a period of 360
consecutive days, unless such event of default shall have been cured or waived
for a period of not less than 90 consecutive days.
(c) In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee or any Holder when such payment is prohibited by Section
12.02(a) or 12.02(b) of this Indenture, the Trustee shall promptly notify the
holders of Guarantor Senior Indebtedness of such prohibited payment and such
payment shall be held in trust for the benefit of, and shall be paid over or
delivered to, the holders of Guarantor Senior Indebtedness or their respective
representatives, or to the trustee or trustees under any indenture pursuant to
which any of such Guarantor Senior Indebtedness may have been issued, as their
respective interests may appear, but only to the extent that, upon notice from
the Trustee to the holders of Guarantor Senior Indebtedness that such prohibited
payment has been made, the holders of the Guarantor Senior Indebtedness (or
their representative or representatives of a trustee) within 30 days of receipt
of such notice from the Trustee notify the Trustee of the amounts then due and
owing on the Guarantor Senior Indebtedness, if any, and only the amounts
specified in such notice to the Trustee shall be paid to the holders of
Guarantor Senior Indebtedness and any excess above such amounts due and owing on
Guarantor Senior Indebtedness shall be paid to such Guarantor.
SECTION 12.03. Payment over Proceeds upon Dissolution, Etc. (a) Upon any
payment or distribution of assets or securities of a Guarantor of any kind or
character, whether in cash, property or securities (other than with the money,
securities or proceeds held under any defeasance trust established in accordance
with this Indenture), in connection with any dissolution or winding up or total
or partial liquidation or reorganization of such Guarantor, whether voluntary or
involuntary, or in bankruptcy, insolvency, receivership or other proceedings or
other marshalling of assets for the benefit of creditors, all amounts due or to
become due upon all Guarantor Senior Indebtedness shall first be paid in full,
in cash or cash equivalents, before the Holders or the Trustee on their behalf
shall be entitled to receive any payment by (or on behalf of) such Guarantor on
account of Senior Subordinated Obligations, or any payment to acquire any of the
Note Guarantees for cash, property or securities, or any distribution with
respect to the Note Guarantees of any cash, property or securities. Before any
payment may be made by, or on behalf of, any Guarantor on any Senior
Subordinated Obligations (other than with the money, securities or proceeds held
under any defeasance trust established in accordance with this Indenture), in
connection with any such dissolution, winding up, liquidation or reorganization,
any payment or distribution of assets or securities for such Guarantor of any
kind or character, whether in cash, property or securities, to which the Holders
or the Trustee on their behalf would be entitled, but for the provisions of this
Article Twelve, shall be made by such Guarantor or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other similar Person making such
payment or distribution or by the Holders or the Trustee if received by them or
it, directly to the holders of Guarantor Senior Indebtedness (pro rata to such
holders
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on the basis of the respective amounts of Guarantor Senior Indebtedness held by
such holders) or their representatives or to any trustee or trustees under any
indenture pursuant to which any such Guarantor Senior Indebtedness may have been
issued, as their respective interests appear, to the extent necessary to pay all
such Guarantor Senior Indebtedness in full, in cash or cash equivalents, after
giving effect to any concurrent payment, distribution or provision therefor to
or for the holders of such Guarantor Senior Indebtedness.
(b) To the extent any payment of Guarantor Senior Indebtedness (whether by
or on behalf of any Guarantor, as proceeds of security or enforcement of any
right of setoff or otherwise) is declared to be fraudulent or preferential, set
aside or required to be paid to any receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar Person under any bankruptcy, insolvency,
receivership, fraudulent conveyance or similar law, then if such payment is
recovered by, or paid over to, such receiver, trustee in bankruptcy, liquidating
trustee or other similar Person, the Guarantor Senior Indebtedness or part
thereof originally intended to be satisfied shall be deemed to be reinstated and
outstanding as if such payment had not occurred. To the extent the obligation to
repay any Guarantor Senior Indebtedness is declared to be fraudulent, invalid,
or otherwise set aside under any bankruptcy, insolvency, receivership,
fraudulent conveyance or similar law, then the obligation so declared
fraudulent, invalid or otherwise set aside (and all other amounts that would
come due with respect thereto had such obligation not been so affected) shall be
deemed to be reinstated and outstanding as Guarantor Senior Indebtedness for all
purposes hereof as if such declaration, invalidity or setting aside had not
occurred.
(c) In the event that, notwithstanding the provision Section 12.03(a)
prohibiting such payment or distribution, any payment or distribution of assets
or securities of any Guarantor of any kind or character, whether in cash,
property or securities, shall be received by the Trustee or any Holder at a time
when such payment or distribution is prohibited by Section 12.03(a) of this
Indenture and before all obligations in respect of Guarantor Senior Indebtedness
are paid in full, in cash or cash equivalents, such payment or distribution
shall be received and held in trust for the benefit of, and shall be paid over
or delivered to, the holders of Guarantor Senior Indebtedness (pro rata to such
holders on the basis of the respective amounts of Guarantor Senior Indebtedness
held by such holders) or their representatives or to any trustee or trustees
under any indenture pursuant to which any such Guarantor Senior Indebtedness may
have been issued, as their respective interests appear, for application to the
payment of all such Guarantor Senior Indebtedness remaining unpaid in full, in
cash or cash equivalents, after giving effect to any concurrent payment,
distribution or provision therefor to or for the holders of such Guarantor
Senior Indebtedness.
(d) For purposes of this Section 12.03, the words "cash, property or
securities" shall not be deemed to include, so long as the effect of this clause
is not to cause the Note Guarantees to be treated in any case or proceeding or
similar event described in this Section 12.03 as part of the same class of
claims as the Guarantor Senior Indebtedness or any class of claims pari passu
with, or senior to, the Guarantor Senior Indebtedness for any payment or
distribution, securities of any Guarantor or any other corporation provided for
by a plan of reorganization or readjustment that are subordinated, at least to
the extent that
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91
the Note Guarantees are subordinated, to the payment of all Guarantor Senior
Indebtedness then outstanding; provided that (1) if a new corporation results
from such reorganization or readjustment, such corporation assumes the Guarantor
Senior Indebtedness and (2) the rights of the holders of the Guarantor Senior
Indebtedness are not, without the consent of such holders, altered by such
reorganization or readjustment. The consolidation of a Guarantor with, or the
merger of a Guarantor with or into, another corporation or the liquidation or
dissolution of a Guarantor following the sale, conveyance, transfer, lease or
other disposition of all or substantially all of its property and assets to
another corporation upon the terms and conditions provided in Article Five of
this Indenture shall not be deemed a dissolution, winding up, liquidation or
reorganization for the purposes of this Section 12.03 if such other corporation
shall, as a part of such consolidation, merger, sale, conveyance, transfer,
lease or other disposition, comply (to the extent required) with the conditions
stated in Article Five of this Indenture.
SECTION 12.04. Subrogation. (a) Upon the payment in full of all Guarantor
Senior Indebtedness in cash or cash equivalents, the Holders shall be subrogated
to the rights of the holders of Guarantor Senior Indebtedness to receive
payments or distributions of cash, property or securities of the Guarantors made
on such Guarantor Senior Indebtedness until all obligations arising under the
Note Guarantees shall be paid in full; and, for the purposes of such
subrogation, no payments or distributions to the holders of the Guarantor Senior
Indebtedness of any cash, property or securities to which the Holders or the
Trustee on their behalf would be entitled except for the provisions of this
Article Twelve, and no payment pursuant to the provisions of this Article Twelve
to the holders of Guarantor Senior Indebtedness by the Holders or the Trustee on
their behalf shall, as between each Guarantor, its creditors other than holders
of Guarantor Senior Indebtedness, and the Holders, be deemed to be a payment by
such Guarantor to or on account of the Guarantor Senior Indebtedness. It is
understood that the provisions of this Article Twelve are intended solely for
the purpose of defining the relative rights of the Holders, on the one hand, and
the holders of the Guarantor Senior Indebtedness, on the other hand.
(b) If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article Twelve shall have been
applied, pursuant to the provisions of this Article Twelve, to the payment of
all amounts payable under Guarantor Senior Indebtedness, then, and in such case,
the Holders shall be entitled to receive from the holders of such Guarantor
Senior Indebtedness any payments or distributions received by such holders of
Guarantor Senior Indebtedness in excess of the amount required to make payment
in full, in cash or cash equivalents, of such Guarantor Senior Indebtedness of
such holders.
SECTION 12.05. Obligations of Guarantor Unconditional. (a) Nothing
contained in this Article Twelve or elsewhere in this Indenture or in the Notes
is intended to or shall impair, as among the Guarantors and the Holders, the
obligation of such Guarantors, which is absolute and unconditional, to pay to
the Holders all obligations arising under the Note Guarantees as and when the
same shall become due and payable in accordance with their terms, or is intended
to or shall affect the relative rights of the Holders and creditors of the
Guarantors other than the holders of the Guarantor Senior Indebtedness, nor
shall
<PAGE>
92
anything herein or therein prevent the Holders or the Trustee on their behalf
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to the rights, if any, under this Article Twelve
of the holders of the Guarantor Senior Indebtedness.
(b) Without limiting the generality of the foregoing, nothing contained in
this Article Twelve will restrict the right of the Trustee or the Holders to
take any action to declare the Notes to be due and payable prior to their Stated
Maturity pursuant to Section 6.01 of this Indenture or to pursue any rights or
remedies hereunder; provided, however, that all Guarantor Senior Indebtedness
then due and payable or thereafter declared to be due and payable shall first be
paid in full, in cash or cash equivalents, before the Holders or the Trustee are
entitled to receive any direct or indirect payment from any Guarantor of
Guarantor Senior Subordinated Obligations.
SECTION 12.06. Notice to Trustee. (a) Each Guarantor shall give prompt
written notice to the Trustee of any fact known to such Guarantor that would
prohibit the making of any payment to or by the Trustee in respect of the Note
Guarantees pursuant to the provisions of this Article Twelve. The Trustee shall
not be charged with the knowledge of the existence of any default or event of
default with respect to any Guarantor Senior Indebtedness of any Guarantor or of
any other facts that would prohibit the making of any payment to or by the
Trustee unless and until the Trustee shall have received notice in writing at
its Corporate Trust Office to that effect signed by an Officer of such
Guarantor, or by a holder of such Guarantor Senior Indebtedness or trustee or
agent thereof; and prior to the receipt of any such written notice, the Trustee
shall, subject to Article Seven, be entitled to assume that no such facts exist;
provided that, if the Trustee shall not have received the notice provided for in
this Section 12.06 at least two Business Days prior to the date upon which, by
the terms of this Indenture, any monies shall become payable for any purpose
(including, without limitation, the payment of all obligations arising under any
Note Guarantee), then, notwithstanding anything herein to the contrary, the
Trustee shall have full power and authority to receive any monies from such
Guarantor and to apply the same to the purpose for which they were received, and
shall not be affected by any notice to the contrary that may be received by it
on or after such prior date except for an acceleration of the Notes prior to
such application. Nothing contained in this Section 12.06 shall limit the right
of the holders of Guarantor Senior Indebtedness to recover payments as
contemplated by this Article Twelve. The foregoing shall not apply if the Paying
Agent is the Company. The Trustee shall be entitled to rely on the delivery to
it of a written notice by a Person representing himself or itself to be a holder
of any Guarantor Senior Indebtedness (or a trustee on behalf of, or other
representative of, such holder) to establish that such notice has been given by
a holder of such Guarantor Senior Indebtedness or a trustee or representative on
behalf of any such holder.
(b) In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Guarantor Senior Indebtedness to participate in any payment or distribution
pursuant to this Article Twelve, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Guarantor Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or
<PAGE>
93
distribution and any other facts pertinent to the rights of such Person under
this Article Twelve and, if such evidence is not furnished to the Trustee, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.
SECTION 12.07. Reliance on Judicial Order or Certificate of Liquidating
Agent. Upon any payment or distribution of assets or securities referred to in
this Article Twelve, the Trustee and the Holders shall be entitled to rely upon
any order or decree made by any court of competent jurisdiction in which
bankruptcy, dissolution, winding up, liquidation or reorganization proceedings
are pending, or upon a certificate of the receiver, trustee in bankruptcy,
liquidating trustee, agent or other similar Person making such payment or
distribution, delivered to the Trustee or to the Holders for the purpose of
ascertaining the persons entitled to participate in such distribution, the
holders of the Guarantor Senior Indebtedness and other Indebtedness of a
Guarantor, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
Twelve.
SECTION 12.08. Trustee's Relation to Guarantor Senior Indebtedness. (a)
The Trustee and any Paying Agent shall be entitled to all the rights set forth
in this Article Twelve with respect to any Guarantor Senior Indebtedness that
may at any time be held by it in its individual or any other capacity to the
same extent as any other holder of Guarantor Senior Indebtedness and nothing in
this Indenture shall deprive the Trustee or any Paying Agent of any of its
rights as such holder.
(b) With respect to the holders of Guarantor Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article Twelve, and no implied
covenants or obligations with respect to the holders of Guarantor Senior
Indebtedness shall be read into this Indenture against the Trustee. The Trustee
shall not be deemed to owe any fiduciary duty to the holders of Guarantor Senior
Indebtedness (except as provided in Sections 12.02(c) and 12.03(c) of this
Indenture) and shall not be liable to any such holders if the Trustee shall in
good faith mistakenly pay over or distribute to Holders of Note Guarantees or to
a Guarantor or to any other person cash, property or securities to which any
holders of Guarantor Senior Indebtedness shall be entitled by virtue of this
Article Twelve or otherwise.
SECTION 12.09. Subordination Rights Not Impaired by Acts or Omissions of a
Guarantor or Holders of Guarantor Senior Indebtedness. No right of any present
or future holders of any Guarantor Senior Indebtedness to enforce subordination
as provided in this Article Twelve will at any time in any way be prejudiced or
impaired by any act or failure to act on the part of a Guarantor or by any act
or failure to act, in good faith, by any such holder, or by any noncompliance by
such Guarantor with the terms of this Indenture, regardless of any knowledge
thereof that any such holder may have or otherwise be charged with. The
provisions of this Article Twelve are intended to be for the benefit of, and
shall be enforceable directly by, the holders of Guarantor Senior Indebtedness.
<PAGE>
94
SECTION 12.10. Holders Authorize Trustee to Effectuate Subordination of
Note Guarantees. Each Holder by his acceptance of the Notes authorizes and
expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article Twelve, and appoints the Trustee his attorney-in-fact for such purposes,
including, in the event of any dissolution, winding up, liquidation or
reorganization of a Guarantor (whether in bankruptcy, insolvency, receivership,
reorganization or similar proceedings or upon an assignment for the benefit of
creditors or otherwise) tending towards liquidation of the property and assets
of such Guarantor, the filing of a claim for the unpaid balance of its Note
Guarantees in the form required in those proceedings. If the Trustee does not
file a proper claim or proof in indebtedness in the form required in such
proceeding at least 30 days before the expiration of the time to file such claim
or claims, each holder of Guarantor Senior Indebtedness is hereby authorized to
file an appropriate claim for and on behalf of the Holders.
SECTION 12.11. Not to Prevent Events of Default. The failure to fulfill
any obligation arising under the Note Guarantees by reason of any provision of
this Article Twelve will not be construed as preventing the occurrence of an
Event of Default.
SECTION 12.12. Trustee's Compensation Not Prejudiced. Nothing in this
Article Twelve will apply to amounts due to the Trustee pursuant to other
sections of this Indenture, including Section 7.07.
SECTION 12.13. No Waiver of Subordination Provisions. Without in any way
limiting the generality of Section 12.09, the holders of Guarantor Senior
Indebtedness may, at any time and from time to time, without the consent of or
notice to the Trustee or the Holders, without incurring responsibility to the
Holders and without impairing or releasing the subordination provided in this
Article Twelve or the obligations hereunder of the Holders to the holders of
Guarantor Senior Indebtedness, do any one or more of the following: (a) change
the manner, place or terms of payment or extend the time of payment of, or renew
or alter, Guarantor Senior Indebtedness or any instrument evidencing the same or
any agreement under which Guarantor Senior Indebtedness is outstanding or
secured; (b) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness; (c) release any
Person liable in any manner for the collection of Guarantor Senior Indebtedness;
and (d) exercise or refrain from exercising any rights against the Company and
any other Person.
SECTION 12.14. Payments May Be Paid Prior to Dissolution. Nothing
contained in this Article Twelve or elsewhere in this Indenture shall prevent
(I) a Guarantor, except under the conditions described in Section 12.02 or
12.03, from fulfilling any obligation arising under the Note Guarantees, or from
depositing with the Trustee any money for such payments, or (ii) the application
by the Trustee of any money deposited with it for the purpose of fulfilling any
obligation arising under the Note Guarantees to the holders entitled thereto
unless, at least two Business Days prior to the date upon which such payment
becomes due and payable, the Trustee shall have received the written notice
provided for in Section 12.02(b) of this Indenture (or there shall have been an
acceleration of the Note Guarantees prior to such
<PAGE>
95
application) or in Section 12.06 of this Indenture. The Company shall give
prompt written notice to the Trustee of any dissolution, winding up, liquidation
or reorganization of such Guarantor.
SECTION 12.15. Consent of Holders of Guarantor Senior Indebtedness. The
provisions of this Article Twelve (including the definitions contained in this
Article and references to this Article contained in this Indenture) shall not be
amended in a manner that would adversely affect the rights of the holders of
Guarantor Senior Indebtedness, and no such amendment shall become effective
unless the holders of Guarantor Senior Indebtedness under the Credit Agreement
shall have consented (in accordance with the provisions of the relevant
agreements governing such Senior Indebtedness) to such amendment. The Trustee
shall be entitled to receive and rely on an Officers' Certificate stating that
such consent has been given.
ARTICLE THIRTEEN
MISCELLANEOUS
SECTION 13.01. Trust Indenture Act of 1939. Prior to the effectiveness of
the Registration Statement, this Indenture shall incorporate and be governed by
the provisions of the TIA that are required to be part of and to govern
indentures qualified under the TIA. After the effectiveness of the Registration
Statement, this Indenture shall be subject to the provisions of the TIA that are
required to be a part of this Indenture and shall, to the extent applicable, be
governed by such provisions.
SECTION 13.02. Notices. Any notice or communication shall be sufficiently
given if in writing and delivered in person, mailed by first-class mail or sent
by telecopier transmission addressed as follows:
if to the Company:
LODGIAN FINANCING CORP.
3445 Peachtree Road, NE
Suite 700
Atlanta, Georgia 30326
Telecopier No.: (404) 364-0088
Attention: Corporate Secretary
<PAGE>
96
if to the Trustee:
BANKERS TRUST COMPANY
4 Albany Street, 4th Floor
New York, New York 10006
Telecopier No.: (212) 250-6392/6961
Attention: Corporate Trust and Agency Services
Lodgian, the Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Holder shall be mailed to it at
its address as it appears on the Security Register by first-class mail and shall
be sufficiently given to him if so mailed within the time prescribed. Any notice
or communication shall also be so mailed to any Person described in TIA Section
313(c), to the extent required by the TIA. Copies of any such communication or
notice to a Holder shall also be mailed to the Trustee and each Agent at the
same time.
Failure to mail a notice or communication to a Holder as provided herein
or any defect in any such notice or communication shall not affect its
sufficiency with respect to other Holders. Except for a notice to the Trustee,
which is deemed given only when received, and except as otherwise provided in
this Indenture, if a notice or communication is mailed in the manner provided in
this Section 10.02, it is duly given, whether or not the addressee receives it.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders shall be filed with the Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason
of any other cause it shall be impracticable to give such notice by mail, then
such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
Holders may communicate pursuant to TIA Section 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA Section
312(c).
SECTION 13.03. Certificate and Opinion as to Conditions Precedent. Upon
any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee:
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97
(I) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(ii) an Opinion of Counsel stating that, in the opinion of such
Counsel, all such conditions precedent have been complied with.
SECTION 13.04. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture shall include:
(I) a statement that each person signing such certificate or opinion
has read such covenant or condition and the definitions herein relating
thereto;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statement or opinion contained in such
certificate or opinion is based;
(iii) a statement that, in the opinion of each such person, he or
she has made such examination or investigation as is necessary to enable
him or her to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(iv) a statement as to whether or not, in the opinion of each such
person, such condition or covenant has been complied with; provided,
however, that, with respect to matters of fact, an Opinion of Counsel may
rely on an Officers' Certificate or certificates of public officials.
SECTION 13.05. Rules by Trustee, Paying Agent or Registrar. The Trustee
may make reasonable rules for action by or at a meeting of Holders. The Paying
Agent or Registrar may make reasonable rules for its functions.
SECTION 13.06. Payment Date Other Than a Business Day. If an Interest
Payment Date, Redemption Date, Payment Date, Stated Maturity or date of maturity
of any Note shall not be a Business Day, then payment of principal of, premium,
if any, or interest on such Note, as the case may be, need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the Interest Payment Date, Payment Date or Redemption
Date, or at the Stated Maturity or date of maturity of such Note; provided that
no interest shall accrue for the period from and after such Interest Payment
Date, Payment Date, Redemption Date, Stated Maturity or date of maturity, as the
case may be.
SECTION 13.07. Governing Law. This Indenture and the Notes shall be
governed by the laws of the State of New York. The Trustee, the Company and the
Holders agree to submit to the jurisdiction
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98
of the courts of the State of New York in any action or proceeding arising out
of or relating to this Indenture or the Notes.
SECTION 13.08. No Adverse Interpretation of Other Agreements. This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Company or any Subsidiary of the Company. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.
SECTION 13.09. No Recourse Against Others. No recourse for the payment of
the principal of, premium, if any, or interest on any of the Notes, or for any
claim based thereon or otherwise in respect thereof, and no recourse under or
upon any obligation, covenant or agreement of the Company contained in this
Indenture or in any of the Notes, or because of the creation of any Indebtedness
represented thereby, shall be had against any incorporator or against any past,
present or future partner, stockholder, other equityholder, officer, director,
employee or controlling person, as such, of the Company or of any successor
Person, either directly or through the Company or any successor Person, whether
by virtue of any constitution, statute or rule of law, or by the enforcement of
any assessment or penalty or otherwise; it being expressly understood that all
such liability is hereby expressly waived and released as a condition of, and as
a consideration for, the execution of this Indenture and the issue of the Notes.
SECTION 13.10. Successors. All agreements of the Company in this Indenture
and the Notes shall bind its successors. All agreements of the Trustee in this
Indenture shall bind its successor.
SECTION 13.11. Duplicate Originals. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
SECTION 13.12. Separability. In case any provision in this Indenture or in
the Notes shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 13.13. Table of Contents, Headings, Etc. The Table of Contents,
Cross- Reference Table and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not to be
considered a part hereof and shall in no way modify or restrict any of the terms
and provisions hereof.
SECTION 13.14. Counterparts. This Indenture may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
LODGIAN FINANCING CORP.
By: /s/ Robert M. Flanders
------------------------
Name: Robert M. Flanders
Title: Vice President
LODGIAN, INC.
By: /s/ Robert M. Flanders
------------------------
Name: Robert M. Flanders
Title: Vice President
SHEFFIELD MOTEL ENTERPRISES, INC.
By: /s/ Robert M. Flanders
------------------------
Name: Robert M. Flanders
Title: President
DOTHAN HOSPITALITY 3053, INC.
By: /s/ Robert M. Flanders
------------------------
Name: Robert M. Flanders
Title: President
<PAGE>
100
DOTHAN HOSPITALITY 3071, INC.
By: /s/ Robert M. Flanders
------------------------
Name: Robert M. Flanders
Title: President
GADSDEN HOSPITALITY, INC.
By: /s/ Robert M. Flanders
------------------------
Name: Robert M. Flanders
Title: President
SERVICO FLAGSTAFF, INC.
By: /s/ Robert M. Flanders
------------------------
Name: Robert M. Flanders
Title: President
LODGIAN ANAHEIM INC.
By: /s/ Robert M. Flanders
------------------------
Name: Robert M. Flanders
Title: President
LODGIAN ONTARIO INC.
By: /s/ Robert M. Flanders
------------------------
Name: Robert M. Flanders
Title: President
<PAGE>
101
SERVICO PENSACOLA, INC.
By: /s/ Robert M. Flanders
------------------------
Name: Robert M. Flanders
Title: President
SERVICO PENSACOLA 7200, INC.
By: /s/ Robert M. Flanders
------------------------
Name: Robert M. Flanders
Title: President
SERVICO PENSACOLA 7330, INC.
By: /s/ Robert M. Flanders
------------------------
Name: Robert M. Flanders
Title: President
SERVICO FT. PIERCE, INC.
By: /s/ Robert M. Flanders
------------------------
Name: Robert M. Flanders
Title: President
AMI OPERATING PARTNERS, L.P.
BY AMIOP ACQUISITION CORP
By: /s/ Robert M. Flanders
------------------------
<PAGE>
102
Name: Robert M. Flanders
Title: President
SERVICO CENTRE ASSOCIATES, LTD.
BY PALM BEACH MOTEL ENTERPRISES, INC.
By: /s/ Robert M. Flanders
------------------------
Name: Robert M. Flanders
Title: President
SERVICO WEST PALM BEACH, INC.
By: /s/ Robert M. Flanders
------------------------
Name: Robert M. Flanders
Title: President
SERVICO WINTER HAVEN, INC.
By: /s/ Robert M. Flanders
------------------------
Name: Robert M. Flanders
Title: President
SERVICO SILVER SPRING, INC.
By: /s/ Robert M. Flanders
------------------------
Name: Robert M. Flanders
Title: President
<PAGE>
103
ALBANY HOTEL, INC.
By: /s/ Robert M. Flanders
------------------------
Name: Robert M. Flanders
Title: President
SERVICO NORTHWOODS, INC.
By: /s/ Robert M. Flanders
------------------------
Name: Robert M. Flanders
Title: President
SERVICO WINDSOR, INC.
By: /s/ Robert M. Flanders
------------------------
Name: Robert M. Flanders
Title: President
BRUNSWICK MOTEL ENTERPRISES, INC.
By: /s/ Robert M. Flanders
------------------------
Name: Robert M. Flanders
Title: President
LITTLE ROCK LODGING ASSOCIATES I, L.P.
BY IMPAC SPE #3, INC.
By: /s/ Robert M. Flanders
------------------------
Name: Robert M. Flanders
Title: Vice President, Secretary and
Treasurer
<PAGE>
104
ATLANTA HILLSBORO LODGING, LLC
By: /s/ Robert S. Cole
--------------------
Name: Robert S. Cole
Title: Manager
LODGIAN RICHMOND, L.L.C.
By: /s/ Robert M. Flanders
-----------------------
Name: Robert M. Flanders
Title: President
SERVICO ROLLING MEADOWS, INC.
By: /s/ Robert M. Flanders
-----------------------
Name: Robert M. Flanders
Title: President
SERVICO CEDAR RAPIDS, INC.
By: /s/ Robert M. Flanders
-----------------------
Name: Robert M. Flanders
Title: President
SERVICO METAIRIE, INC.
By: /s/ Robert M. Flanders
-----------------------
Name: Robert M. Flanders
Title: President
<PAGE>
105
SERVICO COLUMBIA, INC.
By: /s/ Robert M. Flanders
-----------------------
Name: Robert M. Flanders
Title: President
SERVICO COLESVILLE, INC.
By: /s/ Robert M. Flanders
-----------------------
Name: Robert M. Flanders
Title: President
SERVICO MARYLAND, INC.
By: /s/ Robert M. Flanders
-----------------------
Name: Robert M. Flanders
Title: President
NH MOTEL ENTERPRISES, INC.
By: /s/ Robert M. Flanders
-----------------------
Name: Robert M. Flanders
Title: President
MINNEAPOLIS MOTEL ENTERPRISES, INC.
By: /s/ Robert M. Flanders
-----------------------
Name: Robert M. Flanders
Title: President
<PAGE>
106
SERVICO ROSEVILLE, INC.
By: /s/ Robert M. Flanders
-----------------------
Name: Robert M. Flanders
Title: President
LODGIAN MOUNT LAUREL, INC.
By: /s/ Robert M. Flanders
-----------------------
Name: Robert M. Flanders
Title: President
SERVICO JAMESTOWN, INC.
By: /s/ Robert M. Flanders
-----------------------
Name: Robert M. Flanders
Title: President
SERVICO NEW YORK, INC.
By: /s/ Robert M. Flanders
-----------------------
Name: Robert M. Flanders
Title: President
SERVICO NIAGARA FALLS, INC.
By: /s/ Robert M. Flanders
-----------------------
Name: Robert M. Flanders
Title: President
<PAGE>
107
SERVICO GRAND ISLAND, INC.
By: /s/ Robert M. Flanders
-----------------------
Name: Robert M. Flanders
Title: President
FAYETTEVILLE MOTEL ENTERPRISES, INC.
By: /s/ Robert M. Flanders
-----------------------
Name: Robert M. Flanders
Title: President
APICO INNS OF GREEN TREE, INC.
By: /s/ Robert M. Flanders
-----------------------
Name: Robert M. Flanders
Title: President
APICO HILLS, INC.
By: /s/ Robert M. Flanders
-----------------------
Name: Robert M. Flanders
Title: President
SERVICO HILTON HEAD, INC.
By: /s/ Robert M. Flanders
-----------------------
Name: Robert M. Flanders
Title: President
<PAGE>
108
SERVICO AUSTIN, INC.
By: /s/ Robert M. Flanders
-----------------------
Name: Robert M. Flanders
Title: President
SERVICO MARKET CENTER, INC.
By: /s/ Robert M. Flanders
-----------------------
Name: Robert M. Flanders
Title: President
SERVICO HOUSTON, INC.
By: /s/ Robert M. Flanders
-----------------------
Name: Robert M. Flanders
Title: President
BANKERS TRUST COMPANY
By: /s/ Susan Johnson
-------------------
Name: Susan Johnson
Title: Assistant Vice President
<PAGE>
SCHEDULE I
LIST OF INITIAL SUBSIDIARY GUARANTORS
Sheffield Motel Enterprises, Inc., an Alabama corporation
Dothan Hospitality 3053, Inc., an Alabama corporation
Dothan Hospitality 3071, Inc., an Alabama corporation
Gadsden Hospitality, Inc., an Alabama corporation
Servico Flagstaff, Inc., an Arizona corporation
Lodgian Anaheim Inc., a California corporation
Lodgian Ontario Inc., a California 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
AMI Operating Partners, L.P., a Delaware limited partnership
Servico Centre Associates, Ltd., a Florida corporation
Servico West Palm Beach, Inc., a Florida corporation
Servico Winter Haven, Inc., a Florida corporation
Servico Silver Spring, Inc., a Florida corporation
Albany Hotel, Inc., a Florida corporation
Servico Northwoods, Inc., a Florida corporation
<PAGE>
2
Servico Windsor, Inc., a Florida corporation
Brunswick Motel Enterprises, Inc., a Georgia corporation
Little Rock Lodging Associates I, L.P., a Georgia limited partnership
Atlanta Hillsboro Lodging, LLC, a Georgia limited liability company
Lodgian Richmond, L.L.C., a Georgia limited liability company
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
Lodgian Mount Laurel, Inc., a New Jersey corporation
Servico Jamestown, Inc., a New York corporation
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
<PAGE>
3
Apico Inns of Green Tree, Inc., a Pennsylvania corporation
Apico Hills, Inc., a Pennsylvania corporation
Servico Hilton Head, Inc., a South Carolina corporation
Servico Austin, Inc., a Texas corporation
Servico Market Center, Inc., a Texas corporation
Servico Houston, Inc., a Texas corporation
<PAGE>
EXHIBIT A
[APPLICABLE LEGENDS]
[FACE OF NOTE]
LODGIAN FINANCING CORP.
12 1/4% Senior Subordinated Note due 2009
[CUSIP] [CINS] [ISIN] [__________]
No. ____ $200,000,000
LODGIAN FINANCING CORP., a Delaware corporation (the "Company", which term
includes any successor under the Indenture hereinafter referred to), for value
received, promises to pay to _____________, or its registered assigns, the
principal sum of ____________ dollars ($____) on July 15, 2009.
Interest Payment Dates: January 15 and July 15, commencing January 15,
2000.
Regular Record Dates: January 1 and July 1.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
<PAGE>
2
IN WITNESS WHEREOF, the Company has caused this Note to be signed manually
or by facsimile by its duly authorized officers.
LODGIAN FINANCING CORP.
By:____________________________________
Name:
Title:
By:____________________________________
Name:
Title:
(Trustee's Certificate of Authentication)
This is one of the 12 1/4% Senior Subordinated Notes due 2009 described in the
within-mentioned Indenture.
Date: [________,____] BANKERS TRUST COMPANY
as Trustee
By:____________________________________
Authorized Signatory
<PAGE>
3
[REVERSE SIDE OF NOTE]
LODGIAN FINANCING CORP.
12 1/4% Senior Subordinated Note due 2009
1. Principal and Interest.
The Company will pay the principal of this Note on July 15, 2009.
The Company promises to pay interest on the principal amount of this Note
on each Interest Payment Date, as set forth below, at the rate per annum shown
above.
Interest will be payable semiannually (to the holders of record of the
Notes at the close of business on the January 1 or July 1 immediately preceding
the Interest Payment Date) on each Interest Payment Date, commencing January 15,
2000.
If an exchange offer (the "Exchange Offer") registered under the
Securities Act is not consummated and a shelf registration statement (the "Shelf
Registration Statement") under the Securities Act with respect to resales of the
Notes is not declared effective by the Commission, on or before January 23, 2000
in accordance with the terms of the Registration Rights Agreement dated July 20,
1999 between the Company, Lodgian, Inc. and the Subsidiary Guarantors named
therein and Morgan Stanley & Co. Incorporated, Lehman Brothers Inc. and Bear,
Stearns & Co. Inc., the annual interest rate borne by the Notes shall be
increased by 0.5% from the rate shown above accruing from July 23, 1999, payable
in cash semiannually, in arrears, on each Interest Payment Date, commencing
January 15, 2000 and if the Exchange Offer is not consummated, or a Shelf
Registration Statement under the Securities Act with respect to resales of the
Notes is not declared effective by the Commission on or before April 23, 2000 in
accordance with the terms of the Registration Rights Agreement, the annual
interest rate borne by the Notes shall be increased by an additional .5% per
annum. Once the Exchange Offer is consummated or the Shelf Registration
Statement is declared effective, the annual interest rate borne by the Notes
shall be changed to again be the rate shown above. The Holder of this Note is
entitled to the benefits of such Registration Rights Agreement.
Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from July 23, 1999;
provided that, if there is no existing default in the payment of interest and
this Note is authenticated between a Regular Record Date referred to on the face
hereof and the next succeeding Interest Payment Date, interest shall accrue from
such Interest Payment Date. Interest will be computed on the basis of a 360-day
year of twelve 30-day months on a U.S. corporate bond basis.
<PAGE>
4
The Company shall pay interest on overdue principal and premium, if any,
and interest on overdue installments of interest, to the extent lawful, at the
same rate per annum payable on the principal of this Note.
2. Method of Payment.
The Company will pay interest (except defaulted interest) on the principal
amount of the Notes as provided above on each January 15 and July 15, commencing
January 15, 2000 to the persons who are Holders (as reflected in the Security
Register at the close of business on the January 1 or July 1 immediately
preceding the Interest Payment Date), in each case, even if the Note is
cancelled on registration of transfer or registration of exchange after such
record date; provided that, with respect to the payment of principal, the
Company will make payment to the Holder that surrenders this Note to a Paying
Agent on or after July 15, 2009.
The Company will pay principal, premium, if any, and as provided above,
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. However, the Company may pay
principal, premium, if any, and interest by its check payable in such money. It
may mail an interest check to a Holder's registered address (as reflected in the
Security Register). If a payment date is a date other than a Business Day at a
place of payment, payment may be made at that place on the next succeeding day
that is a Business Day and no interest shall accrue for the intervening period.
The Company may also pay principal, premium, if any, and interest by wire
transfer instructions provided by the Holder.
3. Paying Agent and Registrar.
Initially, the Trustee will act as authenticating agent, Paying Agent,
Registrar and agent for service of notice and demands. The Company may change
any authenticating agent, Paying Agent or Registrar upon reasonable notice. The
Company, any Subsidiary or any Affiliate of any of them may act as Paying Agent,
Registrar or co-Registrar.
4. Indenture; Limitations.
The Company issued the Notes under an Indenture dated as of July 23, 1999
(the "Indenture"), between the Company, Lodgian, Inc. and the Subsidiary
Guarantors named therein and Bankers Trust Company, trustee (the "Trustee").
Capitalized terms herein are used as defined in the Indenture unless otherwise
indicated. The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act. The
Notes are subject to all such terms, and Holders are referred to the Indenture
and the Trust Indenture Act for a statement of all such terms. To the extent
permitted by applicable law, in the event of any inconsistency between the terms
of this Note and the terms of the Indenture, the terms of the Indenture shall
control.
The Notes are general unsecured obligations of the Company.
<PAGE>
5
The Company may, subject to Article Four of the Indenture and applicable
law, issue additional Notes under the Indenture.
5. Optional Redemption.
The Notes are redeemable, at the Company's option, in whole or in part, at
any time or from time to time, on or after July 15, 2004 and prior to maturity,
upon not less than 30 nor more than 60 days' prior notice mailed by first class
mail to each Holder's last address, as it appears in the Security Register, at
the following Redemption Prices (expressed in percentages of principal amount ),
plus accrued and unpaid interest to the Redemption Date (subject to the right of
Holders of record on the relevant Regular Record Date that is prior to the
Redemption Date to receive interest due on an Interest Payment Date), if
redeemed during the 12-month period commencing July 15 of the years set forth
below:
Year Redemption Price
---- ----------------
2004................ 106.125%
2005................ 104.083%
2006................ 102.042%
2007 and thereafter. 100.000%
At any time prior to July 15, 2002, the Company may redeem up to 35% of
the aggregate principal amount of the Notes with the proceeds of one or more
Public Equity Offerings, at any time as a whole or from time to time in part, at
a Redemption Price (expressed as a percentage of principal amount) of 112.250%,
plus accrued and unpaid interest to the Redemption Date (subject to the rights
of Holders of record on the relevant Regular Record Date that is prior to the
Redemption Date to receive interest due on an Interest Payment Date); provided
that (I) at least 65% of the aggregate principal amount of Notes originally
issued on the Closing Date remains outstanding after each such redemption and
(ii) notice of such redemption shall be mailed within 60 days of the related
Public Equity Offering.
Notes in original denominations larger than $1,000 may be redeemed in
part. On and after the Redemption Date, interest ceases to accrue on Notes or
portions of Notes called for redemption, unless the Company defaults in the
payment of the Redemption Price.
6. Repurchase upon Change of Control.
Upon the occurrence of any Change of Control, each Holder shall have the
right to require the repurchase of its Notes by the Company in cash pursuant to
the offer described in the Indenture at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase (the "Payment Date").
<PAGE>
6
A notice of such Change of Control will be mailed within 30 days after any
Change of Control occurs to each Holder at its last address as it appears in the
Security Register. Notes in original denominations larger than $1,000 may be
sold to the Company in part. On and after the Payment Date, interest ceases to
accrue on Notes or portions of Notes surrendered for purchase by the Company,
unless the Company defaults in the payment of the purchase price.
7. Denominations; Transfer; Exchange.
The Notes are in registered form without coupons in denominations of
$1,000 of principal amount and multiples of $1,000 in excess thereof. A Holder
may register the transfer or exchange of Notes in accordance with the Indenture.
The Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the transfer
or exchange of any Notes selected for redemption. Also, it need not register the
transfer or exchange of any Notes for a period of 15 days before the day of
mailing of a notice of redemption of Notes selected for redemption.
8. Persons Deemed Owners.
A Holder shall be treated as the owner of a Note for all purposes.
9. Unclaimed Money.
If money for the payment of principal, premium, if any, or interest
remains unclaimed for two years, the Trustee and the Paying Agent will pay the
money back to the Company at its request. After that, Holders entitled to the
money must look to the Company for payment, unless an abandoned property law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
10. Discharge Prior to Redemption or Maturity.
If the Company deposits with the Trustee money or U.S. Government
Obligations sufficient to pay the then outstanding principal of, premium, if
any, and accrued interest on the Notes (a) to redemption or maturity, the
Company will be discharged from the Indenture and the Notes, except in certain
circumstances for certain provisions thereof, and (b) to the Stated Maturity,
the Company will be discharged from certain covenants set forth in the
Indenture.
11. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Notes may be amended
or supplemented with the consent of the Holders of at least a majority in
principal amount of the Notes then outstanding, and any existing default or
compliance with any provision may be waived with the consent of the Holders of
at least
<PAGE>
7
a majority in principal amount of the Notes then outstanding. Without notice to
or the consent of any Holder, the parties thereto may amend or supplement the
Indenture or the Notes to, among other things, cure any ambiguity, defect or
inconsistency and make any change that does not materially and adversely affect
the rights of any Holder.
12. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of Lodgian and
its Restricted Subsidiaries, among other things, to Incur Indebtedness, to Incur
Indebtedness that is subordinate to any Senior Indebtedness but senior to the
Notes or Note Guarantees, make Restricted Payments, suffer to exist restrictions
on the ability of Restricted Subsidiaries to make certain payments to Lodgian,
issue Capital Stock of Restricted Subsidiaries, Guarantee Indebtedness of the
Company or any Guarantor, engage in transactions with Affiliates, suffer to
exist or incur Liens, use the proceeds from Asset Sales, or merge, consolidate
or transfer substantially all of its assets. Within 45 days after the end of
each fiscal quarter (90 days after the end of the last fiscal quarter of each
year), Lodgian shall deliver to the Trustee an Officers' Certificate stating
whether or not the signers thereof know of any Default or Event of Default under
such restrictive covenants.
13. Successor Persons.
When a successor person or other entity assumes all the obligations of its
predecessor under the Notes and the Indenture, the predecessor person will be
released from those obligations.
14. Defaults and Remedies.
Any of the following events constitutes an "Event of Default" under
the Indenture:
(a) default in the payment of principal of (or premium, if any, on)
any Note when the same becomes due and payable at maturity, upon
acceleration, redemption or otherwise, whether or not such payment is
prohibited by the provisions described under Article Eleven;
(b) default in the payment of interest on any Note when the same
becomes due and payable, and such default continues for a period of 30
days, whether or not such payment is prohibited by the provisions
described under Article Eleven;
(c) default in the performance or breach of Article Five or the
failure by the Company to make or consummate an Offer to Purchase in
accordance with Section 4.11 or Section 4.12;
(d) Lodgian, the Company or any Subsidiary Guarantor defaults in the
performance of or breaches any other covenant or agreement in the
Indenture or under the Notes (other than a default specified in clause
(a), (b) or (c) above) and such default or breach continues for a period
<PAGE>
8
of 30 consecutive days after written notice by the Trustee or the Holders
of 25% or more in aggregate principal amount of the Notes;
(e) there occurs with respect to any issue or issues of Indebtedness
of Lodgian, the Company, any Subsidiary Guarantor or any Significant
Subsidiary having an outstanding principal amount of $5 million or more in
the aggregate for all such issues of all such Persons, whether such
Indebtedness now exists or shall hereafter be created, (I) an event of
default that has caused the holder thereof to declare such Indebtedness to
be due and payable prior to its Stated Maturity and such Indebtedness has
not been discharged in full or such acceleration has not been rescinded or
annulled within 30 days of such acceleration and/or (II) the failure to
make a principal payment at the final (but not any interim) fixed maturity
and such defaulted payment shall not have been made, waived or extended
within 30 days of such payment default;
(f) any final judgment or order (not covered by insurance) for the
payment of money in excess of $5 million in the aggregate for all such
final judgments or orders against all such Persons (treating any
deductibles, self-insurance or retention as not so covered) shall be
rendered against Lodgian, the Company, any Subsidiary Guarantor or any
Significant Subsidiary and shall not be paid or discharged, and there
shall be any period of 30 consecutive days following entry of the final
judgment or order that causes the aggregate amount for all such final
judgments or orders outstanding and not paid or discharged against all
such Persons to exceed $5 million during which a stay of enforcement of
such final judgment or order, by reason of a pending appeal or otherwise,
shall not be in effect;
(g) a court having jurisdiction in the premises enters a decree or
order for (A) relief in respect of Lodgian, the Company, any Subsidiary
Guarantor or any Significant Subsidiary in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, (B) appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of Lodgian, the Company, any
Subsidiary Guarantor or any Significant Subsidiary or for all or
substantially all of the property and assets of Lodgian, the Company, any
Subsidiary Guarantor or any Significant Subsidiary or (C) the winding up
or liquidation of the affairs of Lodgian, the Company, any Subsidiary
Guarantor or any Significant Subsidiary and, in each case, such decree or
order shall remain unstayed and in effect for a period of 30 consecutive
days;
(h) Lodgian, the Company, any Subsidiary Guarantor or any
Significant Subsidiary (A) commences a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
consents to the entry of an order for relief in an involuntary case under
any such law, (B) consents to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of Lodgian, the Company, any Subsidiary Guarantor or any
Significant Subsidiary or for all or substantially all of the property and
assets of Lodgian, the Company, any Subsidiary Guarantor or any
Significant Subsidiary or (C) effects any general assignment for the
benefit of creditors; or
<PAGE>
9
(I) Lodgian or any Subsidiary Guarantor repudiates its obligations
under its Note Guarantee or, except as permitted by the Indenture, any
Note Guarantee is determined to be unenforceable or invalid or shall for
any reason cease to be in full force and effect.
If an Event of Default, as defined in the Indenture, occurs and is
continuing, the Trustee may, and at the direction of the Holders of at least 25%
in aggregate principal amount of the Notes then outstanding shall, declare all
the Notes to be due and payable. If a bankruptcy or insolvency default with
respect to the Company or a Guarantor occurs and is continuing, the Notes
automatically become due and payable. Holders may not enforce the Indenture or
the Notes except as provided in the Indenture. The Trustee may require indemnity
satisfactory to it before it enforces the Indenture or the Notes. Subject to
certain limitations, Holders of at least a majority in principal amount of the
Notes then outstanding may direct the Trustee in its exercise of any trust or
power.
15. Subordination.
The payment of the Notes will, to the extent set forth in the Indenture,
be subordinated in right of payment to the prior payment in full, in cash or
cash equivalents, of all Senior Indebtedness.
16. Guarantee.
The Company's obligations under the Notes are guaranteed, to the extent
permitted by law, on a senior subordinated basis by each Guarantor. Each
Guarantor's obligation with respect to a Note Guarantee will, to the extent set
forth in the Indenture, be subordinated in right of payment to the prior payment
in full, in cash, of all Guarantor Senior Indebtedness of such Guarantor.
17. Trustee Dealings with the Company.
The Trustee under the Indenture, in its individual or any other capacity,
may make loans to, accept deposits from and perform services for the Company or
its Affiliates and may otherwise deal with the Company or its Affiliates as if
it were not the Trustee.
18. No Recourse Against Others.
No incorporator or any past, present or future partner, stockholder, other
equityholder, officer, director, employee or controlling person, as such, of the
Company or of any successor Person shall have any liability for any obligations
of the Company under the Notes or the Indenture or for any claim based on, in
respect of or by reason of, such obligations or their creation. Each Holder by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for the issuance of the Notes.
<PAGE>
10
19. Authentication.
This Note shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on the other side of this Note.
20. Abbreviations.
Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors
Act).
The Company will furnish a copy of the Indenture to any Holder upon
written request and without charge. Requests may be made to Lodgian Financing
Corp., 3445 Peachtree Road, NE, Suite 700, Atlanta, Georgia 30326; Attention:
Corporate Secretary.
<PAGE>
11
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED, the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
_____________________________________________________________________
Please print or typewrite name and address including zip code of assignee
_____________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing _________________________ attorney to transfer said Note on the books
of the Company with full power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL NOTES OTHER THAN EXCHANGE NOTES,
UNLEGENDED OFFSHORE GLOBAL NOTES AND
UNLEGENDED OFFSHORE PHYSICAL NOTES]
In connection with any transfer of this Note occurring prior to the date
which is the earlier of (I) the date the Shelf Registration Statement is
declared effective or (ii) the end of the period referred to in Rule 144(k)
under the Securities Act, the undersigned confirms that without utilizing any
general solicitation or general advertising that:
[Check One]
|_|(a) this Note is being transferred in compliance with the exemption from
registration under the Securities Act of 1933 provided by Rule 144A
thereunder.
or
|_|(b) this Note is being transferred other than in accordance with (a) above
and documents are being furnished which comply with the conditions of
transfer set forth in this Note and the Indenture.
<PAGE>
12
If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Note in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.08 of the Indenture shall have
been satisfied.
Date:______________ __________________________________________________
NOTICE: The signature to this assignment must
correspond with the name as written upon the face
of the within-mentioned instrument in every
particular, without alteration or any change
whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933 and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Date:______________ __________________________________________________
NOTICE: To be executed by an executive officer
<PAGE>
13
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to Section
4.11 or 4.12 of the Indenture, check the Box: |_|
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 4.11 or 4.12 of the Indenture, state the amount (in
principal amount): $___________________.
Date: ___________
Your Signature:_________________________________________________________________
(Sign exactly as your name appears on the other side of this Note)
Signature Guarantee: ______________________________
<PAGE>
EXHIBIT B
Form of Certificate
___________, __
Bankers Trust Company
4 Albany Street, 4th Floor
New York, NY 10006
Attention: Corporate Trust and Agency Services
Re: Lodgian Financing Corp. (the "Company")
12 1/4% Senior Subordinated Notes due 2009 (the "Notes")
Dear Sirs:
This letter relates to U.S. $_________ principal amount of Notes
represented by a Note (the "Legended Note") which bears a legend outlining
restrictions upon transfer of such Legended Note. Pursuant to Section 2.02 of
the Indenture dated as of July 23, 1999 (the "Indenture") relating to the Notes,
we hereby certify that we are (or we will hold such securities on behalf of) a
person outside the United States to whom the Notes could be transferred in
accordance with Rule 904 of Regulation S promulgated under the U.S. Securities
Act of 1933. Accordingly, you are hereby requested to exchange the legended
certificate for an unlegended certificate representing an identical principal
amount of Notes, all in the manner provided for in the Indenture.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By: ________________________________________
Authorized Signature
<PAGE>
EXHIBIT C
Form of Certificate to Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
___________, __
Bankers Trust Company
4 Albany Street, 4th Floor
New York, NY 10006
Attention: Corporate Trust and Agency Services
Re: Lodgian Financing Corp. (the "Company")
12 1/4% Senior Subordinated Notes due 2009 (the "Notes")
Dear Sirs:
In connection with our proposed purchase of $__________________ aggregate
principal amount of the Notes, we confirm that:
1. We understand that any subsequent transfer of the Notes is subject to
certain restrictions and conditions set forth in the Indenture dated as of July
23, 2009 (the "Indenture") relating to the Notes and the undersigned agrees to
be bound by, and not to resell, pledge or otherwise transfer the Notes except in
compliance with such restrictions and conditions and the Securities Act of 1933,
amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes may not be offered or
sold except as permitted in the following sentence. We agree, on our own behalf
and on behalf of any accounts for which we are acting as hereinafter stated,
that if we should sell any Notes within the time period referred to in Rule
144(k) of the Securities Act, we will do so only (A) to the Company or any
subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act to
a "qualified institutional buyer" (as defined therein), (C) to an institutional
"accredited investor" (as defined below) that, prior to such transfer, furnishes
(or has furnished on its behalf by a U.S. broker-dealer) to you and to the
Company a signed letter substantially in the form of this letter and, if such
transfer is in respect of an aggregate principal amount of less than $100,000,
an opinion of counsel acceptable to the Company that such transfer is in
compliance with the Securities Act, (D) outside the United States in accordance
with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the
exemption from registration provided by Rule 144 under the Securities Act (if
available) or (F) pursuant to an effective registration statement under the
Securities Act, and we further agree to provide to any person purchasing any of
the Notes from us a notice advising such purchaser that resales of the Notes are
restricted as stated herein.
<PAGE>
C-2
3. We understand that, on any proposed resale of any Notes, we will be
required to furnish to you and the Company such certifications, legal opinions
and other information as you and the Company may reasonably require to confirm
that the proposed sale complies with the foregoing restrictions. We further
understand that the Notes purchased by us will bear a legend to the foregoing
effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Notes purchased by us for our own account or for
one or more accounts (each of which is an institutional "accredited investor")
as to each of which we exercise sole investment discretion.
You, the Company and each Guarantor are entitled to rely upon this letter
and are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:___________________________________
Authorized Signature
<PAGE>
EXHIBIT D
Form of Certificate to Be Delivered in
Connection with Transfers Pursuant to Regulation S
_______________, __
Bankers Trust Company
4 Albany Street, 4th Floor
New York, NY 10006
Attention: Corporate Trust and Agency Services
Re: Lodgian Financing Corp. (the "Company")
12 1/4% Senior Subordinated Notes due 2009 (the "Notes")
Dear Sirs:
In connection with our proposed sale of U.S.$_________ aggregate principal
amount of the Notes, we confirm that such sale has been effected pursuant to and
in accordance with Regulation S under the Securities Act of 1933 and,
accordingly, we represent that:
(1) the offer of the Notes was not made to a person in the United States;
(2) at the time the buy order was originated, the transferee was outside
the United States or we and any person acting on our behalf reasonably believed
that the transferee was outside the United States;
(3) no directed selling efforts have been made by us in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation
S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the U.S. Securities Act of 1933.
You, the Company and each Guarantor are entitled to rely upon this letter
and are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:___________________________________
Authorized Signature
<PAGE>
Exhibit 4.2
- --------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated July 20, 1999
among
LODGIAN FINANCING CORP.,
LODGIAN, INC.,
SUBSIDIARIES LISTED IN SCHEDULE I HERETO,
and
MORGAN STANLEY & CO. INCORPORATED,
LEHMAN BROTHERS INC.
and
BEAR, STEARNS & CO. INC.
- --------------------------------------------------------------------------------
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into July 20, 1999, among LODGIAN FINANCING CORP., a Delaware
corporation ("Lodgian Financing"), LODGIAN INC. ("Lodgian"), a Delaware
corporation and the sole stockholder of Lodgian Financing, and certain
subsidiaries of Lodgian Financing listed in Schedule I hereto (collectively, the
"Subsidiary Guarantors" and, together with Lodgian, the "Guarantors"), and
MORGAN STANLEY & CO. INCORPORATED, LEHMAN BROTHERS INC. and BEAR STEARNS & CO.
INC. (the "Placement Agents").
This Agreement is made pursuant to the Placement Agreement dated
July 20, 1999, among Lodgian Financing, the Guarantors and the Placement Agents
(the "Placement Agreement"), which provides for the sale by Lodgian Financing to
the Placement Agents of an aggregate of $200,000,000 principal amount of Lodgian
Financing's 12 1/4% Senior Subordinated Notes Due 2009 (the "Securities"). The
obligations of Lodgian Financing under the Securities and the Indenture will be
unconditionally guaranteed on a senior subordinated unsecured basis by the
Guarantors pursuant to the terms of the Indenture (the "Guarantees"). In order
to induce the Placement Agents to enter into the Placement Agreement, Lodgian
Financing and the Guarantors have agreed to provide to the Placement Agents and
their direct and indirect transferees the registration rights set forth in this
Agreement. The execution of this Agreement is a condition to the closing under
the Placement Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions.
As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended from
time to time.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Closing Date" shall mean the Closing Date as defined in the
Placement Agreement.
"Exchange Offer" shall mean the exchange offer by Lodgian Financing
of Exchange Securities for Registrable Securities pursuant to Section 2(a)
hereof.
<PAGE>
2
"Exchange Offer Registration" shall mean a registration under the
1933 Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an exchange offer
registration statement on Form S-4 (or, if applicable, on another
appropriate form) and all amendments and supplements to such registration
statement, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"Exchange Securities" shall mean securities issued by Lodgian
Financing which are unconditionally guaranteed on an unsecured senior
subordinated basis by the Guarantors under the Indenture containing terms
identical to the Securities, including the Guarantees (except that the
Exchange Securities will not contain restrictions on transfer), and to be
offered to Holders of Securities in exchange for Securities pursuant to
the Exchange Offer.
"Guarantees" shall have the meaning set forth in the preamble.
"Guarantors" shall have the meaning set forth in the preamble and
shall also include the Guarantors' successors.
"Holder" shall mean the Placement Agents, for so long as they own
any Registrable Securities, and each of their successors, assigns and
direct and indirect transferees who become registered owners of
Registrable Securities under the Indenture; provided that for purposes of
Sections 4 and 5 of this Agreement, the term "Holder" shall include
Participating Broker-Dealers (as defined in Section 4(a)).
"Indenture" shall mean the Indenture relating to the Securities to
be dated as of July 23, 1999 among Lodgian Financing, the Guarantors and
Bankers Trust Company, as trustee, and as the same may be amended from
time to time in accordance with the terms thereof.
"Lodgian" shall have the meaning set forth in the preamble and shall
also include Lodgian's successors.
"Lodgian Financing" shall have the meaning set forth in the preamble
and shall also include Lodgian Financing's successors.
<PAGE>
3
"Majority Holders" shall mean the Holders of a majority of the
aggregate principal amount of outstanding Registrable Securities; provided
that whenever the consent or approval of Holders of a specified percentage
of Registrable Securities is required hereunder, Registrable Securities
held by Lodgian Financing or any of its affiliates (as such term is
defined in Rule 405 under the 1933 Act) (other than the Placement Agents
or subsequent Holders of Registrable Securities if such subsequent holders
are deemed to be such affiliates solely by reason of their holding of such
Registrable Securities) shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage
or amount.
"Person" shall mean an individual, partnership, limited liability
company, corporation, trust or unincorporated organization, or a
government or agency or political subdivision thereof.
"Placement Agents" shall have the meaning set forth in the preamble.
"Placement Agreement" shall have the meaning set forth in the
preamble.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus
as amended or supplemented by any prospectus supplement, including a
prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Shelf Registration
Statement, and by all other amendments and supplements to such prospectus,
and in each case including all material incorporated by reference therein.
"Registrable Securities" shall mean the Securities and the
Guarantees; provided, however, that the Securities and the Guarantees
shall cease to be Registrable Securities (i) when a Registration Statement
with respect to such Securities and Guarantees shall have been declared
effective under the 1933 Act and such Securities and Guarantees shall have
been disposed of pursuant to such Registration Statement, (ii) when such
Securities and Guarantees have been sold to the public pursuant to Rule
144(k) (or any similar provision then in force, but not Rule 144A) under
the 1933 Act or (iii) when such Securities and Guarantees shall have
ceased to be outstanding.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance by Lodgian Financing and the Guarantors with
this Agreement, including, without limitation: (i) all SEC, stock exchange
or National Association of Securities Dealers, Inc. registration and
filing fees, (ii) all fees and expenses incurred in connection with
compliance with
<PAGE>
4
state securities or blue sky laws (including reasonable fees and
disbursements of counsel for any underwriters or Holders in connection
with blue sky qualification of any of the Exchange Securities or
Registrable Securities), (iii) all expenses of any Persons in preparing or
assisting in preparing, word processing, printing and distributing any
Registration Statement, any Prospectus, any amendments or supplements
thereto, any underwriting agreements, securities sales agreements and
other documents relating to the performance of and compliance with this
Agreement, (iv) all rating agency fees, (v) all fees and disbursements
relating to the qualification of the Indenture under applicable securities
laws, (vi) the fees and disbursements of the Trustee and its counsel,
(vii) the fees and disbursements of counsel for Lodgian Financing and the
Guarantors and, in the case of a Shelf Registration Statement, the fees
and disbursements of one counsel for the Holders (which counsel shall be
selected by the Majority Holders and which counsel may also be counsel for
the Placement Agents) and (viii) the fees and disbursements of the
independent public accountants of Lodgian Financing and the Guarantors,
including the expenses of any special audits or "cold comfort" letters
required by or incident to such performance and compliance, but excluding
fees and expenses of counsel to the underwriters (other than fees and
expenses set forth in clause (ii) above) or the Holders and underwriting
discounts and commissions and transfer taxes, if any, relating to the sale
or disposition of Registrable Securities by a Holder.
"Registration Statement" shall mean any registration statement of
Lodgian Financing and the Guarantors that covers any of the Exchange
Securities or Registrable Securities pursuant to the provisions of this
Agreement and all amendments and supplements to any such Registration
Statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"SEC" shall mean the Securities and Exchange Commission.
"Shelf Registration" shall mean a registration effected pursuant to
Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of Lodgian Financing and the Guarantors pursuant to the
provisions of Section 2(b) of this Agreement which covers all of the
Registrable Securities (but no other securities unless approved by the
Holders whose Registrable Securities are covered by such Shelf
Registration Statement) on an appropriate form under Rule 415 under the
1933 Act, or any similar rule that may be adopted by the SEC, and all
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Trustee" shall mean the trustee with respect to the Securities
under the Indenture.
<PAGE>
5
"Underwriter" shall have the meaning set forth in Section 3 hereof.
"Underwritten Registration" or "Underwritten Offering" shall mean a
registration in which Registrable Securities are sold to an Underwriter
for reoffering to the public.
2. Registration Under the 1933 Act.
(a) To the extent not prohibited by any applicable law or applicable
interpretation of the Staff of the SEC, Lodgian Financing and the Guarantors
shall use their best efforts to cause to be filed an Exchange Offer Registration
Statement covering the offer by Lodgian Financing and the Guarantors to the
Holders to exchange all of the Registrable Securities for Exchange Securities
and to have such Registration Statement remain effective until the closing of
the Exchange Offer. Lodgian Financing and the Guarantors shall commence the
Exchange Offer promptly after the Exchange Offer Registration Statement has been
declared effective by the SEC and use their best efforts to have the Exchange
Offer consummated not later than 60 days after such effective date. Lodgian
Financing and the Guarantors shall commence the Exchange Offer by mailing the
related exchange offer Prospectus and accompanying documents to each Holder
stating, in addition to such other disclosures as are required by applicable
law:
(i) that the Exchange Offer is being made pursuant to this
Registration Rights Agreement and that all Registrable Securities validly
tendered will be accepted for exchange;
(ii) the dates of acceptance for exchange (which shall be a period
of at least 20 business days from and including the date such notice is
mailed) (the "Exchange Dates");
(iii) that any Registrable Security not tendered will remain
outstanding and continue to accrue interest, but will not retain any
rights under this Registration Rights Agreement;
(iv) that Holders electing to have a Registrable Security exchanged
pursuant to the Exchange Offer will be required to surrender such
Registrable Security, together with the enclosed letters of transmittal,
to the institution and at the address (located in the Borough of
Manhattan, The City of New York) specified in the notice prior to the
close of business on the last Exchange Date; and
(v) that Holders will be entitled to withdraw their election, not
later than the close of business on the last Exchange Date, by sending to
the institution and at the address (located in the Borough of Manhattan,
The City of New York) specified in the notice a telegram, telex, facsimile
transmission or letter setting forth the name of such Holder, the
principal amount of Registrable Securities delivered for exchange and a
statement that such Holder is withdrawing
<PAGE>
6
his election to have such Securities exchanged; provided that withdrawal
rights may be revoked in connection with any extension of the Exchange
Offer.
As soon as practicable after the last Exchange Date, Lodgian
Financing and the Guarantors shall:
(i) accept for exchange Registrable Securities or portions thereof
tendered and not validly withdrawn pursuant to the Exchange Offer; and
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Securities or portions thereof so accepted
for exchange by Lodgian Financing and the Guarantors and issue, and cause
the Trustee to promptly authenticate and mail to each Holder, an Exchange
Security equal in principal amount to the principal amount of the
Registrable Securities surrendered by such Holder.
Lodgian Financing and the Guarantors shall use their best efforts to complete
the Exchange Offer as provided above and shall comply with the applicable
requirements of the 1933 Act, the 1934 Act and other applicable laws and
regulations in connection with the Exchange Offer. The Exchange Offer shall not
be subject to any conditions, other than that the Exchange Offer does not
violate applicable law or any applicable interpretation of the Staff of the SEC.
Lodgian Financing and the Guarantors shall inform the Placement Agents of the
names and addresses of the Holders to whom the Exchange Offer is made, and the
Placement Agents shall have the right, subject to applicable law, to contact
such Holders and otherwise facilitate the tender of Registrable Securities in
the Exchange Offer.
(b) In the event that (i) Lodgian Financing and the Guarantors
determine that the Exchange Offer Registration provided for in Section 2(a)
above is not available or may not be consummated as soon as practicable after
the last Exchange Date because it would violate applicable law or the applicable
interpretations of the Staff of the SEC, (ii) the Exchange Offer is not for any
other reason consummated by April 23, 2000 or (iii) the Exchange Offer has been
completed and in the opinion of counsel for the Placement Agents a Registration
Statement must be filed and a Prospectus must be delivered by the Placement
Agents in connection with any offering or sale of Registrable Securities,
Lodgian Financing and the Guarantors shall use their best efforts to cause to be
filed as soon as practicable after such determination, date or notice of such
opinion of counsel is given to Lodgian a Shelf Registration Statement providing
for the sale by the Holders of all of the Registrable Securities and to have
such Shelf Registration Statement declared effective by the SEC. In the event
Lodgian Financing and the Guarantors are required to file a Shelf Registration
Statement solely as a result of the matters referred to in clause (iii) of the
preceding sentence, Lodgian Financing and the Guarantors shall use their best
efforts to file and have declared effective by the SEC both an Exchange Offer
Registration Statement pursuant to Section 2(a) with respect to all Registrable
Securities and a Shelf Registration Statement (which may be a combined
Registration Statement with the Exchange Offer
<PAGE>
7
Registration Statement) with respect to offers and sales of Registrable
Securities held by the Placement Agents after completion of the Exchange Offer.
Lodgian Financing and the Guarantors agree to use their best efforts to keep the
Shelf Registration Statement continuously effective until the expiration of the
period referred to in Rule 144(k) with respect to the Registrable Securities or
such shorter period that will terminate when all of the Registrable Securities
covered by the Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement. Lodgian Financing and the Guarantors further agree to
supplement or amend the Shelf Registration Statement if required by the rules,
regulations or instructions applicable to the registration form used by Lodgian
Financing and the Guarantors for such Shelf Registration Statement or by the
1933 Act or by any other rules and regulations thereunder for shelf registration
or if reasonably requested by a Holder with respect to information relating to
such Holder, and to use their best efforts to cause any such amendment to become
effective and such Shelf Registration Statement to become usable as soon as
thereafter practicable. Lodgian Financing and the Guarantors agree to furnish to
the Holders of Registrable Securities copies of any such supplement or amendment
promptly after its being used or filed with the SEC.
(c) Lodgian Financing and the Guarantors shall pay all Registration
Expenses in connection with the registration pursuant to Section 2(a) or Section
2(b). Each Holder shall pay all underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of such Holder's
Registrable Securities pursuant to the Shelf Registration Statement.
(d) An Exchange Offer Registration Statement pursuant to Section
2(a) hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof
will not be deemed to have become effective unless it has been declared
effective by the SEC; provided, however, that, if, after it has been declared
effective, the offering of Registrable Securities pursuant to a Shelf
Registration Statement is interfered with by any stop order, injunction or other
order or requirement of the SEC or any other governmental agency or court, such
Registration Statement will be deemed not to have become effective during the
period of such interference until the offering of Registrable Securities
pursuant to such Shelf Registration Statement may legally resume. As provided
for in the Indenture, in the event the Exchange Offer is not consummated and the
Shelf Registration Statement is not declared effective (i) on or prior to
January 23, 2000, the interest rate on the Securities will be increased by 0.5%
per annum and (ii) on or prior to April 23, 1999, the interest rate on the
Securities will be increased by an additional 0.5% per annum. Once the Exchange
Offer is consummated or the Shelf Registration Statement is declared effective
by the SEC, the annual interest rate on the Securities shall be changed again to
the original interest rate shown in the second paragraph of this Agreement.
(e) Without limiting the remedies available to the Placement Agents
and the Holders, Lodgian Financing and the Guarantors acknowledge that any
failure by Lodgian Financing or any of the Guarantors to comply with its
respective obligations under Section 2(a) and Section 2(b) hereof may result in
material irreparable injury to the Placement Agents or the Holders for which
there
<PAGE>
8
is no adequate remedy at law, that it will not be possible to measure damages
for such injuries precisely and that, in the event of any such failure, the
Placement Agents or any Holder may obtain such relief as may be required to
specifically enforce Lodgian Financing's and the Guarantors' obligations under
Section 2(a) and Section 2(b) hereof.
3. Registration Procedures.
In connection with the obligations of Lodgian Financing and the
Guarantors with respect to the Registration Statements pursuant to Section 2(a)
and Section 2(b) hereof, Lodgian Financing and the Guarantors shall as
expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement on the
appropriate form under the 1933 Act, which form (x) shall be selected by
Lodgian Financing and the Guarantors and (y) shall, in the case of a Shelf
Registration, be available for the sale of the Registrable Securities by
the selling Holders thereof and (z) shall comply as to form in all
material respects with the requirements of the applicable form and include
all financial statements required by the SEC to be filed therewith, and
use their best efforts to cause such Registration Statement to become
effective and remain effective in accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement effective for the applicable period and cause each
Prospectus to be supplemented by any required prospectus supplement and,
as so supplemented, to be filed pursuant to Rule 424 under the 1933 Act;
to keep each Prospectus current during the period described under Section
4(3) and Rule 174 under the 1933 Act that is applicable to transactions by
brokers or dealers with respect to the Registrable Securities or Exchange
Securities;
(c) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, to counsel for the Placement Agents, to counsel
for the Holders and to each Underwriter of an Underwritten Offering of
Registrable Securities, if any, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any amendment or
supplement thereto and such other documents as such Holder or Underwriter
may reasonably request, in order to facilitate the public sale or other
disposition of the Registrable Securities; and Lodgian Financing and the
Guarantors consent to the use of such Prospectus and any amendment or
supplement thereto in accordance with applicable law by each of the
selling Holders of Registrable Securities and any such Underwriters in
connection with the offering and sale of the Registrable Securities
covered by and in the manner described in such Prospectus or any amendment
or supplement thereto in accordance with applicable law;
<PAGE>
9
(d) use their best efforts to register or qualify the Registrable
Securities under all applicable state securities or "blue sky" laws of
such jurisdictions as any Holder of Registrable Securities covered by a
Registration Statement shall reasonably request in writing by the time the
applicable Registration Statement is declared effective by the SEC, to
cooperate with such Holders in connection with any filings required to be
made with the National Association of Securities Dealers, Inc. and do any
and all other acts and things which may be reasonably necessary or
advisable to enable such Holder to consummate the disposition in each such
jurisdiction of such Registrable Securities owned by such Holder;
provided, however, that neither Lodgian Financing nor any of the
Guarantors shall be required to (i) qualify as a foreign corporation or as
a dealer in securities in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d), (ii) file any general
consent to service of process or (iii) subject itself to taxation in any
such jurisdiction if it is not so subject;
(e) in the case of a Shelf Registration, notify each Holder of
Registrable Securities, counsel for the Holders and counsel for the
Placement Agents promptly and, if requested by any such Holder or counsel,
confirm such advice in writing (i) when a Registration Statement has
become effective and when any post-effective amendment thereto has been
filed and becomes effective, (ii) of any request by the SEC or any state
securities authority for amendments and supplements to a Registration
Statement and Prospectus or for additional information after the
Registration Statement has become effective, (iii) of the issuance by the
SEC or any state securities authority of any stop order suspending the
effectiveness of a Registration Statement or the initiation of any
proceedings for that purpose, (iv) if, between the effective date of a
Registration Statement and the closing of any sale of Registrable
Securities covered thereby, the representations and warranties of Lodgian
Financing or any of the Guarantors contained in any underwriting
agreement, securities sales agreement or other similar agreement, if any,
relating to the offering cease to be true and correct in all material
respects or if Lodgian Financing or any of the Guarantors receives any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation of
any proceeding for such purpose, (v) of the happening of any event during
the period a Shelf Registration Statement is effective which makes any
statement made in such Registration Statement or the related Prospectus
untrue in any material respect or which requires the making of any changes
in such Registration Statement or Prospectus in order to make the
statements therein not misleading and (vi) of any determination by Lodgian
Financing or any of the Guarantors that a post-effective amendment to a
Registration Statement would be appropriate;
(f) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the
earliest possible moment and provide immediate notice to each Holder of
the withdrawal of any such order;
<PAGE>
10
(g) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, without charge, at least one conformed copy of
each Registration Statement and any post-effective amendment thereto
(without documents incorporated therein by reference or exhibits thereto,
unless requested);
(h) in the case of a Shelf Registration, cooperate with the selling
Holders of Registrable Securities to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold
and not bearing any restrictive legends and enable such Registrable
Securities to be in such denominations (consistent with the provisions of
the Indenture) and registered in such names as the selling Holders may
reasonably request at least one business day prior to the closing of any
sale of Registrable Securities;
(i) in the case of a Shelf Registration, upon the occurrence of any
event contemplated by Section 3(e)(v) hereof, use their best efforts to
prepare and file with the SEC a supplement or post-effective amendment to
a Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable
Securities, such Prospectus will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading. Lodgian Financing and the Guarantors agree to notify
the Holders to suspend use of the Prospectus as promptly as practicable
after the occurrence of such an event, and the Holders hereby agree to
suspend use of the Prospectus until Lodgian Financing and the Guarantors
have amended or supplemented the Prospectus to correct such misstatement
or omission;
(j) a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a Prospectus or any document which is to be
incorporated by reference into a Registration Statement or a Prospectus
after initial filing of a Registration Statement, provide copies of such
document to the Placement Agents and their counsel (and, in the case of a
Shelf Registration Statement, the Holders and their counsel) and make such
of the representatives of Lodgian Financing and the Guarantors shall be
reasonably requested by the Placement Agents or their counsel (and, in the
case of a Shelf Registration Statement, the Holders or their counsel)
available for discussion of such document, and shall not at any time file
or make any amendment to the Registration Statement, any Prospectus or any
amendment of or supplement to a Registration Statement or a Prospectus or
any document which is to be incorporated by reference into a Registration
Statement or a Prospectus, of which the Placement Agents and their counsel
(and, in the case of a Shelf Registration Statement, the Holders and their
counsel) shall not have previously been advised and furnished a copy or to
which the Placement Agents
<PAGE>
11
or their counsel (and, in the case of a Shelf Registration Statement, the
Holders or their counsel) shall object;
(k) obtain a CUSIP number for all Exchange Securities or Registrable
Securities, as the case may be, not later than the effective date of a
Registration Statement;
(l) cause the Indenture to be qualified under the Trust Indenture
Act of 1939, as amended (the "TIA"), in connection with the registration
of the Exchange Securities or Registrable Securities, as the case may be,
cooperate with the Trustee and the Holders to effect such changes to the
Indenture as may be required for the Indenture to be so qualified in
accordance with the terms of the TIA and execute, and use its best efforts
to cause the Trustee to execute, all documents as may be required to
effect such changes and all other forms and documents required to be filed
with the SEC to enable the Indenture to be so qualified in a timely
manner;
(m) in the case of a Shelf Registration, make available for
inspection by a representative of the Holders of the Registrable
Securities, any Underwriter participating in any disposition pursuant to
such Shelf Registration Statement, and attorneys and accountants
designated by the Holders, at reasonable times and in a reasonable manner,
all financial and other records, pertinent documents and properties of
Lodgian Financing and the Guarantors, and cause the respective officers,
directors and employees of Lodgian Financing and the Guarantors to supply
all information reasonably requested by any such representative,
Underwriter, attorney or accountant in connection with a Shelf
Registration Statement;
(n) in the case of a Shelf Registration, use their best efforts to
cause all Registrable Securities to be listed on any securities exchange
or any automated quotation system on which similar securities issued by
Lodgian Financing or any of the Guarantors are then listed if requested by
the Majority Holders, to the extent such Registrable Securities satisfy
applicable listing requirements;
(o) use their best efforts to cause the Exchange Securities to
continue to be rated by two nationally recognized statistical rating
organizations (as such term is defined in Rule 436(g)(2) under the 1933
Act), if the Registrable Securities have been rated;
(p) if reasonably requested by any Holder of Registrable Securities
covered by a Registration Statement, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment such information with
respect to such Holder as such Holder reasonably requests to be included
therein and (ii) make all required filings of such Prospectus supplement
or such post-effective amendment as soon as Lodgian Financing or any of
the Guarantors have received notification of the matters to be
incorporated in such filing; and
<PAGE>
12
(q) in the case of a Shelf Registration, enter into such customary
agreements and take all such other actions in connection therewith
(including those requested by the Holders of a majority of the Registrable
Securities being sold) in order to expedite or facilitate the disposition
of such Registrable Securities including, but not limited to, an
Underwritten Offering and in such connection, (i) to the extent possible,
make such representations and warranties to the Holders and any
Underwriters of such Registrable Securities with respect to the business
of Lodgian and its subsidiaries, the Registration Statement, Prospectus
and documents incorporated by reference or deemed incorporated by
reference, if any, in each case, in form, substance and scope as are
customarily made by issuers to underwriters in underwritten offerings and
confirm the same if and when requested, (ii) obtain opinions of counsel to
Lodgian Financing and the Guarantors (which counsel and opinions, in form,
scope and substance, shall be reasonably satisfactory to the Holders and
such Underwriters and their respective counsel) addressed to each selling
Holder and Underwriter of Registrable Securities, covering the matters
customarily covered in opinions requested in underwritten offerings, (iii)
obtain "cold comfort" letters from the independent certified public
accountants of Lodgian (and, if necessary, any other certified public
accountant of any subsidiary of Lodgian, or of any business acquired by
Lodgian for which financial statements and financial data are or are
required to be included in the Registration Statement) addressed to each
selling Holder and Underwriter of Registrable Securities, such letters to
be in customary form and covering matters of the type customarily covered
in "cold comfort" letters in connection with underwritten offerings, and
(iv) deliver such documents and certificates as may be reasonably
requested by the Holders of a majority in principal amount of the
Registrable Securities being sold or the Underwriters, and which are
customarily delivered in underwritten offerings, to evidence the continued
validity of the representations and warranties of Lodgian Financing and
the Guarantors made pursuant to clause (i) above and to evidence
compliance with any customary conditions contained in an underwriting
agreement.
In the case of a Shelf Registration Statement, Lodgian Financing and
the Guarantors may require each Holder of Registrable Securities to furnish to
Lodgian Financing and the Guarantors such information regarding the Holder and
the proposed distribution by such Holder of such Registrable Securities as
Lodgian may from time to time reasonably request in writing.
In the case of a Shelf Registration Statement, each Holder agrees
that, upon receipt of any notice from Lodgian Financing or any of the Guarantors
of the happening of any event of the kind described in Section 3(e)(v) hereof,
such Holder will forthwith discontinue disposition of Registrable Securities
pursuant to a Registration Statement until such Holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 3(i) hereof,
and, if so directed by Lodgian, such Holder will deliver to Lodgian Financing
and the Guarantors (at its expense) all copies in its possession, other than
permanent file copies then in such Holder's possession, of the Prospectus
covering such Registrable Securities current at the time of receipt of such
notice. If Lodgian Financing
<PAGE>
13
or any of the Guarantors shall give any such notice to suspend the disposition
of Registrable Securities pursuant to a Registration Statement, Lodgian
Financing and the Guarantors shall extend the period during which the
Registration Statement shall be maintained effective pursuant to this Agreement
by the number of days during the period from and including the date of the
giving of such notice to and including the date when the Holders shall have
received copies of the supplemented or amended Prospectus necessary to resume
such dispositions. Lodgian Financing and the Guarantors may give any such notice
only twice during any 365 day period and any such suspensions may not exceed 30
days for each suspension and there may not be more than two suspensions in
effect during any 365 day period.
The Holders of Registrable Securities covered by a Shelf
Registration Statement who desire to do so may sell such Registrable Securities
in an Underwritten Offering. In any such Underwritten Offering, the investment
banker or investment bankers and manager or managers (the "Underwriters") that
will administer the offering will be selected by the Majority Holders of the
Registrable Securities included in such offering.
4. Participation of Broker-Dealers in Exchange Offer.
(a) The Staff of the SEC has taken the position that any
broker-dealer that receives Exchange Securities for its own account in the
Exchange Offer in exchange for Securities that were acquired by such
broker-dealer as a result of market-making or other trading activities (a
"Participating Broker-Dealer"), may be deemed to be an "underwriter" within the
meaning of the 1933 Act and must deliver a prospectus meeting the requirements
of the 1933 Act in connection with any resale of such Exchange Securities.
Lodgian Financing and the Guarantors understand that it is the
Staff's position that if the Prospectus contained in the Exchange Offer
Registration Statement includes a plan of distribution containing a statement to
the above effect and the means by which Participating Broker-Dealers may resell
the Exchange Securities, without naming the Participating Broker-Dealers or
specifying the amount of Exchange Securities owned by them, such Prospectus may
be delivered by Participating Broker-Dealers to satisfy their prospectus
delivery obligation under the 1933 Act in connection with resales of Exchange
Securities for their own accounts, so long as the Prospectus otherwise meets the
requirements of the 1933 Act.
(b) In light of the above, notwithstanding the other provisions of
this Agreement, each of Lodgian Financing and the Guarantors agree that the
provisions of this Agreement as they relate to a Shelf Registration shall also
apply to an Exchange Offer Registration to the extent, and with such reasonable
modifications thereto as may be, reasonably requested by the Placement Agents or
by one or more Participating Broker-Dealers, in each case as provided in clause
(ii) below, in order to
<PAGE>
14
expedite or facilitate the disposition of any Exchange Securities by
Participating Broker-Dealers consistent with the positions of the Staff recited
in Section 4(a) above; provided that:
(i) neither Lodgian Financing nor any of the Guarantors shall be
required to amend or supplement the Prospectus contained in the Exchange
Offer Registration Statement, as would otherwise be contemplated by
Section 3(i), for a period exceeding 180 days after the last Exchange Date
(as such period may be extended pursuant to the penultimate paragraph of
Section 3 of this Agreement) and Participating Broker-Dealers shall not be
authorized by Lodgian Financing or any of the Guarantors to deliver and
shall not deliver such Prospectus after such period in connection with the
resales contemplated by this Section 4; and
(ii) the application of the Shelf Registration procedures set forth
in Section 3 of this Agreement to an Exchange Offer Registration, to the
extent not required by the positions of the Staff of the SEC or the 1933
Act and the rules and regulations thereunder, will be in conformity with
the reasonable request to Lodgian Financing and the Guarantors by the
Placement Agents or with the reasonable request in writing to Lodgian
Financing and the Guarantors by one or more broker-dealers who certify to
the Placement Agents and Lodgian Financing and the Guarantors in writing
that they anticipate that they will be Participating Broker-Dealers; and
provided further that, in connection with such application of the Shelf
Registration procedures set forth in Section 3 to an Exchange Offer
Registration, Lodgian Financing and the Guarantors shall be obligated (x)
to deal only with one entity representing the Participating
Broker-Dealers, which shall be Morgan Stanley & Co. Incorporated unless it
elects not to act as such representative, (y) to pay the fees and expenses
of only one counsel representing the Participating Broker-Dealers, which
shall be counsel to the Placement Agents unless such counsel elects not to
so act and (z) to cause to be delivered only one, if any, "cold comfort"
letter with respect to the Prospectus in the form existing on the last
Exchange Date and with respect to each subsequent amendment or supplement,
if any, effected during the period specified in clause (i) above.
(c) The Placement Agents shall have no liability to Lodgian
Financing, any of the Guarantors or any Holder with respect to any request that
it may make pursuant to Section 4(b) above.
5. Indemnification and Contribution.
(a) Lodgian Financing and the Guarantors, each jointly and severally
agrees to indemnify and hold harmless the Placement Agents, each Holder and each
Person, if any, who controls any Placement Agent or any Holder within the
meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act, or
is under common control with, or is controlled by, any Placement Agent or any
Holder, from and against all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred by any
Placement Agent, any Holder or any such
<PAGE>
15
controlling or affiliated Person in connection with defending or investigating
any such action or claim) caused by any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement (or any
amendment thereto) pursuant to which Exchange Securities or Registrable
Securities were registered under the 1933 Act, including all documents
incorporated therein by reference, or caused by any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, or caused by any untrue statement or
alleged untrue statement of a material fact contained in any Prospectus (as
amended or supplemented if Lodgian Financing or any of the Guarantors shall have
furnished any amendments or supplements thereto), or caused by any omission or
alleged omission to state therein a material fact necessary to make the
statements therein in light of the circumstances under which they were made not
misleading, except insofar as such losses, claims, damages or liabilities are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to the Placement Agents or any Holder
furnished to Lodgian in writing through Morgan Stanley & Co. Incorporated or any
selling Holder expressly for use therein; provided that the foregoing indemnity
with respect to any preliminary Prospectus shall not inure to the benefit of any
Holder from whom the person asserting any such losses, claims, damages or
liabilities purchased Securities, or any person controlling such Holder, if a
copy of the final Prospectus (as then amended or supplemented if Lodgian
Financing and the Guarantors shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Holder to such person, if
required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Securities to such person, and if the final
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such loss, claim, damage or liability. In connection with any
Underwritten Offering permitted by Section 3, Lodgian Financing and the
Guarantors will also indemnify the Underwriters, if any, selling brokers,
dealers and similar securities industry professionals participating in the
distribution, their officers and directors and each Person who controls such
Persons (within the meaning of the 1933 Act and the 1934 Act) to the same extent
as provided above with respect to the indemnification of the Holders, if
requested in connection with any Registration Statement.
(b) Each Holder agrees, severally and not jointly, to indemnify and
hold harmless Lodgian Financing, the Guarantors, the Placement Agents and the
other selling Holders, and each of their respective directors, officers who sign
the Registration Statement and each Person, if any, who controls Lodgian
Financing or any of the Guarantors, any Placement Agent and any other selling
Holder within the meaning of either Section 15 of the 1933 Act or Section 20 of
the 1934 Act to the same extent as the foregoing indemnity from Lodgian
Financing and the Guarantors to the Placement Agents and the Holders, but only
with reference to information relating to such Holder furnished to Lodgian in
writing by such Holder expressly for use in any Registration Statement (or any
amendment thereto) or any Prospectus (or any amendment or supplement thereto).
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any Person in respect of which
indemnity may be sought pursuant to either
<PAGE>
16
paragraph (a) or paragraph (b) above, such Person (the "indemnified party")
shall promptly notify the Person against whom such indemnity may be sought (the
"indemnifying party") in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for (a) the fees and expenses of more than one separate
firm (in addition to any local counsel) for the Placement Agents and all
Persons, if any, who control any Placement Agent within the meaning of either
Section 15 of the 1933 Act or Section 20 of the 1934 Act, (b) the fees and
expenses of more than one separate firm (in addition to any local counsel) for
Lodgian Financing, the Guarantors, their respective directors and officers who
sign the Registration Statement and each Person, if any, who controls Lodgian
Financing and the Guarantors within the meaning of either such Section and (c)
the fees and expenses of more than one separate firm (in addition to any local
counsel) for all Holders and all Persons, if any, who control any Holders within
the meaning of either such Section, and that all such fees and expenses shall be
reimbursed as they are incurred. In such case involving the Placement Agents and
Persons who control the Placement Agents, such firm shall be designated in
writing by Morgan Stanley & Co. Incorporated. In such case involving the Holders
and such Persons who control Holders, such firm shall be designated in writing
by the Majority Holders. In all other cases, such firm shall be designated by
Lodgian. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent but, if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second and third sentences of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
indemnified party for such fees and expenses of counsel in accordance with such
request prior to the date of such settlement. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which such
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
<PAGE>
17
(d) If the indemnification provided for in paragraph (a) or
paragraph (b) of this Section 5 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of the indemnifying party or parties on the one hand and of the indemnified
party or parties on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative fault of Lodgian
Financing, the Guarantors and the Holders shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by Lodgian Financing or any of the Guarantors on the one
hand or by the Holders on the other hand and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Holders' respective obligations to contribute
pursuant to this Section 5(d) are several in proportion to the respective
principal amount of Registrable Securities of such Holder that were registered
pursuant to a Registration Statement.
(e) Lodgian Financing, the Guarantors and each Holder agree that it
would not be just or equitable if contribution pursuant to this Section 5 were
determined by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in paragraph (d)
above. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages and liabilities referred to in paragraph (d) above shall
be deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 5, no Holder shall be required to indemnify or
contribute any amount in excess of the amount by which the total price at which
Registrable Securities were sold by such Holder exceeds the amount of any
damages that such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. The remedies provided for in this
Section 5 are not exclusive and shall not limit any rights or remedies which may
otherwise be available to any indemnified party at law or in equity.
The indemnity and contribution provisions contained in this Section
5 shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
the Placement Agents, any Holder or any Person controlling any Placement Agent
or any Holder, or by or on behalf of Lodgian Financing or any of the Guarantors,
their respective officers or directors or any Person controlling or any of the
Guarantors, (iii) acceptance of any of the Exchange Securities and (iv) any sale
of Registrable Securities pursuant to a Shelf Registration Statement.
<PAGE>
18
6. Miscellaneous.
(a) No Inconsistent Agreements. Neither Lodgian Financing nor any of
the Guarantors has entered into, and on or after the date of this Agreement will
not enter into, any agreement which is inconsistent with the rights granted to
the Holders of Registrable Securities in this Agreement or otherwise conflicts
with the provisions hereof. The rights granted to the Holders hereunder do not
in any way conflict with and are not inconsistent with the rights granted to the
holders of Lodgian Financing's or any of the Guarantors' other issued and
outstanding securities under any such agreements.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless Lodgian Financing and the Guarantors have obtained the
written consent of Holders of at least a majority in aggregate principal amount
of the outstanding Registrable Securities affected by such amendment,
modification, supplement, waiver or consent; provided, however, that no
amendment, modification, supplement, waiver or consent to any departure from the
provisions of Section 5 hereof shall be effective as against any Holder of
Registrable Securities unless consented to in writing by such Holder.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder to
Lodgian by means of a notice given in accordance with the provisions of this
Section 6(c), which address initially is, with respect to the Placement Agents,
the address set forth in the Placement Agreement; (ii) if to Lodgian Financing,
initially at Lodgian Financing's address set forth in the Placement Agreement
and thereafter at such other address, notice of which is given in accordance
with the provisions of this Section 6(c); and (iii) if to the Guarantors,
initially the Guarantors' address set forth in the Placement Agreement and
thereafter at such other address, notice of which is given in accordance with
the provisions of this Section 6(c).
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied; and
on the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications shall
be concurrently delivered by the Person giving the same to the Trustee, at the
address specified in the Indenture.
<PAGE>
19
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; provided that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Registrable
Securities in violation of the terms of the Placement Agreement. If any
transferee of any Holder shall acquire Registrable Securities, in any manner,
whether by operation of law or otherwise, such Registrable Securities shall be
held subject to all of the terms of this Agreement, and by taking and holding
such Registrable Securities such Person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Agreement and such Person shall be entitled to receive the benefits hereof. The
Placement Agents (in their capacity as Placement Agents) shall have no liability
or obligation to Lodgian Financing or any of the Guarantors with respect to any
failure by a Holder to comply with, or any breach by any Holder of, any of the
obligations of such Holder under this Agreement.
(e) Purchases and Sales of Securities. Neither Lodgian Financing nor
any of the Guarantors shall, and each of Lodgian Financing and the Guarantors
shall use their best efforts to cause their respective affiliates (as defined in
Rule 405 under the 1933 Act) not to, purchase and then resell or otherwise
transfer any Registrable Securities.
(f) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder among Lodgian Financing and the
Guarantors, on the one hand, and the Placement Agents, on the other hand, and
shall have the right to enforce such agreements directly to the extent it deems
such enforcement necessary or advisable to protect its rights or the rights of
Holders hereunder.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. This Agreement shall be governed by the laws of
the State of New York.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
<PAGE>
20
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
LODGIAN FINANCING CORP.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: Vice President
LODGIAN, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: Vice President
SHEFFIELD MOTEL ENTERPRISES, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
DOTHAN HOSPITALITY 3053, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
DOTHAN HOSPITALITY 3071, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
<PAGE>
21
GADSDEN HOSPITALITY, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
SERVICO FLAGSTAFF, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
LODGIAN ANAHEIM INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
LODGIAN ONTARIO INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
SERVICO PENSACOLA, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
<PAGE>
22
SERVICO PENSACOLA 7200, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
SERVICO PENSACOLA 7330, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
SERVICO FT. PIERCE, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
AMI OPERATING PARTNERS, L.P.
By: AMIOP Acquisition Corp.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
SERVICO CENTRE ASSOCIATES, LTD.
By: Palm Beach Motel Enterprises, Inc.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
<PAGE>
23
SERVICO WEST PALM BEACH, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
SERVICO WINTER HAVEN, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
SERVICO SILVER SPRING, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
ALBANY HOTEL, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
SERVICO NORTHWOODS, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
<PAGE>
24
SERVICO WINDSOR, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
BRUNSWICK MOTEL ENTERPRISES, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
LITTLE ROCK LODGING ASSOCIATES I, L.P.
BY IMPAC SPE #3, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: Vice President, Secretary
and Treasurer
ATLANTA HILLSBORO LODGING, LLC
By: /s/ Robert S. Cole
--------------------------
Name: Robert S. Cole
Title: Manager
LODGIAN RICHMOND, L.L.C.
BY LODGIAN RICHMOND SPE, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
<PAGE>
25
SERVICO ROLLING MEADOWS, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
SERVICO CEDAR RAPIDS, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
SERVICO METAIRIE, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
SERVICO COLUMBIA, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
SERVICO COLESVILLE, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
<PAGE>
26
SERVICO MARYLAND, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
NH MOTEL ENTERPRISES, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
MINNEAPOLIS MOTEL ENTERPRISES, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
SERVICO ROSEVILLE, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
LODGIAN MOUNT LAUREL, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
<PAGE>
27
SERVICO JAMESTOWN, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
SERVICO NEW YORK, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
SERVICO NIAGARA FALLS, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
SERVICO GRAND ISLAND, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
FAYETTEVILLE MOTEL ENTERPRISES, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
<PAGE>
28
APICO INNS OF GREEN TREE, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
APICO HILLS, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
SERVICO HILTON HEAD, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
SERVICO AUSTIN, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
SERVICO MARKET CENTER, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
<PAGE>
29
SERVICO HOUSTON, INC.
By: /s/ Robert M. Flanders
--------------------------
Name: Robert M. Flanders
Title: President
<PAGE>
Confirmed and accepted as of
the date first above written:
MORGAN STANLEY & CO. INCORPORATED
LEHMAN BROTHERS INC.
BEAR, STEARNS & CO. INC.
By: MORGAN STANLEY & CO. INCORPORATED
By /s/ David J. Frey
--------------------------
Name: David J. Frey
Title: Vice President
<PAGE>
SCHEDULE I
LIST OF SUBSIDIARY GUARANTORS
Sheffield Motel Enterprises, Inc., an Alabama corporation
Dothan Hospitality 3053, Inc., an Alabama corporation
Dothan Hospitality 3071, Inc., an Alabama corporation
Gadsden Hospitality, Inc., an Alabama corporation
Servico Flagstaff, Inc., an Arizona corporation
Lodgian Anaheim Inc., a California corporation
Lodgian Ontario Inc., a California 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
AMI Operating Partners, L.P., a Delaware limited partnership
Servico Centre Associates, Ltd., a Florida corporation
Servico West Palm Beach, Inc., a Florida corporation
Servico Winter Haven, Inc., a Florida corporation
Servico Silver Spring, Inc., a Florida corporation
Albany Hotel, Inc., a Florida corporation
Servico Northwoods, Inc., a Florida corporation
<PAGE>
2
Servico Windsor, Inc., a Florida corporation
Brunswick Motel Enterprises, Inc., a Georgia corporation
Little Rock Lodging Associates I, L.P., a Georgia limited partnership
Atlanta Hillsboro Lodging, LLC, a Georgia limited liability company
Lodgian Richmond, L.L.C., a Georgia limited liability company
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
Lodgian Mount Laurel, Inc., a New Jersey corporation
Servico Jamestown, Inc., a New York corporation
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
<PAGE>
3
Apico Inns of Green Tree, Inc., a Pennsylvania corporation
Apico Hills, Inc., a Pennsylvania corporation
Servico Hilton Head, Inc., a South Carolina corporation
Servico Austin, Inc., a Texas corporation
Servico Market Center, Inc., a Texas corporation
Servico Houston, Inc., a Texas corporation
<PAGE>
Exhibit 4.3
Letter of Transmittal
To Tender for Exchange
12 1/4% Senior Subordinated Notes due 2009, Series A
of
LODGIAN FINANCING CORP.
Pursuant to
Prospectus dated ___________, 1999
- -------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON
__________________, 1999, UNLESS EXTENDED. TENDERS OF 12 1/4% SENIOR
SUBORDINATED NOTES DUE 2009, SERIES A MAY ONLY BE WITHDRAWN UNDER THE
CIRCUMSTANCES DESCRIBED IN THE PROSPECTUS AND HEREIN.
- -------------------------------------------------------------------------------
The Exchange Agent for the Exchange Offer is:
BANKERS TRUST COMPANY
Facsimile Transmission:
Confirm by Telephone:
By Mail: By Hand By Overnight Mail or
Courier
BT Services Tennessee, Bankers Trust Company BT Services Tennessee,
Inc. Corporate Trust and Agency Inc.
Reorganization Unit Group Corporate Trust & Agency
P.O. Box 292737 Attn: Reorganization Group
Nashville, Tennessee Department Reorganization Unit
37229-2737 Receipt & Delivery Window 648 Grassmere Park Road
Fax: (615) 835-3701 123 Washington Street, 1st Nashville, Tennessee
Floor 37211
New York, New York 10006
Confirm by telephone: (615) 835-3572
- -------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES TENDERED
- -------------------------------------------------------------------------------
Name(s) and Address(es) of Holder(s) Old Notes Tendered
(Please fill in, if blank, exactly as (Attach additional schedule, if
name(s) appear(s) on Old Notes) necessary)
- -------------------------------------------------------------------------------
(1) (2) (3)
----------------------------------------
Certificate Total Principal
Number(s) Amount
of Old Notes
Tendered
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
Total
- -------------------------------------------------------------------------------
The undersigned acknowledges receipt of the Prospectus, dated ,
1999 (the "Prospectus"), of Lodgian Financing Corp., a
Delaware corporation (the "Company"), relating to the offer (the "Exchange
Offer") of the Company, upon the terms and subject to the conditions set forth
in the Prospectus and herein and the instructions hereto, to exchange $1,000
principal amount of its 12 1/4% Senior Subordinated Notes due 2009, Series B
(the "Exchange Notes") for each $1,000 principal amount of the outstanding 12
1/4% Senior Subordinated Notes due 2009, Series A (the "Old Notes"), of which
$200.0 million aggregate principal
<PAGE>
amount is outstanding. The minimum permitted tender is $1,000 principal amount
of Old Notes, and all other tenders must be in integral multiples of $1,000.
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION BY
FACSIMILE, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
The Exchange Offer will expire at 5:00 p.m., New York
City time, on , 1999 (the "Expiration Date"),
unless extended.
HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE EXCHANGE NOTES PURSUANT TO THE
EXCHANGE OFFER MUST VALIDLY TENDER THEIR OLD NOTES TO THE EXCHANGE AGENT ON OR
PRIOR TO THE EXPIRATION DATE.
This Letter of Transmittal should be used only to exchange the Old Notes,
pursuant to the Exchange Offer as set forth in the Prospectus.
This Letter of Transmittal is to be used (a) if Old Notes are to be
physically delivered to the Exchange Agent or (b) if delivery of Old Notes is to
be made by book-entry transfer to the account maintained by the Exchange Agent
at The Depository Trust Company ("DTC" or the "Book-Entry Transfer Facility")
pursuant to the procedures set forth in the Prospectus under the caption "The
Exchange Offer--Procedures for Tendering." Delivery of documents to the
Book-Entry Transfer Facility does not constitute deliver to the Exchange Agent.
Holders whose Old Notes are not available or who cannot deliver their Old
Notes and all other documents required hereby to the Exchange Agent on or prior
to the Expiration Date nevertheless may tender their Old Notes in accordance
with the guaranteed delivery procedures set forth in the Prospectus under the
caption "The Exchange Offer--Guaranteed Delivery Procedures." See Instruction 1.
THE EXCHANGE OFFER IS NOT BEING MADE TO (NOR WILL THE SURRENDER OF OLD
NOTES FOR EXCHANGE BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS IN ANY JURISDICTION
IN WHICH THE MAKING OR ACCEPTANCE OF THE EXCHANGE OFFER WOULD NOT BE IN
COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION.
All capitalized terms used herein and not defined herein shall have the
meanings ascribed to them in the Prospectus.
Holders who wish to exchange their Old Notes must complete the box below
entitled "Method of Delivery," complete columns (1) through (3) in the box on
the cover entitled "Description of Old Notes Tendered" and sign in the
appropriate box(es) below.
2
<PAGE>
METHOD OF DELIVERY
- -------------------------------------------------------------------------------
|_| CHECK HERE IF CERTIFICATES FOR TENDERED OLD NOTES ARE ENCLOSED HEREWITH.
|_| CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY SPECIFIED ABOVE AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:___________________________________________
Name of Book-Entry Transfer Facility:
|_| The Depository Trust Company
Account Number:_____________________ Transaction Code Number:____________
- -------------------------------------------------------------------------------
|_| CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE
THE FOLLOWING (See Instructions 1 and 4):
Name(s) of Registered Holder(s):_________________________________________
Window Ticket Number (if any):___________________________________________
Date of Execution of Notice of Guaranteed Delivery:______________________
Name of Eligible Institution which Guaranteed Delivery:__________________
If delivered by the Book-Entry Transfer Facility, check box of Book-Entry
Transfer Facility:
|_| The Depository Trust Company
Account Number:_____________________ Transaction Code Number:____________
- -------------------------------------------------------------------------------
|_| CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE TEN ADDITIONAL
COPIES OF THE PROSPECTUS AND COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:_____________________________________________________________________
Address:__________________________________________________________________
--------------------------------------------------------------------------
- -------------------------------------------------------------------------------
3
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the principal amount of Old Notes
indicated in the box on the cover entitled "Description of Old Notes Tendered."
Subject to, and effective upon, the acceptance for exchange of the Old Notes
tendered hereby, the undersigned hereby irrevocably sells, assigns and transfers
to or upon the order of the Company all right, title and interest in and to such
Old Notes, and hereby irrevocably constitutes and appoints the Exchange Agent
the true and lawful agent and attorney-in-fact of the undersigned (with full
knowledge that said Exchange Agent also acts as the agent of the Company and as
Trustee under the indenture governing the Old Notes and the Exchange Notes) with
respect to such Old Notes, with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest) to
(a) deliver certificates representing such Old Notes, and to deliver all
accompanying evidences of transfer and authenticity to or upon the order of the
Company upon receipt by the Exchange Agent, as the undersigned's agent, of the
Exchange Notes to which the undersigned is entitled upon the acceptance by the
Company of such Old Notes for exchange pursuant to the Exchange Offer, (b)
receive all benefits and otherwise to exercise all rights of beneficial
ownership of such Old Notes, all in accordance with the terms of the Exchange
Offer, and (c) present such Old Notes for transfer on the register for such Old
Notes.
The undersigned acknowledges that prior to this Exchange Offer, there has
been no public market for the Old Notes or the Exchange Notes. If a market for
the Exchange Notes should develop, the Exchange Notes could trade at a discount
from their principal amount. The undersigned is aware that the Company does not
intend to list the Exchange Notes on a national securities exchange and that
there can be no assurance that an active market for the Exchange Notes will
develop.
The undersigned also acknowledges that this Exchange Offer is being made
in reliance on an interpretation by the staff of the Securities and Exchange
Commission (the "Commission") that the Exchange Notes issued pursuant to the
Exchange Offer in exchange for the Old Notes may be offered for resale, resold
and otherwise transferred by any person receiving such Exchange Notes whether or
not such person is the holder thereof, (other than any such holder or other
person which is (i) a broker-dealer that receives Exchange Notes for its own
account in exchange for Old Notes, where such Old Notes were acquired by such
broker-dealer as a result of market-making or other trading activities, or (ii)
an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act of 1933, as amended (the "Securities Act")) without compliance
with the registration and prospectus delivery provisions of the Securities Act,
provided that such Exchange Notes are acquired in the ordinary course of
business of such holder or other person, such holder or other person is not
engaged in or intending to engage in a distribution of the Exchange Notes, and
such holder or other person has no arrangement with any person to participate in
the distribution of such Exchange Notes. See Morgan Stanley & Co. Incorporated,
SEC No-Action Letter (available June 5, 1991) and Exxon Capital Holdings
Corporation, SEC No-Action Letter (available May 13, 1988).
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of
Exchange Notes. If the undersigned is a broker-dealer that will receive Exchange
Notes, it represents that the Old Notes to be exchanged for Exchange Notes were
acquired as a result of market-making activities or other trading activities and
it acknowledges that it will deliver a prospectus in connection with any resale
of such Exchange Notes; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
The Exchange Offer is not being made to, nor will tenders be accepted from
or on behalf of, holders of the Old Notes in any jurisdiction in which the
making of the Offer or acceptance thereof would not be in compliance with the
laws of such jurisdiction or would otherwise not be in compliance with any
provision of any applicable security law.
The undersigned represents that (a) the Exchange Notes acquired pursuant
to the Exchange Offer are being obtained in the ordinary course of business of
the undersigned or other person receiving such Exchange Notes, (b) neither the
undersigned nor any such other person is engaged in or intends to engage in a
distribution of such Exchange Notes, (c) neither the undersigned nor any such
other person has any arrangement or understanding with
4
<PAGE>
any person to participate in a distribution of the Exchange Notes and (d)
neither the undersigned nor any such other person is an "affiliate" as defined
under Rule 405 of the Securities Act, of the Company, its subsidiaries or The
Renco Group, Inc., the parent corporation of the Company, or if such holder is
such an affiliate, that such holder will comply with the registration and the
prospectus delivery requirements of the Securities Act in connection with the
disposition of any Exchange Notes to the extent applicable.
The undersigned understands and acknowledges that the Company reserves the
right in its sole discretion to purchase or make offers for any Old Notes that
remain outstanding subsequent to the Expiration Date or, as set forth in the
Prospectus under the caption "Conditions of the Exchange Offer," to terminate
the Exchange Offer and, to the extent permitted by applicable law, purchase Old
Notes in the open market, in privately negotiated transactions or otherwise. The
terms of any such purchases or offers will differ from the terms of the Exchange
Offer.
The undersigned hereby represents and warrants that the undersigned
accepts the terms and conditions of the Exchange Offer, has full power and
authority to tender, exchange, assign and transfer the Old Notes tendered
hereby, and that when the same are accepted for exchange by the Company, the
Company will acquire good and unencumbered title thereto, free and clear of all
liens, restrictions, charges and encumbrances and not subject to any adverse
claim or right. The undersigned will, upon request, execute and deliver any
additional documents deemed by the Exchange Agent or the Company to be necessary
or desirable to complete the sale, assignment and transfer of the Old Notes
tendered hereby.
The undersigned agrees that all authority conferred or agreed to be
conferred by this Letter of Transmittal and every obligation of the undersigned
hereunder shall be binding upon the successors, assigns, heirs, executors,
administrators, trustees in bankruptcy and legal representatives of the
undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. The undersigned also agrees that, except as
stated in the Prospectus, the Old Notes tendered hereby cannot be withdrawn.
The undersigned understands that tenders of the Old Notes pursuant to any
one of the procedures described in the Prospectus under the caption "The
Exchange Offer--Procedures for Tendering" and in the instructions hereto will
constitute a binding agreement between the undersigned and the Company in
accordance with the terms and subject to the conditions of the Exchange Offer.
The undersigned understands that by tendering Old Notes pursuant to one of
the procedures described in the Prospectus and the instructions hereto, the
tendering holder will be deemed to have waived the right to receive any payment
in respect of interest on the Old Notes accrued up to the date of issuance of
the Exchange Notes.
The undersigned recognizes that, under certain circumstances set forth in
the Prospectus, the Company may not be required to accept for exchange any of
the Old Notes tendered. Old Notes not accepted for exchange or withdrawn will be
returned to the undersigned at the address set forth below unless otherwise
indicated under "Special Delivery Instructions" below.
Unless otherwise indicated herein under the box entitled "Special Issuance
Instructions" below, Exchange Notes, and Old Notes not validly tendered or
accepted for exchange, will be issued in the name of the undersigned. Similarly,
unless otherwise indicated under the box entitled "Special Delivery
Instructions" below, Exchange Notes, and Old Notes not validly tendered or
accepted for exchange, will be delivered to the undersigned at the address shown
below the signature of the undersigned. The undersigned recognizes that the
Company has no obligation pursuant to the "Special Issuance Instructions" to
transfer any Old Notes from the name of the registered holder thereof if the
Company does not accept for exchange any of the principal amount of such Old
Notes so tendered.
All questions as to the validity, form, eligibility (including time of
receipt), and withdrawal of the tendered Old Notes will be determined by the
Company in its sole discretion, which determination will be final and binding.
The Company reserves the absolute right to reject any and all Old Notes not
properly tendered or any Old Notes the Company's acceptance of which would, in
the opinion of counsel for the Company, be unlawful. The Company also reserves
the right to waive any irregularities or conditions of tender as to particular
Old Notes. The Company's interpretation of the terms and conditions of the
Exchange Offer (including the instructions in this Letter of Transmittal) will
be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Old Notes must be cured within such
time as the Company shall determine. Neither the
5
<PAGE>
Company, the Exchange Agent nor any other person shall be under any duty to give
notification of defects or irregularities with respect to tenders of Old Notes,
nor shall any of them incur any liability for failure to give such notification.
Tenders of Old Notes will not be deemed to have been made until such
irregularities have been cured or waived. Any Old Notes received by the Exchange
Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned without cost to
such holder by the Exchange Agent to the tendering holders of Old Notes, unless
otherwise provided in this Letter of Transmittal, as soon as practicable
following the Expiration Date.
6
<PAGE>
THE UNDERSIGNED, BY COMPLETING THE BOX ON THE COVER ENTITLED "DESCRIPTION
OF OLD NOTES TENDERED" AND SIGNING THIS LETTER OF TRANSMITTAL, WILL BE DEEMED TO
HAVE TENDERED THE OLD NOTES AND MADE CERTAIN REPRESENTATIONS (INCLUDING AS TO
FINANCIAL STATUS) DESCRIBED IN THE PROSPECTUS AND HEREIN.
- -------------------------------------------------------------------------------
SIGN HERE
(To Be Completed by All Tendering Holders)
X____________________________________________________________________________
X____________________________________________________________________________
(Signature(s) of Holder(s) or Authorized Signatory)
Must be signed by the registered holder(s) of Old Notes exactly as their
name(s) appear(s) on certificate(s) for the Old Notes or by person(s) authorized
to become registered holder(s) by endorsements and documents transmitted with
this Letter of Transmittal. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, agent or
other person acting in a fiduciary or representative capacity, please provide
the following information. See Instruction 3.
Name(s): ______________________________________________________________________
- -------------------------------------------------------------------------------
(Please Print)
Capacity (full title):_________________________________________________________
Address:_______________________________________________________________________
- -------------------------------------------------------------------------------
(Including Zip Code)
Area Code and Telephone No.:___________________________________________________
SIGNATURE GUARANTEE
(See Instruction 3)
- --------------------------------------------------------------------------------
(Name of Eligible Institution Guaranteeing Signature(s))
- --------------------------------------------------------------------------------
(Address, including Zip Code, and Telephone No., including area code, of Firm)
- --------------------------------------------------------------------------------
(Authorized Signature)
- --------------------------------------------------------------------------------
(Printed Name)
- --------------------------------------------------------------------------------
(Title)
Date: __________________, 1998
- -------------------------------------------------------------------------------
7
<PAGE>
- --------------------------------------- --------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVER INSTRUCTIONS (See Instructions
3, 4 and 6) (See Instructions 3, 4 and 6)
To be completed ONLY if To be completed ONLY if
certificates for Old Notes in a certificates for Old Notes in a
principal amount not exchanged principal amount not exchanged
and/or certificates for Exchange and/or certificates for Exchange
Notes are to be issued in the Notes are to be sent to someone
name of someone other than the other than the undersigned at an
undersigned, or if Old Notes are address other than that shown
to be returned by credit to an above.
account maintained by the
Book-Entry Transfer Facility.
Issue (check appropriate box) Deliver (check appropriate box)
|_| Exchange Notes to: |_| Exchange Notes to:
|_| Old Notes to: |_| Old Notes to:
Name:__________________________ Name:_____________________________
(Please Print) (Please Print)
Address:_______________________ Address:__________________________
------------------------------- ----------------------------------
Zip Code Zip Code
------------------------------- ----------------------------------
Taxpayer Identification Number Taxpayer Identification Number
(You must also complete (You must also complete Substitute Form W-9
below.) Substitute Form W-9 below.)
Credit unaccepted Old Notes tendered by book-entry transfer to:
|_| The Depository Trust Company
account set forth below
-------------------------------
(DTC account number)
- --------------------------------------- --------------------------------------
8
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the
Offer and the Solicitation
1. Delivery of this Letter of Transmittal and Certificates; Guaranteed
Delivery Procedures. To be effectively tendered pursuant to the Exchange Offer,
the Old Notes, together with a properly completed Letter of Transmittal (or
facsimile thereof), duly executed by the registered holder thereof, and any
other documents required by this Letter of Transmittal, must be received by the
Exchange Agent at one of its addresses set forth on the front page of this
Letter of Transmittal. If the beneficial owner of any Old Notes is not the
registered holder, then such person may validly tender his or her Old Notes only
by obtaining and submitting to the Exchange Agent a properly completed Letter of
Transmittal from the registered holder. Old Notes should be delivered only to
the Exchange Agent and not to the Company or to any other person.
The method of delivery of Old Notes and all other required documents to
the Exchange Agent is at the election and risk of the holder, but if such
delivery is by mail, it is suggested that the holder use properly insured,
registered or certified mail with return receipt requested. Instead of delivery
by mail, it is recommended that Old Notes be delivered by hand or by courier.
If certificates for Old Notes are sent by mail, it is suggested that the
mailing be made sufficiently in advance of the Expiration Date to permit
delivery to the Exchange Agent prior to 5:00 p.m., New York City time, on the
Expiration Date.
If a holder desires to tender Old Notes and such holder's Old Notes are
not immediately available or time will not permit such holder's Letter of
Transmittal, Old Notes or other required documents to reach the Exchange Agent
on or before the Expiration Date, such holder's tender may be effected if:
(a) such tender is made by or through an Eligible Institution (as
defined);
(b) on or prior to the Expiration Date, the Exchange Agent has
received a properly completed and duly executed Notice of Guaranteed
Delivery (by facsimile transmission, mail or hand delivery) from such
Eligible Institution setting forth the name and address of the holder of
such Old Notes, the certificate numbers of such Old Notes (if available)
and the principal amount of Old Notes tendered and stating that the tender
is being made thereby and guaranteeing that, within three business days
after the Expiration Date, a duly executed Letter of Transmittal, or
facsimile thereof, together with the Old Notes, and any other documents
required by this Letter of Transmittal and the instructions hereto, will
be deposited by such Eligible Institution with the Exchange Agent; and
(c) this Letter of Transmittal (or facsimile thereof), a Notice of
Guaranteed Delivery and Old Notes, in proper form for transfer, and all
other required documents are received by the Exchange Agent within three
business days after the date of such telegram, facsimile transmission or
letter.
2. Withdrawal of Tenders. Tendered Old Notes may be withdrawn at any time
prior to 5:00 p.m., New York City time, on the Expiration Date, unless
previously accepted for exchange.
To be effective, a written or facsimile transmission notice of withdrawal
must (a) be received by the Exchange Agent at one of its addresses set forth on
the first page of this Letter of Transmittal prior to 5:00 p.m., New York City
time, on the Expiration Date, unless previously accepted for exchange, (b)
specify the name of the person who tendered the Old Notes, (c) contain the
description of the Old Notes to be withdrawn, the certificate numbers shown on
the particular certificates evidencing such Old Notes and the aggregate
principal amount represented by such Old Notes and (d) be signed by the holder
of such Old Notes in the same manner as the original signature appears on this
Letter of Transmittal (including any required signature guarantees) or be
accompanied by evidence sufficient to have the Trustee with respect to the Old
Notes register the transfer of such Old Notes into the name of the holder
withdrawing the tender. The signature(s) on the notice of withdrawal must be
guaranteed by an Eligible Institution unless such Old Notes have been tendered
(a) by a registered holder of Old Notes who has not completed either the box
entitled "Special Issuance Instructions" or the box entitled "Special Delivery
Instructions" on this Letter of Transmittal or (b) for the account of an
Eligible Institution. All questions as to the validity, form and eligibility
(including time of receipt) of such withdrawal notices shall be determined by
the Company, whose
9
<PAGE>
determination shall be final and binding on all parties. If the Old Notes to be
withdrawn have been delivered or otherwise identified to the Exchange Agent, a
signed notice of withdrawal is effective immediately upon receipt by the
Exchange Agent of a written or facsimile transmission notice of withdrawal even
if physical release is not yet effected. In addition, such notice must specify,
in the case of Old Notes tendered by delivery of certificates for such Old
Notes, the name of the registered holder (if different from that of the
tendering holder) to be credited with the withdrawn Old Notes. Withdrawals may
not be rescinded, and any Old Notes withdrawn will thereafter be deemed not
validly tendered for purposes of the Exchange Offer. However, properly withdrawn
Old Notes may be retendered by following one of the procedures described under
"The Exchange Offer--Procedures for Tendering" in the Prospectus at any time on
or prior to the applicable Expiration Date.
3. Signatures on this Letter of Transmittal, Bond Powers and Endorsements;
Guarantee of Signatures. If this letter of Transmittal is signed by the
registered holder(s) of the Old Notes tendered hereby, the signature must
correspond exactly with the name(s) as written on the face of the certificates
without any change whatsoever.
If any Old Notes tendered hereby are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal.
If any Old Notes tendered hereby are registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate copies of this Letter of Transmittal as there are different
registrations of certificates.
When this Letter of Transmittal is signed by the registered holder or
holders specified herein and tendered hereby, no endorsements of certificates or
separate bond powers are required unless Exchange Notes are to be issued, or
certificates for any untendered principal amount of Old Notes are to be
reissued, to a person other than the registered holder.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of any certificate(s) specified herein such certificates(s)
must be endorsed or accompanied by appropriate bond powers, in either case
signed exactly as the name(s) of the registered holder(s) appear(s) on the
certificate(s).
If this Letter of Transmittal or a Notice of Guaranteed Delivery or any
certificates or bond powers are signed by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, such persons should so indicate when
signing, and unless waived by the Company, proper evidence satisfactory to the
Company of their authority so to act must be submitted.
Except as described below, signatures on this Letter of Transmittal or a
notice of withdrawal, as the case may be, must be guaranteed by an Eligible
Institution. Signatures on this Letter of Transmittal or a notice of withdrawal,
as the case may be, need not be guaranteed if the Old Notes tendered pursuant
hereto are tendered (a) by a registered holder of Old Notes who has not
completed either the box entitled "Special Issuance Instructions" or the box
entitled "Special Delivery Instructions" on this Letter of Transmittal or (b)
for the account of an Eligible Institution. In the event that signatures on this
Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantee must be by a firm which is a member of
a registered national securities exchange or a member of the National
Association of Securities Delivers, Inc. or by a commercial bank or trust
company having an office or correspondent in the Untied States (each as
"Eligible Institutions").
Endorsements on certificates for Old Notes or signatures on bond powers
required by this Instruction 3 must be guaranteed by an Eligible Institution.
4. Special Issuance and Delivery Instructions. Tendering holders should
indicate in the applicable box the name and address to which certificates for
Exchange Notes and/or substitute certificates evidencing Old Notes for the
principal amounts not exchanged are to be issued or sent, if different from the
name and address of the person signing this Letter of Transmittal. In the case
of issuance in a different name, the employer identification or social security
number of the person named must also be indicated. If no such instructions are
given, any Old Notes not exchanged will be returned to the name and address of
the person signing this Letter of Transmittal.
5. Tax Identification Number and Backup Withholding. Federal income tax
law of the United States requires that a holder of Old Notes whose Old Notes are
accepted for exchange provide the Company with his correct taxpayer
identification number, which, in the case of a holder who is an individual, is
his or her social
10
<PAGE>
security number, or otherwise establish an exemption from backup withholding. If
the Company is not provided with the correct taxpayer identification number, the
exchanging holder of Old Notes may be subject to a $50 penalty imposed by the
Internal Revenue Service (the "IRS"). In addition, interest on the Exchange
Notes acquired pursuant to the Exchange Offer may be subject to backup
withholding in an amount equal to 31% of any interest payment. If withholding
occurs and results in an overpayment of taxes, a refund may be obtained.
To prevent backup withholding, each exchange holder of Old Notes subject
to backup withholding must provide his correct taxpayer identification number by
completing the Substitute Form W-9 provided in this Letter of Transmittal,
certifying that the taxpayer identification number provided is correct (or that
the exchanging holder of Old Notes is awaiting a taxpayer identification number)
and that either (a) the exchanging holder has not yet notified by the IRS that
such holder is subject to backup withholding as a result of failure to report
all interest or dividends or (b) the IRS has notified the exchanging holder that
such holder is no longer subject to backup withholding.
Certain exchanging holders of Old Notes (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding requirements. A foreign individual and other exempt holders (i.e.
corporations) should certify, in accordance with the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9," to such
exempt status on the Substitute Form W-9 provided in this Letter of Transmittal.
6. Transfer Taxes. Holders tendering pursuant to the Exchange Offer will
not be obligated to pay brokerage commissions or fees or to pay transfer taxes
with respect to their exchange under the Exchange Offer unless the box entitled
"Special Issuance Instructions" in this Letter of Transmittal has been
completed, or unless the Exchange Notes are to be issued to any person other
than the holder of the Old Notes tendered for exchange. The Company will pay all
other charges or expenses in connection with the Exchange Offer. If holders
tender Old Notes for exchange and the Exchange Offer is not consummated,
certificates representing the Old Notes will be returned to the holders at the
Company's expense.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the certificate(s) specified in this Letter
of Transmittal.
7. Inadequate Space. If the space provided herein is inadequate, the
aggregate principal amount of the Old Notes being tendered and the certificate
numbers (if available) should be listed on a separate schedule attached hereto
and separately signed by all parties required to sign this Letter of
Transmittal.
8. Partial Tenders. Tenders of Old Notes will be accepted only in integral
multiples of $1,000. If tenders are to be made with respect to less than the
entire principal amount of any Old Notes, fill in the principal amount of Old
Notes which are tendered in column (3) in the box on the cover entitled
"Description of Old Notes Tendered." In the case of partial tenders, new
certificates representing the Old Notes in fully registered form for the
remainder of the principal amount of the Old Notes will be sent to the person(s)
signing this Letter of Transmittal, unless otherwise indicated in the
appropriate place on this Letter of Transmittal, as promptly as practicable
after the expiration or termination of the Exchange Offer.
9. Mutilated, Lost, Stolen or Destroyed Old Notes. Any holder whose Old
Notes have been mutilated, lost, stolen or destroyed should contact the Exchange
Agent at the address indicated above for further instructions.
10. Request for Assistance or Additional Copies. Requests for assistance
or additional copies of the Prospectus or this Letter of Transmittal may be
obtained from the Exchange Agent at its telephone number set forth on the cover.
11
<PAGE>
PAYER'S NAME: BANKERS TRUST COMPANY
- --------------------------------------------------------------------------------
SUBSTITUTE Part I--PLEASE PROVIDE
YOUR TIN IN THE BOX AT _______________________
Form W-9 RIGHT AND CERTIFY BY Social Security Number
Department of the Treasury SIGNING AND DATING BELOW.
Internal Revenue Service OR
-----------------------
Payer's Request for Employer Identification
Taxpayer Number
Identification Number
(TIN)
- --------------------------------------------------------------------------------
CERTIFICATION--UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
(1) The number shown on this form is my correct Taxpayer Identification Number
(or I am waiting for a number to be issued to me) and
(2) I am not subject to backup withholding either because: (a) I am exempt
from backup withholding; or (b) I have not been notified by the Internal
Revenue Service (the "IRS") that I am subject to backup withholding as a
result of failure to report all interest or dividends, or (c) the IRS has
notified me that I am no longer subject to backup withholding.
-----------------------------------------------------
Part II--Awaiting TIN |_| Part III--Exempt |_|
-----------------------------------------------------
Certification Instructions--You must cross out item (2) above if you have
been notified by the IRS that you are subject to backup withholding
because of under-reporting interest or dividends on your tax return.
However, if after being notified by the IRS that you were subject to
backup withholding you received another notification from the IRS stating
that you are no longer subject to backup withholding, do not cross out
item (2). If you are exempt from backup withholding, check the box in Part
III.
Signature _________________________ Date___________________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Payer's Request for Taxpayer Identification Number (TIN) Please fill out your
name and address below:
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
Address (Number and street)
- --------------------------------------------------------------------------------
City, State and Zip Code
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER AND THE
SOLICITATION. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER OF SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE
BOX IN PART II OF SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number to the payor by the time of
payment, 31% of all reportable payments made to me will be withheld until I
provide a number and that, if I do not provide my taxpayer identification number
within 60 days, such retained amounts shall be remitted to the IRS as backup
withholding.
Signature _________________________ Date___________________________
- --------------------------------------------------------------------------------
12
<PAGE>
Exhibit 5.1
[Letterhead of Cadwalader, Wickersham & Taft]
August 13, 1999
Lodgian Financing Corp.
Lodgian, Inc. and
the Subidiaries listed on Schedule A attached hereto
3445 Peachtree, N.E.
Suite 700
Atlanta, Georgia 30326
Re: Registration Statement on Form S-4 related to 12 1/4% Senior Subordinated
Notes due 2009, Series B
Dear Ladies and Gentlemen:
We have acted as special counsel for Lodgian Financing Corp., a Delaware
corporation ("Lodgian Financing"), Lodgian, Inc., a Delaware corporation
("Lodgian"), and the subsidiaries of Lodgian Financing listed on Schedule A
attached hereto (collectively, the "Issuers") in connection with the preparation
of the Issuers' Registration Statement on Form S-4 pursuant to the Securities
Act of 1933, as amended (the "Securities Act"), being filed with the Securities
and Exchange Commission (the "Commission") on the date hereof and to which this
opinion letter is an exhibit. The Registration Statement relates to Lodgian
Financing's offer to exchange its 12 1/4% Senior Subordinated Notes due 2009,
Series B (the "Exchange Notes") for any and all of its outstanding 12 1/4%
Senior Subordinated Notes due 2009, Series A (the "Old Notes"). The Old Notes
were issued, and the Exchange Notes are to be issued, under an indenture, dated
as of July 23, 1999 (the "Indenture"), by and among Lodgian Financing, as
issuer, and Lodgian and the subsidiaries listed on Schedule A, as guarantors
(collectively, in such capacity, the "Guarantors"), and Bankers Trust Company,
as trustee.
In rendering the opinions expressed below, we have examined and relied upon,
among other things, (a) the Registration Statement, including the Prospectus
constituting a part thereof, (b) the Indenture filed as an exhibit to the
Registration Statement and
<PAGE>
Lodgian Financing Corp.
Lodgian, Inc. and
the Subidiaries listed on Schedule A -2- August 13, 1999
(c) originals or copies, certified or otherwise identified to our satisfaction,
of such certificates, corporate, public or other records, and other documents as
we have deemed appropriate for the purpose of rendering this opinion letter. In
connection with such examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to original documents and instruments of all documents and
instruments submitted to us as copies or specimens, and the authenticity of the
originals of such documents and instruments submitted to us as copies or
specimens. We have also made such investigations of law as we have deemed
appropriate. In addition, we have assumed that the Exchange Notes and the
guarantees of the Guarantors (the "Guarantees") will be executed and delivered
in substantially the form in which they are filed as exhibits to the
Registration Statement.
Based upon the foregoing and subject to the qualifications set forth herein, we
are of the opinion that:
1. The Exchange Notes and the Guarantees will be legally and validly issued
and binding obligations of Lodgian Financing and the Guarantors, as the
case may be, (except to the extent enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws affecting the enforcement of creditors'
rights generally and by the effect of general principles of equity,
regardless of whether enforceability is considered in a proceeding in
equity or at law), when (a) the Registration Statement, as finally amended,
shall have become effective under the Securities Act and the Indenture
shall have been qualified under the Trust Indenture Act of 1939, as
amended, and (b) the Exchange Notes shall have been duly executed,
authenticated and delivered, and the Guarantees shall have been duly
executed and delivered, as contemplated in the Registration Statement.
2. The statements made in the Prospectus constituting a part of the
Registration Statement under the caption "Certain U.S. Federal Tax
Considerations," insofar as such statements purport to summarize certain
federal income tax laws of the United States of America, constitute a fair
summary of the principal federal income tax consequences of an investment
in the Exchange Notes.
<PAGE>
Lodgian Financing Corp.
Lodgian, Inc. and
the Subidiaries listed on Schedule A -3- August 13, 1999
We hereby consent to the filing of this opinion letter as an exhibit to the
Registration Statement and to the reference to this Firm in the Prospectus
constituting a part of the Registration Statement under the caption "Legal
Matters," without admitting that we are "experts" within the meaning of the
Securities Act or the rules and regulations of the Commission issued thereunder
with respect to any part of the Registration Statement, including this exhibit.
Very truly yours,
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
STATE OF
NAME OF SUBSIDIARY ORGANIZATION
------------------ ------------
<S> <C>
SHEFFIELD MOTEL ENTERPRISES, INC. Alabama
DOTHAN HOSPITALITY 3053, INC. Alabama
DOTHAN HOSPITALITY 3071, INC. Alabama
GADSDEN HOSPITALITY, INC. Alabama
SERVICO FLAGSTAFF, INC. Arizona
LODGIAN ANAHEIM INC California
LODGIAN ONTARIO INC. California
SERVICO PENSACOLA, INC. Delaware
SERVICO PENSACOLA 7200, INC. Delaware
SERVICO PENSACOLA 7330, INC. Delaware
SERVICO FT. PIERCE, INC. Delaware
AMI OPERATING PARTNERS, L.P. Delaware
SERVICO WEST PALM BEACH, INC. Florida
SERVICO WINTER HAVEN, INC. Florida
SERVICO SILVER SPRING, INC. Florida
ALBANY HOTEL, INC. Florida
PALM BEACH MOTEL ENTERPRISES, INC. Florida
SERVICO NORTHWOODS, INC. Florida
SERVICO WINDSOR, INC. Florida
BRUNSWICK MOTEL ENTERPRISES, INC. Georgia
LITTLE ROCK LODGING ASSOCIATES I, L.P. Georgia
ATLANTA HILLSBORO LODGING, LLC Georgia
LODGIAN RICHMOND, L.L.C. Georgia
SERVICO ROLLING MEADOWS, INC. Illinois
SERVICO CEDAR RAPIDS, INC. Iowa
SERVICO METAIRIE, INC. Louisiana
SERVICO COLUMBIA, INC. Maryland
SERVICO COLESVILLE, INC. Maryland
SERVICO MARYLAND, INC. Maryland
NH MOTEL ENTERPRISES, INC. Michigan
MINNEAPOLIS MOTEL ENTERPRISES, INC. Minnesota
SERVICO ROSEVILLE, INC. Minnesota
LODGIAN MOUNT LAUREL, INC. New Jersey
SERVICO JAMESTOWN, INC. New York
SERVICO NEW YORK, INC. New York
SERVICO NIAGARA FALLS, INC. New York
SERVICO GRAND ISLAND, INC. New York
FAYETTEVILLE MOTEL ENTERPRISES, INC. North Carolina
APICO INNS OF GREEN TREE, INC. Pennsylvania
APICO HILLS, INC. Pennsylvania
SERVICO HILTON HEAD, INC. South Carolina
SERVICO AUSTIN, INC. Texas
SERVICO MARKET CENTER, INC. Texas
</TABLE>
<PAGE>
Exhibit 10.3.1
LOAN AGREEMENT
IN THE AMOUNT OF $8,449,183
Dated December 8, 1998
BETWEEN
SERVICO CONCORD, INC.
BORROWER
AND
BANC ONE CAPITAL FUNDING CORPORATION
LENDER
<PAGE>
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS 1
Defined Terms 1
ARTICLE 2 BORROWER'S REPRESENTATIONS, WARRANTIES AND COVENANTS 8
Representations, Warranties and Covenants 8
Representations Remade 14
ARTICLE 3 GENERAL CONDITIONS OF LOAN 15
Loan Documents 15
Additional Requirements 15
ARTICLE 4 FURTHER COVENANTS OF BORROWER 18
Covenants 18
ARTICLE 5 AGREEMENT TO LEND 27
Agreement to Lend 27
ARTICLE 6 INSURANCE AND CASUALTY 27
Insurance Provisions 27
ARTICLE 6A RENOVATION WORK 34
6A.1 Construction 34
6A.2 Completion 34
6A.3 Compliance with Laws 34
6A.4 Other Remedies of Lender 34
ARTICLE 6B MORTGAGE DELIVERY 35
6B.1 Requirements 35
6B.2 Effect of Failure to Deliver 35
ARTICLE 7 BORROWER'S DEFAULT 35
7.1. Events of Default 35
7.2. Remedies 37
ARTICLE 8 MISCELLANEOUS 39
8.1 Indemnification 39
8.2 Defense of Claims 39
8.3 Performance by Lender 39
8.4 Transfer or Assignment 40
8.5 Lender's Actions 40
8.6 Time is of the Essence 40
8.7 Waivers 40
8.8 Notices 41
8.9 Successors and Assigns 42
8.10 No Partnership 42
8.11. Brokerage Claims 42
8.12 Publicity 42
8.13 Documents Satisfactory to Lender 42
8.14 Additional Assurances 42
8.15 Entire Agreement 42
<PAGE>
8.16 Severability 42
8.17 No Third Party Beneficiary 43
8.18 CHOICE OF LAW 43
8.19 Limitation on Liability 43
8.20 WRITTEN AGREEMENT 45
8.21 Intentionally Omitted 45
8.22 Intentionally Omitted 45
8.23 Intentionally Omitted 46
8.24 WAIVER OF JURY TRIAL 46
8.25 Consent to Jurisdiction 46
<PAGE>
Exhibit A Legal Description
Exhibit B-1 Additional Note
Exhibit B-2 Primary Note
Exhibit C Permitted Encumbrances
Exhibit D Insurance Requirements
Exhibit E Renovation Work
Exhibit F-1 Estoppel Agreement
Exhibit F-2 Estoppel Agreement
Exhibit F-3 Estoppel Agreement
Schedule 1 Description of Ground Lease
<PAGE>
THIS LOAN AGREEMENT (this "Agreement") is dated effective as of December
8, 1998 between SERVICO CONCORD, INC., a California corporation, with an office
and principal place of business at Two Live Oak Center, 3445 Peachtree Road, NE,
Suite 700, Atlanta, Georgia 30326 ("Borrower") and BANC ONE CAPITAL FUNDING
CORPORATION, an Ohio corporation having a principal place of business at 150
East Gay Street, 24th Floor, Columbus, Ohio 43215 ("Lender").
R E C I T A L S
The Borrower desires to borrow from Lender up to $8,449,183 for the
financing and renovation of that certain piece or parcel of real property
located at 45 John Glenn Drive, Concord, California 94520 (the "Land"), known as
the Sheraton Hotel Concord (the "Hotel") consisting of a 323-room hotel and all
other improvements located thereon and together with all furniture, equipment
and other personal property now or hereafter used in the management and
operation of the Hotel (the "Personal Property"). The Land and the Improvements
(as defined below) are hereinafter collectively referred to as the "Premises."
The Premises and the Personal Property are hereinafter collectively referred to
as the "Property." Lender has agreed to make the loan to Borrower pursuant to
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the covenants,
conditions and agreements contained herein, Borrower and Lender agree as
follows:
ARTICLE 1
DEFINITIONS
Defined Terms. In this Agreement, the following terms shall have the
following meanings:
"Accounting Period" -- shall mean each of the four (4) week periods
designated by Borrower as a fiscal period of the Hotel, except that an
Accounting Period may occasionally contain five (5) weeks when necessary to
conform Borrower's accounting system to the calendar.
"Additional Note" -- the Promissory Note from Borrower to Lender of even
date herewith in the stated principal amount of One Million Thirteen Thousand
Nine Hundred and Two Dollars ($1,013,902). A copy of the Additional Note is
attached hereto as Exhibit B-1.
"Advance" -- an advance by Lender to Borrower in accordance with the Note
or this Agreement.
<PAGE>
"Affiliate" -- of any person or entity shall mean any other person or
entity directly or indirectly controlling, under common control with, or
controlled by such person or entity. For purposes of the definition of
Affiliate, "control" when used with respect to any person or entity means the
power to direct the management and policies of such person or entity, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
relative to the foregoing.
"Assignment of Accounts" -- the Assignment of Accounts and Security
Agreement of even date herewith from Borrower to Lender and to be delivered to
Lender on the Mortgage Delivery Date.
"Assignment of Permits and Contracts" -- the Assignment of Licenses,
Permits and Contracts, (specifically including the management agreement relating
to the Property) of even date herewith from Borrower to Lender and to be
delivered to Lender on the Mortgage Delivery Date.
"Assignment of Leases" -- the Assignment of Leases and Rents of even date
herewith from Borrower to Lender and to be delivered to Lender on the Mortgage
Delivery Date.
"Bankruptcy Code" -- the United States Bankruptcy Code and any similar
state or federal law now or hereafter in effect relating to bankruptcy,
reorganization or insolvency, or the arrangement or adjustment of debts.
"Business Day" -- any day other than a Saturday, Sunday or legal holiday
on which commercial banks are authorized or required to be closed in Columbus,
Ohio.
"Calculation Date" -- January 20, 2000, and the twentieth day of every
third Loan Month thereafter prior to the Maturity Date.
"Calculation Period" -- the period of twelve (12) full calendar months
immediately preceding the calendar month which includes the Calculation Date.
"Capital Reserve" -- the furniture, fixtures and equipment reserve to be
held by Lender pursuant to the terms and conditions of Section 4.1.T.
"Cash Management Agreement" -- that certain Cash Management Agreement
dated January 31, 1995 among Servico, Inc., Servico Management Corporation and
certain of their subsidiaries and affiliates, including Borrower, as amended
November 24, 1998.
"Closing" -- the closing of the Loan contemplated by this Agreement.
"Cross-Guaranty" -- the Guaranty Agreement of even date herewith from the
Related Parties to Lender in connection with the Loan.
"Code" -- the Internal Revenue Code of 1986, as amended, and the
Regulations promulgated thereunder.
<PAGE>
"Costs" -- costs and expenses incurred directly relating to the Renovation
Work.
"Deferred Origination Fee" -- a deferred origination fee in the amount of
$148,705.62 payable to Lender in accordance with Section 4.Y.
"DSCR" -- the debt service coverage ratio as determined by Lender on each
Calculation Date by calculating the ratio of (x) the Net Operating Income from
the Property for the immediately preceding thirteen (13) Accounting Periods, to
(y) the sum of the payments of interest which are due and payable under the
Primary Note for the immediately following twelve (12) Loan Months.
"Default Rate" -- see Section 1 of the Primary Note.
"Environmental Indemnity" -- the Hazardous Substances Indemnity Agreement
of even date herewith from Borrower and Guarantors to Lender.
"Environmental Site Assessment Report" -- the Phase I Environmental Site
Assessment Report dated October 20, 1998, prepared by Building Evaluation
Services & Technology, Inc.
"Estoppel Agreement" -- an Estoppel Agreement with respect to the Ground
Lease executed by the Ground Lessor and substantially in the forms attached
hereto as Exhibits F-1, F-2 and F-3.
"Event of Default" -- the occurrence of any one or more of the events set
forth in Section 7.1.
"Financing Statements" -- the UCC-1 Financing Statements naming Borrower
as debtor and Lender as secured party and to be filed with the offices of the
California Secretary of State and the Contra Costa County Recorder in connection
with the Mortgage, the Security Agreement, the Assignment of Leases, the
Assignment of Permits and Contracts, and the Assignment of Accounts.
"Franchise Agreement" -- that certain Franchise Agreement dated September
2, 1997, between Borrower and Franchisor relating to the Property.
"Franchisor" -- ITT Sheraton Corporation.
"Governmental Authority" -- the United States of America, the state in
which the Property is located, the state under the laws of which Borrower is
organized, any state in which (or to residents of which) Borrower offers to sell
or lease any portion of the Property or Improvements have been or will be made
by or on behalf of Borrower, any political subdivision of any of them, and any
court, agency, department, commission, board, bureau or instrumentality of any
of them. <PAGE>
"Gross Revenues" -- for each Accounting Period shall mean all rents,
revenues and other payments earned by Borrower in cash or current funds or other
consideration from any source whatsoever in connection with its ownership,
operation and management of the Property, including all amounts earned by
Borrower from all tenants or other occupants of the Property. Gross Revenues
shall be determined on an accrual basis and in accordance with generally
accepted accounting principles consistently applied.
"Ground Lease" -- that certain lease more particularly described in
Schedule 1.
"Ground Lessor" -- County of Contra Costa.
"Guarantor" -- Lodgian, Inc., a Delaware corporation.
"Impac Loan" -- collectively, all outstanding indebtedness owing to Banc
One Capital Partners III, Ltd. or its Affiliates by Impac Hotel Group, L.L.C.
"Impositions" -- all taxes of every kind and nature, sewer rents, charges
for water, for setting or repairing meters and for all other utilities serving
the Premises, and assessments, levies, inspection and license fees and all other
charges imposed upon or assessed against the Premises or any portion thereof
(including the income derived from the Premises), and any stamp or other taxes
which might be required to be paid with respect to any of the Loan Documents,
any of which might, if unpaid, result in a lien on the Premises or any portion
thereof, regardless of to whom assessed.
"Improvements" -- the improvements existing upon the Land.
"Incipient Default" -- the existence of any condition or state of facts
which with the giving of notice by Lender or the passage of time, or both, would
constitute an Event of Default.
"Indebtedness" -- all indebtedness, obligations, liabilities, amounts,
sums and expenses payable by Borrower under the Note, this Agreement and every
other Loan Document, together with interest thereon in accordance with the terms
and conditions of the Loan Documents.
"Interest Rate" -- shall mean the Interest Rate as defined in the Primary
Note.
"Knowledge of Borrower" -- any matter actually known or, with the exercise
of reasonable care or diligence, should have been known, to the Borrower or the
Guarantor.
"Lease" -- any lease (including any equipment lease) or other rental or
occupancy agreement, demising a portion of the Property, other than those with
hotel guests and the Ground Lease.
"Lender's Consultant" -- the architect or engineer retained by Lender to
inspect the Improvements or the Renovation Work on behalf of Lender; in the
event all or a portion of such functions are performed by Lender, references in
this Agreement to Lender's Consultant shall be deemed to such extent to be
references to Lender.
"Limited Guaranty" -- the Limited Guaranty and Indemnity Agreement of even
date herewith from Guarantor to Lender in connection with the Loan.
<PAGE>
"Liquor License Agreement" -- the Liquor License Agreement of even date
herewith between Lender and Borrower.
"Loan" -- the loan evidenced by the Note and this Agreement.
"Loan Amount" -- Eight Million Four Hundred Forty Nine Thousand One
Hundred and Eighty Three Dollars ($8,449,183).
"Loan Documents" -- this Agreement, the Note, the Environmental Indemnity,
the Liquor License Agreement, the Cross Guaranty, the Stock Pledge, and the
Limited Guaranty and, if applicable, the Mortgage, the Security Agreement, the
Assignment of Leases, the Assignment of Permits and Contracts, the Assignment of
Accounts, the Financing Statements and such other documents and agreements as
Lender may require in connection with the Loan.
"Loan Month" -- See Section 1 of the Primary Note.
"Loan Party" -- Borrower or the Guarantor.
"Management Agreement" -- the Consulting Agreement effective September 24,
1997 and amended November 24, 1998, by and between Borrower and Manager.
"Manager" -- Servico Management Corp., a Florida corporation.
"Maturity Date" -- See Section 1 of the Additional Note and the Primary
Note, as applicable.
"Mortgage" -- the Leasehold Deed of Trust, Security Agreement and Fixture
Filing dated no later than the Mortgage Delivery Date from Borrower to Lender on
the Premises, securing the Note and Borrower's obligations under the other Loan
Documents and to be delivered to Lender on the Mortgage Delivery Date.
"Mortgage Delivery Date" -- December 19, 1998, the date on or before which
all deliveries pursuant to Section 6B.1 are required to be made.
"Net Cash Flow" -- for each Accounting Period shall mean Net Operating
Income reduced by all monthly payments of interest under the Note and all other
payments under the Note and the other Loan Documents actually paid by Borrower
and received by Lender during such Accounting Period.
"Net Operating Income" -- for each Accounting Period shall be calculated
by Lender based upon Lender's review of Borrower's monthly financial statements
provided to Lender pursuant to Section 4.1.K, together with such other
information as Lender may reasonably request, and shall mean the difference
between: <PAGE>
(1) the Gross Revenues for said Accounting Period; and
(2) all the Operating Expenses for said Accounting Period.
"Note" -- collectively, the Primary Note and the Additional Note.
"Operating Expenses" -- the reasonably necessary and customary costs and
expenses incurred, whether or not actually paid, by Borrower in connection with
its ownership, operation and management of the Property, determined on an
accrual basis and in accordance with generally accepted accounting principles
consistently applied and specifically including in Operating Expenses all
required payments made by Borrower into the Capital Reserve pursuant to Section
4.l.T of this Agreement, any payments made pursuant to Section 4.l.B of the
Agreement and any other reserve established pursuant to this Agreement;
specifically excluding from Operating Expenses, however (w) all capital
expenditures incurred by Borrower (x) principal, interest and all other payments
made under the Loan Documents, and costs and expenses incurred by Borrower in
connection with the closing of the Loan, and (y) depreciation and all other
non-cash expenses of the Property. For purposes of calculating DSCR, Lender
shall include Operating Expenses which were budgeted for the applicable
Accounting Period(s) and were incurred but not paid. Operating Expenses which
are paid less frequently than each Accounting Period and which are allocable
evenly to each Accounting Period may be prorated to reflect such allocation.
"Organizational Documents" -- Borrower's articles of incorporation, bylaws
and other organizational documents and any amendments or modifications thereto.
"Permitted Encumbrances" -- the liens, claims, assessments, encumbrances
and rights of others encumbering title to the Premises and the Personal Property
which are set forth on Exhibit C.
"Permitted Transfers" -- any transfer, sale or issuance of stock in
Lodgian, Inc., a Delaware corporation.
"Primary Note" -- the Promissory Note from Borrower to Lender of even date
herewith in the stated principal amount of Seven Million Four Hundred Thirty
Five Thousand Two Hundred and Eighty One Dollars ($7,435,281). A copy of the
Primary Note is attached hereto as Exhibit B-2.
"Principal Amortization Reserve" -- the reserve of funds which may be held
and disbursed by Lender pursuant to Section 4.l.R.
"Proceeds" -- all proceeds, judgments, claims, compensation, awards or
damages and settlements with respect to the Property as a result of or in lieu
of any condemnation or taking of the Property or any portion thereof by eminent
domain or any casualty loss or damage to any of the Property or any portion
thereof. <PAGE>
"Related Parties" -- Lodgian AMI, Inc., a Maryland corporation, Penmoco,
Inc., a Michigan corporation, and Island Motel Enterprises, Inc., a Georgia
corporation.
"Related Party Loan Documents" -- all documents, instruments or agreements
securing or evidencing the Related Party Loans from the Lender to the Related
Parties.
"Related Party Loans" -- that (i) certain loan to Lodgian AMI, Inc. of
even date herewith in the original aggregate principal amount of $35,073,117 and
secured by the Holiday Inn - Inner Harbor, (ii) certain loan to Lodgian AMI,
Inc. of even date herewith in the original aggregate principal amount of
$15,740,722 and secured by the Holiday Inn International Airport, (iii) certain
loan to Lodgian AMI, Inc. of even date herewith in the original aggregate
principal amount of $3,322,817 and secured by the Holiday Inn - Glen Burnie
North, (iv) certain loan to Lodgian AMI, Inc. of even date herewith in the
original aggregate principal amount of $5,214,292 and secured by the Holiday Inn
- - Visitors Center/Lancaster East, and (v) certain loan to Penmoco, Inc. and
Island Motel Enterprises, Inc. of even date herewith in the original aggregate
principal amount of $4,199,869 and secured by the Holiday Inn Jekyll Island.
"Related Party Properties" -- the Holiday Inn - Inner Harbor in Baltimore,
Maryland, the Holiday Inn International Airport in Linthicum Heights, Maryland,
the Holiday Inn - Glen Burnie North in Glen Burnie, Maryland, the Holiday Inn
Visitors Center/Lancaster East in Lancaster, Pennsylvania, and the Holiday Inn
Jekyll Island in Jekyll Island, Georgia.
"Renovation Budget" -- the budget for the Renovation Work to be prepared
by the Borrower and delivered to Lender for its review and approval prior to the
Closing.
"Renovation Completion" -- the completion of the Renovation Work in
accordance with the requirements of Article 6A.
"Renovation Completion Date" -- September 30, 1999, the date on which all
of the Renovation Work is required to be completed in accordance with Article 6A
hereof.
"Renovation Plans" -- the plans and specifications for the Renovation Work
to be prepared by the Borrower and delivered to the Lender for its review and
approval prior to the Closing.
"Renovation Work" -- the work and projects described in Exhibit E.
"Required Coverage Standard" -- shall mean 1.25:1 for all Calculation
Dates on or before January 20, 2000 and 1.40:1 for all Calculation Dates
subsequent to January 20, 2000.
"Reserved Funds" -- all Net Cash Flow held by Lender pursuant to the terms
and conditions of Section 4.1.R.
<PAGE>
"Security Agreement" -- the Security Agreement of even date herewith from
Borrower, as debtor, to Lender, as secured party.
"Stock Pledge" -- the Pledge of Stock executed by Servico Operations
Corporation pursuant to which Servico Operations Corporation pledges the Stock
of the Borrower and each Related Party to secure the obligations of Borrower
with respect to the Loan and the Related Party Loans.
"Title Company" -- Lawyers Title Insurance Corporation.
"Title Policy" -- a mortgagee's policy of title insurance issued on the
1992 ALTA form by the Title Company in the aggregate face amount of $8,449,183,
guaranteeing as of the date of the Closing, the Mortgage to be a valid first and
prior lien on Borrower's leasehold interest in the Premises (including any
easements appurtenant thereto) subject only to the Permitted Encumbrances. The
Title Policy shall contain such endorsements as Lender may reasonably require.
In this Agreement, the word "including" shall mean "including without
limitation."
ARTICLE 2
BORROWER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Representations, Warranties and Covenants. Borrower hereby represents,
covenants and warrants as follows:
Accuracy of Recitals. Each of the recitals to this Agreement is true and
correct.
Organization of Borrower. Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the State of California.
Borrower is and at all times prior to the repayment of the Loan shall remain a
single purpose entity, so called, whose sole asset is the Property and whose
sole business interest is the ownership of a leasehold interest in, and
operation of, the Property. The Borrower has provided Lender with a true and
accurate copy of the Organizational Documents. The status of Borrower as a duly
organized and validly existing corporation under California law will not be
terminated. The Borrower shall not amend the Organizational Documents in any
material respect, without the Lender's prior written consent.
<PAGE>
Authority and Enforceability. Borrower has full right, power and authority
to execute, deliver and carry out the terms and provisions of this Agreement and
the other Loan Documents and every other document and instrument to be executed
and delivered by Borrower pursuant to this Agreement. The person executing and
delivering this Agreement and the Loan Documents on behalf of Borrower is duly
authorized to so act on behalf of Borrower. This Agreement, each other Loan
Document and every other document and instrument to be executed and delivered by
any Loan Party, when executed and delivered shall constitute the duly
authorized, valid and legally binding obligation of the party or parties
executing the same, enforceable in accordance with their respective terms,
subject only to applicable bankruptcy, reorganization, moratorium and similar
laws affecting the enforceability of creditors' rights generally.
Maintenance of Existence. Borrower shall do all things necessary to
preserve and keep in full force and effect its existence and all franchises,
licenses, authorizations, registrations, permits and approvals under the laws of
the state of its incorporation and the State of California, and shall comply
with all regulations, rules, ordinances, statutes, orders and decrees of any
governmental authority or court applicable to Borrower and to the Property or
any portion thereof.
No Default. Neither Borrower nor any other Loan Party is in default under
any material contract, agreement or commitment to which it is a party or by
which it is bound. The execution and delivery of this Agreement and the other
Loan Documents and any other documents or instruments to be executed and
delivered by Borrower or any other Loan Party pursuant hereto or thereto, the
consummation of the transactions herein or therein contemplated and compliance
with the terms and provisions hereof or thereof, will not (i) violate any law or
any regulation, order, writ or injunction of any court or governmental or
administrative department, commission, board, bureau, agency or instrumentality,
or (ii) conflict or be inconsistent with, or result in a breach of any of the
provisions of, or constitute a default under, any instrument, document,
agreement, or contract of any kind to which Borrower or any other Loan Party is
a party or by which Borrower or any other Loan Party or any of their respective
property is bound.
No Litigation. There are no petitions, actions, suits, or proceedings
pending or, to the Knowledge of Borrower, threatened against or affecting
Borrower or any other Loan Party or the Property, by or before any court or any
governmental, administrative, regulatory, adjudicatory or arbitrational body or
agency (including any such petition, action, suit or proceeding to alter or
declare invalid any laws, regulations, permits, certificates, restrictions or
agreements relating to the Property) which, if determined against the Property,
the Borrower or the Loan Party, would reasonably likely have a material adverse
effect on the condition (financial or otherwise) or business of the Borrower or
the Loan Party or the condition or ownership of the Property.
Compliance with Laws. To the Knowledge of Borrower and except as may be
otherwise disclosed to Lender in the Environmental Site Assessment Report, the
Title Policy, the survey or the zoning letter with respect to the Premises, the
use of the Property as a hotel with restaurant and bar does not violate (i) any
applicable law, regulation, ordinance or order of any kind whatsoever (including
any such relating to zoning, building and environmental protection), (ii) any
permit or license issued with respect to the Property, or (iii) any condition,
easement, right-of-way, covenant or restriction affecting the Property.
<PAGE>
Permits. To the Knowledge of Borrower, all necessary material and required
franchises, licenses, authorizations, registrations, permits and approvals for
the use and occupancy of the Premises have been obtained from all Governmental
Authorities having jurisdiction over the Premises so as to permit the operation
of the Property as herein contemplated. Borrower has provided Lender with true
and correct copies of all of the certificates of occupancy (to the extent
available) and the hotel operating license and liquor license respecting the
Property.
Title. Effective as of the Closing, Borrower will have good and
indefeasible leasehold interest in the Premises and good and indefeasible title
to all existing Personal Property, free and clear of all liens, claims,
assessments, encumbrances and rights of others other than the Permitted
Encumbrances. Borrower shall preserve such title to the Premises and the
Personal Property and will forever warrant and defend the same and the validity
and priority of the Mortgage to Lender against all claims whatsoever other than
the Permitted Encumbrances.
Easements. In addition to the Permitted Encumbrances, all proposed
easements, permits, licenses, and other instruments which would or might affect
the title to the Property have been submitted to Lender for Lender's approval
together with a survey showing the exact or, if applicable, proposed location
thereof. Borrower shall not subject the Property or any part thereof to any
restrictive covenant (including any restriction or exclusive use provision in
any lease or other occupancy agreement) without the prior written consent of
Lender.
Zoning. To the Knowledge of Borrower, and subject to any disclosures in
the zoning letters delivered to the Lender, (i) the Premises are zoned for hotel
use, which zoning is final, unconditional and in full force and effect, (ii) the
Premises are in compliance with all applicable zoning and land use laws,
regulations and ordinances, (iii) in the event that all or any part of the
Improvements are destroyed or damaged, said Improvements can be legally
reconstructed to their condition prior to such damage or destruction, and
thereafter exist for the same use without violating any zoning or other
ordinances applicable thereto and without the necessity of obtaining any
variances or special permits, (iv) the Property contains enough permanent
parking spaces to satisfy all requirements imposed by applicable laws with
respect to parking, (v) no legal proceedings are pending or threatened with
respect to the zoning of the Premises, and (vi) neither the zoning nor any other
right to construct, use or operate the Premises is in any way dependent upon or
related to any real estate other than the Premises. No tract map, parcel map,
condominium plan, condominium declaration, or plat of subdivision will be
recorded by Borrower with respect to the Premises without Lender's prior written
consent.
Complete Disclosure. Neither this Agreement nor any document, financial
statement, credit information, certificate or statement provided to Lender by
Borrower contains any untrue statement of material fact or omits to state a fact
necessary to make any statements made herein not misleading.
<PAGE>
Agreements Affecting the Property. Borrower has provided Lender with true
and complete copies of all material contracts and agreements affecting the
Property, including, (i) the Management Agreement, (ii) all lease financings or
purchase money financings for equipment incurred as of the date hereof, and
(iii) all other contracts or agreements relating to the maintenance,
development, operation or management of the Property which either involve space
in excess of 1,000 square feet or payment obligations on the part of Borrower in
excess of $25,000 in any twelve (12) month period.
Brokerage Commissions. No brokerage fees or commissions are payable in
connection with the Loan.
Condemnation. Borrower has not received any notice from any Governmental
Authority or quasi-governmental body or agency or from any person or entity with
respect to (and Borrower does not know of) any actual or threatened taking of
the Premises, or any portion thereof, for any public or quasi-public purpose or
of any moratorium which may affect the use or operation of the Property.
Year 2000 Compliance. All devices, systems, machinery, information
technology, computer software and hardware, and other date sensitive technology
(jointly and severally the "Systems") necessary for Borrower to carry on its
business as presently conducted and as contemplated to be conducted in the
future are Year 2000 Compliant or will be Year 2000 Compliant within a period of
time calculated to result in no material disruption of any of Borrower's
business operations. For purposes of these provisions, "Year 2000 Compliant"
means that such Systems are designed to be used prior to, during and after the
Gregorian calendar year 2000 A.D. and will operate during each such time period
without error relating to date data, specifically including any error relating
to, or the product of, date data which represents or references different
centuries or more than one century. Borrower: (1) has taken and continues to
undertake a detailed inventory, review, and assessment of all areas within its
business and operations that could be adversely affected by the failure of
Borrower to be Year 2000 Compliant on a timely basis; (2) is developing a
detailed plan and time line for becoming Year 2000 Compliant on a timely basis;
and (3) to date, has implemented that plan in accordance with timetable in all
material respects. The fair market value of all real and personal property, if
any, pledged to Lender as collateral to secure the Loan Agreement is not and
shall not be less than currently anticipated or subject to substantial
deterioration in value because of the failure of such collateral to be Year 2000
Compliant.
Access. Except as otherwise shown on the survey delivered to the Lender,
the Property has access to and full utilization of completed public roads
necessary for access to and full utilization of the Property for its intended
purposes.
Tax Division. A tax division has been effected with respect to the
Premises so that it is taxed for ad valorem taxation without regard to or
inclusion of any other property. No subdivision or other approval is necessary
with respect to the Premises in order for Borrower to mortgage, convey and
otherwise deal with the Premises as a separate lot or parcel.
Non-Foreign Status of Borrower. Borrower is not a non-resident alien for
purposes of U.S. income taxation and is not a foreign corporation, partnership,
foreign trust or foreign estate (as said terms are defined in the Code).
<PAGE>
ERISA. Neither Borrower nor any Loan Party is a party to any plan defined
and regulated under the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") or Section 4975 of the Code. None of the assets of Borrower or
any Loan Party are "plan assets"" as defined in 29 C.F.R. ss.2509.75-2 or
ss.2510.3-101.
Mortgage. Upon delivery and due recordation, the Mortgage will constitute
a valid and enforceable first lien on Borrower's leasehold interest in the
Premises, subject only to the Permitted Encumbrances.
Security Interest. Upon delivery and due recordation, the Security
Agreement and the Mortgage, together with the Financing Statements to be filed
in connection therewith, will create a valid, enforceable and perfected first
priority security interest in the Collateral (as defined therein) including the
Personal Property, subject to no other interests, liens or encumbrances other
than the Permitted Encumbrances.
Intentionally Omitted.
Intentionally Omitted.
Bankruptcy. No petition in bankruptcy, whether voluntary or involuntary,
or assignment for the benefit of creditors, or any other action involving
debtors' and creditors' rights has been filed or threatened under the laws of
the United States of America or any state thereof, against the Borrower or any
other Loan Party or against any other entity in which the Borrower or any other
Loan Party is a shareholder, principal, managing member or general partner.
Leases. Except as may be described in the Title Policy, there are no
leases affecting the Property. Borrower has not executed any prior assignment of
the Leases, nor has it performed any act or executed any other instrument which
might prevent Lender from operating under any of the terms and conditions of the
Assignment of Leases or which would limit Lender in such operation; and Borrower
further covenants and warrants to Lender that Borrower has not executed or
granted any modification whatsoever of the Leases, except as herein indicated,
and that the Leases are in full force and effect, and that, except as otherwise
disclosed to Lender in writing, there are no defaults now existing under the
Leases with respect to which Borrower has notified the tenant under the Leases.
<PAGE>
Physical Condition of Property. Subject to the Renovation Work, all of the
Improvements are in good condition and repair except as otherwise expressly
provided in the Property Condition Report dated as of October 20, 1998, prepared
by Building Evaluation Services & Technology, Inc. (the "Property Condition
Report"). Since the date of the Property Condition Report, there have been no
material adverse changes to the physical condition of the Improvements. Borrower
is aware of no latent or patent structural or other significant defect or
deficiency in such Improvements except as may be disclosed in the Property
Condition Report. Water supply, storm and sanitary sewers, and electrical, gas
and telephone facilities are available to the Property within the boundary lines
of the Property, are sufficient to meet the reasonable needs of the Property as
now used or contemplated to be used, no other utility facilities are necessary
to meet the reasonable needs of the Property as now used, and design and
as-built conditions of the Property are such that surface and storm water does
not accumulate on the Property and, except as disclosed in writing to Lender,
does not drain from the Property across land of adjacent property owners. Except
as otherwise disclosed in writing to Lender, no part of the Property is within a
flood plain and none of the Improvements create an encroachment over, across or
upon any of the Property's boundary lines, rights of way or easements, and no
building or other improvement on adjoining land create such an encroachment.
Mechanics' Liens. There are no mechanics' or materialmen's liens,
alienable bills or other claims constituting or that may constitute a lien on
the Property or any part thereof, and no work for which any such lien could be
asserted has been performed within the last 90 days, except as otherwise
disclosed in writing to Lender.
Payment of Liens. Borrower shall pay when due all payments and charges due
under or in connection with any liens and encumbrances on and security interests
in the Property or any portion thereof, all rents and charges under any ground
leases and other leases forming a part of the Property, and all claims and
demands of mechanics, materialmen, laborers and others which, if unpaid, might
result in or permit the creation of a lien on the Property or any portion
thereof, and shall cause the prompt (but in no event later than 30 days after
imposition), full and unconditional discharge of all liens imposed on or against
the Property or any portion thereof. Borrower shall do or cause to be done, at
the sole cost of Borrower, everything necessary to fully preserve the initial
priority of the Mortgage upon its delivery and due recordation. If Borrower
fails to make any such payment or if a lien (other than a Permitted Encumbrance)
attaches to the Property or any portion thereof, Lender may (but shall not be
obligated to) make such payment or discharge such lien and Borrower shall
reimburse Lender on demand for all such Advances.
Commercial Purpose. Borrower holds its interests in the Property for
commercial or investment purposes.
Franchise Agreement. Borrower has provided Lender with a true and complete
copy of the Franchise Agreement and any other agreements with the Franchisor
related to the Property. The Franchise Agreement is in full force and effect and
free from default on the part of the Borrower. The Franchise Agreement embodies
the entire transaction between Borrower and the Franchisor with respect to the
operation of the Property. Borrower shall not modify, amend or waive any
provisions of the Franchise Agreement without Lender's prior written consent.
Borrower will promptly furnish Lender with copies of all notices furnished to
Borrower under the Franchise Agreement. <PAGE>
Management Agreement. Borrower has provided Lender with a true and
complete copy of the Management Agreement. The Management Agreement is in full
force and effect and free from default on the part of the Borrower and Manager.
The Management Agreement embodies the entire transaction between Borrower and
Manager with respect to the operation of the Property. Borrower shall not
terminate, modify, amend or waive any provisions of the Management Agreement
without Lender's prior written consent. Borrower will promptly furnish Lender
with copies of all notices furnished to Borrower under the Management Agreement.
Ground Lease. Borrower has provided Lender with a true and complete copy
of the Ground Lease, and there are no documents, agreements, or other
modifications to the Ground Lease other than those listed under the definition
of Ground Lease contained in this Agreement. The Ground Lease is in full force
and effect and free from default on the part of Borrower and the Ground Lessor,
and, to the Knowledge of Borrower, no events have occurred which, with the
passage of time, would constitute a default under the Ground Lease. The Borrower
shall provide to the Lender copies of all notices (including, without
limitation, notices of defaults by Borrower) received with respect to the Ground
Lease within five (5) Business Days of Borrower's receipt of the same. The
Ground Lease embodies the entire transaction between Borrower and the Ground
Lessor with respect to the Property. The amount of rental payable under the
Ground Lease and the terms of the Ground Lease, are as set forth under the
definition of Ground Lease. Borrower shall not modify, amend or waive any
provisions of the Ground Lease without the Lender's prior written consent.
Liquor License. Borrower has provided Lender with a true and complete copy
of the liquor license with respect to the Property. Said liquor license is in
full force and effect and free of all liens and encumbrances. To the Knowledge
of Borrower, Borrower is in compliance with all terms and conditions of said
liquor license.
Representations Remade. Borrower warrants and covenants that the foregoing
representations and warranties will be true and shall be deemed remade as of the
date of the Closing and the Mortgage Delivery Date. All representations,
warranties and covenants made herein or in any other Loan Document or in any
certificate or other document delivered to Lender by or on behalf of Borrower
pursuant to or in connection with this Agreement or any other Loan Document
shall be deemed to have been relied upon by Lender, notwithstanding any
investigation heretofore or hereafter made by or on behalf of Lender. All such
representations, warranties and covenants shall survive the making of the Loan
and any or all of the Advances contemplated hereby and shall continue in full
force and effect until such time as the Loan has been paid in full.
ARTICLE 3
GENERAL CONDITIONS OF LOAN
Loan Documents. It shall be a condition precedent to Lender's obligation
to make the Loan that at or before the Closing, Borrower shall execute and
deliver or cause to be duly executed and delivered to Lender all of the Loan
Documents and that all of the Loan Documents shall be in form and substance
satisfactory to Lender. <PAGE>
Additional Requirements. In addition to the Loan Documents, prior to the
Closing, Borrower shall deliver or cause to be delivered to Lender each of the
following, all of which shall be in form and substance satisfactory to Lender:
Title Policy. The Title Policy or a pro-forma policy evidencing the same
and satisfactory to the Lender in its sole discretion.
Survey. A current, as built survey of the Premises, certified to Lender
and the Title Company by a surveyor reasonably satisfactory to Lender, which
survey shall contain the minimum detail for land surveys as most recently
adopted by ALTA/ASCM, and which survey shall comply with Lender's survey
requirements and shall contain Lender's standard form certification. Said survey
shall show no state of facts or conditions reasonably objectionable to Lender.
Opinion. An opinion of Borrower's and Guarantor's counsel dated the date
of the Closing and relating to such matters with respect to this Agreement and
the transaction contemplated hereby (including usury and choice of laws) as
Lender may reasonably require. By its execution and delivery of this Agreement,
Borrower authorizes and directs such counsel to render such opinion.
Insurance. The insurance policies described on Exhibit D or certificates
of insurance evidencing the same, including without limitation, evidence of
insurance protection against the risks of hurricanes, satisfactory to Lender in
its sole discretion.
UCC Searches. Uniform Commercial Code searches made in the State of
California showing no filings relating to (i) the Personal Property, (ii) any
fixtures on the Premises, or (iii) the Collateral (as such term is defined in
the Security Agreement), other than those made pursuant to this Agreement or
otherwise approved by Lender in its sole discretion.
Organizational Documents. A certified copy of the Organizational
Documents, together with such other documents as Lender may require, including
evidence of the Borrower's good standing in the State of California, and
resolutions authorizing the Loan transaction contemplated by this Agreement.
Ground Lease. A copy of the Ground Lease certified by the Borrower to be
true, complete and accurate.
Appraisal and Engineer's Report. An independent appraisal of the Property
from a state certified appraiser engaged by Lender which indicates the fair
market value of the Property and is satisfactory to Lender in all respects, and
an engineer's report satisfactory to the Lender.
Environmental Assessment. The Environmental Site Assessment Report, a
letter from the consultant preparing the environmental site assessment stating
that Lender is authorized to rely on the information contained therein, and
evidence satisfactory to Lender of said environmental consultant's errors and
omissions insurance coverage. <PAGE>
Subordination of Management Agreement. A copy of the Management Agreement
(certified by the Borrower to be true, complete and accurate), together with a
subordination of the Management Agreement whereby the Management Agreement is
subordinated to the Mortgage and Lender is given the right to terminate the
Management Agreement or any replacement thereof upon the occurrence of an Event
of Default, without payment of any termination or other fee or other liability
on the part of Lender.
Leases/Subordination Agreements and Estoppels. Copies of all Leases, which
shall be satisfactory to Lender and certified by Borrower to be true, complete
and accurate, together with (i) an estoppel certificate executed by the tenant
under each Lease in form and substance reasonably satisfactory to Lender, and
(ii) a subordination, nondisturbance and attornment agreement executed by each
such tenant in form and substance reasonably satisfactory to Lender.
Licenses, Permits and Approvals. A final, unconditional certificate of
occupancy (if available) issued with respect to the Premises, together with the
hotel operating license and liquor license respecting the Property.
Agreements. Copies of all agreements described in Section 2.1M certified
by the Borrower to be true, complete and accurate.
Zoning. Evidence reasonably satisfactory to Lender as to the zoning
compliance of the Premises.
Lender's Inspection. A satisfactory inspection report of the Premises
prepared by an architect/engineer or other consultant reasonably satisfactory to
Lender.
Equity Contribution. Evidence satisfactory to Lender that the Borrower or
its Affiliate originally acquired the Property for not less than $22,000,000.
Financial Statements. Current financial statements satisfactory to the
Lender for the Borrower, and the Guarantor.
Renovation Budget and Plans. A copy of the Renovation Budget and the
Renovation Plans satisfactory to the Lender.
Franchise Agreement. A copy of the Franchise Agreement certified by the
Borrower to be true, complete and accurate.
Compliance with Laws. Evidence that the Property is in compliance with all
applicable laws, zoning and land use requirements, regulations and ordinances,
including all applicable environmental protection laws and the Americans with
Disabilities Act of 1990 (except as stated in the Environmental Site Assessment
Report). <PAGE>
Flood Hazards. Evidence as to whether or not the Property is or is to be
located in an area having special flood hazards as such term is used in the
federal Flood Disaster Protection Act of 1973. If any part of the Property is or
is to be located in an area having "special flood hazards," a flood insurance
policy or certificate thereof naming the Lender as mortgagee must be submitted
to the Lender.
Fees and Expenses. Payment by Borrower of all applicable mortgage and
recording taxes and all fees and charges in connection with the Loan, including
all fees and charges of Lender's legal counsel.
Intentionally Omitted.
Intentionally Omitted.
Intentionally Omitted.
Payment of Impac Loan. Evidence of payment in full of the Impac Loan and
all fees associated therewith in accordance with the requirements of the
intercreditor agreement(s) executed in connection therewith.
Other Items. Such other documents and instruments as Lender may reasonably
require.
ARTICLE 4
FURTHER COVENANTS OF BORROWER
Covenants. Borrower hereby further covenants and agrees with Lender as
follows:
Taxes and Impositions.
Borrower shall pay and discharge all Impositions prior to
delinquency. Borrower shall provide to Lender validated receipts or other
evidence satisfactory to Lender showing the payment of all real estate and
personal property taxes within 15 days after the same would otherwise have
become delinquent. Borrower's obligation to pay Impositions pursuant to this
Agreement shall include, to the extent permitted by applicable law, taxes
resulting from future changes in law which impose upon Lender an obligation to
pay any property taxes or other Impositions. Should Borrower default in the
payment of any Impositions, Lender may (but shall not be obligated to) pay such
Impositions or any portion thereof and Borrower shall reimburse Lender on demand
for all such Advances. <PAGE>
Borrower shall not be required to pay, discharge or remove any
Imposition so long as Borrower contests in good faith such Imposition or the
validity, applicability or amount thereof by an appropriate legal proceeding
which operates to prevent the collection of such amounts and the sale of the
Property or any portion thereof; provided, however, that prior to the date on
which such Imposition would otherwise have become delinquent Borrower shall have
(i) given Lender prior written notice of such contest, and (ii) provided
reasonable evidence to Lender that Borrower has available funds to pay the
balance of such Imposition then remaining unpaid, and all interest, penalties,
costs and charges accrued or accumulated thereon. Any such contest shall be
prosecuted with due diligence, and Borrower shall promptly pay the amount of
such Imposition as finally determined, together with all interest and penalties
payable in connection therewith. Notwithstanding any provision of this Section
4.1.A to the contrary, Borrower shall pay any Imposition which it might
otherwise be entitled to contest if, in the reasonable discretion of Lender, the
Property is in jeopardy or in danger of being forfeited or foreclosed. If
Borrower refuses to pay any such Imposition, Lender may (but shall not be
obligated to) make such payment and Borrower shall reimburse Lender on demand
for all such Advances.
Deposits.
Borrower shall provide Lender with evidence of the timely payment of
all insurance premiums. For so long as Borrower's insurance coverages are part
of blanket coverages with other properties, Borrower shall not be required to
deposit in escrow any insurance premiums. Initially, so long as (i) Borrower
provides Lender with evidence of the timely payment of all real estate and
personal property taxes and (ii) Borrower is not required to make payments of
Reserve Funds pursuant to Section 4.1.R as of the most recent Calculation Date,
Borrower shall not be required to deposit in escrow any funds for real estate
and personal property taxes as hereinafter provided; provided, however, Lender,
in its sole discretion, may at any time require Borrower to do the following:
Deposit with Lender (or such agent of Lender as Lender may designate
in writing to Borrower from time to time), monthly, on the due date
of each monthly installment under the Note, 1/12th of the annual
charges (as estimated by Lender) for all real estate and personal
property taxes; and
Deposit with Lender, simultaneously with such above-referenced
monthly deposits, a sum of money which together with such monthly
deposits will be sufficient to make the payment of each such charge
at least 30 days prior to the date initially due. Should such
charges not be ascertainable at the time any deposit is required to
be made, the deposit shall be made on the basis of the charges for
the prior year or payment period, as reasonably estimated by Lender.
When the charges are fixed for the then current year or period,
Borrower shall deposit any deficiency on demand.
<PAGE>
Any interest earned on the sums held by Lender pursuant to this
Section 4.1.B shall be added to said sums and shall be taxable to Borrower, and
shall, so long as no Event of Default shall have occurred, be disbursed by
Lender for the payment of the applicable real estate and personal property
taxes. Should an Event of Default occur, the funds so deposited may be applied
in payment of the charges for which such funds shall have been deposited or to
the payment of the Indebtedness or any other charges affecting the Property, as
Lender in its sole and absolute discretion may determine, but no such
application shall be deemed to have been made by operation of law or otherwise
until actually made by Lender as herein provided. Borrower shall provide Lender
with bills and all other documents necessary for the payment of the foregoing
charges at least 30 days prior to the date on which each payment thereof shall
first become due or promptly upon receipt of such bill.
Mortgage Taxes. Borrower shall pay any and all taxes, charges, filing,
registration and recording fees, excises and levies imposed upon Lender by
reason of their respective interests in, or measured by amounts payable under,
the Note, this Agreement, the Mortgage or any other Loan Document (other than
income, franchise and doing business taxes), and shall pay all stamp taxes and
other taxes required to be paid on the Note, this Agreement, the Mortgage or the
other Loan Documents. If Borrower fails to make such payment within five days
after notice thereof from Lender, Lender may (but shall not be obligated to) pay
the amount due, and Borrower shall reimburse Lender on demand for all such
Advances. If applicable law prohibits Borrower from paying such taxes, charges,
filing, registration and recording fees, excises, levies, stamp taxes or other
taxes, then Lender may declare the Indebtedness then unpaid to be due and
payable upon one hundred twenty (120) days prior written notice. In such event,
no prepayment fee shall be charged.
No Liens. Except for Permitted Encumbrances, and except as provided in
Section 4.1.F and Section 4.1.O, the Property shall be kept free and clear of
all liens, security interests and encumbrances of every nature or description
(whether for taxes or assessments, or charges for labor, materials, supplies or
services or any other thing). Other than the Permitted Encumbrances, Borrower
will not cause or permit any instrument or document affecting the Property to be
recorded without Lender's prior written consent thereto.
<PAGE>
Condition of Premises. Consistent with current practice and industry
standards, Borrower shall keep and maintain the Property in good order,
condition and repair and shall make, as and when the same shall become
necessary, all structural and non-structural, exterior and interior, ordinary
and extraordinary, foreseen and unforeseen, repairs and maintenance necessary or
appropriate. Borrower shall suffer or commit no waste upon the Premises or any
portion thereof. Borrower shall, at its expense, promptly repair, restore,
replace or rebuild any part of the Property which may be damaged or destroyed by
any casualty (provided that, to the extent Borrower is entitled to receive
insurance Proceeds in accordance with the provisions of Article 6, such proceeds
are made available to Borrower) or as the result of any taking under the power
of eminent domain to the extent permitted given the size, scope and extent of
the taking. Borrower shall cause all repairs, maintenance, rebuilding,
replacement or restoration to be (in the reasonable opinion of Lender) of
substantially equivalent quality and to be performed in compliance with all
applicable requirements of any Governmental Authorities having jurisdiction,
including without limitation all federal, state, and local environmental laws.
Borrower shall not cause, suffer or permit the construction of any material
buildings, structures, or improvements on the Premises without the prior written
consent of Lender to the proposed construction as well as the plans and
specifications relating thereto. None of the buildings, structures, or
improvements erected or located on the Premises shall be removed, demolished or
substantially or structurally altered in any material respect without the prior
written consent of Lender. Lender's consents hereunder shall not be unreasonably
withheld or delayed.
Personal Property. Effective as of the Closing, all of the Personal
Property will be owned by Borrower in Borrower's name except for those items
identified on Schedule 4.1.F attached hereto, which are leased by Borrower.
Compliance. Borrower shall comply with all (i) building, zoning, fire,
health, environmental, disability and use laws, and all other laws, codes,
ordinances, rules and regulations applicable to the Premises, the Improvements
or any part thereof or the construction of any improvements thereon, or the use
or enjoyment thereof, (ii) covenants and restrictions of record, and (iii)
easements which are in any way applicable to the Premises, the Improvements or
any part thereof or to the construction of any improvements thereon and the use
or enjoyment thereof. Without limiting the generality of the foregoing, any
asbestos or lead-based paint (or any other hazardous substance) located at the
Premises shall be handled and managed in compliance with all applicable federal,
state, and local laws and requirements.
Performance of Agreements. Borrower shall duly and punctually perform,
observe and comply with all of the terms, provisions, conditions, covenants and
agreements on its part to be performed, observed and complied with hereunder and
under (i) the other Loan Documents, (ii) the Permitted Encumbrances, (iii) the
Management Agreement, (iv) the Franchise Agreement, (v) the Ground Lease and
(vi) all agreements entered into or assumed by Borrower in connection with the
Property, and Borrower will not suffer or permit any default or Event of Default
(giving effect to any applicable notice requirements and cure periods) to exist
under any of the foregoing.
Lender's Expenses. Borrower shall, or shall cause the Guarantor to, pay,
on demand by Lender, all reasonable expenses, charges, costs and fees in
connection with the negotiation and documentation of the Loan, including all
registration and recording fees, insurance consultant fees, if any,
environmental consultant fees, costs of appraisals, costs or fees incurred in
connection with market studies, costs of engineering reports, cost of credit
reports, cost of audits, fees and disbursements of all counsel (both local and
special) for Lender, escrow fees, cost of surveys, fees and expenses of Lender's
Consultant or others employed by Lender to inspect the Premises from time to
time, and travel expenses incurred by Lender and Lender's agents and employees
in connection with the Loan. Notwithstanding the foregoing, so long as no Event
of Default exists, Borrower shall have no obligation to pay or reimburse Lender
for travel expenses in excess of $1,500 in any twelve month period. At Closing,
Lender may pay directly from the proceeds of the Loan each of the foregoing
expenses.
Intentionally Omitted.
<PAGE>
Financial Statements.
Borrower shall provide to Lender (i) annual financial statements of
Borrower and Guarantor and all such financial statements shall be prepared in
accordance with generally accepted accounting principles, consistently applied
and shall be prepared by a certified public accountant reasonably satisfactory
to Lender, (ii) Loan Month (or, if applicable, Accounting Period) and quarterly
cash flow and operating statements for the Property prepared by and certified by
Borrower (which quarterly statements shall include the calculation of DSCR),
(iii) such other financial information as Lender may from time to time
reasonably request, and (iv) copies of all Federal income tax returns for
Borrower and Guarantor certified by Borrower and Guarantor, respectively, to be
true and correct. All such financial statements, cash flow statements and
operating statements shall be delivered to Lender as soon as possible but not
later than thirty (30) days after the close of each Loan Month (or, if
applicable, Accounting Period), and in the case of annual financial statements,
not later than one hundred twenty (120) days after the close of each fiscal
year. Said copies of Borrower's and Guarantor's federal income tax returns shall
be provided to Lender within thirty (30) days following their filing with the
Internal Revenue Service.
Lender may, at Borrower's sole cost and expense and following
written notice to Borrower, require that any or all of the foregoing annual
financial statements be prepared on an "audited" basis, so called.
Management and Cash Management. Borrower shall provide competent and
responsible management for the Property by a management company, and pursuant to
a written management agreement, reasonably satisfactory to Lender. The existing
Manager and Management Agreement are satisfactory to Lender. Borrower shall not
enter into any other management agreement or arrangement with any other party
with respect to the management of the Property without Lender's prior written
consent. Borrower shall not modify, amend or terminate the Management Agreement
without Lender's prior written consent. Borrower shall provide Lender with
written notice of the occurrence of any event of default or condition which with
the giving of notice or passage of time, or both, would constitute an event of
default under the Management Agreement or any subsequent management agreement
which Lender may have approved. The Management Fee(s) shall not exceed a base
fee(s) in an amount equal to 5% of Gross Revenues. The payment of any Management
Fees over and above an amount equal to 3% of Gross Revenues shall be subordinate
to all payments to be made to Lender as provided in the Management,
Subordination and Estoppel Agreement among Lender, Borrower and Manager of even
date herewith. Borrower shall not modify, amend or terminate the Cash Management
Agreement in any material respect without Lender's prior written consent.
<PAGE>
Due on Sale or Encumbrance. Except as otherwise expressly provided in
Section 8.4, Borrower shall not and shall not permit others to convey, assign,
sell, mortgage, encumber, pledge, hypothecate, grant a security interest in,
grant options with respect to, or otherwise dispose of (directly or indirectly,
voluntarily or involuntarily, by operation of law or otherwise, and whether or
not for consideration or of record) all or any portion of any legal or
beneficial interest in all or any portion of the Property or the Leases. Any
such transfer or encumbrance, as aforesaid, shall be deemed to be an Event of
Default hereunder, and shall entitle Lender to declare the Loan immediately due
and payable.
Estoppel Certificates. Within ten (10) Business Days following a request
by Lender, Borrower shall provide to Lender a duly acknowledged written
statement confirming the amount of the outstanding Indebtedness, the terms of
payment and maturity date of the Note, the date to which interest has been paid,
and whether any offsets or defenses exist against the Indebtedness. If any such
offsets or defenses are alleged to exist, the nature thereof shall be set forth
in detail. The Lender agrees to provide the Borrower, within ten (10) Business
Days following a request by Borrower, a payoff letter affirming the amount of
the Loan then outstanding.
Space Leases, Service Agreements and Equipment Leases. Borrower shall not,
without the prior written consent of Lender, enter into or modify, amend or
terminate (except upon a default by tenant) any lease of space (including
restaurants) with respect to the Premises or any portion thereof in excess of
1,000 square feet. Any lease of space entered into by Borrower with respect to
the Premises or any portion thereof shall (a) be subordinate to the lien of the
Mortgage, (b) be pursuant to an arms' length transaction and (c) not contain any
term which would materially affect Lender's rights under the Loan Documents.
Borrower shall not, without the prior written consent of Lender, enter into any
operating agreements or service contracts with respect to the Property ("Service
Agreements") other than (i) agreements or contracts to provide customary guest
services such as laundry, gift shop, or television cable services, or (ii) other
agreements the aggregate annual payments for which do not exceed $50,000. All
Service Agreements shall (a) be subordinate to the lien of the Mortgage and (b)
be pursuant to an arms' length transaction. Borrower shall not, without the
prior written consent of Lender, enter into any equipment lease which would
cause the aggregate annual payments by Borrower for all equipment leases to
exceed $25,000. All equipment leases shall be pursuant to an arms' length
transaction.
Within ten (10) days following the execution by Borrower of any new Lease,
Borrower shall deliver to Lender a Subordination, Non-Disturbance and Attornment
Agreement executed by the tenant under such Lease which is in form satisfactory
to Lender unless the Lease contains subordination, non-disturbance and
attornment provisions otherwise satisfactory to the Lender.
Borrower shall perform and comply with all of the landlord's obligations
under each Lease and shall not suffer or permit any breach or default on the
part of the landlord to occur thereunder. <PAGE>
Condemnation. Borrower shall not enter into any agreement for the taking
of the Premises or any part thereof with anyone authorized to acquire the same
in or by condemnation proceedings, or by the exercise of any power of eminent
domain, unless and until Lender shall have consented thereto in writing.
Litigation. Borrower shall promptly provide Lender with written notice of
any material litigation in which Borrower, any other Loan Party or the Property
is named as defendant which is not fully covered by insurance for which the
insurer has assumed the defense and acknowledged coverage, and Borrower shall
provide Lender with copies of all pleadings or orders filed or entered therein
or with respect thereto.
Principal Amortization Reserve.
The DSCR shall be calculated by Lender on each Calculation Date for
the most recent Calculation Period. At all times prior to the Maturity Date, if
the DSCR on the most recent Calculation Date is less than the Required Coverage
Standard, Borrower shall, in addition to the regularly scheduled monthly
payments of interest due under the Note, deposit with Lender on or before the
twenty-fifth (25th) day of each month 100% of the Net Cash Flow for the
immediately preceding Accounting Period.
Borrower shall make and Lender shall hold all such payments of
Reserved Funds in accordance with the following terms and conditions:
All Reserved Funds held by Lender upon the Maturity Date or upon the
occurrence of an Event of Default may be applied by Lender to the
repayment of the Loan in accordance with the terms and conditions of
the Note.
Provided that no Event of Default or Incipient Default exists, if,
on the next Calculation Date, the DSCR is greater than or equal to
the Required Coverage Standard, Lender shall return to Borrower the
Reserved Funds then held by Lender, and Borrower's obligation to
deposit the Reserved Funds with Lender shall be suspended until any
subsequent Calculation Date when the DSCR is less than the Required
Coverage Standard.
If Borrower is required to make payments of Reserved Funds pursuant
to this Section 4.1.R for four (4) consecutive Calculation Dates, so
long as no Event of Default or Incipient Default exists, Lender may,
on such fourth consecutive Calculation Date, apply all Reserved
Funds to the repayment of the Loan. No such repayment shall be
subject to any prepayment fee or premium. Thereafter, all Reserved
Funds may be applied by Lender, upon receipt, to the repayment of
the Loan, as aforesaid; provided, however, if on any subsequent
Calculation Date the DSCR shall be equal to or greater than the
Required Coverage Standard, Borrower's obligation to deposit the
Reserved Funds with Lender shall be suspended until any Calculation
Date thereafter when the DSCR is less than the Required Coverage
Standard.
<PAGE>
All interest accrued on the Reserved Funds shall be added to the
Reserved Funds and shall be disbursed in accordance with the
foregoing terms and conditions. All interest earned on the Reserved
Funds shall be taxable to Borrower.
Application of Gross Revenues; Distributions. Borrower shall promptly
apply all Gross Revenues to the payment of all current and past due Operating
Expenses and to the repayment of all sums currently due or past due under this
Loan, including all payments of Capital Reserve pursuant to Section 4.1T and
real estate tax escrow payments pursuant to Section 4.1.B of this Agreement, if
any. After the Renovation Completion and so long as no Event of Default or
Incipient Default exists, and subject to the provisions of Section 4.1.R,
Borrower may make dividends to its shareholders of Net Cash Flow after the
payment of all current and past due Operating Expenses, debt service on the
Loan, Capital Reserve payments, real estate tax escrow payments pursuant to
Section 4.1.B, if any, and all sums due and payable to Lender (for its own
account or to be held by it) at or prior to the time of said dividend.
Capital Reserve. Beginning on January 25, 1999, and continuing on the
twenty-fifth (25th) day of each Loan Month thereafter, Borrower shall deposit
with Lender on a monthly basis a reserve of not less than four percent (4%) of
Gross Revenues for the preceding Accounting Period. So long as no Event of
Default or Incipient Default (other than an Incipient Default which is
susceptible to cure and as to which Borrower is diligently pursuing such cure)
shall exist, Lender shall make said funds available to Borrower on the following
terms and conditions: (i) all Capital Reserve funds released by Lender to
Borrower shall be used to pay Borrower for the reasonable expenses actually
incurred by Borrower for the acquisition, repair, or replacement of furniture,
fixtures or equipment necessary for the management and operation of the Property
(based on invoices furnished by Borrower) under an annual budget approved by
Lender for said acquisitions, repairs and replacements; (ii) all requests by
Borrower for a disbursement of Capital Reserve funds shall be in writing and
shall not be made more frequently than once per Loan Month; (iii) each such
request for a disbursement shall be in an amount of not less than $10,000.00;
and (iv) Borrower shall provide Lender with invoices, contracts providing for
progress payments or paid receipts covering the expenses for which Borrower
seeks payment or reimbursement from the Capital Reserve funds. Prior to the
disbursement of any Capital Reserve funds, Borrower shall also provide Lender
with (i) evidence satisfactory to Lender that Borrower has accepted possession
of said items and commenced using the same in the management and operation of
the Property, or the applicable contract requires an advance payment prior to
manufacture or delivery and (ii) paid receipts covering the expenses for which
Capital Reserve funds were previously disbursed. <PAGE>
Funds Deposited with Lender. All funds of Borrower which are deposited
with Lender pursuant to this Agreement or any other Loan Document shall be held
in a separate account and invested in an interest-bearing account (at not less
than money market rates). Any interest which accrues on said funds shall, at
Lender's sole option, be paid to Borrower or be held as part of the applicable
funds being held by Lender for the same purpose for which the principal sum of
said funds is being held by Lender. The Capital Reserve fund shall be reviewed
by the Lender annually on the anniversary of the Loan to determine if sufficient
sums are being funded for the expenses provided for herein. If the Lender
determines, in its reasonable discretion, that the Capital Reserve fund is
insufficient, Borrower shall pay all funding shortages within thirty (30) days
after notice by Lender. To secure all of Borrower's obligations to Lender under
the Loan Documents, Borrower hereby grants to Lender a security interest in all
funds now or hereafter deposited with Lender or otherwise in Lender's
possession, custody or control pursuant to the provisions of this Agreement or
any other Loan Document, including all funds deposited pursuant to Sections
4.1.B, 4.1.R, and 4.1.T of this Agreement. So long as any Event of Default
exists, Lender shall have such rights with respect to such funds and any
interest accrued thereon as are provided by applicable law and may apply such
funds towards the satisfaction of Borrower's obligations hereunder or under any
other Loan Documents. Without limiting any of the foregoing provisions, at the
request of Lender, Borrower shall execute and deliver from time to time such
documents as may be necessary or appropriate, in Lender's sole judgment, to
assure Lender that it has a first priority perfected security interest in and
lien on all funds deposited pursuant to Sections 4.1.B, 4.1.R, and 4.1.T of this
Agreement, including the creation of a deposit account in the name of Borrower
in a banking institution approved by Lender either within or outside of the
State of Ohio, as directed by Lender, into which any or all of such funds will
be deposited and maintained, subject to the rights of Lender with respect to
such funds as provided herein. Lender reserves the right to inspect such repairs
or replacements prior to the release of funds at Borrower's expense provided
that such inspection expenses shall not exceed $1,500 in any twelve (12) month
period. <PAGE>
Audit and Inspection by Lender. Lender shall have the right, upon
reasonable prior notice, and Borrower shall permit and shall cooperate with
Lender in arranging for, at any reasonable time and from time to time, Lender
and its representatives (i) to inspect the Property, and (ii) to review and
audit all books, records and financial statements of Borrower (including all
supporting data and any other records from which the Net Cash Flow may be
determined); and Borrower shall make all such books of account and records
available for such examination at the office where the same are regularly
maintained. Lender shall have the right to copy, duplicate and make abstracts
from such books and records as Lender may require. If any audit by Lender
discloses that payments of Net Cash Flow which should have been made by Borrower
exceeds the sums which were actually made by Borrower, then Borrower shall,
within ten (10) days following written notice from Lender, pay to Lender the
difference between said amounts, together with interest on such amount at the
Default Rate from the date such amounts should have been paid to the date of
post-audit payment. Borrower shall pay Lender's costs and expenses incurred in
connection with no more than one (1) such audit per year. Borrower acknowledges
and agrees that (i) all of such audits, inspections and reports shall be made
for the sole benefit of Lender, and not for the benefit of Borrower or any third
party, and neither Lender nor Lender's auditors or inspectors or any of Lender's
representatives, agents or contractors assumes any responsibility or liability
(except to Lender) by reason of such audits, inspections or reports, (ii)
Borrower will not rely upon any of such audits, inspections or reports for any
purpose whatsoever, and (iii) the performance of such audits, inspections and
reports will not constitute a waiver of any of the provisions of this Agreement
or any other Loan Document or any of the obligations of Borrower hereunder or
thereunder. Borrower further acknowledges and agrees that neither Lender nor
Lender's inspectors, representatives, agents or contractors shall be deemed to
be in any way responsible for any matters related to design or construction of
the Improvements.
Appraisal. At any time during the term of the Loan, Borrower shall
cooperate with Lender and use reasonable efforts to assist Lender in obtaining
an appraisal of the Property. Such cooperation and assistance from Borrower
shall include but not be limited to the obligation to provide Lender or Lender's
appraiser with the following: (i) reasonable access to the Property, (ii) a
current certified rent roll for the Property in form and substance satisfactory
to Lender, current asking rents and a history of change in asking rents and
historical vacancy for the past three years, (iii) current and budgeted income
and expense statements for the prior three years, (iv) a site plan and survey of
Property (to the extent available and at no cost to Borrower), (v) the building
plans and specifications, including typical elevation and floor plans (to the
extent available and at no cost to Borrower), (vi) a photocopy of the deed
conveying the Property to Borrower, together with the legal description of the
Property, (vii) the current and prior year real estate tax bills, (viii) a
detailed list of past and scheduled capital improvements made during Borrower's
period of ownership and the costs thereof, (ix) a summary of the then current
ownership entity, (x) all environmental reports and other applicable information
relating to the Property, and (xi) copies of all recent appraisals/property
description information or brochures, including descriptions of amenities and
services relating to the Property. The appraiser performing any such appraisal
shall be engaged by Lender, and Lender shall be responsible for any fees payable
to said appraiser in connection with an appraisal of the Property.
Accounts. Borrower agrees that, at any time requested by Lender in writing
after an Incipient Default or Event of Default has occurred, Borrower will do
all acts requested by Lender to perfect or confirm the continued perfection of
Lender's security interest in all of Borrower's bank accounts, including,
without limitation, appointing a collateral agent satisfactory to Lender and
segregating all of Borrower's funds from those of Manager or any Affiliates.
Deferred Origination Fee. Borrower acknowledges that the Lender has earned
the Deferred Origination Fee as of the date hereof although the Lender has
agreed to defer its payment as hereinafter provided. Borrower agrees that it
shall pay the Deferred Origination Fee to the Lender when the Loan is paid or
becomes payable in full whether at the Maturity Date or upon earlier prepayment
or acceleration.
Limitation on Indebtedness. Borrower shall not, without the prior written
consent of Lender, create, assume, incur or guaranty, directly or indirectly,
any indebtedness or obligation, except for lease financing or purchase money
financing for equipment, incurred after the date hereof, which is secured by the
equipment so leased or purchased and which lease or purchase money financings do
not contain payment obligations, in the aggregate, in excess of $25,000 per
year. <PAGE>
ARTICLE 5
AGREEMENT TO LEND
Agreement to Lend. On the basis of the covenants, agreements and
representations of Borrower contained in, and subject to the terms and
conditions set forth in, this Agreement and the other Loan Documents, Lender
agrees to lend to Borrower the principal sum of up to $8,449,183. Except as
otherwise expressly provided in Section 6B.2, the entire proceeds of the Loan
shall be disbursed by Lender at Closing. Borrower shall use the Loan proceeds
for the purpose for which they were advanced and for no other purpose.
ARTICLE 6
INSURANCE AND CASUALTY
Insurance Provisions.
Insurance. Borrower, at its sole cost and expense, shall insure and keep
insured the Property against such perils and hazards, and in such amounts and
with such limits, as Lender may from time to time reasonably require. At the
time of the Closing, Lender's requirements for said insurance are set forth in
Exhibit D, which requirements Borrower acknowledges are reasonable and
customary. Borrower shall also carry such other insurance, and in such amounts,
as Lender may from time to time reasonably require, against insurable risks
which at the time are commonly insured against in the case of premises similarly
situated, due regard being given to the availability of insurance and to the
type of construction, location, utilities, use and occupancy of the Premises or
any replacements or substitutions therefor ("Additional Insurance"). Such
Additional Insurance may include flood, hurricane, earthquake, war risk, nuclear
explosion, demolition and contingent liability from the operation of
"nonconforming improvements" on the Premises, and shall be obtained within 30
days after demand by Lender. Otherwise, Borrower shall not obtain any separate
or additional insurance which is contributing in the event of loss, unless it is
properly endorsed and otherwise reasonably satisfactory to Lender in all
respects. The Proceeds (as defined in the Mortgage) of insurance paid on account
of any damage to or destruction of the Premises or any portion thereof shall be
paid over to Lender to be applied as hereinafter provided.
<PAGE>
Evidence of Coverage. The insurance shall be evidenced by the original
policy or a true and certified copy of the original policy, or by certificates
of insurance. Said certified copies, original policies or certificates shall be
delivered to Lender at or prior to Closing. On or before the Closing and each
stated due date thereafter, Borrower shall pay all premiums and fees for the
insurance policies required hereunder. Borrower shall deliver certified copies
of all policies and renewals (or certificates evidencing the same) to Lender at
least thirty (30) days before the expiration of existing policies. Each such
policy shall provide that such policy may not be canceled or materially changed
except upon 30 days prior written notice of intention of non-renewal,
cancellation or material change to Lender, and that no act or thing done by
Borrower shall invalidate the policy as against Lender. Notwithstanding anything
to the contrary contained herein or in any provision of law, the Proceeds of
insurance policies coming into the possession of Lender and which are not to be
used for the Work (as hereinafter defined) shall not be deemed trust funds and
Lender shall be entitled to dispose of such Proceeds as hereinafter provided. If
Lender has not received satisfactory evidence of such renewal or substitute
insurance in the time frame herein specified, Lender shall have the right, but
not the obligation, to purchase such insurance for Lender's interest only. Any
amounts so disbursed by Lender pursuant to this Section 6.1.B shall be deemed to
be a part of the Loan and shall bear interest at the Default Rate. Nothing
contained in this Article 6 shall require Lender to incur any expense or take
any action hereunder, and inaction by Lender shall never be deemed a waiver of
any rights accruing to Lender on account of this Article 6.
Separate Insurance. Borrower shall not carry any separate insurance on the
Property concurrent in kind or form with any insurance required hereunder or
contributing in the event of loss without Lender's prior written consent, and
any such policy shall have attached a standard non-contributing mortgagee
clause, with loss payable to Lender, and shall meet all other requirements set
forth herein.
Damage to or Destruction of Premises. In the event of any damage to or
destruction of the Premises, Borrower shall give prompt written notice to Lender
and, provided Lender makes the Proceeds available for the costs of repair,
restoration and rebuilding, Borrower shall promptly commence and diligently
continue to completion the repair, restoration and rebuilding of the Premises so
damaged or destroyed in full compliance with all legal requirements and with the
provisions of Section 6.1.F below, and free and clear from any and all liens and
claims. Such repair, restoration and rebuilding of the Premises are sometimes
hereinafter collectively referred to as the "Work." Borrower shall not adjust,
compromise or settle any claim(s) for insurance Proceeds without the prior
written consent of Lender unless such claim(s) does not exceed $100,000 in the
aggregate in which case no consent of Lender is required. Subject to Sections
6.1E and F, below, Lender shall have the option in its sole discretion to apply
any insurance Proceeds it may receive pursuant to the Mortgage (less any cost to
Lender of recovering and paying out such Proceeds, including reasonable
attorneys' fees) to the payment of the Indebtedness or to allow all or a portion
of such Proceeds to be used for the Work. If any insurance Proceeds are applied
to reduce the Indebtedness, Lender shall apply the same in the following order:
first, to the payment of interest due on any Advances;
next, to the principal amount of any Advances;
next, to any Late Charges (as provided in the Note);
next, to accrued interest then due under the Note; and
finally, to the unpaid principal balance of the Note.
<PAGE>
If Lender applies insurance Proceeds to reduce the Indebtedness, no
prepayment fee shall be due with respect to any prepayment effected thereby.
Restoration. Notwithstanding the provisions of Section 6.1.D above, if, in
Lender's reasonable judgment, the Work can be completed within 18 months of the
occurrence of said damage or destruction, then Lender shall, upon request by
Borrower, permit Borrower to use the insurance Proceeds for the Work (subject to
the provisions of, and less Lender's costs described in, Section 6.1.F below),
so long as Lender, in its reasonable judgment, is satisfied that as of each date
on which such insurance Proceeds are to be applied to payment thereof:
The insurance Proceeds held by Lender in respect of the applicable
casualty equal or exceed such estimated cost of effecting such
repair and restoration, or such portion thereof as then remains to
be completed and paid for or Borrower provides evidence satisfactory
to Lender that Borrower has funds available to pay any shortfall,
and, if required by Lender, escrows such funds with Lender for
disbursement in accordance with the requirements of Section 6.1.F;
The Management Agreement shall remain in full force and effect and
all material Leases, if any, shall remain in full force and effect,
and no tenant thereunder shall be entitled to cancel or terminate
its Lease as a consequence of such casualty;
Upon completion of the Work, the monthly revenues from the Property
shall, in Lender's reasonable judgment, be sufficient to pay all
interest and other sums due and payable under the Note, this
Agreement and the other Loan Documents;
The Work will, in Lender's reasonable judgment, be completed on or
prior to May 31, 2000;
There is in force and effect for the benefit of Borrower and Lender
rental or business interruption insurance sufficient to provide
coverage for one hundred percent (100%) of all income lost as a
consequence of such casualty for not less than the projected period
for the completion of the Work or Borrower provides evidence
satisfactory to Lender that Borrower has funds available to pay all
interest and other sums due and payable under the Note, this
Agreement and the other Loan Documents, as well as all other
expenses of the Property during such period and, if required by
Lender, escrows such funds with Lender for application to the
payment of such obligations as they come due;
<PAGE>
The Work will be effected pursuant to plans and specifications
reasonably approved in writing by Lender, and by a general
contractor and major subcontractors, and pursuant to contracts,
reasonably approved in writing by Lender; and
The Work can be effected in compliance with all applicable laws and
Borrower has obtained all licenses, permits, consents and approvals
from all applicable governmental authorities or private parties
required to permit Borrower to effect such restoration and repair
and to use, operate and occupy the repaired and restored premises
upon completion thereof (other than those which will issue in the
ordinary course upon completion) and that the same are in full force
and effect.
Lender shall have no obligation to make such insurance Proceeds available to pay
for the Work if (A) the Loan shall have been accelerated and the principal and
accrued interest owing on the Loan have become due and payable, or (B) there
shall exist an Event of Default or Incipient Default other than an Incipient
Default which is susceptible to cure and as to which Borrower is diligently
pursuing such cure.
Distribution of Proceeds. If any insurance Proceeds are used for the Work,
then such Proceeds shall be held by Lender and shall be paid out from time to
time to Borrower as the Work progresses (less any cost to Lender of recovering
and paying out such Proceeds, including reasonable attorneys' fees and costs
allocable to inspecting the Work and the plans and specifications therefor),
subject to each of the following conditions:
If the Work is structural or if the cost of the Work is reasonably
estimated by Lender to exceed $250,000, the Work shall be conducted
under the supervision of a certified and registered architect or
engineer unless otherwise waived in writing by the Lender. Before
Borrower commences any Work, other than temporary work to protect
property or prevent interference with business, Lender shall have
approved in writing the plans and specifications for the Work, which
approval shall not be unreasonably withheld or delayed, it being
nevertheless understood that such plans and specifications shall
provide for Work so that, upon completion thereof, the Premises
shall be at least equal in value and general utility to the Premises
prior to the damage or destruction.
<PAGE>
Each request for payment shall be made on not less than ten (10)
Business Days prior notice to Lender and shall be accompanied by a
certificate of the architect or engineer in (i) above (or a
certificate given by Borrower if no architect or engineer is so
required) stating (A) that all of the Work completed has been done
in substantial compliance with the approved plans and
specifications, if required under (i) above, (B) that the sum
requested is justly required to reimburse the Borrower for payments
by Borrower, or is justly due to the contractor, subcontractors,
materialmen, laborers, engineers, architects or other persons
rendering services or materials for the Work (giving a brief
description of such services and materials), and that when added to
all sums previously paid out by Lender does not exceed the value of
the Work done to the date of such certificate, (C) if the sum
requested is to cover payment relating to repair and restoration of
personal property required or relating to the Premises, that title
to the personal property items covered by the request for payment is
vested in Borrower, and (D) that the amount of such Proceeds
remaining in the hands of Lender will be sufficient on completion of
the Work to pay for the same in full (giving in such reasonable
detail as Lender may require an estimate of the cost of such
completion). Additionally, each request for payment shall contain a
statement signed by Borrower approving both the Work done to date
and the Work covered by the request for payment in question. Each
request for payment shall be accompanied by waivers of lien
satisfactory to Lender covering that part of the Work for which
payment or reimbursement is being requested and, if required by
Lender, a search prepared by a title company or an attorney
authorized to practice law in the State, or by other evidence
satisfactory to Lender that there has not been filed with respect to
the Premises any mechanics' or other lien or instrument for the
retention of title relating to any part of the Work not discharged
of record. Additionally, as to any personal property covered by the
request for payment, Lender shall be furnished with evidence of
payment therefor and such further evidence satisfactory to assure
Lender of its valid first lien on the personal property.
Lender or its designee shall have the right to inspect the Work at
all reasonable times and may condition any disbursement of Proceeds
upon the satisfactory completion, as determined in Lender's
reasonable discretion, of any portion of the Work for which payment
or reimbursement is being requested. The cost of any such inspection
of the Work shall be paid by Borrower prior to or simultaneously
with the next disbursement of any portion of the Proceeds. Neither
the approval by Lender of the plans and specifications for the Work
nor the inspection by Lender of the Work shall make Lender
responsible for the preparation of such plans and specifications or
the compliance of such plans and specifications, or of the Work,
with any applicable law, regulation, ordinance, covenant or
agreement.
Proceeds shall not be disbursed more frequently than every 30 days.
Any request for payment made after the Work has been completed shall
be accompanied by a copy or copies of any certificate or
certificates required by law to render occupancy and full operation
of the Premises legal.
<PAGE>
Upon completion of the Work and payment in full therefor, or upon
any failure on the part of Borrower to promptly commence the Work,
or upon the failure on the part of Borrower to proceed diligently
and continuously to completion of the Work (subject to allowance for
reasonable delays and interruptions in the supply of materials and
labor not caused by any act or omission of Borrower), Lender may
apply any such proceeds it then or thereafter holds to the payment
of the Indebtedness; provided, however, that Lender shall be
entitled to apply at any time all or any portion of insurance
Proceeds it then holds to the curing of any Event of Default. Upon
completion of the Work, so long as no Event of Default exists, any
remaining insurance Proceeds held by Lender shall be paid to
Borrower.
Miscellaneous Insurance Provisions.
Notwithstanding any other provision of this Section 6.1, if in
Lender's reasonable judgment the cost of the Work is less than
$250,000 and such Work can be completed in less than 60 days and
provided no Event of Default has occurred and is continuing, then
Lender shall, upon request by Borrower, permit Borrower to apply for
and receive the insurance Proceeds directly from the insurer (and
Lender shall advise the insurer to pay over such Proceeds directly
to Borrower), provided that Borrower shall apply such insurance
Proceeds solely to the prompt and diligent commencement and
completion of such Work.
In the event of the foreclosure of the Mortgage or other transfer of
title to or assignment of the Property in extinguishment of the
Indebtedness in whole or in part, all right, title and interest of
Borrower in and to any insurance Proceeds shall inure to the benefit
of and pass to Lender or any purchaser or transferee of the
Property.
Borrower hereby authorizes Lender, during all periods in which an
Event of Default has occurred and remains uncured, to settle any
insurance claims, to obtain insurance Proceeds, and to endorse any
checks, drafts or other instruments representing any insurance
Proceeds whether payable by reason of loss thereunder or otherwise.
<PAGE>
ARTICLE 6A
RENOVATION WORK
6A.1 Construction. During the pendency of the Renovation Work, Borrower
shall provide Lender with monthly reports which include, as applicable, (i)
evidence reasonably satisfactory to Lender that the Renovation Work complies
with all building, zoning and other laws and governmental codes, rules and
regulations, (ii) copies of all necessary licenses, permits, approvals and
consents required for the use, occupancy and operation of the Premises, as
altered by the Renovation Work, (iii) evidence satisfactory to Lender that all
Renovation Work completed as of the date of such report has been inspected and
approved by each required Governmental Authority and by each other person or
entity (including any tenants) having the right to inspect and approve the
Renovation Work and (iv) all contractors and subcontractors have been paid
current. Borrower shall provide Lender with such other information and material
relating to the Renovation Work as Lender reasonably requests.
6A.2 Completion. Borrower shall: (i) cause the Renovation Work to be
completed in a good and workmanlike manner in accordance with the reasonable
requirements of Lender's Consultant, and the requirements of this Agreement, the
Renovation Budget and the Renovation Plans; (ii) cause the Renovation Work to be
completed so that the Premises remain free and clear of all liens and
encumbrances other than Permitted Exceptions; (iii) cause Renovation Completion
to be achieved on or before the Renovation Completion Date; and (iv) commence
the Renovation Work within 90 days following the Closing and pursue the
Renovation Work diligently to completion.
6A.3 Compliance with Laws. Borrower shall cause the Renovation Work to be
constructed in accordance with all applicable requirements of any Governmental
Authority having jurisdiction with respect thereto including, without
limitation, obtaining all licenses, permits, approvals and consents for the use,
occupancy and operation of the Premises, as altered by the Renovation Work.
<PAGE>
6A.4 Other Remedies of Lender. Upon the occurrence of an Event of Default,
in addition to any other remedies available to Lender by the terms of this
Agreement or any other Loan Document or by law, Lender may at its sole
discretion: (a) complete the Renovation Work (with such changes as Lender shall
deem appropriate), all at the risk, cost and expense of Borrower; (b)
discontinue at any time the Renovation Work; (c) engage builders, contractors,
engineers, architects and others for the purpose of furnishing labor, material
and equipment in connection with the Renovation Work, which personnel may, but
need not, be the same as those engaged by Borrower; (d) pay, compromise or
settle all bills or claims incurred in connection with the Renovation Work; and
(e) take or refrain from taking such action with respect to the Renovation Work
as Lender may from time to time reasonably determine. All such action shall be
at Borrower's sole cost and expense, such sums being secured by the Mortgage.
ARTICLE 6B
MORTGAGE DELIVERY
6B.1 Requirements. The Borrower shall deliver to the Lender, on or before
the Mortgage Delivery Date, the following:
A. The Estoppel Agreement duly executed by the Ground Lessor;
B. The duly executed Mortgage, Security Agreement, Assignment of Leases,
Assignment of Permits and Contracts, Assignment of Accounts and Financing
Statements; and
C. The Title Policy or a pro-forma policy in the form approved by Lender
at the Closing.
6B.2 Effect of Failure to Deliver. Notwithstanding any other provisions to
the contrary contained in this Agreement or any other Loan Document, in the
event the Borrower fails to make the deliveries set forth in Section 6B.1 on or
before the Mortgage Delivery Date, then (i) upon thirty (30) days prior written
notice to the Borrower, the Note shall become due and payable without
presentment, demand, protest or further notice of any kind, and (ii) the failure
to pay the Note in full on or before the expiration of such thirty (30) day
period shall be an Event of Default under this Agreement. Any prepayment in full
of the Note on or before the expiration of such thirty (30) day period shall not
be subject to any prepayment fee or premium. Borrower acknowledges that, at
Closing, three million dollars ($3,000,000) of the Loan proceeds have been
delivered to Lender to be held as part of the Capital Reserve funds. Upon
satisfaction of the requirements of Section 6B.2, said proceeds will be released
to Borrower. Upon an Event of Default, in addition to any other rights or
remedies of Lender under the Loan Documents, Lender shall be entitled to apply
all funds held in the Capital Reserve against the Borrower's obligations
hereunder or under the other Loan Documents.
ARTICLE 7
BORROWER'S DEFAULT
7.1 Events of Default. Each of the following shall constitute an "Event of
Default" under this Agreement:
A. Borrower fails (i) to pay any installment of interest on the Note when
due and continuing for more than five (5) days after written notice thereof from
Lender or (ii) to pay the Note in full on or before the Maturity Date; <PAGE>
B. Borrower or the Guarantor fails to pay within ten (10) days following
written notice from Lender any amounts due hereunder or under any of the other
Loan Documents, other than installments of interest on the Note; or
C. Any representation or warranty made by Borrower or any other Loan Party
in or pursuant to this Agreement or otherwise made in writing in connection with
or as contemplated by this Agreement shall be incorrect or false or misleading
in any material respect as to the period of time to which it relates; or
D. An Event of Default exists under any other Loan Document; or
E. Any representation to Lender by Borrower or any other Loan Party as to
the financial condition or credit standing of Borrower or any other Loan Party,
or any financial statement provided to Lender pursuant to any Loan Document, is
or proves to be false or misleading in any material respect; or
F. Except for Permitted Transfers, any interest in Borrower or the
Property (or any part thereof) is sold, conveyed, transferred, assigned,
disposed of or further encumbered, either directly or indirectly, or any
agreement for any of the foregoing is entered into; or
G. The Premises or any portion thereof is rezoned either voluntarily or
involuntarily, so as to no longer permit the Premises or any portion thereof to
be used as a hotel; or
Any order or decree is entered by any court of competent jurisdiction
directly or indirectly enjoining or prohibiting Lender or Borrower from
performing any of their obligations under this Agreement; or
Borrower or any other Loan Party makes an assignment for the benefit of
creditors; or petitions or applies to any court for the appointment of a trustee
or receiver for itself or for any part of its assets or for the Property or any
portion thereof, or commences any proceedings under any bankruptcy, insolvency,
readjustment of debt or reorganization statute or law of any jurisdiction,
whether now or hereafter in effect; or if any such petition or application is
filed or any such proceedings are commenced, and Borrower or any other Loan
Party by any act indicates any approval thereof, consent thereto, or
acquiescence therein; or an order is entered appointing any such trustee or
receiver, or adjudicating Borrower or any other Loan Party bankrupt or
insolvent, or approving the petition in any such proceeding; or if any petition
or application for any such proceeding or for the appointment of a trustee or
receiver is filed by any third party against Borrower or any other Loan Party or
their respective assets or the Property, or any portion thereof, and any of the
aforesaid proceedings is not dismissed within ninety (90) days of its filing; or
Any representation or warranty made by the Ground Lessor in the Estoppel
Agreement shall be incorrect or false or misleading in any material respect; or
<PAGE>
A default or event of default occurs under the Franchise Agreement and
Franchisor has taken affirmative action to enforce its rights under the
Franchise Agreement, or has affirmatively declared a default under the Franchise
Agreement, or has otherwise expressly indicated that it deems such default
material, or the Franchise Agreement or any related arrangement with Franchisor
is terminated without the prior written consent of Lender, in its sole
discretion; or
A final non-appealable judgment or judgments for the payment of money in
excess of an aggregate of $50,000 shall be rendered against Borrower and such
judgment or judgments shall remain undischarged or unbonded (to Lender's
satisfaction) for a period of 60 consecutive days during which the execution
shall not be effectively stayed; or
The Management Agreement is amended or terminated for any reason without
the prior written consent of Lender; or
Borrower or any other Loan Party fails to comply with, keep or perform any
of its other obligations, agreements, undertakings, covenants, conditions or
warranties under (i) this Agreement, (ii) any other Loan Document, or (iii) any
other document or instrument executed and delivered to Lender by Borrower or any
other Loan Party pursuant to this Agreement, and such failure continues for a
period of thirty (30) days after written notice thereof by Lender to Borrower,
provided, however, if such failure is susceptible to cure by Borrower but cannot
be cured within such thirty (30) day period, but Borrower commences to cure the
same within such thirty (30) day period and thereafter diligently proceeds to
cure the same, Borrower shall have an additional reasonable period of time in
which to cure such failure (but in no event longer than ninety (90) days after
the date of notice thereof); or
An event of default occurs under the Related Party Loan Documents and is
not cured by the Related Party within any applicable grace or cure period.
7.2 Remedies. Upon the happening of an Event of Default, Lender shall have
the right, in addition to all the remedies conferred upon Lender by law or
equity or the terms of any Loan Document, to do any or all of the following,
concurrently or successively, without notice to Borrower:
A. Declare the Note to be, and such Note shall thereupon become,
immediately due and payable, together with the Prepayment Fees (as defined in
the Primary Note), if applicable, without presentment, demand, protest, notice
of intention to accelerate, notice of acceleration or notice of any kind, all of
which are hereby expressly waived, anything contained herein or in the Note to
the contrary notwithstanding, and exercise any one or more of its rights and
remedies under the Loan Documents. <PAGE>
B. Enter upon and take possession of the Property and all material,
equipment and supplies thereon and do anything necessary or desirable to fulfill
the obligations of Borrower hereunder and to sell, manage, maintain, repair and
protect the Property. Without limiting the generality of the foregoing and for
the purposes aforesaid, Borrower hereby appoints and constitutes Lender its
lawful attorney-in-fact with full power of substitution to (i) pay, settle or
compromise all existing bills and claims which may be liens upon or security
interests in the Property, or to avoid such bills and claims becoming liens or
security interests, against the Property or any fixtures or equipment thereon,
or as may be necessary or desirable for the clearance of title or otherwise,
(ii) use any funds of Borrower for purpose of completing the Renovation Work,
(iii) execute all applications and certificates in the name of Borrower which
may be required to carry out the intent and purpose hereof, (iv) employ such
contractors, subcontractors, architects and others as Lender may deem reasonably
appropriate, (v) do any and every act which Borrower might do on its own behalf,
including to enter into Leases of any portion of the Property, and (vi)
prosecute or defend any and all actions or proceedings involving the Property or
any fixtures, equipment or other installations thereon, it being understood and
agreed that this power of attorney shall be a power coupled with an interest and
cannot be revoked. Lender and its designees, representatives, agents, licensees
and contractors shall be entitled to the entry, possession and use contemplated
herein without the consent of any party and without any legal process or other
condition precedent whatsoever. Borrower acknowledges that any denial of such
entry, possession and use by Lender will cause irreparable injury and damage to
Lender and agrees that Lender may forthwith sue for any remedy to enforce the
immediate enjoyment of such right. Borrower hereby waives the posting of any
bond as a condition for exercising such remedy.
C. Apply the sum of any Reserved Funds and Capital Reserve payments then
being held by Lender to the repayment of the Loan in any order or priority.
D. Declare any or all of the Related Party Loans to be in default and to
pursue all of its rights and remedies with respect thereto.
Anything in this Agreement to the contrary notwithstanding, all funds
advanced or disbursed by Lender pursuant to the provisions of this Article 7
shall be deemed advanced by Lender under an obligation to do so regardless of
the identity of the person or persons to whom such funds are owed and shall bear
interest at the Default Rate. Funds advanced or disbursed by Lender in the
exercise of its judgment that the same are needed to protect its security or to
otherwise perform any obligations of Borrower hereunder are to be deemed
obligatory advances hereunder and are to be added to the total indebtedness
evidenced by the Note and secured by the Mortgage and the other Loan Documents
and said indebtedness shall, if necessary, be increased accordingly.
In case of any Event of Default hereunder, Borrower will pay Lender's
attorneys' fees and disbursements and court costs (including those relating to
appeals) and all related expenses in connection with the enforcement of this
Agreement or any of the other Loan Documents. <PAGE>
ARTICLE 8
MISCELLANEOUS
8.1 Indemnification. Except for Losses (as hereinafter defined) which are
finally adjudicated by a court of competent jurisdiction to have arisen directly
and proximately from the gross negligence or willful misconduct of Lender or
have arisen solely and exclusively from acts or events occurring after the
Borrower has relinquished all possession, direction or control over the
Property, Borrower shall protect, defend, indemnify and hold Lender, and its
officers, directors, employees and agents (each, an "Indemnified Party")
harmless from and against any and all harm, loss, liability, damage, suit,
claim, demand, expense, fees, costs, judgments and penalties (including
reasonable attorneys' fees but excluding consequential damages) (each a "Loss")
suffered or incurred by an Indemnified Party in connection with (i) any claim,
demand, suit or proceeding brought or asserted by any person against an
Indemnified Party arising out of or relating to Lender's entering into or
carrying out the terms of this Agreement or any of the other Loan Documents or
being the holder of the Note, (ii) any default by Borrower or any other Loan
Party hereunder or under any other Loan Document, (iii) any bodily injury,
death, other personal injury or property damage occurring in or upon the
Property through any cause whatsoever, and (iv) any transaction otherwise
arising out of or in any way connected with the Property, this Agreement, any
other Loan Document or the Indebtedness, excluding a Loss arising out of
Lender's gross negligence or willful misconduct.
8.2 Defense of Claims. Lender may, at Borrower's sole cost and expense,
retain separate counsel to defend Lender against any claim relating to any Loss
or potential Loss. If Lender retains separate counsel in such an action,
Borrower will cooperate with Lender and provide Lender with copies of all
existing pleadings, discovery materials and other materials relating to said
claim. In any event, Borrower shall defend any such claim and shall provide
Lender with copies of all pleadings, filings and correspondence relating
thereto. <PAGE>
8.3 Performance by Lender. In the event that Borrower shall at any time
fail to duly and punctually pay, perform, observe or comply with any of its
covenants and agreements hereunder or under the other Loan Documents, or if any
Event of Default hereunder shall exist, then Lender may (but shall in no event
be required to) make any such payment or perform any such term, provision,
condition, covenant or agreement or cure any such Event of Default. Lender shall
not take action under this Section 8.3 prior to the occurrence of an Event of
Default unless in Lender's reasonable judgment, such action is necessary or
appropriate in order to preserve the value of the collateral, to protect persons
or property, or Borrower has abandoned the Property or any portion thereof.
Lender shall not be obligated to continue any such action having commenced the
same and may cease the same without notice to Borrower. Any amounts expended by
Lender in connection with such action shall constitute additional advances
hereunder, the payment of which is additional indebtedness, secured by the Loan
Documents and shall become due and payable upon demand by Lender, with interest
at the Default Rate from the date of disbursement thereof until fully paid. No
further direction or authorization from Borrower shall be necessary for such
disbursements. The execution of this Agreement by Borrower shall and hereby does
constitute an irrevocable direction and authorization to Lender to so disburse
such funds.
8.4 Transfer or Assignment. Lender may assign, negotiate, pledge or
otherwise hypothecate all or any portion of the Loan or grant participation
therein, or in any of its rights and security hereunder and under the other Loan
Documents, and Borrower shall accord full recognition thereto provided that if
the Loan is assigned to any party other than Nationwide Life Insurance Company
or any other life insurance company, financial institution or other commercial
or institutional lender, or affiliate thereof, then Borrower must consent to
such assignment which consent shall not be unreasonably withheld or delayed.
Lender agrees to provide Borrower with written notice of any assignment of the
Loan other than to Nationwide Life Insurance Company. Lender may deliver copies
to any potential participant or assignee or transferee of financial statements
and other information from time to time furnished to Lender pursuant hereto or
in connection therewith provided that Lender shall take such steps as may be
reasonably necessary to assure that such information remains confidential.
Borrower shall not assign or attempt to assign its rights or obligations under
this Agreement or any other Loan Document other than Permitted Transfers.
8.5 Lender's Actions. The authority herein conferred upon Lender and any
action taken by Lender hereunder or in any other Loan Document will be taken by
Lender for its own protection only, and Lender does not and shall not be deemed
to have assumed any responsibility to Borrower or to any other person or persons
with respect to any such action herein authorized or taken by Lender. No person
shall be entitled to rely upon, or claim to have relied upon, any action taken
or failed to have been taken by Lender or any of its representatives.
8.6 Time is of the Essence. TIME IS OF THE ESSENCE OF THIS AGREEMENT.
8.7 Waivers. No waiver of any term, provision, condition, covenant or
agreement contained herein or in any other Loan Document shall be effective
unless set forth in a writing signed by Lender, and any such waiver shall be
effective only to the extent set forth in such writing. No failure by Lender to
exercise, or delay by Lender in exercising, any right, power or privilege
hereunder or in any other Loan Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof, or the exercise of any other
right or remedy provided by law. No notice to or demand on Borrower in any case
shall, in itself, entitle Borrower to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of Lender to
any other or further action in any circumstances without notice or demand.
8.8 Notices. Any notice which any party hereto may be required or may
desire to give hereunder shall be delivered personally, or by overnight express
courier, addressed in the case of Borrower to: <PAGE>
Servico Concord, Inc.
Two Live Oak Center
3445 Peachtree Road, NE
Suite 700
Atlanta, Georgia 30326
with a copy to:
Stearns, Weaver, Miller, Weissler,
Alhadeff & Sitterson, P.A.
Museum Tower
150 West Flagler Street
Miami, Florida 33130
Attention: Robert Weissler, Esq.
in the case of Lender to:
Banc One Capital Funding Corporation
150 East Gay Street
Columbus, Ohio 43215
Attention: Loan Servicing
with a copy to:
Banc One Capital Markets, Inc.
150 East Gay Street, 24th Floor
Columbus, Ohio 43215
Attn: Legal Department and Real Estate Investment Group
or at such other addresses or to the attention of such other persons as may from
time to time be designated by the party to be addressed by written notice to the
other in the manner herein provided. Notices, demands and requests given in the
manner aforesaid shall be deemed sufficiently served or given for all purposes
hereunder when received or when delivery is refused or when the same are
returned to sender for failure to be called for.
8.9 Successors and Assigns. This Agreement shall inure to the benefit of
the parties and their respective successors and permitted assigns. No assignment
made by Borrower in violation of this Agreement shall confer any rights on any
assignee of Borrower.
8.10 No Partnership. Nothing contained herein, or in any other Loan
Document, and no action or inaction whatsoever on the part of Lender, shall be
deemed to make Lender a partner or joint venturer with Borrower.
<PAGE>
8.11 Brokerage Claims. Borrower shall, and shall cause the Guarantor, to
protect, defend, indemnify and hold Lender harmless from and against all loss,
cost, liability and expense incurred as a result of any claim for a broker's or
finder's fee against Lender or any person or entity in connection with the
transaction herein contemplated, provided such claim is made by or arises
through or under Borrower or the Guarantor or is based in whole or in part upon
alleged acts or omissions of Borrower or the Guarantor. Lender shall protect,
defend, indemnify and hold Borrower harmless from and against all loss, cost,
liability and expense incurred as a result of any claim for a broker's or
finder's fee against Borrower provided such claim is based upon alleged acts or
omissions of Lender.
8.12 Publicity. Lender and Borrower may each reasonably publicize the Loan
if it so elects. Borrower agrees to consult with Lender prior to any press
release concerning the Loan.
8.13 Documents Satisfactory to Lender. All documents and other matters
required by any of the provisions of this Agreement to be submitted or provided
to Lender shall be in form and substance reasonably satisfactory to Lender.
8.14 Additional Assurances. At any time or from time to time, upon the
written request of Lender, Borrower shall execute, and, if required, record,
file (and pay all fees, taxes or other expenses relating thereto) all such
further documents and do all such other acts and things as Lender may reasonably
request to effectuate the transaction contemplated herein in accordance with the
terms hereof.
8.15 Entire Agreement. This Agreement, the Exhibits hereto and the other
Loan Documents and other documents referred to herein constitute the entire
agreement between the Lender and Borrower with respect to the subject matter
hereof and may not be modified or amended in any manner other than by
supplemental written agreement executed by the parties hereto.
8.16 Severability. If any provision of this Agreement or any other Loan
Document or the application thereof to any person or situation shall, to any
extent, be held invalid or unenforceable, the remainder of this Agreement or any
other Loan Document, and the application of such provision to persons or
situations other than those to which it shall have been held invalid or
unenforceable, shall not be affected thereby, but shall continue valid and
enforceable to the fullest extent permitted by applicable law.
8.17 No Third Party Beneficiary. Except as hereinafter expressly provided,
this Agreement is made for the sole benefit of Borrower and Lender, and no other
person shall be deemed to have any privity of contract hereunder nor any right
to rely hereon to any extent or for any purpose whatsoever, nor shall any other
person have any right of action of any kind hereon or be deemed to be a third
party beneficiary hereunder. Notwithstanding the foregoing, Banc One Capital
Partners, VII, Ltd., its successors and assigns, shall be a third party
beneficiary of the representations, warranties, covenants and agreements of
Borrower and Guarantor under the Loan Documents for so long as it may own a
participation interest in the Loan. <PAGE>
8.18 CHOICE OF LAW. THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF OHIO,
ACCEPTED BY LENDER IN THE STATE OF OHIO, AND THE PROCEEDS OF THE LOAN EVIDENCED
HEREBY WERE OR ARE TO BE DISBURSED BY LENDER FROM THE STATE OF OHIO. BORROWER
AND LENDER AGREE THAT THE STATE OF OHIO HAS A SUBSTANTIAL RELATIONSHIP TO THE
TRANSACTION EVIDENCED HEREBY AND AGREE THAT THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF OHIO (WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW).
8.19 Limitation on Liability.
Subject to the limitations and exceptions contained in subsections
(b), (c), (d) and (e) below, Borrower shall not have any personal recourse
liability for amounts owing under the Note or any of the other Loan Documents
and no deficiency judgment therefor shall be enforced against Borrower. Lender's
recourse for such amounts shall, subject to the limitations and exceptions
contained in subsections (b), (c), (d) and (e) below, be limited to the
collateral and security provided under the Loan Documents. Anything herein to
the contrary notwithstanding, the Borrower acknowledges and agrees that the
collateral provided under the Pledge of Stock is intended to secure and
cross-collateralize both the Loan and the Related Party Loans.
A judgment may be sought, obtained, entered and enforced against
Borrower to the extent necessary to preserve or enforce the rights and remedies
of Lender in, to or against the collateral and security provided under the Loan
Documents, and nothing contained in this Section 8.19 shall be construed to
limit, prejudice or impair the rights of Lender to enforce its rights and
remedies against any real and personal property mortgaged, pledged, encumbered,
assigned or granted to secure payment or performance under this Agreement, the
Note, and the other Loan Documents. Notwithstanding anything to the contrary
herein or elsewhere Lender shall, to the fullest extent permitted by law, be
entitled to injunctive relief and to specific performance.
Anything contained herein or elsewhere to the contrary
notwithstanding, Borrower and Guarantor shall be liable to Lender, without
limitation, for Lender's harm, loss (including lost interest and principal on
the Loan), damage, costs and expenses (including Lender's reasonable attorneys'
fees and court and collection costs) arising out of or in connection with any of
the following circumstances:
any misapplication or misappropriation of any insurance or
condemnation proceeds;
revenues collected after an Event of Default or Incipient Default
and not properly applied to the Loan or normal operating expenses of
the Premises;
any waste respecting all or any part of the Property or any other
collateral;
<PAGE>
real estate taxes, personal property taxes or Impositions, if any,
and insurance premiums with respect to the Property (except to the
extent resulting from the failure by Lender to disburse any deposits
received from Borrower with respect to such real estate or personal
property taxes in accordance with the provisions of Section 4.1(B));
fraud in connection with the Loan or any Loan Document;
any material breach of any representation or warranty made in
connection with the Loan (expressly excluding any representations or
warranties made by the Ground Lessor) known by Borrower or Guarantor
to have been false when made, or deemed made specifically including
any material misrepresentation or inaccuracy contained in any
financial statement or other document provided to Lender pursuant to
Section 4.1.K of this Agreement known by Borrower or Guarantor to
have been false or inaccurate when provided;
any destruction of the Property or any part thereof in or from an
uninsured or underinsured casualty for which Borrower was required
to obtain insurance under this Agreement;
any breach of any of the terms and provisions of Section 2.10
(Environmental Matters) of the Mortgage; or
any lien arising from the failure of the Borrower to pay or perform
any obligation with respect to taxes or employee benefits which lien
is superior in priority to the lien created by the Mortgage and the
Security Agreement upon the property encumbered thereby.
In the event of any filing by Borrower of any voluntary petition
under the Bankruptcy Code, or the taking by Borrower of any comparable action
under any federal or state law; or the filing of any involuntary petition under
the Bankruptcy Code against Borrower or the taking of comparable action under
any federal or state law against Borrower by any Affiliate of any of them, the
Loan shall become fully recourse against Borrower.
Nothing contained in this Section 8.19 shall be construed to release
Borrower or any Loan Party from liability under (i) the indemnifications
contained in Section 2.10 (Environmental Matters) of the Mortgage, (ii) the
Limited Guaranty, or (iii) the Environmental Indemnity. <PAGE>
8.20 WRITTEN AGREEMENT.
(a) THE RIGHTS AND OBLIGATIONS OF BORROWER AND LENDER SHALL BE
DETERMINED SOLELY FROM THIS WRITTEN LOAN AGREEMENT AND THE
OTHER LOAN DOCUMENTS, AND ANY PRIOR ORAL OR WRITTEN AGREEMENTS
BETWEEN LENDER AND BORROWER CONCERNING THE SUBJECT MATTER
HEREOF AND OF THE OTHER LOAN DOCUMENTS ARE SUPERSEDED BY AND
MERGED INTO THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS.
(b) THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY NOT BE
VARIED BY ANY ORAL AGREEMENTS OR DISCUSSIONS THAT OCCUR
BEFORE, CONTEMPORANEOUSLY WITH, OR SUBSEQUENT TO THE EXECUTION
OF THIS LOAN AGREEMENT OR THE LOAN DOCUMENTS.
(c) THIS WRITTEN LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENTS BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
8.21 Intentionally Omitted.
8.22 Intentionally Omitted.
8.23 Intentionally Omitted.
8.24 WAIVER OF JURY TRIAL. LENDER AND BORROWER HEREBY WAIVE THE RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT
MATTER OF THIS AGREEMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND
VOLUNTARILY MADE BY LENDER AND BORROWER, AND LENDER AND BORROWER ACKNOWLEDGE
THAT NO PERSON ACTING ON BEHALF OF ANOTHER PARTY TO THIS AGREEMENT HAS MADE ANY
REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO
MODIFY OR NULLIFY ITS EFFECT. LENDER AND BORROWER FURTHER ACKNOWLEDGE THAT THEY
HAVE BEEN REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE
SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL
COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND THAT THEY HAVE HAD THE OPPORTUNITY
TO DISCUSS THIS WAIVER WITH COUNSEL. <PAGE>
8.25 Consent to Jurisdiction. The parties hereto submit to personal
jurisdiction in the State of Ohio for the enforcement of the provisions of this
Agreement and the other Loan Documents and irrevocably waive any and all rights
to object to such jurisdiction for the purposes of litigation to enforce any
provision of this Agreement and the other Loan Documents. Lender and Borrower
hereby consent to the jurisdiction of and agree that any action, suit or
proceeding to enforce this Agreement may be brought in any state or federal
court in the State of Ohio. Lender and Borrower hereby irrevocably waive any
objection which they may have to the laying of the venue of any such action,
suit, or proceeding in any such court and hereby further irrevocably waive any
claim that any such action, suit or proceeding brought in such a court has been
brought in an inconvenient forum. Borrower and Lender hereby consent that
service of process in any action, suit or proceeding may be made by service upon
the Borrower's agent for service of process (in the case of service to be made
upon Borrower), by personal service upon the party being served, or by delivery
in accordance with the notice requirements of Section 8.8 of this Agreement.
IN WITNESS WHEREOF, Borrower and Lender have caused this Agreement to be
executed by their duly authorized representatives as of the day, month and year
first above written.
BORROWER:
SERVICO CONCORD, INC.
a California corporation
By: /s/ Toni Jones
--------------
Name: Toni Jones
Title: Vice President
LENDER:
BANC ONE CAPITAL FUNDING
CORPORATION, an Ohio corporation
By: /s/ Ronald L. Callentine
------------------------
Name: Ronald L. Callentine
Title: Vice President
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
<PAGE>
EXHIBIT B-1
ADDITIONAL NOTE
<PAGE>
EXHIBIT B-2
PRIMARY NOTE
<PAGE>
EXHIBIT C
PERMITTED ENCUMBRANCES
<PAGE>
EXHIBIT D
INSURANCE REQUIREMENTS
(i) Insurance against loss to the Property on an "All Risk" policy form,
covering insurance risks no less broad than those covered under a Standard Multi
Peril (SMP) policy form, which contains a 1987 Commercial 150 "Causes of Loss
Special Format and such other risks as Lender may reasonably require, including
risk of hurricane, insurance covering the cost of demolition of undamaged
portions of any portion of the Property when required by code or ordinance and
the increased cost of reconstruction to conform with current code or ordinance
requirements, in amounts equal to the full replacement cost of the Property
(other than the Land), including fixtures and equipment, Borrower's interest in
leasehold improvements, and the cost of debris removal, with 1008 co-insurance
with an agreed amount endorsement and deductibles of not more than $10,000.00;
(ii) Business interruption/extra expense insurance in amounts sufficient
to pay during any period in which the Property may be damaged or destroyed, on a
gross income basis for a period of twelve (12) months (i) all business income
derived from the Property and (ii) all amounts (including all impositions,
utility charges and insurance premiums) required to be paid by Borrower;
(iii) During the performance of the Renovation Work and the making of any
other alterations or improvements to the Property insurance covering claims
based on the owner's or employer's contingent liability not covered by the
insurance provided in subsection (f) below.
(iv) Insurance against loss or damage by flood or mud slide in compliance
with the Flood Disaster Protection Act of 1973, as amended from time to time, if
the Property or any portion thereof is now, or at any time while the Loan
remains outstanding shall be, situated in any area which an appropriate
Governmental Authority designates as a special flood hazard area, Zone A or Zone
V, in amounts equal to the full replacement value of all above grade structures
on the Property;
(v) Insurance against loss or damage by earthquake, if the Premises are
now, or at any time while the Loan remains outstanding shall be, situated in any
area which is classified as a Major Damage Zone, Zones 3 and 4, by the
International Conference of Building Officials in an amount equal to the
probable maximum loss for the Premises, fixtures and equipment, plus the cost of
debris removal;
(vi) Commercial general public liability insurance, with the location of
the Property designated thereon, against death, bodily injury and property
damage arising in connection with the Property with Borrower listed as the named
insured with such limits as Lender may reasonably require, but in no event less
than $1,000,000, and written on a 1986 Standard ISO occurrence basis form or
equivalent form, and excess umbrella liability insurance with such limits as
Lender may reasonably require, but in no event less than $10,000,000; and <PAGE>
(vii) Such other insurance relating to the Property and the use and
operation thereof, as Lender may, from time to time, reasonably require,
including dramshop, products liability and workers' compensation insurance.
All insurance shall: (i) be carried by companies qualified to do business
in the State with a Best's rating of A-6 or better; (ii) be in form and content
reasonably acceptable to Lender; (iii) provide thirty (30) days' advance written
notice to Lender before any cancellation, material modification or notice of
non-renewal.
All physical damage policies and renewals shall contain a standard
mortgagee clause naming Lender as mortgagee, which clause shall expressly state
that any breach of any condition or warranty by Borrower shall not prejudice the
rights of Lender under such insurance, and a loss payable clause in favor of
Lender for personal property, contents, inventory, equipment and business
interruption. All liability policies and renewals shall name Lender as an
additional insured with respect to policies in which Lender has an interest. No
additional parties shall appear in the mortgage or loss payable clause without
Lender's prior written consent. All deductibles shall be in amounts reasonably
acceptable to Lender. In the event of the foreclosure of the Mortgage or any
other transfer of title to the Property in full or partial satisfaction of the
Loan, all right, title and interest of Borrower in and to all insurance policies
and renewals thereof then in force shall pass to the purchaser or grantee.
During any period during which construction is conducted on the Premises
and during which period the construction and materials are not covered by the
existing policies, Borrower shall cause to be provided to Lender, premium
prepaid insurance policies covering the Property (which during construction
shall be on an "All-Risk" perils, including theft, "Builder's Risk", "Completed
Value" form) in companies and forms satisfactory to Lender, and in amounts equal
to the replacement costs of the Improvements (including construction materials
and personal property on or off site) covering insurance risks no less broad
than those covered under a Standard Multi Peril (SMP) policy form, which
contains a 1987 Commercial ISO "Causes of Loss Special Form", with coverage for
such other expenses as Lender may reasonably require, including: debris removal;
cost of demolition of the undamaged portion of a building when required by code
or ordinance; increased cost of reconstruction to conform with current code or
ordinance requirements; real estate property taxes; architect, engineering, and
consulting fees; legal and accounting fees, including the cost of in-house
attorneys and paralegals; advertising and promotional expenses; interest on
money borrowed; additional commissions incurred upon renegotiating leases and
any and all other expenses which may be incurred as a result of any property
loss or destruction by an insured peril. Such insurance shall contain an agreed
amount endorsement (such amount to include foundation and underground pipes) and
bear a 100% co-insurance clause. The deductible shall be not more than $10,000.
Said policies shall contain a standard mortgagee clause naming Lender as
mortgagee, and a permission to occupy endorsement. <PAGE>
In addition, Borrower shall cause to be furnished to Lender certificates
from the insurance carrier for each general contractor evidencing workers'
compensation, employers' liability, commercial auto liability, and commercial
general liability insurance (including contractual liability and completed
operations coverage) written on a 1986 standard "ISO" occurrence basis form or
equivalent and excess umbrella coverage, carried during the course of
construction, with general liability insurance limits as Lender may reasonably
require, but in no event less than $1,000,000. Lender shall be named as an
additional insured under such liability policies. Borrower shall cause each
subcontractor to maintain commercial general liability, commercial automobile
liability, workers' compensation, employers' liability, and excess umbrella
liability coverage in form and amount reasonably satisfactory to Lender.
The additional insurance provisions for construction periods do not
obviate or otherwise affect requirements of the Loan Agreement or the previous
portions of this Exhibit, which requirements remain a part of this Agreement in
their entirety. <PAGE>
EXHIBIT E
RENOVATION WORK
<PAGE>
EXHIBIT F-1
[ADD FORM OF ESTOPPEL AGREEMENT]
<PAGE>
EXHIBIT F-2
[ADD FORM OF ESTOPPEL AGREEMENT]
<PAGE>
EXHIBIT F-3
[ADD FORM OF ESTOPPEL AGREEMENT]
<PAGE>
Exhibit 10.3.2
GUARANTY AND INDEMNITY AGREEMENT
THIS GUARANTY AND INDEMNITY AGREEMENT (this "Agreement"), made effective
as of the 8th day of December 1998, by LODGIAN AMI, INC., a Maryland corporation
("AMI"), PENMOCO, INC., a Michigan corporation ("PI"), and ISLAND MOTEL
ENTERPRISES, INC., a Georgia corporation ("IME"), each with a principal place of
business at Two Live Oak Center, 3445 Peachtree Road, NE, Suite 700, Atlanta,
Georgia 30326 (AMI, PI and IME are sometimes hereinafter collectively referred
to as "Guarantor"), to and for the benefit of BANC ONE CAPITAL FUNDING
CORPORATION, an Ohio corporation, having an office at 150 East Gay Street, 24th
Floor, Columbus, Ohio 43215 ("Lender").
RECITALS:
A. Lender and Servico Concord, Inc., a California corporation
("Borrower"), have entered into a Loan Agreement of even date herewith (as the
same may be amended from time to time, the "Loan Agreement") pursuant to which
Lender has agreed to make a loan to Borrower in the amount of up to $8,449,183
(the "Loan"), which Loan is evidenced by that certain Promissory Note of even
date herewith in the principal amount of $7,435,281 (the "Primary Note" and that
certain Promissory Note of even date herewith in the principal amount of
$1,013,902 (the "Additional Note" and, together with the Primary Note, the
"Note"). The Loan is secured by, inter alia, that certain Leasehold Deed of
Trust, Security Agreement and Fixture Filing of even date herewith from Borrower
to Lender encumbering Borrower's property commonly known as Sheraton Hotel
Concord, located at 45 John Glenn Drive, Concord, California 94520 (the
"Mortgage") (the Note, the Loan Agreement, the Mortgage and every other
document, instrument and agreement evidencing or securing the Loan are
hereinafter sometimes collectively referred to as the "Loan Documents");
B. Borrower is an affiliate of PI, AMI and IME;
C. Lender is extending financial accommodations to PI, AMI and IME
concurrently with the Loan and, in order to induce Lender to extend such
financial accommodations, PI, AMI and IME are willing to execute this Agreement;
D. Lender is unwilling to make the Loan without the execution and delivery
of this Agreement by PI, AMI and IME;
NOW, THEREFORE, to induce Lender to make the Loan and in consideration of
One Dollar ($1.00) and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Guarantor, intending to be legally
bound hereby, jointly and severally, agree as follows:
<PAGE>
1. Liabilities.
(a) Notwithstanding any provision contained in the Note, the Loan
Agreement, the Mortgage or any other Loan Document to the contrary, Guarantor
hereby absolutely, primarily, unconditionally and irrevocably guarantees to
Lender, its successors and assigns, the full prompt and complete payment and
performance of all obligations and liabilities of Borrower arising under the
Loan Documents (all of which obligations and liabilities are collectively
hereinafter referred to as the "Liabilities"). All terms used and not otherwise
defined herein shall have the meanings ascribed to them in the Loan Agreement.
(b) The validity of this Agreement and the obligations of Guarantor
hereunder shall in no way be terminated, abated, affected or impaired by the
happening from time to time of any event or condition, including, without
limitation, any of the following: (i) the assertion or non-assertion by Lender
of any of the rights or remedies available to Lender pursuant to the provisions
of the Loan Documents or pursuant to any applicable statutes; (ii) the waiver by
Lender of, or the failure of Lender to enforce, or the lack of diligence by
Lender in connection with, the enforcement of any of its rights or remedies
under the Loan Documents; (iii) the granting by Lender of any indulgence or
extension of time; (iv) the exercise by Lender of any so-called self-help
remedies; (v) any other act, omission or conditions which might in any manner or
to any extent vary the risk to Guarantor or might otherwise operate as a
discharge or release of the Guarantor under applicable law; (vi) the invalidity
or unenforceability of all or any portion or provision of the Note; (vii) any
release or discharge of or accord and satisfaction with Borrower or any other
person or entity, by variation of the terms of the Note or otherwise; (viii) the
impairment, modification, change, release, discharge or limitation of the
liability of Borrower or the Guarantor or any of their estates in bankruptcy,
resulting from or pursuant to the application of the bankruptcy or insolvency
laws of or any decision of any court of the United States or any state thereof;
(ix) any present or future law or order of any government (de jure or de facto)
or of any agency thereof purporting to reduce, amend or otherwise affect the
Liabilities or to vary any terms of payment, satisfaction or discharge thereof;
(x) the waiver, compromise, settlement, release, extension, amendment, change,
modification or termination of the terms of the Liabilities or any or all of the
obligations, covenants or agreements of Borrower under the Loan Documents
(except by satisfaction in full of all Liabilities) or of the Guarantor under
this Agreement; (xi) the extension of the time for satisfaction, discharge or
payment of the Liabilities or any part thereof owing or payable by Borrower
under the Loan Documents or of the time for performance of any other
obligations, covenants or agreements under or arising out of this Agreement or
the extension or renewal of any thereof; (xii) the existence of any other
guaranty of the Liabilities in favor of Lender, or the enforcement or attempted
enforcement of such other guaranty; and (xiii) any event or action that would in
the absence of this paragraph result in the release or discharge of the
Guarantor from the performance or observance of any obligation, covenant or
agreement contained in this Agreement or any other agreement.
<PAGE>
2. Waivers. The Guarantor hereby waives all notice of any default in the
payment of or non-performance of any Liabilities, all protest, demands, notices
or presentments of any kind, notice of any acceptance of this Agreement and all
matters and rights which may be raised in avoidance of, or in defense against,
any action to enforce the obligations of the Guarantor hereunder; provided,
however, that nothing herein shall waive the Guarantor's right to assert payment
or performance of any Liabilities as a defense to a claim relating to such
Liabilities under this Agreement, to the extent of such payment or performance.
The Guarantor hereby waives any and all suretyship defenses or defenses in the
nature thereof without in any manner limiting any other provisions of this
Agreement. Notwithstanding anything to the contrary contained herein, the
Guarantor hereby irrevocably waives all rights the Guarantor may have at law or
in equity, including, without limitation, any law subrogating the Guarantor to
the rights of Lender, to seek contribution, indemnification or any other form of
reimbursement from Borrower and any other person now or hereafter primarily or
secondarily liable for any obligations of Borrower to Lender, including without
limitation, the Liabilities, for any payment or performance made by the
Guarantor under or in connection with this Agreement, unless and until
irrevocable payment in full of the Note has been received by Lender.
3. Primary Liability.
(a) The Guarantor's liability under this Agreement shall be primary,
and with respect to any right of action which shall accrue to Lender relating to
any Liabilities, Lender may at its sole option and without notice or demand,
proceed directly against the Guarantor without having proceeded against Borrower
or any other person or entity liable to any extent for any of the Liabilities or
against the collateral under the Loan Documents. The Guarantor's liability
hereunder shall continue without regard to whether or not Lender may have
instituted or prosecuted or obtained or realized any judgment in any suit,
action or proceeding or shall have exhausted any of its remedies or taken any
steps to enforce any of its rights under or pursuant to the Loan Documents or at
law or in equity, or otherwise, and without regard to any other condition or
contingency, so long as any of the Liabilities remains unsatisfied to any
extent. This Agreement is an agreement of payment and performance and not merely
of collection.
(b) Each default on any of the Liabilities shall give rise to a
separate cause of action and separate suits may be brought hereunder as each
cause of action arises or, at Lender's option, any or all causes of action which
arise prior to or after any suit is commenced hereunder may be included in such
suit.
4. Representations. The Guarantor further represents to Lender, as an
inducement to making the Loan, that there is not pending or threatened any
litigation, arbitration, administrative or governmental proceeding against the
Guarantor which would in any way prohibit or impede the adoption, execution, or
performance of this Agreement by the Guarantor or which would affect any of the
undertakings herein; that compliance by the Guarantor with the Guarantor's
<PAGE>
obligations under this Agreement has not resulted and will not result in the
violation of this Agreement or any agreement or other instrument to which the
Guarantor is a party or by which the Guarantor or any of the Guarantor's assets
are bound; that this Agreement and all actions contemplated to be taken by the
Guarantor hereunder have been duly authorized; and that this Agreement and such
actions and undertakings are valid and binding upon the Guarantor and
enforceable against the Guarantor in accordance with their terms.
5. Borrower's Actions. No encumbrance, assignment, leasing, subletting,
sale or other transfer by Borrower of any of Borrower's assets shall operate to
extinguish or diminish the liability of the Guarantor under this Agreement.
6. Bankruptcy. If Borrower files a petition for reorganization,
arrangement, composition or similar relief under any present or future provision
of the Federal Bankruptcy Code, or if such a petition is filed against Borrower
by any member or partner of Borrower, by Guarantor or by any person or entity
affiliated with, related to or in which a beneficial interest is owned by such
member or partner or Guarantor (each, a "Bankruptcy Event"), Guarantor shall,
from and after the date of such filing, absolutely, primarily, unconditionally
and irrevocably guarantee to Lender, its successors and assigns, the full,
prompt and absolute payment, performance, observance and discharge of all of
Borrower's obligations and liabilities arising under the Loan Documents,
including the repayment of all principal and interest under the Note and the
payment of all other sums payable by Borrower under the Loan Documents.
7. No Reliance. The Guarantor assumes the responsibility for being and
keeping itself informed of the financial condition of Borrower and of all other
circumstances bearing upon the risk of failure to pay, perform or discharge any
of the obligations and liabilities of Borrower which diligent inquiry would
reveal, and Lender shall have no duty to advise the Guarantor of information
known to Lender regarding such condition or any such circumstance.
8. Payment of Expenses. The Guarantor shall be responsible to Lender for
all expenses (including reasonable attorneys' fees), incurred by Lender in
enforcing any obligations of the Guarantor under this Agreement.
9. Successors and Assigns. All references to Lender and Guarantor shall be
deemed to include references to the successors and assigns of Lender and
Guarantor.
10. Governing Law. In all respects, including without limitation, matters
of construction and performance of this Agreement and the obligations arising
hereunder, this Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of Ohio applicable to contracts and
obligations made and performed in such state and any applicable laws of the
United States of America. Interpretation and construction of this Agreement
shall be according to the contents hereof and without presumption or standard of
construction in favor of or against Guarantor or Lender.
<PAGE>
11. Severability. If any term or provision of this Agreement or the
application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Agreement shall be valid and enforced to the fullest
extent permitted by law; provided, however, all rights, powers and remedies
provided herein may be exercised only to the extent that the exercise thereof
does not violate any applicable law, and are intended to be limited to the
extent necessary so that they will not render this Agreement invalid or
unenforceable under any applicable law.
12. No Waiver. The waiver of any provision of this Agreement by Lender
shall constitute a waiver of that provision on that occasion only, and shall not
constitute a waiver of any other provision of this Agreement, or that provision
with respect to any other occasion.
13. Commercial Transaction.
(a) TO INDUCE LENDER TO ENTER INTO THE COMMERCIAL LOAN TRANSACTION
EVIDENCED BY AND SECURED BY THE LOAN DOCUMENTS, GUARANTOR AGREES THAT THE SAID
TRANSACTION IS COMMERCIAL AND NOT A CONSUMER TRANSACTION.
(b) Each of the waivers set forth in this Agreement is made with
knowledge of its significance and consequences, and under the circumstances the
waivers are reasonable. If any of said waivers is determined to be contrary to
any applicable law or public policy, such waiver shall be effective only to the
maximum extent permitted by law.
14. Jury Trial. LENDER AND GUARANTOR HEREBY WAIVE THE RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER
OF THIS AGREEMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE
BY LENDER AND GUARANTOR, AND LENDER AND GUARANTOR ACKNOWLEDGE THAT NO PERSON
ACTING ON BEHALF OF ANOTHER PARTY TO THIS AGREEMENT HAS MADE ANY REPRESENTATIONS
OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR
NULLIFY ITS EFFECT. LENDER AND GUARANTOR FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN
REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF
THIS AGREEMENT AND IN THE MAKING OF ALL WAIVERS CONTAINED HEREIN BY INDEPENDENT
LEGAL COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND THAT LENDER AND GUARANTOR
HAVE HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.
<PAGE>
15. Consent to Jurisdiction. GUARANTOR HEREBY SUBMITS TO PERSONAL
JURISDICTION IN THE STATE OF OHIO FOR THE ENFORCEMENT OF THE PROVISIONS OF THIS
AGREEMENT AND IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO OBJECT TO SUCH
JURISDICTION FOR THE PURPOSES OF LITIGATION TO ENFORCE ANY PROVISION OF THIS
AGREEMENT. GUARANTOR HEREBY CONSENTS TO THE JURISDICTION OF AND AGREES THAT ANY
ACTION, SUIT OR PROCEEDING TO ENFORCE THIS AGREEMENT MAY BE BROUGHT IN ANY STATE
OR FEDERAL COURT IN THE STATE OF OHIO. GUARANTOR HEREBY IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY HAVE TO THE LAYING OF THE VENUE OF ANY SUCH ACTION, SUIT,
OR PROCEEDING IN ANY SUCH COURT AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM
THAT ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. EACH GUARANTOR HEREBY APPOINTS CT CORPORATION
AS THEIR AGENT FOR SERVICE OF PROCESS. GUARANTOR HEREBY CONSENTS THAT SERVICE OF
PROCESS IN ANY ACTION, SUIT OR PROCEEDING MAY BE MADE BY SERVICE UPON THE
AFORESAID AGENT FOR SERVICE OF PROCESS, BY PERSONAL SERVICE UPON THE PARTY BEING
SERVED, OR BY DELIVERY IN ACCORDANCE WITH THE NOTICE REQUIREMENTS OF SECTION 16
OF THIS AGREEMENT.
16. Notices. Any notice which any party hereto may be required or may
desire to give hereunder shall be delivered personally, or by overnight express
courier, addressed in the case of Guarantor to:
Penmoco, Inc., Lodgian AMI, Inc. and
Island Motel Enterprises, Inc.
Two Live Oak Center
3445 Peachtree Road, NE
Suite 700
Atlanta, Georgia 30326
with a copy to:
Stearns, Weaver, Miller, Weissler,
Alhadeff & Sitterson, P.A.
Museum Tower
150 West Flagler Street
Miami, Florida 33130
Attention: Robert Weissler, Esq.
in the case of Lender to:
Banc One Capital Funding Corporation
<PAGE>
150 East Gay Street, 24th Floor
Columbus, Ohio 43215
Attention: Loan Servicing
with a copy to:
Banc One Capital Markets, Inc.
150 East Gay Street, 24th Floor
Columbus, Ohio 43215
Attention: Legal Department and Real Estate Group
or at such other addresses or to the attention of such other persons as may from
time to time be designated by the party to be addressed by written notice to the
other in the manner herein provided. Notices, demands and requests given in the
manner aforesaid shall be deemed sufficiently served or given for all purposes
hereunder when received or when delivery is refused or when the same are
returned to sender for failure to be called for.
17. Miscellaneous.
(a) This Agreement may not be modified, altered or amended nor may
any provision hereof or rights hereunder be waived, except by an instrument in
writing signed by the person or entity against which such modification,
alteration, amendment or waiver is sought to be enforced.
(b) Except as provided in Section 6 above, this Agreement shall
terminate upon the irrevocable payment by Borrower to Lender of all amounts
evidenced by the Note and the other Loan Documents.
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this instrument to be duly
executed as of the date first written above.
GUARANTOR:
LODGIAN AMI, INC.
a Maryland corporation
By: /s/ Toni Jones
----------------------------------
Name: Toni Jones
Title: Vice President
ISLAND MOTEL ENTERPRISES, INC.
a Georgia corporation
By: /s/ Toni Jones
----------------------------------
Name: Toni Jones
Title: Vice President
PENMOCO, INC.
a Michigan corporation
By: /s/ Toni Jones
----------------------------------
Name: Toni Jones
Title: Vice President
<PAGE>
Exhibit 10.3.3
LIMITED GUARANTY AND INDEMNITY AGREEMENT
THIS LIMITED GUARANTY AND INDEMNITY AGREEMENT (this "Agreement"), made
effective as of the 8th day of December 1998, by LODGIAN, INC., a Delaware
corporation, with a principal place of business at Two Live Oak Center, 3445
Peachtree Road, NE, Suite 700, Atlanta, Georgia 30326 ("Guarantor"), to and for
the benefit of BANC ONE CAPITAL FUNDING CORPORATION, an Ohio corporation, having
an office at 150 East Gay Street, 24th Floor, Columbus, Ohio 43215 ("Lender")
RECITALS:
A. Lender and Servico Concord, Inc., a California corporation
("Borrower"), have entered into a Loan Agreement of even date herewith (as the
same may be amended from time to time, the "Loan Agreement") pursuant to which
Lender has agreed to make a loan to Borrower in the amount of up to $8,449,183
(the "Loan"), which Loan is evidenced by that certain Promissory Note of even
date herewith in the principal amount of $7,435,281 (the "Primary Note") and
that certain Promissory Note of even date herewith in the principal amount of
$1,013,902 (the "Additional Note," and together with the Primary Note, the
"Note"). The Loan is secured by, inter alia, that certain Leasehold Deed of
Trust, Security Agreement and Fixture Filing of even date herewith from Borrower
to Lender encumbering Borrower's property commonly known as Sheraton Hotel
Concord, located at 45 John Glenn Drive, Concord, California 94520 (the
"Mortgage") (the Note, the Loan Agreement, the Mortgage and every other
document, instrument and agreement evidencing or securing the Loan are
hereinafter sometimes collectively referred to as the "Loan Documents");
B. Borrower is a direct or indirect subsidiary of Guarantor;
C. Guarantor will directly benefit from the making of the Loan to
Borrower; and
D. Lender is unwilling to make the Loan without the execution and delivery
of this Agreement by Guarantor;
NOW, THEREFORE, to induce Lender to make the Loan and in consideration of
One Dollar ($1.00) and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Guarantor, intending to be legally
bound hereby, jointly and severally, agree as follows:
1. Liabilities.
<PAGE>
(a) Notwithstanding any provision contained in the Note, the Loan
Agreement, the Mortgage or any other Loan Document to the contrary, Guarantor
hereby absolutely, primarily, unconditionally and irrevocably guarantees to
Lender, its successors and assigns, (i) the full prompt and complete payment and
performance of all principal, interest, charges, fees and other monetary
obligations of Borrower under the Primary Note, provided, however, that upon
Renovation Completion and so long as no Event of Default then exists, such
obligation shall terminate and become null and void, and (ii) the full prompt
and complete payment and performance of all principal, interest, charges, fees
and other monetary obligations of Borrower under the Additional Note, and (iii)
the full, prompt and complete payment and performance of all obligations and
liabilities of Borrower arising under Section 8.19 (c) and (d) of the Loan
Agreement and Sections 2.10 and 4.13 of the Mortgage (all of which obligations
and liabilities are collectively hereinafter referred to as the "Liabilities").
All terms used and not otherwise defined herein shall have the meanings ascribed
to them in the Loan Agreement.
(b) The validity of this Agreement and the obligations of Guarantor
hereunder shall in no way be terminated, abated, affected or impaired by the
happening from time to time of any event or condition, including, without
limitation, any of the following: (i) the assertion or non-assertion by Lender
of any of the rights or remedies available to Lender pursuant to the provisions
of the Loan Documents or pursuant to any applicable statutes; (ii) the waiver by
Lender of, or the failure of Lender to enforce, or the lack of diligence by
Lender in connection with, the enforcement of any of its rights or remedies
under the Loan Documents; (iii) the granting by Lender of any indulgence or
extension of time; (iv) the exercise by Lender of any so-called self-help
remedies; (v) any other act, omission or conditions which might in any manner or
to any extent vary the risk to Guarantor or might otherwise operate as a
discharge or release of the Guarantor under applicable law; (vi) the invalidity
or unenforceability of all or any portion or provision of the Note; (vii) any
release or discharge of or accord and satisfaction with Borrower or any other
person or entity, by variation of the terms of the Note or otherwise; (viii) the
impairment, modification, change, release, discharge or limitation of the
liability of Borrower or the Guarantor or any of their estates in bankruptcy,
resulting from or pursuant to the application of the bankruptcy or insolvency
laws of or any decision of any court of the United States or any state thereof;
(ix) any present or future law or order of any government (de jure or de facto)
or of any agency thereof purporting to reduce, amend or otherwise affect the
Liabilities or to vary any terms of payment, satisfaction or discharge thereof;
(x) the waiver, compromise, settlement, release, extension, amendment, change,
modification or termination of the terms of the Liabilities or any or all of the
obligations, covenants or agreements of Borrower under the Loan Documents
(except by satisfaction in full of all Liabilities) or of the Guarantor under
this Agreement; (xi) the extension of the time for satisfaction, discharge or
payment of the Liabilities or any part thereof owing or payable by Borrower
under the Loan Documents or of the time for performance of any other
obligations, covenants or agreements under or arising out of this Agreement or
the extension or renewal of any thereof; (xii) the existence of any other
guaranty of the Liabilities in favor of Lender, or the enforcement or attempted
enforcement of such other
<PAGE>
guaranty; and (xiii) any event or action that would in the absence of this
paragraph result in the release or discharge of the Guarantor from the
performance or observance of any obligation, covenant or agreement contained in
this Agreement or any other agreement.
2. Waivers. The Guarantor hereby waives all notice of any default in the
payment of or non-performance of any Liabilities, all protest, demands, notices
or presentments of any kind, notice of any acceptance of this Agreement and all
matters and rights which may be raised in avoidance of, or in defense against,
any action to enforce the obligations of the Guarantor hereunder; provided,
however, that nothing herein shall waive the Guarantor's right to assert payment
or performance of any Liabilities as a defense to a claim relating to such
Liabilities under this Agreement, to the extent of such payment or performance.
The Guarantor hereby waives any and all suretyship defenses or defenses in the
nature thereof without in any manner limiting any other provisions of this
Agreement. Notwithstanding anything to the contrary contained herein, the
Guarantor hereby irrevocably waives all rights the Guarantor may have at law or
in equity, including, without limitation, any law subrogating the Guarantor to
the rights of Lender, to seek contribution, indemnification or any other form of
reimbursement from Borrower and any other person now or hereafter primarily or
secondarily liable for any obligations of Borrower to Lender, including without
limitation, the Liabilities, for any payment or performance made by the
Guarantor under or in connection with this Agreement, unless and until
irrevocable payment in full of the Note has been received by Lender.
3. Primary Liability.
(a) The Guarantor's liability under this Agreement shall be primary,
and with respect to any right of action which shall accrue to Lender relating to
any Liabilities, Lender may at its sole option and without notice or demand,
proceed directly against the Guarantor without having proceeded against Borrower
or any other person or entity liable to any extent for any of the Liabilities or
against the collateral under the Loan Documents. The Guarantor's liability
hereunder shall continue without regard to whether or not Lender may have
instituted or prosecuted or obtained or realized any judgment in any suit,
action or proceeding or shall have exhausted any of its remedies or taken any
steps to enforce any of its rights under or pursuant to the Loan Documents or at
law or in equity, or otherwise, and without regard to any other condition or
contingency, so long as any of the Liabilities remains unsatisfied to any
extent. This Agreement is an agreement of payment and performance and not merely
of collection.
(b) Each default on any of the Liabilities shall give rise to a
separate cause of action and separate suits may be brought hereunder as each
cause of action arises or, at Lender's option, any or all causes of action which
arise prior to or after any suit is commenced hereunder may be included in such
suit.
<PAGE>
4. Representations. The Guarantor further represents to Lender, as an
inducement to making the Loan, that there is not pending or threatened any
litigation, arbitration, administrative or governmental proceeding against the
Guarantor which would in any way prohibit or impede the adoption, execution, or
performance of this Agreement by the Guarantor or which would affect any of the
undertakings herein; that compliance by the Guarantor with the Guarantor's
obligations under this Agreement has not resulted and will not result in the
violation of this Agreement or any agreement or other instrument to which the
Guarantor is a party or by which the Guarantor or any of the Guarantor's assets
are bound; that this Agreement and all actions contemplated to be taken by the
Guarantor hereunder have been duly authorized; and that this Agreement and such
actions and undertakings are valid and binding upon the Guarantor and
enforceable against the Guarantor in accordance with their terms.
5. Borrower's Actions. No encumbrance, assignment, leasing, subletting,
sale or other transfer by Borrower of any of Borrower's assets shall operate to
extinguish or diminish the liability of the Guarantor under this Agreement.
6. Bankruptcy. If Borrower files a petition for reorganization,
arrangement, composition or similar relief under any present or future provision
of the Federal Bankruptcy Code, or if such a petition is filed against Borrower
by any member or partner of Borrower, by Guarantor or by any person or entity
affiliated with, related to or in which a beneficial interest is owned by such
member or partner or Guarantor (each, a "Bankruptcy Event"), Guarantor shall,
from and after the date of such filing, absolutely, primarily, unconditionally
and irrevocably guarantee to Lender, its successors and assigns, the full,
prompt and absolute payment, performance, observance and discharge of all of
Borrower's obligations and liabilities arising under the Loan Documents,
including the repayment of all principal and interest under the Note and the
payment of all other sums payable by Borrower under the Loan Documents.
7. No Reliance. The Guarantor assumes the responsibility for being and
keeping itself informed of the financial condition of Borrower and of all other
circumstances bearing upon the risk of failure to pay, perform or discharge any
of the obligations and liabilities of Borrower which diligent inquiry would
reveal, and Lender shall have no duty to advise the Guarantor of information
known to Lender regarding such condition or any such circumstance.
8. Payment of Expenses. The Guarantor shall be responsible to Lender for
all expenses (including reasonable attorneys' fees), incurred by Lender in
enforcing any obligations of the Guarantor under this Agreement.
9. Successors and Assigns. All references to Lender and Guarantor shall be
deemed to include references to the successors and assigns of Lender and
Guarantor.
10. Governing Law. In all respects, including without limitation, matters
of construction and performance of this Agreement and the obligations arising
hereunder, this
<PAGE>
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of Ohio applicable to contracts and obligations made and
performed in such state and any applicable laws of the United States of America.
Interpretation and construction of this Agreement shall be according to the
contents hereof and without presumption or standard of construction in favor of
or against Guarantor or Lender.
11. Severability. If any term or provision of this Agreement or the
application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Agreement shall be valid and enforced to the fullest
extent permitted by law; provided, however, all rights, powers and remedies
provided herein may be exercised only to the extent that the exercise thereof
does not violate any applicable law, and are intended to be limited to the
extent necessary so that they will not render this Agreement invalid or
unenforceable under any applicable law.
12. No Waiver. The waiver of any provision of this Agreement by Lender
shall constitute a waiver of that provision on that occasion only, and shall not
constitute a waiver of any other provision of this Agreement, or that provision
with respect to any other occasion.
13. Commercial Transaction.
(a) TO INDUCE LENDER TO ENTER INTO THE COMMERCIAL LOAN TRANSACTION
EVIDENCED BY AND SECURED BY THE LOAN DOCUMENTS, GUARANTOR AGREES THAT THE SAID
TRANSACTION IS COMMERCIAL AND NOT A CONSUMER TRANSACTION.
(b) Each of the waivers set forth in this Agreement is made with
knowledge of its significance and consequences, and under the circumstances the
waivers are reasonable. If any of said waivers is determined to be contrary to
any applicable law or public policy, such waiver shall be effective only to the
maximum extent permitted by law.
14. Jury Trial. LENDER AND GUARANTOR HEREBY WAIVE THE RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER
OF THIS AGREEMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE
BY LENDER AND GUARANTOR, AND LENDER AND GUARANTOR ACKNOWLEDGE THAT NO PERSON
ACTING ON BEHALF OF ANOTHER PARTY TO THIS AGREEMENT HAS MADE ANY REPRESENTATIONS
OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR
NULLIFY ITS EFFECT. LENDER AND GUARANTOR FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN
REPRESENTED (OR HAVE HAD
<PAGE>
THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS AGREEMENT AND IN THE
MAKING OF ALL WAIVERS CONTAINED HEREIN BY INDEPENDENT LEGAL COUNSEL, SELECTED OF
THEIR OWN FREE WILL, AND THAT LENDER AND GUARANTOR HAVE HAD THE OPPORTUNITY TO
DISCUSS THIS WAIVER WITH COUNSEL.
15. Consent to Jurisdiction. GUARANTOR HEREBY SUBMITS TO PERSONAL
JURISDICTION IN THE STATE OF OHIO FOR THE ENFORCEMENT OF THE PROVISIONS OF THIS
AGREEMENT AND IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO OBJECT TO SUCH
JURISDICTION FOR THE PURPOSES OF LITIGATION TO ENFORCE ANY PROVISION OF THIS
AGREEMENT. GUARANTOR HEREBY CONSENTS TO THE JURISDICTION OF AND AGREES THAT ANY
ACTION, SUIT OR PROCEEDING TO ENFORCE THIS AGREEMENT MAY BE BROUGHT IN ANY STATE
OR FEDERAL COURT IN THE STATE OF OHIO. GUARANTOR HEREBY IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY HAVE TO THE LAYING OF THE VENUE OF ANY SUCH ACTION, SUIT,
OR PROCEEDING IN ANY SUCH COURT AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM
THAT ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. EACH GUARANTOR HEREBY APPOINTS CT CORPORATION
AS THEIR AGENT FOR SERVICE OF PROCESS. GUARANTOR HEREBY CONSENTS THAT SERVICE OF
PROCESS IN ANY ACTION, SUIT OR PROCEEDING MAY BE MADE BY SERVICE UPON THE
AFORESAID AGENT FOR SERVICE OF PROCESS, BY PERSONAL SERVICE UPON THE PARTY BEING
SERVED, OR BY DELIVERY IN ACCORDANCE WITH THE NOTICE REQUIREMENTS OF SECTION 16
OF THIS AGREEMENT.
16. Notices. Any notice which any party hereto may be required or may
desire to give hereunder shall be delivered personally, or by overnight express
courier, addressed in the case of Guarantor to:
Lodgian, Inc.
Two Live Oak Center
3445 Peachtree Road, NE
Suite 700
Atlanta, Georgia 30326
with a copy to:
Stearns, Weaver, Miller, Weissler,
Alhadeff & Sitterson, P.A.
Museum Tower
<PAGE>
150 West Flagler Street
Miami, Florida 33130
Attention: Robert Weissler, Esq.
in the case of Lender to:
Banc One Capital Funding Corporation
150 East Gay Street, 24th Floor
Columbus, Ohio 43215
Attention: Loan Servicing
<PAGE>
with a copy to:
Banc One Capital Markets, Inc.
150 East Gay Street, 24th Floor
Columbus, Ohio 43215
Attention: Legal Department and Real Estate Group
or at such other addresses or to the attention of such other persons as may from
time to time be designated by the party to be addressed by written notice to the
other in the manner herein provided. Notices, demands and requests given in the
manner aforesaid shall be deemed sufficiently served or given for all purposes
hereunder when received or when delivery is refused or when the same are
returned to sender for failure to be called for.
17. Miscellaneous.
(a) This Agreement may not be modified, altered or amended nor may
any provision hereof or rights hereunder be waived, except by an instrument in
writing signed by the person or entity against which such modification,
alteration, amendment or waiver is sought to be enforced.
(b) Except as provided in Section 6 above, this Agreement shall
terminate upon the irrevocable payment by Borrower to Lender of all amounts
evidenced by the Note and the other Loan Documents.
IN WITNESS WHEREOF, the undersigned has caused this instrument to be duly
executed as of the date first written above.
GUARANTOR:
LODGIAN, INC.,
a Delaware corporation
By: /s/ Toni Jones
----------------------------------
Name: Toni Jones
Title: Vice President
<PAGE>
Exhibit 10.4.1
LOAN AGREEMENT
IN THE AMOUNT OF $4,199,869
Dated December 8, 1998
BETWEEN
ISLAND MOTEL ENTERPRISES, INC.
AND
PENMOCO, INC.
BORROWER
AND
BANC ONE CAPITAL FUNDING CORPORATION
LENDER
<PAGE>
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS 1
Defined Terms 1
ARTICLE 2 BORROWER'S REPRESENTATIONS, WARRANTIES AND COVENANTS 8
Representations, Warranties and Covenants 8
Representations Remade 14
ARTICLE 3 GENERAL CONDITIONS OF LOAN 14
Loan Documents 14
Additional Requirements 14
ARTICLE 4 FURTHER COVENANTS OF BORROWER 17
Covenants. 17
ARTICLE 5 AGREEMENT TO LEND 27
Agreement to Lend 27
ARTICLE 6 INSURANCE AND CASUALTY 27
Insurance Provisions 27
ARTICLE 6A RENOVATION WORK 33
6A.1 Construction 33
6A.2 Completion 33
6A.3 Compliance with Laws 33
6A.4 Other Remedies of Lender 33
ARTICLE 7 BORROWER'S DEFAULT 34
7.1. Events of Default 34
7.2. Remedies 35
ARTICLE 8 MISCELLANEOUS 37
8.1 Indemnification 37
8.2 Defense of Claims 37
8.3 Performance by Lender 37
8.4 Transfer or Assignment 38
8.5 Lender's Actions 38
8.6 Time is of the Essence 38
8.7 Waivers 38
8.8 Notices 39
8.9 Successors and Assigns 39
8.10 No Partnership 40
8.11. Brokerage Claims 40
8.12 Publicity 40
8.13 Documents Satisfactory to Lender 40
8.14 Additional Assurances 40
8.15 Entire Agreement 40
8.16 Severability 40
<PAGE>
8.17 No Third Party Beneficiary 40
8.18 CHOICE OF LAW 41
8.19 Limitation on Liability 41
8.20 WRITTEN AGREEMENT 43
8.21 Intentionally Omitted 43
8.22 Intentionally Omitted 43
8.23 Intentionally Omitted 43
8.24 WAIVER OF JURY TRIAL 43
8.25 Consent to Jurisdiction 44
Exhibit A Legal Description
Exhibit B-1 Additional Note
Exhibit B-2 Primary Note
Exhibit C Permitted Encumbrances
Exhibit D Insurance Requirements
Exhibit E Renovation Work
Schedule 1 Description of Ground Lease
<PAGE>
THIS LOAN AGREEMENT (this "Agreement") is dated effective as of December
8, 1998 between ISLAND MOTEL ENTERPRISES, INC., a Georgia corporation ("IME"),
and PENMOCO, INC., a Michigan corporation ("PI"), each with an office and
principal place of business at Two Live Oak Center, 3445 Peachtree Road, NE,
Suite 700, Atlanta, Georgia 30326 and BANC ONE CAPITAL FUNDING CORPORATION, an
Ohio corporation having a principal place of business at 150 East Gay Street,
24th Floor, Columbus, Ohio 43215 ("Lender"). IME and PI are sometimes
hereinafter referred to collectively as "Borrower."
R E C I T A L S
The Borrower desires to borrow from Lender up to $4,199,869 for the
financing and renovation of that certain piece or parcel of real property
located at 200 South Beachview Drive, Jekyll Island, Georgia 31527 (the "Land"),
known as the Holiday Inn Jekyll Island (the "Hotel") consisting of a 199-room
hotel and all other improvements located thereon and together with all
furniture, equipment and other personal property now or hereafter used in the
management and operation of the Hotel (the "Personal Property"). The Land and
the Improvements (as defined below) are hereinafter collectively referred to as
the "Premises." The Premises and the Personal Property are hereinafter
collectively referred to as the "Property." Lender has agreed to make the loan
to Borrower pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the covenants,
conditions and agreements contained herein, Borrower and Lender agree as
follows:
ARTICLE 1
DEFINITIONS
Defined Terms. In this Agreement, the following terms shall have the
following meanings:
"Accounting Period" -- shall mean each of the four (4) week periods
designated by Borrower as a fiscal period of the Hotel, except that an
Accounting Period may occasionally contain five (5) weeks when necessary to
conform Borrower's accounting system to the calendar.
"Additional Note" -- the Promissory Note from Borrower to Lender of even
date herewith in the stated principal amount of Five Hundred Three Thousand Nine
Hundred Eighty Four Dollars ($503,984). A copy of the Additional Note is
attached hereto as Exhibit B-1.
"Advance" -- an advance by Lender to Borrower in accordance with the Note
or this Agreement.
<PAGE>
"Affiliate" -- of any person or entity shall mean any other person or
entity directly or indirectly controlling, under common control with, or
controlled by such person or entity. For purposes of the definition of
Affiliate, "control" when used with respect to any person or entity means the
power to direct the management and policies of such person or entity, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
relative to the foregoing.
"Assignment of Accounts" -- the Assignment of Accounts and Security
Agreement of even date herewith from Borrower to Lender.
"Assignment of Permits and Contracts" -- the Assignment of Licenses,
Permits and Contracts, (specifically including the management agreement relating
to the Property) of even date herewith from Borrower to Lender.
"Assignment of Leases" -- the Assignment of Leases and Rents of even date
herewith from Borrower to Lender.
"Bankruptcy Code" -- the United States Bankruptcy Code and any similar
state or federal law now or hereafter in effect relating to bankruptcy,
reorganization or insolvency, or the arrangement or adjustment of debts.
"Business Day" -- any day other than a Saturday, Sunday or legal holiday
on which commercial banks are authorized or required to be closed in Columbus,
Ohio.
"Calculation Date" -- January 20, 2000, and the twentieth day of every
third Loan Month thereafter prior to the Maturity Date.
"Calculation Period" -- the period of twelve (12) full calendar months
immediately preceding the calendar month which includes the Calculation Date.
"Capital Reserve" -- the furniture, fixtures and equipment reserve to be
held by Lender pursuant to the terms and conditions of Section 4.1.T.
"Cash Management Agreement" -- that certain Cash Management Agreement
dated January 31, 1995 among Servico, Inc., Servico Management Corporation and
certain of their subsidiaries and affiliates, including Borrower, as amended
November 24, 1998.
"Closing" -- the closing of the Loan contemplated by this Agreement.
"Cross-Guaranty" -- the Guaranty Agreement of even date herewith from the
Related Parties to Lender in connection with the Loan.
"Code" -- the Internal Revenue Code of 1986, as amended, and the
Regulations promulgated thereunder.
"Costs" -- costs and expenses incurred directly relating to the
Renovation Work.
<PAGE>
"Deferred Origination Fee" -- a deferred origination fee in the amount of
$73,917.70 payable to Lender in accordance with Section 4.Y.
"DSCR" -- the debt service coverage ratio as determined by Lender on each
Calculation Date by calculating the ratio of (x) the Net Operating Income from
the Property for the immediately preceding thirteen (13) Accounting Periods, to
(y) the sum of the payments of interest which are due and payable under the
Primary Note for the immediately following twelve (12) Loan Months.
"Default Rate" -- see Section 1 of the Primary Note.
"Environmental Indemnity" -- the Hazardous Substances Indemnity Agreement
of even date herewith from Borrower and Guarantors to Lender.
"Environmental Site Assessment Report" -- the Phase I Environmental
Site Assessment Report dated September 8, 1998, prepared by Building Evaluation
Services & Technology, Inc.
"Estoppel Agreement" -- an Estoppel Agreement with respect to the Ground
Lease executed by the Ground Lessor in form and substance acceptable to the
Lender.
"Event of Default" -- the occurrence of any one or more of the events
set forth in Section 7.1.
"Financing Statements" -- the UCC-1 Financing Statements naming Borrower
as debtor and Lender as secured party and filed with the office of the Glynn
County Clerk of Superior Court, Georgia in connection with the Mortgage, the
Security Agreement, the Assignment of Leases, the Assignment of Permits and
Contracts, and the Assignment of Accounts.
"Franchise Agreement" -- that certain Franchise Agreement dated November
26, 1991, between Borrower and Franchisor relating to the Property.
"Franchisor" -- Holiday Hospitality Franchising, Inc.
"Governmental Authority" -- the United States of America, the state in
which the Property is located, the state under the laws of which Borrower is
organized, any state in which (or to residents of which) Borrower offers to sell
or lease any portion of the Property or Improvements have been or will be made
by or on behalf of Borrower, any political subdivision of any of them, and any
court, agency, department, commission, board, bureau or instrumentality of any
of them.
"Gross Revenues" -- for each Accounting Period shall mean all rents,
revenues and other payments earned by Borrower in cash or current funds or other
consideration from any source whatsoever in connection with its ownership,
operation and management of the Property, including all amounts earned by
Borrower from all tenants or other occupants of the Property. Gross Revenues
shall be determined on an accrual basis and in accordance with generally
accepted accounting principles consistently applied. <PAGE>
"Ground Lease" -- that certain lease more particularly described in
Schedule 1.
"Ground Lessor" -- Jekyll Island-State Park Authority.
"Guarantor" -- Lodgian, Inc., a Delaware corporation.
"Impac Loan" -- collectively, all outstanding indebtedness owing to
Banc One Capital Partners III, Ltd. or its Affiliates by Impac Hotel Group,
L.L.C.
"Impositions" -- all taxes of every kind and nature, sewer rents, charges
for water, for setting or repairing meters and for all other utilities serving
the Premises, and assessments, levies, inspection and license fees and all other
charges imposed upon or assessed against the Premises or any portion thereof
(including the income derived from the Premises), and any stamp or other taxes
which might be required to be paid with respect to any of the Loan Documents,
any of which might, if unpaid, result in a lien on the Premises or any portion
thereof, regardless of to whom assessed.
"Improvements" -- the improvements existing upon the Land.
"Incipient Default" -- the existence of any condition or state of facts
which with the giving of notice by Lender or the passage of time, or both, would
constitute an Event of Default.
"Indebtedness" -- all indebtedness, obligations, liabilities, amounts,
sums and expenses payable by Borrower under the Note, this Agreement and every
other Loan Document, together with interest thereon in accordance with the terms
and conditions of the Loan Documents.
"Interest Rate" -- shall mean the Interest Rate as defined in the Primary
Note.
"Knowledge of Borrower" -- any matter actually known or, with the exercise
of reasonable care or diligence, should have been known, to the Borrower or the
Guarantor.
"Lease" -- any lease (including any equipment lease) or other rental or
occupancy agreement, demising a portion of the Property, other than those with
hotel guests and the Ground Lease.
"Lender's Consultant" -- the architect or engineer retained by Lender to
inspect the Improvements or the Renovation Work on behalf of Lender; in the
event all or a portion of such functions are performed by Lender, references in
this Agreement to Lender's Consultant shall be deemed to such extent to be
references to Lender.
"Limited Guaranty" -- the Limited Guaranty and Indemnity Agreement of even
date herewith from Guarantor to Lender in connection with the Loan.
"Liquor License Agreement" -- the Liquor License Agreement of even date
herewith between Lender and Borrower.
<PAGE>
"Loan" -- the loan evidenced by the Note and this Agreement.
"Loan Amount" -- Four Million One Hundred Ninety Nine Thousand Eight
Hundred and Sixty Nine Dollars ($4,199,869).
"Loan Documents" -- this Agreement, the Note, the Environmental Indemnity,
the Liquor License Agreement, the Cross Guaranty, the Stock Pledge, the Limited
Guaranty, the Mortgage, the Security Agreement, the Assignment of Leases, the
Assignment of Permits and Contracts, the Assignment of Accounts, the Financing
Statements and such other documents and agreements as Lender may require in
connection with the Loan.
"Loan Month" -- See Section 1 of the Primary Note.
"Loan Party" -- Borrower or the Guarantor.
"Management Agreement" -- the Consulting Agreement effective October 5,
1993, and amended November 24, 1998, by and between Borrower and Manager.
"Manager" -- Servico Management Corp., a Florida corporation.
"Maturity Date" -- See Section 1 of the Additional Note and the Primary
Note, as applicable.
"Mortgage" -- the Leasehold Deed to Secure Debt and Security Agreement of
even date herewith from Borrower to Lender on the Premises, securing the Note
and Borrower's obligations under the other Loan Documents.
"Net Cash Flow" -- for each Accounting Period shall mean Net Operating
Income reduced by all monthly payments of interest under the Note and all other
payments under the Note and the other Loan Documents actually paid by Borrower
and received by Lender during such Accounting Period.
"Net Operating Income" -- for each Accounting Period shall be calculated
by Lender based upon Lender's review of Borrower's monthly financial statements
provided to Lender pursuant to Section 4.1.K, together with such other
information as Lender may reasonably request, and shall mean the difference
between:
(1) the Gross Revenues for said Accounting Period; and
(2) all the Operating Expenses for said Accounting Period.
"Note" -- collectively, the Primary Note and the Additional Note.
<PAGE>
"Operating Expenses" -- the reasonably necessary and customary costs and
expenses incurred, whether or not actually paid, by Borrower in connection with
its ownership, operation and management of the Property, determined on an
accrual basis and in accordance with generally accepted accounting principles
consistently applied and specifically including in Operating Expenses all
required payments made by Borrower into the Capital Reserve pursuant to Section
4.l.T of this Agreement, any payments made pursuant to Section 4.l.B of the
Agreement and any other reserve established pursuant to this Agreement;
specifically excluding from Operating Expenses, however (w) all capital
expenditures incurred by Borrower (x) principal, interest and all other payments
made under the Loan Documents, and costs and expenses incurred by Borrower in
connection with the closing of the Loan, and (y) depreciation and all other
non-cash expenses of the Property. For purposes of calculating DSCR, Lender
shall include Operating Expenses which were budgeted for the applicable
Accounting Period(s) and were incurred but not paid. Operating Expenses which
are paid less frequently than each Accounting Period and which are allocable
evenly to each Accounting Period may be prorated to reflect such allocation.
"Organizational Documents" -- the articles of incorporation, bylaws and
other organizational documents, and any amendments or modifications thereto, of
IME and PI.
"Permitted Encumbrances" -- the liens, claims, assessments, encumbrances
and rights of others encumbering title to the Premises and the Personal Property
which are set forth on Exhibit C.
"Permitted Transfers" -- any transfer, sale or issuance of stock in
Lodgian, Inc., a Delaware corporation.
"Primary Note" -- the Promissory Note from Borrower to Lender of even date
herewith in the stated principal amount of Three Million Six Hundred Ninety Five
Thousand Eight Hundred and Eighty Five Dollars ($3,695,885). A copy of the
Primary Note is attached hereto as Exhibit B-2.
"Principal Amortization Reserve" -- the reserve of funds which may be held
and disbursed by Lender pursuant to Section 4.l.R.
"Proceeds" -- all proceeds, judgments, claims, compensation, awards or
damages and settlements with respect to the Property as a result of or in lieu
of any condemnation or taking of the Property or any portion thereof by eminent
domain or any casualty loss or damage to any of the Property or any portion
thereof.
"Related Parties" -- Lodgian AMI, Inc., a Maryland corporation, and
Servico Concord, Inc., a California corporation.
"Related Party Loan Documents" -- all documents, instruments or agreements
securing or evidencing the Related Party Loans from the Lender to the Related
Parties.
<PAGE>
"Related Party Loans" -- that (i) certain loan to Lodgian AMI, Inc. of
even date herewith in the original aggregate principal amount of $35,073,117 and
secured by the Holiday Inn - Inner Harbor, (ii) certain loan to Lodgian AMI,
Inc. of even date herewith in the original aggregate principal amount of
$15,740,722 and secured by the Holiday Inn International Airport, (iii) certain
loan to Lodgian AMI, Inc. of even date herewith in the original aggregate
principal amount of $3,322,817 and secured by the Holiday Inn Glen Burnie North,
(iv) certain loan to Lodgian AMI, Inc. of even date herewith in the original
aggregate principal amount of $5,214,292 and secured by the Holiday Inn Visitors
Center/Lancaster East, and (v) certain loan to Servico Concord, Inc. of even
date herewith in the original aggregate principal amount of $8,449,183 and
secured by the Sheraton Hotel Concord.
"Related Party Properties" -- the Holiday Inn - Inner Harbor in Baltimore,
Maryland, the Holiday Inn International Airport in Linthicum Heights, Maryland,
the Holiday Inn - Glen Burnie North in Glen Burnie, Maryland, the Holiday Inn
Visitors Center/Lancaster East in Lancaster, Pennsylvania, and the Sheraton
Hotel Concord in Concord, California.
"Renovation Budget" -- the budget for the Renovation Work to be prepared
by the Borrower and delivered to Lender for its review and approval prior to the
Closing.
"Renovation Completion" -- the completion of the Renovation Work in
accordance with the requirements of Article 6A.
"Renovation Completion Date" -- September 30, 1999, the date on which all
of the Renovation Work is required to be completed in accordance with Article 6A
hereof.
"Renovation Plans" -- the plans and specifications for the Renovation Work
to be prepared by the Borrower and delivered to the Lender for its review and
approval prior to the Closing.
"Renovation Work" -- the work and projects described in Exhibit E.
"Required Coverage Standard" -- shall mean 1.25:1 for all Calculation
Dates on or before January 20, 2000 and 1.40:1 for all Calculation Dates
subsequent to January 20, 2000.
"Reserved Funds" -- all Net Cash Flow held by Lender pursuant to the terms
and conditions of Section 4.1.R.
"Security Agreement" -- the Security Agreement of even date herewith from
Borrower, as debtor, to Lender, as secured party.
"Stock Pledge" -- the Pledge of Stock executed by Servico Operations
Corporation pursuant to which Servico Operations Corporation pledges the Stock
of the Borrower and each Related Party to secure the obligations of Borrower
with respect to the Loan and the Related Party Loans.
"Title Company" -- Lawyers Title Insurance Corporation.
"Title Policy" -- a mortgagee's policy of title insurance issued on the
1992 ALTA form by the Title Company in the aggregate face amount of $4,199,869,
guaranteeing as of the date of the Closing, the Mortgage to be a valid first and
prior lien on Borrower's leasehold interest in the <PAGE>
Premises (including any easements appurtenant thereto) subject only to the
Permitted Encumbrances. The Title Policy shall contain such endorsements as
Lender may reasonably require.
In this Agreement, the word "including" shall mean "including without
limitation."
ARTICLE 2
BORROWER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Representations, Warranties and Covenants. Borrower hereby represents,
covenants and warrants as follows:
Accuracy of Recitals. Each of the recitals to this Agreement is true and
correct.
Organization of Borrower. IME is a corporation duly organized, validly
existing and in good standing under the laws of the State of Georgia. PI is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Michigan. Each Borrower is and at all times prior to the
repayment of the Loan shall remain a single purpose entity, so called, whose
sole asset is the Property and whose sole business interest is the ownership of
a leasehold interest in, and operation of, the Property. Borrower has provided
Lender with a true and accurate copy of the Organizational Documents. The status
of IME as a duly organized and validly existing corporation under Georgia law
will not be terminated. The status of PI as a duly organized and validly
existing corporation under Michigan law will not be terminated. Borrower shall
not amend the Organizational Documents in any material respect, without the
Lender's prior written consent.
Authority and Enforceability. Borrower has full right, power and authority
to execute, deliver and carry out the terms and provisions of this Agreement and
the other Loan Documents and every other document and instrument to be executed
and delivered by Borrower pursuant to this Agreement. The person executing and
delivering this Agreement and the Loan Documents on behalf of Borrower is duly
authorized to so act on behalf of Borrower. This Agreement, each other Loan
Document and every other document and instrument to be executed and delivered by
any Loan Party, when executed and delivered shall constitute the duly
authorized, valid and legally binding obligation of the party or parties
executing the same, enforceable in accordance with their respective terms,
subject only to applicable bankruptcy, reorganization, moratorium and similar
laws affecting the enforceability of creditors' rights generally.
Maintenance of Existence. Each Borrower shall do all things necessary to
preserve and keep in full force and effect its existence and all franchises,
licenses, authorizations, registrations, permits and approvals under the laws of
the state of its incorporation and the State of Georgia, and shall comply with
all regulations, rules, ordinances, statutes, orders and decrees of any
governmental authority or court applicable to Borrower and to the Property or
any portion thereof. <PAGE>
No Default. Neither Borrower nor any other Loan Party is in default under
any material contract, agreement or commitment to which it is a party or by
which it is bound. The execution and delivery of this Agreement and the other
Loan Documents and any other documents or instruments to be executed and
delivered by Borrower or any other Loan Party pursuant hereto or thereto, the
consummation of the transactions herein or therein contemplated and compliance
with the terms and provisions hereof or thereof, will not (i) violate any law or
any regulation, order, writ or injunction of any court or governmental or
administrative department, commission, board, bureau, agency or instrumentality,
or (ii) conflict or be inconsistent with, or result in a breach of any of the
provisions of, or constitute a default under, any instrument, document,
agreement, or contract of any kind to which Borrower or any other Loan Party is
a party or by which Borrower or any other Loan Party or any of their respective
property is bound.
No Litigation. There are no petitions, actions, suits, or proceedings
pending or, to the Knowledge of Borrower, threatened against or affecting
Borrower or any other Loan Party or the Property, by or before any court or any
governmental, administrative, regulatory, adjudicatory or arbitrational body or
agency (including any such petition, action, suit or proceeding to alter or
declare invalid any laws, regulations, permits, certificates, restrictions or
agreements relating to the Property) which, if determined against the Property,
the Borrower or the Loan Party, would reasonably likely have a material adverse
effect on the condition (financial or otherwise) or business of the Borrower or
the Loan Party or the condition or ownership of the Property.
Compliance with Laws. To the Knowledge of Borrower and except as may be
otherwise disclosed to the Lender in the Environmental Site Assessment Report,
the Title Policy, the survey or the zoning letter with respect to the Premises,
the use of the Property as a hotel with restaurant and bar does not violate (i)
any applicable law, regulation, ordinance or order of any kind whatsoever
(including any such relating to zoning, building and environmental protection),
(ii) any permit or license issued with respect to the Property, or (iii) any
condition, easement, right-of-way, covenant or restriction affecting the
Property.
Permits. To the Knowledge of Borrower, all necessary material and required
franchises, licenses, authorizations, registrations, permits and approvals for
the use and occupancy of the Premises have been obtained from all Governmental
Authorities having jurisdiction over the Premises so as to permit the operation
of the Property as herein contemplated. Borrower has provided Lender with true
and correct copies of all of the certificates of occupancy (to the extent
available) and the hotel operating license and liquor license respecting the
Property.
Title. Effective as of the Closing, Borrower will have good and
indefeasible leasehold interest in the Premises and good and indefeasible title
to all existing Personal Property, free and clear of all liens, claims,
assessments, encumbrances and rights of others other than the Permitted
Encumbrances. Borrower shall preserve such title to the Premises and the
Personal Property and will forever warrant and defend the same and the validity
and priority of the Mortgage to Lender against all claims whatsoever other than
the Permitted Encumbrances. <PAGE>
Easements. In addition to the Permitted Encumbrances, all proposed
easements, permits, licenses, and other instruments which would or might affect
the title to the Property have been submitted to Lender for Lender's approval
together with a survey showing the exact or, if applicable, proposed location
thereof. Borrower shall not subject the Property or any part thereof to any
restrictive covenant (including any restriction or exclusive use provision in
any lease or other occupancy agreement) without the prior written consent of
Lender.
Zoning. To the Knowledge of Borrower, and subject to any disclosures in
the zoning letters delivered to the Lender, (i) the Premises are zoned for hotel
use, which zoning is final, unconditional and in full force and effect, (ii) the
Premises are in compliance with all applicable zoning and land use laws,
regulations and ordinances, (iii) in the event that all or any part of the
Improvements are destroyed or damaged, said Improvements can be legally
reconstructed to their condition prior to such damage or destruction, and
thereafter exist for the same use without violating any zoning or other
ordinances applicable thereto and without the necessity of obtaining any
variances or special permits, (iv) the Property contains enough permanent
parking spaces to satisfy all requirements imposed by applicable laws with
respect to parking, (v) no legal proceedings are pending or threatened with
respect to the zoning of the Premises, and (vi) neither the zoning nor any other
right to construct, use or operate the Premises is in any way dependent upon or
related to any real estate other than the Premises. No tract map, parcel map,
condominium plan, condominium declaration, or plat of subdivision will be
recorded by Borrower with respect to the Premises without Lender's prior written
consent.
Complete Disclosure. Neither this Agreement nor any document, financial
statement, credit information, certificate or statement provided to Lender by
Borrower contains any untrue statement of material fact or omits to state a fact
necessary to make any statements made herein not misleading.
Agreements Affecting the Property. Borrower has provided Lender with true
and complete copies of all material contracts and agreements affecting the
Property, including, (i) the Management Agreement, (ii) all lease financings or
purchase money financings for equipment incurred as of the date hereof, and
(iii) all other contracts or agreements relating to the maintenance,
development, operation or management of the Property which either involve space
in excess of 1,000 square feet or payment obligations on the part of Borrower in
excess of $25,000 in any twelve (12) month period.
Brokerage Commissions. No brokerage fees or commissions are payable in
connection with the Loan.
Condemnation. Borrower has not received any notice from any Governmental
Authority or quasi-governmental body or agency or from any person or entity with
respect to (and Borrower does not know of) any actual or threatened taking of
the Premises, or any portion thereof, for any public or quasi-public purpose or
of any moratorium which may affect the use or operation of the Property.
<PAGE>
Year 2000 Compliance. All devices, systems, machinery, information
technology, computer software and hardware, and other date sensitive technology
(jointly and severally the "Systems") necessary for Borrower to carry on its
business as presently conducted and as contemplated to be conducted in the
future are Year 2000 Compliant or will be Year 2000 Compliant within a period of
time calculated to result in no material disruption of any of Borrower's
business operations. For purposes of these provisions, "Year 2000 Compliant"
means that such Systems are designed to be used prior to, during and after the
Gregorian calendar year 2000 A.D. and will operate during each such time period
without error relating to date data, specifically including any error relating
to, or the product of, date data which represents or references different
centuries or more than one century. Borrower: (1) has taken and continues to
undertake a detailed inventory, review, and assessment of all areas within its
business and operations that could be adversely affected by the failure of
Borrower to be Year 2000 Compliant on a timely basis; (2) is developing a
detailed plan and time line for becoming Year 2000 Compliant on a timely basis;
and (3) to date, has implemented that plan in accordance with timetable in all
material respects. The fair market value of all real and personal property, if
any, pledged to Lender as collateral to secure the Loan Agreement is not and
shall not be less than currently anticipated or subject to substantial
deterioration in value because of the failure of such collateral to be Year 2000
Compliant.
Access. Except as otherwise shown on the survey delivered to the Lender,
the Property has access to and full utilization of completed public roads
necessary for access to and full utilization of the Property for its intended
purposes.
Tax Division. A tax division has been effected with respect to the
Premises so that it is taxed for ad valorem taxation without regard to or
inclusion of any other property. No subdivision or other approval is necessary
with respect to the Premises in order for Borrower to mortgage, convey and
otherwise deal with the Premises as a separate lot or parcel.
Non-Foreign Status of Borrower. Borrower is not a non-resident alien for
purposes of U.S. income taxation and is not a foreign corporation, partnership,
foreign trust or foreign estate (as said terms are defined in the Code).
ERISA. Neither Borrower nor any Loan Party is a party to any plan defined
and regulated under the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") or Section 4975 of the Code. None of the assets of Borrower or
any Loan Party are "plan assets"" as defined in 29 C.F.R. ss.2509.75-2 or
ss.2510.3-101.
Mortgage. The Mortgage constitutes a valid and enforceable first lien on
Borrower's leasehold interest in the Premises, subject only to the Permitted
Encumbrances.
Security Interest. The Security Agreement and the Mortgage, together with
the Financing Statements filed in connection therewith, create a valid,
enforceable and perfected first priority security interest in the Collateral (as
defined therein) including the Personal Property, subject to no other interests,
liens or encumbrances other than the Permitted Encumbrances.
Intentionally Omitted.
Intentionally Omitted.
<PAGE>
Bankruptcy. No petition in bankruptcy, whether voluntary or involuntary,
or assignment for the benefit of creditors, or any other action involving
debtors' and creditors' rights has been filed or threatened under the laws of
the United States of America or any state thereof, against the Borrower or any
other Loan Party or against any other entity in which the Borrower or any other
Loan Party is a shareholder, principal, managing member or general partner.
Leases. There are no Leases affecting the Property. Borrower has not
executed any prior assignment of the Leases, nor has it performed any act or
executed any other instrument which might prevent Lender from operating under
any of the terms and conditions of the Assignment of Leases or which would limit
Lender in such operation; and Borrower further covenants and warrants to Lender
that Borrower has not executed or granted any modification whatsoever of the
Leases, except as herein indicated, and that the Leases are in full force and
effect, and that, except as otherwise disclosed to Lender in writing, there are
no defaults now existing under the Leases with respect to which Borrower has
notified the tenant under the Leases.
Physical Condition of Property. Subject to the Renovation Work, all of the
Improvements are in good condition and repair except as otherwise expressly
provided in the Property Condition Report dated as of September 8, 1998,
prepared by Building Evaluation Services & Technology, Inc. (the "Property
Condition Report"). Since the date of the Property Condition Report, there have
been no material adverse changes to the physical condition of the Improvements.
Borrower is aware of no latent or patent structural or other significant defect
or deficiency in such Improvements except as may be disclosed in the Property
Condition Report. Water supply, storm and sanitary sewers, and electrical, gas
and telephone facilities are available to the Property within the boundary lines
of the Property, are sufficient to meet the reasonable needs of the Property as
now used or contemplated to be used, no other utility facilities are necessary
to meet the reasonable needs of the Property as now used, and design and
as-built conditions of the Property are such that surface and storm water does
not accumulate on the Property and, except as disclosed in writing to Lender,
does not drain from the Property across land of adjacent property owners. Except
as otherwise disclosed in writing to Lender, no part of the Property is within a
flood plain and none of the Improvements create an encroachment over, across or
upon any of the Property's boundary lines, rights of way or easements, and no
building or other improvement on adjoining land create such an encroachment.
Mechanics' Liens. There are no mechanics' or materialmen's liens,
alienable bills or other claims constituting or that may constitute a lien on
the Property or any part thereof, and no work for which any such lien could be
asserted has been performed within the last 90 days, except as otherwise
disclosed in writing to Lender. <PAGE>
Payment of Liens. Borrower shall pay when due all payments and charges due
under or in connection with any liens and encumbrances on and security interests
in the Property or any portion thereof, all rents and charges under any ground
leases and other leases forming a part of the Property, and all claims and
demands of mechanics, materialmen, laborers and others which, if unpaid, might
result in or permit the creation of a lien on the Property or any portion
thereof, and shall cause the prompt (but in no event later than 30 days after
imposition), full and unconditional discharge of all liens imposed on or against
the Property or any portion thereof. Borrower shall do or cause to be done, at
the sole cost of Borrower, everything necessary to fully preserve the initial
priority of the Mortgage. If Borrower fails to make any such payment or if a
lien (other than a Permitted Encumbrance) attaches to the Property or any
portion thereof, Lender may (but shall not be obligated to) make such payment or
discharge such lien and Borrower shall reimburse Lender on demand for all such
Advances.
Commercial Purpose. Borrower holds its interests in the Property for
commercial or investment purposes.
Franchise Agreement. Borrower has provided Lender with a true and complete
copy of the Franchise Agreement and any other agreements with the Franchisor
related to the Property. The Franchise Agreement is in full force and effect and
free from default on the part of the Borrower. The Franchise Agreement embodies
the entire transaction between Borrower and the Franchisor with respect to the
operation of the Property. Borrower shall not modify, amend or waive any
provisions of the Franchise Agreement without Lender's prior written consent.
Borrower will promptly furnish Lender with copies of all notices furnished to
Borrower under the Franchise Agreement. The term of the existing Franchise
Agreement expires on January 10, 2000. Borrower agrees to cause such term to be
extended for a period not less than ten (10) years from the date hereof, unless
otherwise agreed in writing by Lender.
Management Agreement. Borrower has provided Lender with a true and
complete copy of the Management Agreement. The Management Agreement is in full
force and effect and free from default on the part of the Borrower and Manager.
The Management Agreement embodies the entire transaction between Borrower and
Manager with respect to the operation of the Property. Borrower shall not
terminate, modify, amend or waive any provisions of the Management Agreement
without Lender's prior written consent. Borrower will promptly furnish Lender
with copies of all notices furnished to Borrower under the Management Agreement.
Ground Lease. Borrower has provided Lender with a true and complete copy
of the Ground Lease, and there are no documents, agreements, or other
modifications to the Ground Lease other than those listed under the definition
of Ground Lease contained in this Agreement. The Ground Lease is in full force
and effect and free from default on the part of Borrower and the Ground Lessor,
and, to the Knowledge of Borrower, no events have occurred which, with the
passage of time, would constitute a default under the Ground Lease. The Borrower
shall provide to the Lender copies of all notices (including, without
limitation, notices of defaults by Borrower) received with respect to the Ground
Lease within five (5) Business Days of Borrower's receipt of the same. The
Ground Lease embodies the entire transaction between Borrower and the Ground
Lessor with respect to the Property. The amount of rental payable under the
Ground Lease and the terms of the Ground Lease, are as set forth under the
definition of Ground Lease. Borrower shall not modify, amend or waive any
provisions of the Ground Lease without the Lender's prior written consent.
<PAGE>
Liquor License. Borrower has provided Lender with a true and complete copy
of the liquor license with respect to the Property. Said liquor license is in
full force and effect and free of all liens and encumbrances. To the Knowledge
of Borrower, Borrower is in compliance with all terms and conditions of said
liquor license.
Representations Remade. Borrower warrants and covenants that the foregoing
representations and warranties will be true and shall be deemed remade as of the
date of the Closing. All representations, warranties and covenants made herein
or in any other Loan Document or in any certificate or other document delivered
to Lender by or on behalf of Borrower pursuant to or in connection with this
Agreement or any other Loan Document shall be deemed to have been relied upon by
Lender, notwithstanding any investigation heretofore or hereafter made by or on
behalf of Lender. All such representations, warranties and covenants shall
survive the making of the Loan and any or all of the Advances contemplated
hereby and shall continue in full force and effect until such time as the Loan
has been paid in full.
ARTICLE 3
GENERAL CONDITIONS OF LOAN
Loan Documents. It shall be a condition precedent to Lender's obligation
to make the Loan that at or before the Closing, Borrower shall execute and
deliver or cause to be duly executed and delivered to Lender all of the Loan
Documents and that all of the Loan Documents shall be in form and substance
satisfactory to Lender.
Additional Requirements. In addition to the Loan Documents, prior to the
Closing, Borrower shall deliver or cause to be delivered to Lender each of the
following, all of which shall be in form and substance satisfactory to Lender:
Title Policy. The Title Policy or a pro-forma policy evidencing the same
and satisfactory to the Lender in its sole discretion.
Survey. A current, as built survey of the Premises, certified to Lender
and the Title Company by a surveyor reasonably satisfactory to Lender, which
survey shall contain the minimum detail for land surveys as most recently
adopted by ALTA/ASCM, and which survey shall comply with Lender's survey
requirements and shall contain Lender's standard form certification. Said survey
shall show no state of facts or conditions reasonably objectionable to Lender.
Opinion. An opinion of Borrower's and Guarantor's counsel dated the date
of the Closing and relating to such matters with respect to this Agreement and
the transaction contemplated hereby (including usury and choice of laws) as
Lender may reasonably require. By its execution and delivery of this Agreement,
Borrower authorizes and directs such counsel to render such opinion.
Insurance. The insurance policies described on Exhibit D or certificates
of insurance evidencing the same, including without limitation, evidence of
insurance protection against the risks of hurricanes, satisfactory to Lender in
its sole discretion.
<PAGE>
UCC Searches. Uniform Commercial Code searches made in the States of
Georgia and Michigan showing no filings relating to (i) the Personal Property,
(ii) any fixtures on the Premises, or (iii) the Collateral (as such term is
defined in the Security Agreement), other than those made pursuant to this
Agreement or otherwise approved by Lender in its sole discretion.
Organizational Documents. A certified copy of the Organizational
Documents, together with such other documents as Lender may require, including
evidence of PI's good standing in the State of Michigan and IME's good standing
in the State of Georgia, and resolutions authorizing the Loan transaction
contemplated by this Agreement.
Ground Lease. A copy of the Ground Lease certified by the Borrower to be
true, complete and accurate.
Appraisal and Engineer's Report. An independent appraisal of the Property
from a state certified appraiser engaged by Lender which indicates the fair
market value of the Property and is satisfactory to Lender in all respects, and
an engineer's report satisfactory to the Lender.
Environmental Assessment. The Environmental Site Assessment Report, a
letter from the consultant preparing the environmental site assessment stating
that Lender is authorized to rely on the information contained therein, and
evidence satisfactory to Lender of said environmental consultant's errors and
omissions insurance coverage.
Subordination of Management Agreement. A copy of the Management Agreement
(certified by the Borrower to be true, complete and accurate), together with a
subordination of the Management Agreement whereby the Management Agreement is
subordinated to the Mortgage and Lender is given the right to terminate the
Management Agreement or any replacement thereof upon the occurrence of an Event
of Default, without payment of any termination or other fee or other liability
on the part of Lender.
Leases/Subordination Agreements and Estoppels. Copies of all Leases, which
shall be satisfactory to Lender and certified by Borrower to be true, complete
and accurate, together with (i) an estoppel certificate executed by the tenant
under each Lease in form and substance reasonably satisfactory to Lender, and
(ii) a subordination, nondisturbance and attornment agreement executed by each
such tenant in form and substance reasonably satisfactory to Lender.
Licenses, Permits and Approvals. A final, unconditional certificate of
occupancy (if available) issued with respect to the Premises, together with the
hotel operating license and liquor license respecting the Property.
Agreements. Copies of all agreements described in Section 2.1M certified
by the Borrower to be true, complete and accurate.
<PAGE>
Zoning. Evidence reasonably satisfactory to Lender as to the zoning
compliance of the Premises.
Lender's Inspection. A satisfactory inspection report of the Premises
prepared by an architect/engineer or other consultant reasonably satisfactory to
Lender.
Equity Contribution. Evidence satisfactory to Lender that the Borrower or
its Affiliate originally acquired the Property for not less than $5,900,000.
Financial Statements. Current financial statements satisfactory to the
Lender for the Borrower, and the Guarantor.
Renovation Budget and Plans. A copy of the Renovation Budget and the
Renovation Plans satisfactory to the Lender.
Franchise Agreement. A copy of the Franchise Agreement certified by the
Borrower to be true, complete and accurate.
Compliance with Laws. Evidence that the Property is in compliance with all
applicable laws, zoning and land use requirements, regulations and ordinances,
including all applicable environmental protection laws and the Americans with
Disabilities Act of 1990 (except as stated in the Environmental Site Assessment
Report).
Flood Hazards. Evidence as to whether or not the Property is or is to be
located in an area having special flood hazards as such term is used in the
federal Flood Disaster Protection Act of 1973. If any part of the Property is or
is to be located in an area having "special flood hazards," a flood insurance
policy or certificate thereof naming the Lender as mortgagee must be submitted
to the Lender.
Fees and Expenses. Payment by Borrower of all applicable mortgage and
recording taxes and all fees and charges in connection with the Loan, including
all fees and charges of Lender's legal counsel.
Ground Lease Estoppel. The originally executed Estoppel Agreement.
Intentionally Omitted.
Intentionally Omitted.
Payment of Impac Loan. Evidence of payment in full of the Impac Loan and
all fees associated therewith in accordance with the requirements of the
intercreditor agreement(s) executed in connection therewith.
<PAGE>
Other Items. Such other documents and instruments as Lender may reasonably
require.
ARTICLE 4
FURTHER COVENANTS OF BORROWER
Covenants. Borrower hereby further covenants and agrees with Lender as
follows:
Taxes and Impositions.
Borrower shall pay and discharge all Impositions prior to
delinquency. Borrower shall provide to Lender validated receipts or other
evidence satisfactory to Lender showing the payment of all real estate and
personal property taxes within 15 days after the same would otherwise have
become delinquent. Borrower's obligation to pay Impositions pursuant to this
Agreement shall include, to the extent permitted by applicable law, taxes
resulting from future changes in law which impose upon Lender an obligation to
pay any property taxes or other Impositions. Should Borrower default in the
payment of any Impositions, Lender may (but shall not be obligated to) pay such
Impositions or any portion thereof and Borrower shall reimburse Lender on demand
for all such Advances.
Borrower shall not be required to pay, discharge or remove any
Imposition so long as Borrower contests in good faith such Imposition or the
validity, applicability or amount thereof by an appropriate legal proceeding
which operates to prevent the collection of such amounts and the sale of the
Property or any portion thereof; provided, however, that prior to the date on
which such Imposition would otherwise have become delinquent Borrower shall have
(i) given Lender prior written notice of such contest, and (ii) provided
reasonable evidence to Lender that Borrower has available funds to pay the
balance of such Imposition then remaining unpaid, and all interest, penalties,
costs and charges accrued or accumulated thereon. Any such contest shall be
prosecuted with due diligence, and Borrower shall promptly pay the amount of
such Imposition as finally determined, together with all interest and penalties
payable in connection therewith. Notwithstanding any provision of this Section
4.1.A to the contrary, Borrower shall pay any Imposition which it might
otherwise be entitled to contest if, in the reasonable discretion of Lender, the
Property is in jeopardy or in danger of being forfeited or foreclosed. If
Borrower refuses to pay any such Imposition, Lender may (but shall not be
obligated to) make such payment and Borrower shall reimburse Lender on demand
for all such Advances.
Deposits.
<PAGE>
Borrower shall provide Lender with evidence of the timely payment of
all insurance premiums. For so long as Borrower's insurance coverages are part
of blanket coverages with other properties, Borrower shall not be required to
deposit in escrow any insurance premiums. Initially, so long as (i) Borrower
provides Lender with evidence of the timely payment of all real estate and
personal property taxes and (ii) Borrower is not required to make payments of
Reserve Funds pursuant to Section 4.1.R as of the most recent Calculation Date,
Borrower shall not be required to deposit in escrow any funds for real estate
and personal property taxes as hereinafter provided; provided, however, Lender,
in its sole discretion, may at any time require Borrower to do the following:
Deposit with Lender (or such agent of Lender as Lender may designate
in writing to Borrower from time to time), monthly, on the due date
of each monthly installment under the Note, 1/12th of the annual
charges (as estimated by Lender) for all real estate and personal
property taxes; and
Deposit with Lender, simultaneously with such above-referenced
monthly deposits, a sum of money which together with such monthly
deposits will be sufficient to make the payment of each such charge
at least 30 days prior to the date initially due. Should such
charges not be ascertainable at the time any deposit is required to
be made, the deposit shall be made on the basis of the charges for
the prior year or payment period, as reasonably estimated by Lender.
When the charges are fixed for the then current year or period,
Borrower shall deposit any deficiency on demand.
Any interest earned on the sums held by Lender pursuant to this
Section 4.1.B shall be added to said sums and shall be taxable to Borrower, and
shall, so long as no Event of Default shall have occurred, be disbursed by
Lender for the payment of the applicable real estate and personal property
taxes. Should an Event of Default occur, the funds so deposited may be applied
in payment of the charges for which such funds shall have been deposited or to
the payment of the Indebtedness or any other charges affecting the Property, as
Lender in its sole and absolute discretion may determine, but no such
application shall be deemed to have been made by operation of law or otherwise
until actually made by Lender as herein provided. Borrower shall provide Lender
with bills and all other documents necessary for the payment of the foregoing
charges at least 30 days prior to the date on which each payment thereof shall
first become due or promptly upon receipt of such bill.
Mortgage Taxes. Borrower shall pay any and all taxes, charges, filing,
registration and recording fees, excises and levies imposed upon Lender by
reason of their respective interests in, or measured by amounts payable under,
the Note, this Agreement, the Mortgage or any other Loan Document (other than
income, franchise and doing business taxes), and shall pay all stamp taxes and
other taxes required to be paid on the Note, this Agreement, the Mortgage or the
other Loan Documents. If Borrower fails to make such payment within five days
after notice thereof from Lender, Lender may (but shall not be obligated to) pay
the amount due, and Borrower shall reimburse Lender on demand for all such
Advances. If applicable law prohibits Borrower from paying such taxes, charges,
filing, registration and recording fees, excises, levies, stamp taxes or other
taxes, then Lender may declare the Indebtedness then unpaid to be due and
payable upon one hundred twenty (120) days prior written notice. In such event,
no prepayment fee shall be charged. <PAGE>
No Liens. Except for Permitted Encumbrances, and except as provided in
Section 4.1.F and Section 4.1.O, the Property shall be kept free and clear of
all liens, security interests and encumbrances of every nature or description
(whether for taxes or assessments, or charges for labor, materials, supplies or
services or any other thing). Other than the Permitted Encumbrances, Borrower
will not cause or permit any instrument or document affecting the Property to be
recorded without Lender's prior written consent thereto.
Condition of Premises. Consistent with current practice and industry
standards, Borrower shall keep and maintain the Property in good order,
condition and repair and shall make, as and when the same shall become
necessary, all structural and non-structural, exterior and interior, ordinary
and extraordinary, foreseen and unforeseen, repairs and maintenance necessary or
appropriate. Borrower shall suffer or commit no waste upon the Premises or any
portion thereof. Borrower shall, at its expense, promptly repair, restore,
replace or rebuild any part of the Property which may be damaged or destroyed by
any casualty (provided that, to the extent Borrower is entitled to receive
insurance Proceeds in accordance with the provisions of Article 6, such proceeds
are made available to Borrower) or as the result of any taking under the power
of eminent domain to the extent permitted given the size, scope and extent of
the taking. Borrower shall cause all repairs, maintenance, rebuilding,
replacement or restoration to be (in the reasonable opinion of Lender) of
substantially equivalent quality and to be performed in compliance with all
applicable requirements of any Governmental Authorities having jurisdiction,
including without limitation all federal, state, and local environmental laws.
Borrower shall not cause, suffer or permit the construction of any material
buildings, structures, or improvements on the Premises without the prior written
consent of Lender to the proposed construction as well as the plans and
specifications relating thereto. None of the buildings, structures, or
improvements erected or located on the Premises shall be removed, demolished or
substantially or structurally altered in any material respect without the prior
written consent of Lender. Lender's consents hereunder shall not be unreasonably
withheld or delayed.
Personal Property. Effective as of the Closing, all of the Personal
Property will be owned by Borrower in Borrower's name except for those items
identified on Schedule 4.1.F attached hereto, which are leased by Borrower.
Compliance. Borrower shall comply with all (i) building, zoning, fire,
health, environmental, disability and use laws, and all other laws, codes,
ordinances, rules and regulations applicable to the Premises, the Improvements
or any part thereof or the construction of any improvements thereon, or the use
or enjoyment thereof, (ii) covenants and restrictions of record, and (iii)
easements which are in any way applicable to the Premises, the Improvements or
any part thereof or to the construction of any improvements thereon and the use
or enjoyment thereof. Without limiting the generality of the foregoing, any
asbestos or lead-based paint (or any other hazardous substance) located at the
Premises shall be handled and managed in compliance with all applicable federal,
state, and local laws and requirements. <PAGE>
Performance of Agreements. Borrower shall duly and punctually perform,
observe and comply with all of the terms, provisions, conditions, covenants and
agreements on its part to be performed, observed and complied with hereunder and
under (i) the other Loan Documents, (ii) the Permitted Encumbrances, (iii) the
Management Agreement, (iv) the Franchise Agreement, (v) the Ground Lease and
(vi) all agreements entered into or assumed by Borrower in connection with the
Property, and Borrower will not suffer or permit any default or Event of Default
(giving effect to any applicable notice requirements and cure periods) to exist
under any of the foregoing.
Lender's Expenses. Borrower shall, or shall cause the Guarantor to, pay,
on demand by Lender, all reasonable expenses, charges, costs and fees in
connection with the negotiation and documentation of the Loan, including all
registration and recording fees, insurance consultant fees, if any,
environmental consultant fees, costs of appraisals, costs or fees incurred in
connection with market studies, costs of engineering reports, cost of credit
reports, cost of audits, fees and disbursements of all counsel (both local and
special) for Lender, escrow fees, cost of surveys, fees and expenses of Lender's
Consultant or others employed by Lender to inspect the Premises from time to
time, and travel expenses incurred by Lender and Lender's agents and employees
in connection with the Loan. Notwithstanding the foregoing, so long as no Event
of Default exists, Borrower shall have no obligation to pay or reimburse Lender
for travel expenses in excess of $1,500 in any twelve month period. At Closing,
Lender may pay directly from the proceeds of the Loan each of the foregoing
expenses.
Intentionally Omitted.
Financial Statements.
Borrower shall provide to Lender (i) annual financial statements of
Borrower and Guarantor and all such financial statements shall be prepared in
accordance with generally accepted accounting principles, consistently applied
and shall be prepared by a certified public accountant reasonably satisfactory
to Lender, (ii) Loan Month (or, if applicable, Accounting Period) and quarterly
cash flow and operating statements for the Property prepared by and certified by
Borrower (which quarterly statements shall include the calculation of DSCR),
(iii) such other financial information as Lender may from time to time
reasonably request, and (iv) copies of all Federal income tax returns for
Borrower and Guarantor certified by Borrower and Guarantor, respectively, to be
true and correct. All such financial statements, cash flow statements and
operating statements shall be delivered to Lender as soon as possible but not
later than thirty (30) days after the close of each Loan Month (or, if
applicable, Accounting Period), and in the case of annual financial statements,
not later than one hundred twenty (120) days after the close of each fiscal
year. Said copies of Borrower's and Guarantor's federal income tax returns shall
be provided to Lender within thirty (30) days following their filing with the
Internal Revenue Service.
Lender may, at Borrower's sole cost and expense and following
written notice to Borrower, require that any or all of the foregoing annual
financial statements be prepared on an "audited" basis, so called.
<PAGE>
Management and Cash Management. Borrower shall provide competent and
responsible management for the Property by a management company, and pursuant to
a written management agreement, reasonably satisfactory to Lender. The existing
Manager and Management Agreement are satisfactory to Lender. Borrower shall not
enter into any other management agreement or arrangement with any other party
with respect to the management of the Property without Lender's prior written
consent. Borrower shall not modify, amend or terminate the Management Agreement
without Lender's prior written consent. Borrower shall provide Lender with
written notice of the occurrence of any event of default or condition which with
the giving of notice or passage of time, or both, would constitute an event of
default under the Management Agreement or any subsequent management agreement
which Lender may have approved. The Management Fee(s) shall not exceed a base
fee(s) in an amount equal to 5% of Gross Revenues. The payment of any Management
Fees over and above an amount equal to 3% of Gross Revenues shall be subordinate
to all payments to be made to Lender as provided in the Management,
Subordination and Estoppel Agreement among Lender, Borrower and Manager of even
date herewith. Borrower shall not modify, amend or terminate the Cash Management
Agreement in any material respect without Lender's prior written consent.
Due on Sale or Encumbrance. Except as otherwise expressly provided in
Section 8.4, Borrower shall not and shall not permit others to convey, assign,
sell, mortgage, encumber, pledge, hypothecate, grant a security interest in,
grant options with respect to, or otherwise dispose of (directly or indirectly,
voluntarily or involuntarily, by operation of law or otherwise, and whether or
not for consideration or of record) all or any portion of any legal or
beneficial interest in all or any portion of the Property or the Leases. Any
such transfer or encumbrance, as aforesaid, shall be deemed to be an Event of
Default hereunder, and shall entitle Lender to declare the Loan immediately due
and payable.
Estoppel Certificates. Within ten (10) Business Days following a request
by Lender, Borrower shall provide to Lender a duly acknowledged written
statement confirming the amount of the outstanding Indebtedness, the terms of
payment and maturity date of the Note, the date to which interest has been paid,
and whether any offsets or defenses exist against the Indebtedness. If any such
offsets or defenses are alleged to exist, the nature thereof shall be set forth
in detail. The Lender agrees to provide the Borrower, within ten (10) Business
Days following a request by Borrower, a payoff letter affirming the amount of
the Loan then outstanding. <PAGE>
Space Leases, Service Agreements and Equipment Leases. Borrower shall not,
without the prior written consent of Lender, enter into or modify, amend or
terminate (except upon a default by tenant) any lease of space (including
restaurants) with respect to the Premises or any portion thereof in excess of
1,000 square feet. Any lease of space entered into by Borrower with respect to
the Premises or any portion thereof shall (a) be subordinate to the lien of the
Mortgage, (b) be pursuant to an arms' length transaction and (c) not contain any
term which would materially affect Lender's rights under the Loan Documents.
Borrower shall not, without the prior written consent of Lender, enter into any
operating agreements or service contracts with respect to the Property ("Service
Agreements") other than (i) agreements or contracts to provide customary guest
services such as laundry, gift shop, or television cable services, or (ii) other
agreements the aggregate annual payments for which do not exceed $50,000. All
Service Agreements shall (a) be subordinate to the lien of the Mortgage and (b)
be pursuant to an arms' length transaction. Borrower shall not, without the
prior written consent of Lender, enter into any equipment lease which would
cause the aggregate annual payments by Borrower for all equipment leases to
exceed $25,000. All equipment leases shall be pursuant to an arms' length
transaction.
Leasing. Borrower shall not, without the prior written consent of Lender,
enter into any Lease with respect to the Property or any portion thereof in
excess of 1,000 square feet. Any Lease entered into by Borrower shall (a) be
subordinate to the lien of the Mortgage, (b) be terminable by Lender or its
successor upon not more than thirty (30) days notice, and (c) be pursuant to an
arms' length transaction. Borrower shall not modify, amend or terminate (except
upon a default by a tenant) any Leases affecting any part of the Property,
without Lender's prior written approval, which approval shall not be
unreasonably withheld or delayed, other than Leases which involve an area of
1,000 square feet or less. The Borrower shall not, without the prior written
consent of Lender, enter into any operating agreements or service contracts with
respect to the Property other than agreements or contracts to provide customary
guest services such as laundry, gift shop, restaurant or television cable
services ("Service Agreements"). Without the prior written consent of the
Lender, the aggregate annual payments by Borrower for all Service Agreements for
the Property shall not exceed $50,000. All Service Agreements shall (a) be
subordinate to the lien of the Mortgage and (b) be pursuant to an arms' length
transaction.
Within ten (10) days following the execution by Borrower of any new Lease,
Borrower shall deliver to Lender a Subordination, Non-Disturbance and Attornment
Agreement executed by the tenant under such Lease which is in form satisfactory
to Lender unless the Lease contains subordination, non-disturbance and
attornment provisions otherwise satisfactory to the Lender.
Borrower shall perform and comply with all of the landlord's obligations
under each Lease and shall not suffer or permit any breach or default on the
part of the landlord to occur thereunder.
Condemnation. Borrower shall not enter into any agreement for the taking
of the Premises or any part thereof with anyone authorized to acquire the same
in or by condemnation proceedings, or by the exercise of any power of eminent
domain, unless and until Lender shall have consented thereto in writing.
Litigation. Borrower shall promptly provide Lender with written notice of
any material litigation in which Borrower, any other Loan Party or the Property
is named as defendant which is not fully covered by insurance for which the
insurer has assumed the defense and acknowledged coverage, and Borrower shall
provide Lender with copies of all pleadings or orders filed or entered therein
or with respect thereto.
Principal Amortization Reserve.
<PAGE>
The DSCR shall be calculated by Lender on each Calculation Date for
the most recent Calculation Period. At all times prior to the Maturity Date, if
the DSCR on the most recent Calculation Date is less than the Required Coverage
Standard, Borrower shall, in addition to the regularly scheduled monthly
payments of interest due under the Note, deposit with Lender on or before the
twenty-fifth (25th) day of each month 100% of the Net Cash Flow for the
immediately preceding Accounting Period.
Borrower shall make and Lender shall hold all such payments of
Reserved Funds in accordance with the following terms and conditions:
All Reserved Funds held by Lender upon the Maturity Date or upon the
occurrence of an Event of Default may be applied by Lender to the
repayment of the Loan in accordance with the terms and conditions of
the Note.
Provided that no Event of Default or Incipient Default exists, if,
on the next Calculation Date, the DSCR is greater than or equal to
the Required Coverage Standard, Lender shall return to Borrower the
Reserved Funds then held by Lender, and Borrower's obligation to
deposit the Reserved Funds with Lender shall be suspended until any
subsequent Calculation Date when the DSCR is less than the Required
Coverage Standard.
If Borrower is required to make payments of Reserved Funds pursuant
to this Section 4.1.R for four (4) consecutive Calculation Dates, so
long as no Event of Default or Incipient Default exists, Lender may,
on such fourth consecutive Calculation Date, apply all Reserved
Funds to the repayment of the Loan. No such repayment shall be
subject to any prepayment fee or premium. Thereafter, all Reserved
Funds may be applied by Lender, upon receipt, to the repayment of
the Loan, as aforesaid; provided, however, if on any subsequent
Calculation Date the DSCR shall be equal to or greater than the
Required Coverage Standard, Borrower's obligation to deposit the
Reserved Funds with Lender shall be suspended until any Calculation
Date thereafter when the DSCR is less than the Required Coverage
Standard.
All interest accrued on the Reserved Funds shall be added to the
Reserved Funds and shall be disbursed in accordance with the
foregoing terms and conditions. All interest earned on the Reserved
Funds shall be taxable to Borrower.
Application of Gross Revenues; Distributions. Borrower shall promptly
apply all Gross Revenues to the payment of all current and past due Operating
Expenses and to the repayment of all sums currently due or past due under this
Loan, including all payments of Capital Reserve pursuant to Section 4.1T and
real estate tax escrow payments pursuant to Section 4.1.B of this Agreement, if
any. After the Renovation Completion and so long as no Event of Default or
Incipient Default exists, and subject to the provisions of Section 4.1.R,
Borrower may make dividends to its shareholders of Net Cash Flow after the
payment of all current and past due Operating Expenses, debt service on the
Loan, Capital Reserve payments, real estate tax escrow payments pursuant to
Section 4.1.B, if any, and all sums due and payable to Lender (for its own
account or to be held by it) at or prior to the time of said dividend.
<PAGE>
Capital Reserve. Beginning on January 25, 1999, and continuing on the
twenty-fifth (25th) day of each Loan Month thereafter, Borrower shall deposit
with Lender on a monthly basis a reserve of not less than four percent (4%) of
Gross Revenues for the preceding Accounting Period. So long as no Event of
Default or Incipient Default (other than an Incipient Default which is
susceptible to cure and as to which Borrower is diligently pursuing such cure)
shall exist, Lender shall make said funds available to Borrower on the following
terms and conditions: (i) all Capital Reserve funds released by Lender to
Borrower shall be used to pay Borrower for the reasonable expenses actually
incurred by Borrower for the acquisition, repair, or replacement of furniture,
fixtures or equipment necessary for the management and operation of the Property
(based on invoices furnished by Borrower) under an annual budget approved by
Lender for said acquisitions, repairs and replacements; (ii) all requests by
Borrower for a disbursement of Capital Reserve funds shall be in writing and
shall not be made more frequently than once per Loan Month; (iii) each such
request for a disbursement shall be in an amount of not less than $10,000.00;
and (iv) Borrower shall provide Lender with invoices, contracts providing for
progress payments or paid receipts covering the expenses for which Borrower
seeks payment or reimbursement from the Capital Reserve funds. Prior to the
disbursement of any Capital Reserve funds, Borrower shall also provide Lender
with (i) evidence satisfactory to Lender that Borrower has accepted possession
of said items and commenced using the same in the management and operation of
the Property, or the applicable contract requires an advance payment prior to
manufacture or delivery and (ii) paid receipts covering the expenses for which
Capital Reserve funds were previously disbursed. <PAGE>
Funds Deposited with Lender. All funds of Borrower which are deposited
with Lender pursuant to this Agreement or any other Loan Document shall be held
in a separate account and invested in an interest-bearing account (at not less
than money market rates). Any interest which accrues on said funds shall, at
Lender's sole option, be paid to Borrower or be held as part of the applicable
funds being held by Lender for the same purpose for which the principal sum of
said funds is being held by Lender. The Capital Reserve fund shall be reviewed
by the Lender annually on the anniversary of the Loan to determine if sufficient
sums are being funded for the expenses provided for herein. If the Lender
determines, in its reasonable discretion, that the Capital Reserve fund is
insufficient, Borrower shall pay all funding shortages within thirty (30) days
after notice by Lender. To secure all of Borrower's obligations to Lender under
the Loan Documents, Borrower hereby grants to Lender a security interest in all
funds now or hereafter deposited with Lender or otherwise in Lender's
possession, custody or control pursuant to the provisions of this Agreement or
any other Loan Document, including all funds deposited pursuant to Sections
4.1.B, 4.1.R, and 4.1.T of this Agreement. So long as any Event of Default
exists, Lender shall have such rights with respect to such funds and any
interest accrued thereon as are provided by applicable law and may apply such
funds towards the satisfaction of Borrower's obligations hereunder or under any
other Loan Documents. Without limiting any of the foregoing provisions, at the
request of Lender, Borrower shall execute and deliver from time to time such
documents as may be necessary or appropriate, in Lender's sole judgment, to
assure Lender that it has a first priority perfected security interest in and
lien on all funds deposited pursuant to Sections 4.1.B, 4.1.R, and 4.1.T of this
Agreement, including the creation of a deposit account in the name of Borrower
in a banking institution approved by Lender either within or outside of the
State of Ohio, as directed by Lender, into which any or all of such funds will
be deposited and maintained, subject to the rights of Lender with respect to
such funds as provided herein. Lender reserves the right to inspect such repairs
or replacements prior to the release of funds at Borrower's expense provided
that such inspection expenses shall not exceed $1,500 in any twelve (12) month
period.
Audit and Inspection by Lender. Lender shall have the right, upon
reasonable prior notice, and Borrower shall permit and shall cooperate with
Lender in arranging for, at any reasonable time and from time to time, Lender
and its representatives (i) to inspect the Property, and (ii) to review and
audit all books, records and financial statements of Borrower (including all
supporting data and any other records from which the Net Cash Flow may be
determined); and Borrower shall make all such books of account and records
available for such examination at the office where the same are regularly
maintained. Lender shall have the right to copy, duplicate and make abstracts
from such books and records as Lender may require. If any audit by Lender
discloses that payments of Net Cash Flow which should have been made by Borrower
exceeds the sums which were actually made by Borrower, then Borrower shall,
within ten (10) days following written notice from Lender, pay to Lender the
difference between said amounts, together with interest on such amount at the
Default Rate from the date such amounts should have been paid to the date of
post-audit payment. Borrower shall pay Lender's costs and expenses incurred in
connection with no more than one (1) such audit per year. Borrower acknowledges
and agrees that (i) all of such audits, inspections and reports shall be made
for the sole benefit of Lender, and not for the benefit of Borrower or any third
party, and neither Lender nor Lender's auditors or inspectors or any of Lender's
representatives, agents or contractors assumes any responsibility or liability
(except to Lender) by reason of such audits, inspections or reports, (ii)
Borrower will not rely upon any of such audits, inspections or reports for any
purpose whatsoever, and (iii) the performance of such audits, inspections and
reports will not constitute a waiver of any of the provisions of this Agreement
or any other Loan Document or any of the obligations of Borrower hereunder or
thereunder. Borrower further acknowledges and agrees that neither Lender nor
Lender's inspectors, representatives, agents or contractors shall be deemed to
be in any way responsible for any matters related to design or construction of
the Improvements. <PAGE>
Appraisal. At any time during the term of the Loan, Borrower shall
cooperate with Lender and use reasonable efforts to assist Lender in obtaining
an appraisal of the Property. Such cooperation and assistance from Borrower
shall include but not be limited to the obligation to provide Lender or Lender's
appraiser with the following: (i) reasonable access to the Property, (ii) a
current certified rent roll for the Property in form and substance satisfactory
to Lender, current asking rents and a history of change in asking rents and
historical vacancy for the past three years, (iii) current and budgeted income
and expense statements for the prior three years, (iv) a site plan and survey of
Property (to the extent available and at no cost to Borrower), (v) the building
plans and specifications, including typical elevation and floor plans (to the
extent available and at no cost to Borrower), (vi) a photocopy of the deed
conveying the Property to Borrower, together with the legal description of the
Property, (vii) the current and prior year real estate tax bills, (viii) a
detailed list of past and scheduled capital improvements made during Borrower's
period of ownership and the costs thereof, (ix) a summary of the then current
ownership entity, (x) all environmental reports and other applicable information
relating to the Property, and (xi) copies of all recent appraisals/property
description information or brochures, including descriptions of amenities and
services relating to the Property. The appraiser performing any such appraisal
shall be engaged by Lender, and Lender shall be responsible for any fees payable
to said appraiser in connection with an appraisal of the Property.
Accounts. Borrower agrees that, at any time requested by Lender in writing
after an Incipient Default or Event of Default has occurred, Borrower will do
all acts requested by Lender to perfect or confirm the continued perfection of
Lender's security interest in all of Borrower's bank accounts, including,
without limitation, appointing a collateral agent satisfactory to Lender and
segregating all of Borrower's funds from those of Manager or any Affiliates.
Deferred Origination Fee. Borrower acknowledges that the Lender has earned
the Deferred Origination Fee as of the date hereof although the Lender has
agreed to defer its payment as hereinafter provided. Borrower agrees that it
shall pay the Deferred Origination Fee to the Lender when the Loan is paid or
becomes payable in full whether at the Maturity Date or upon earlier prepayment
or acceleration.
Limitation on Indebtedness. Borrower shall not, without the prior written
consent of Lender, create, assume, incur or guaranty, directly or indirectly,
any indebtedness or obligation, except for lease financing or purchase money
financing for equipment, incurred after the date hereof, which is secured by the
equipment so leased or purchased and which lease or purchase money financings do
not contain payment obligations, in the aggregate, in excess of $25,000 per
year.
ARTICLE 5
AGREEMENT TO LEND
Agreement to Lend. On the basis of the covenants, agreements and
representations of Borrower contained in, and subject to the terms and
conditions set forth in, this Agreement and the other Loan Documents, Lender
agrees to lend to Borrower the principal sum of up to $4,199,869. The entire
proceeds of the Loan shall be disbursed by Lender at Closing. Borrower shall use
the Loan proceeds for the purpose for which they were advanced and for no other
purpose.
ARTICLE 6
INSURANCE AND CASUALTY
Insurance Provisions.
<PAGE>
Insurance. Borrower, at its sole cost and expense, shall insure and keep
insured the Property against such perils and hazards, and in such amounts and
with such limits, as Lender may from time to time reasonably require. At the
time of the Closing, Lender's requirements for said insurance are set forth in
Exhibit D, which requirements Borrower acknowledges are reasonable and
customary. Borrower shall also carry such other insurance, and in such amounts,
as Lender may from time to time reasonably require, against insurable risks
which at the time are commonly insured against in the case of premises similarly
situated, due regard being given to the availability of insurance and to the
type of construction, location, utilities, use and occupancy of the Premises or
any replacements or substitutions therefor ("Additional Insurance"). Such
Additional Insurance may include flood, hurricane, earthquake, war risk, nuclear
explosion, demolition and contingent liability from the operation of
"nonconforming improvements" on the Premises, and shall be obtained within 30
days after demand by Lender. Otherwise, Borrower shall not obtain any separate
or additional insurance which is contributing in the event of loss, unless it is
properly endorsed and otherwise reasonably satisfactory to Lender in all
respects. The Proceeds (as defined in the Mortgage) of insurance paid on account
of any damage to or destruction of the Premises or any portion thereof shall be
paid over to Lender to be applied as hereinafter provided.
Evidence of Coverage. The insurance shall be evidenced by the original
policy or a true and certified copy of the original policy, or by certificates
of insurance. Said certified copies, original policies or certificates shall be
delivered to Lender at or prior to Closing. On or before the Closing and each
stated due date thereafter, Borrower shall pay all premiums and fees for the
insurance policies required hereunder. Borrower shall deliver certified copies
of all policies and renewals (or certificates evidencing the same) to Lender at
least thirty (30) days before the expiration of existing policies. Each such
policy shall provide that such policy may not be canceled or materially changed
except upon 30 days prior written notice of intention of non-renewal,
cancellation or material change to Lender, and that no act or thing done by
Borrower shall invalidate the policy as against Lender. Notwithstanding anything
to the contrary contained herein or in any provision of law, the Proceeds of
insurance policies coming into the possession of Lender and which are not to be
used for the Work (as hereinafter defined) shall not be deemed trust funds and
Lender shall be entitled to dispose of such Proceeds as hereinafter provided. If
Lender has not received satisfactory evidence of such renewal or substitute
insurance in the time frame herein specified, Lender shall have the right, but
not the obligation, to purchase such insurance for Lender's interest only. Any
amounts so disbursed by Lender pursuant to this Section 6.1.B shall be deemed to
be a part of the Loan and shall bear interest at the Default Rate. Nothing
contained in this Article 6 shall require Lender to incur any expense or take
any action hereunder, and inaction by Lender shall never be deemed a waiver of
any rights accruing to Lender on account of this Article 6.
Separate Insurance. Borrower shall not carry any separate insurance on the
Property concurrent in kind or form with any insurance required hereunder or
contributing in the event of loss without Lender's prior written consent, and
any such policy shall have attached a standard non-contributing mortgagee
clause, with loss payable to Lender, and shall meet all other requirements set
forth herein. <PAGE>
Damage to or Destruction of Premises. In the event of any damage to or
destruction of the Premises, Borrower shall give prompt written notice to Lender
and, provided Lender makes the Proceeds available for the costs of repair,
restoration and rebuilding, Borrower shall promptly commence and diligently
continue to completion the repair, restoration and rebuilding of the Premises so
damaged or destroyed in full compliance with all legal requirements and with the
provisions of Section 6.1.F below, and free and clear from any and all liens and
claims. Such repair, restoration and rebuilding of the Premises are sometimes
hereinafter collectively referred to as the "Work." Borrower shall not adjust,
compromise or settle any claim(s) for insurance Proceeds without the prior
written consent of Lender unless such claim(s) does not exceed $100,000 in the
aggregate in which case no consent of Lender is required. Subject to Sections
6.1E and F, below, Lender shall have the option in its sole discretion to apply
any insurance Proceeds it may receive pursuant to the Mortgage (less any cost to
Lender of recovering and paying out such Proceeds, including reasonable
attorneys' fees) to the payment of the Indebtedness or to allow all or a portion
of such Proceeds to be used for the Work. If any insurance Proceeds are applied
to reduce the Indebtedness, Lender shall apply the same in the following order:
first, to the payment of interest due on any Advances;
next, to the principal amount of any Advances;
next, to any Late Charges (as provided in the Note);
next, to accrued interest then due under the Note; and
finally, to the unpaid principal balance of the Note.
If Lender applies insurance Proceeds to reduce the Indebtedness, no
prepayment fee shall be due with respect to any prepayment effected thereby.
Restoration. Notwithstanding the provisions of Section 6.1.D above, if, in
Lender's reasonable judgment, the Work can be completed within 18 months of the
occurrence of said damage or destruction, then Lender shall, upon request by
Borrower, permit Borrower to use the insurance Proceeds for the Work (subject to
the provisions of, and less Lender's costs described in, Section 6.1.F below),
so long as Lender, in its reasonable judgment, is satisfied that as of each date
on which such insurance Proceeds are to be applied to payment thereof:
The insurance Proceeds held by Lender in respect of the applicable
casualty equal or exceed such estimated cost of effecting such
repair and restoration, or such portion thereof as then remains to
be completed and paid for or Borrower provides evidence satisfactory
to Lender that Borrower has funds available to pay any shortfall,
and, if required by Lender, escrows such funds with Lender for
disbursement in accordance with the requirements of Section 6.1.F;
The Management Agreement shall remain in full force and effect and
all material Leases, if any, shall remain in full force and effect,
and no tenant thereunder shall be entitled to cancel or terminate
its Lease as a consequence of such casualty;
<PAGE>
Upon completion of the Work, the monthly revenues from the Property
shall, in Lender's reasonable judgment, be sufficient to pay all
interest and other sums due and payable under the Note, this
Agreement and the other Loan Documents;
The Work will, in Lender's reasonable judgment, be completed on or
prior to May 31, 2000;
There is in force and effect for the benefit of Borrower and Lender
rental or business interruption insurance sufficient to provide
coverage for one hundred percent (100%) of all income lost as a
consequence of such casualty for not less than the projected period
for the completion of the Work or Borrower provides evidence
satisfactory to Lender that Borrower has funds available to pay all
interest and other sums due and payable under the Note, this
Agreement and the other Loan Documents, as well as all other
expenses of the Property during such period and, if required by
Lender, escrows such funds with Lender for application to the
payment of such obligations as they come due;
The Work will be effected pursuant to plans and specifications
reasonably approved in writing by Lender, and by a general
contractor and major subcontractors, and pursuant to contracts,
reasonably approved in writing by Lender; and
The Work can be effected in compliance with all applicable laws and
Borrower has obtained all licenses, permits, consents and approvals
from all applicable governmental authorities or private parties
required to permit Borrower to effect such restoration and repair
and to use, operate and occupy the repaired and restored premises
upon completion thereof (other than those which will issue in the
ordinary course upon completion) and that the same are in full force
and effect.
Lender shall have no obligation to make such insurance Proceeds available to pay
for the Work if (A) the Loan shall have been accelerated and the principal and
accrued interest owing on the Loan have become due and payable, or (B) there
shall exist an Event of Default or Incipient Default other than an Incipient
Default which is susceptible to cure and as to which Borrower is diligently
pursuing such cure.
Distribution of Proceeds. If any insurance Proceeds are used for the Work,
then such Proceeds shall be held by Lender and shall be paid out from time to
time to Borrower as the Work progresses (less any cost to Lender of recovering
and paying out such Proceeds, including reasonable attorneys' fees and costs
allocable to inspecting the Work and the plans and specifications therefor),
subject to each of the following conditions: <PAGE>
If the Work is structural or if the cost of the Work is reasonably
estimated by Lender to exceed $250,000, the Work shall be conducted
under the supervision of a certified and registered architect or
engineer unless otherwise waived in writing by the Lender. Before
Borrower commences any Work, other than temporary work to protect
property or prevent interference with business, Lender shall have
approved in writing the plans and specifications for the Work, which
approval shall not be unreasonably withheld or delayed, it being
nevertheless understood that such plans and specifications shall
provide for Work so that, upon completion thereof, the Premises
shall be at least equal in value and general utility to the Premises
prior to the damage or destruction.
Each request for payment shall be made on not less than ten (10)
Business Days prior notice to Lender and shall be accompanied by a
certificate of the architect or engineer in (i) above (or a
certificate given by Borrower if no architect or engineer is so
required) stating (A) that all of the Work completed has been done
in substantial compliance with the approved plans and
specifications, if required under (i) above, (B) that the sum
requested is justly required to reimburse the Borrower for payments
by Borrower, or is justly due to the contractor, subcontractors,
materialmen, laborers, engineers, architects or other persons
rendering services or materials for the Work (giving a brief
description of such services and materials), and that when added to
all sums previously paid out by Lender does not exceed the value of
the Work done to the date of such certificate, (C) if the sum
requested is to cover payment relating to repair and restoration of
personal property required or relating to the Premises, that title
to the personal property items covered by the request for payment is
vested in Borrower, and (D) that the amount of such Proceeds
remaining in the hands of Lender will be sufficient on completion of
the Work to pay for the same in full (giving in such reasonable
detail as Lender may require an estimate of the cost of such
completion). Additionally, each request for payment shall contain a
statement signed by Borrower approving both the Work done to date
and the Work covered by the request for payment in question. Each
request for payment shall be accompanied by waivers of lien
satisfactory to Lender covering that part of the Work for which
payment or reimbursement is being requested and, if required by
Lender, a search prepared by a title company or an attorney
authorized to practice law in the State, or by other evidence
satisfactory to Lender that there has not been filed with respect to
the Premises any mechanics' or other lien or instrument for the
retention of title relating to any part of the Work not discharged
of record. Additionally, as to any personal property covered by the
request for payment, Lender shall be furnished with evidence of
payment therefor and such further evidence satisfactory to assure
Lender of its valid first lien on the personal property.
<PAGE>
Lender or its designee shall have the right to inspect the Work at
all reasonable times and may condition any disbursement of Proceeds
upon the satisfactory completion, as determined in Lender's
reasonable discretion, of any portion of the Work for which payment
or reimbursement is being requested. The cost of any such inspection
of the Work shall be paid by Borrower prior to or simultaneously
with the next disbursement of any portion of the Proceeds. Neither
the approval by Lender of the plans and specifications for the Work
nor the inspection by Lender of the Work shall make Lender
responsible for the preparation of such plans and specifications or
the compliance of such plans and specifications, or of the Work,
with any applicable law, regulation, ordinance, covenant or
agreement.
Proceeds shall not be disbursed more frequently than every 30 days.
Any request for payment made after the Work has been completed shall
be accompanied by a copy or copies of any certificate or
certificates required by law to render occupancy and full operation
of the Premises legal.
Upon completion of the Work and payment in full therefor, or upon
any failure on the part of Borrower to promptly commence the Work,
or upon the failure on the part of Borrower to proceed diligently
and continuously to completion of the Work (subject to allowance for
reasonable delays and interruptions in the supply of materials and
labor not caused by any act or omission of Borrower), Lender may
apply any such proceeds it then or thereafter holds to the payment
of the Indebtedness; provided, however, that Lender shall be
entitled to apply at any time all or any portion of insurance
Proceeds it then holds to the curing of any Event of Default. Upon
completion of the Work, so long as no Event of Default exists, any
remaining insurance Proceeds held by Lender shall be paid to
Borrower.
Miscellaneous Insurance Provisions.
Notwithstanding any other provision of this Section 6.1, if in
Lender's reasonable judgment the cost of the Work is less than
$250,000 and such Work can be completed in less than 60 days and
provided no Event of Default has occurred and is continuing, then
Lender shall, upon request by Borrower, permit Borrower to apply for
and receive the insurance Proceeds directly from the insurer (and
Lender shall advise the insurer to pay over such Proceeds directly
to Borrower), provided that Borrower shall apply such insurance
Proceeds solely to the prompt and diligent commencement and
completion of such Work.
<PAGE>
In the event of the foreclosure of the Mortgage or other transfer of
title to or assignment of the Property in extinguishment of the
Indebtedness in whole or in part, all right, title and interest of
Borrower in and to any insurance Proceeds shall inure to the benefit
of and pass to Lender or any purchaser or transferee of the
Property.
Borrower hereby authorizes Lender, during all periods in which an
Event of Default has occurred and remains uncured, to settle any
insurance claims, to obtain insurance Proceeds, and to endorse any
checks, drafts or other instruments representing any insurance
Proceeds whether payable by reason of loss thereunder or otherwise.
ARTICLE 6A
RENOVATION WORK
6A.1 Construction. During the pendency of the Renovation Work, Borrower
shall provide Lender with monthly reports which include, as applicable, (i)
evidence reasonably satisfactory to Lender that the Renovation Work complies
with all building, zoning and other laws and governmental codes, rules and
regulations, (ii) copies of all necessary licenses, permits, approvals and
consents required for the use, occupancy and operation of the Premises, as
altered by the Renovation Work, (iii) evidence satisfactory to Lender that all
Renovation Work completed as of the date of such report has been inspected and
approved by each required Governmental Authority and by each other person or
entity (including any tenants) having the right to inspect and approve the
Renovation Work and (iv) all contractors and subcontractors have been paid
current. Borrower shall provide Lender with such other information and material
relating to the Renovation Work as Lender reasonably requests.
6A.2 Completion. Borrower shall: (i) cause the Renovation Work to be
completed in a good and workmanlike manner in accordance with the reasonable
requirements of Lender's Consultant, and the requirements of this Agreement, the
Renovation Budget and the Renovation Plans; (ii) cause the Renovation Work to be
completed so that the Premises remain free and clear of all liens and
encumbrances other than Permitted Exceptions; (iii) cause Renovation Completion
to be achieved on or before the Renovation Completion Date; and (iv) commence
the Renovation Work within 90 days following the Closing and pursue the
Renovation Work diligently to completion.
6A.3 Compliance with Laws. Borrower shall cause the Renovation Work to be
constructed in accordance with all applicable requirements of any Governmental
Authority having jurisdiction with respect thereto including, without
limitation, obtaining all licenses, permits, approvals and consents for the use,
occupancy and operation of the Premises, as altered by the Renovation Work.
<PAGE>
6A.4 Other Remedies of Lender. Upon the occurrence of an Event of Default,
in addition to any other remedies available to Lender by the terms of this
Agreement or any other Loan Document or by law, Lender may at its sole
discretion: (a) complete the Renovation Work (with such changes as Lender shall
deem appropriate), all at the risk, cost and expense of Borrower; (b)
discontinue at any time the Renovation Work; (c) engage builders, contractors,
engineers, architects and others for the purpose of furnishing labor, material
and equipment in connection with the Renovation Work, which personnel may, but
need not, be the same as those engaged by Borrower; (d) pay, compromise or
settle all bills or claims incurred in connection with the Renovation Work; and
(e) take or refrain from taking such action with respect to the Renovation Work
as Lender may from time to time reasonably determine. All such action shall be
at Borrower's sole cost and expense, such sums being secured by the Mortgage.
ARTICLE 7
BORROWER'S DEFAULT
7.1. Events of Default. Each of the following shall constitute an "Event
of Default" under this Agreement:
A. Borrower fails (i) to pay any installment of interest on the Note when
due and continuing for more than five (5) days after written notice thereof from
Lender or (ii) to pay the Note in full on or before the Maturity Date;
B. Borrower or the Guarantor fails to pay within ten (10) days following
written notice from Lender any amounts due hereunder or under any of the other
Loan Documents, other than installments of interest on the Note; or
C. Any representation or warranty made by Borrower or any other Loan Party
in or pursuant to this Agreement or otherwise made in writing in connection with
or as contemplated by this Agreement shall be incorrect or false or misleading
in any material respect as to the period of time to which it relates; or
D. An Event of Default exists under any other Loan Document; or
E. Any representation to Lender by Borrower or any other Loan Party as to
the financial condition or credit standing of Borrower or any other Loan Party,
or any financial statement provided to Lender pursuant to any Loan Document, is
or proves to be false or misleading in any material respect; or
F. Except for Permitted Transfers, any interest in Borrower or the
Property (or any part thereof) is sold, conveyed, transferred, assigned,
disposed of or further encumbered, either directly or indirectly, or any
agreement for any of the foregoing is entered into; or
G. The Premises or any portion thereof is rezoned either voluntarily or
involuntarily, so as to no longer permit the Premises or any portion thereof to
be used as a hotel; or
<PAGE>
Any order or decree is entered by any court of competent jurisdiction
directly or indirectly enjoining or prohibiting Lender or Borrower from
performing any of their obligations under this Agreement; or
Borrower or any other Loan Party makes an assignment for the benefit of
creditors; or petitions or applies to any court for the appointment of a trustee
or receiver for itself or for any part of its assets or for the Property or any
portion thereof, or commences any proceedings under any bankruptcy, insolvency,
readjustment of debt or reorganization statute or law of any jurisdiction,
whether now or hereafter in effect; or if any such petition or application is
filed or any such proceedings are commenced, and Borrower or any other Loan
Party by any act indicates any approval thereof, consent thereto, or
acquiescence therein; or an order is entered appointing any such trustee or
receiver, or adjudicating Borrower or any other Loan Party bankrupt or
insolvent, or approving the petition in any such proceeding; or if any petition
or application for any such proceeding or for the appointment of a trustee or
receiver is filed by any third party against Borrower or any other Loan Party or
their respective assets or the Property, or any portion thereof, and any of the
aforesaid proceedings is not dismissed within ninety (90) days of its filing; or
Any representation or warranty made by the Ground Lessor in the Estoppel
Agreement shall be incorrect or false or misleading in any material respect; or
A default or event of default occurs under the Franchise Agreement and
Franchisor has taken affirmative action to enforce its rights under the
Franchise Agreement, or has affirmatively declared a default under the Franchise
Agreement, or has otherwise expressly indicated that it deems such default
material, or the Franchise Agreement or any related arrangement with Franchisor
is terminated without the prior written consent of Lender, in its sole
discretion; or
A final non-appealable judgment or judgments for the payment of money in
excess of an aggregate of $50,000 shall be rendered against Borrower and such
judgment or judgments shall remain undischarged or unbonded (to Lender's
satisfaction) for a period of 60 consecutive days during which the execution
shall not be effectively stayed; or
The Management Agreement is amended or terminated for any reason without
the prior written consent of Lender; or
Borrower or any other Loan Party fails to comply with, keep or perform any
of its other obligations, agreements, undertakings, covenants, conditions or
warranties under (i) this Agreement, (ii) any other Loan Document, or (iii) any
other document or instrument executed and delivered to Lender by Borrower or any
other Loan Party pursuant to this Agreement, and such failure continues for a
period of thirty (30) days after written notice thereof by Lender to Borrower,
provided, however, if such failure is susceptible to cure by Borrower but cannot
be cured within such thirty (30) day period, but Borrower commences to cure the
same within such thirty (30) day period and thereafter diligently proceeds to
cure the same, Borrower shall have an additional reasonable period of time in
which to cure such failure (but in no event longer than ninety (90) days after
the date of notice thereof); or <PAGE>
An event of default occurs under the Related Party Loan Documents and is
not cured by the Related Party within any applicable grace or cure period.
7.2. Remedies. Upon the happening of an Event of Default, Lender shall
have the right, in addition to all the remedies conferred upon Lender by law or
equity or the terms of any Loan Document, to do any or all of the following,
concurrently or successively, without notice to Borrower:
A. Declare the Note to be, and such Note shall thereupon become,
immediately due and payable, together with the Prepayment Fees (as defined in
the Primary Note), if applicable, without presentment, demand, protest, notice
of intention to accelerate, notice of acceleration or notice of any kind, all of
which are hereby expressly waived, anything contained herein or in the Note to
the contrary notwithstanding, and exercise any one or more of its rights and
remedies under the Loan Documents.
B. Enter upon and take possession of the Property and all material,
equipment and supplies thereon and do anything necessary or desirable to fulfill
the obligations of Borrower hereunder and to sell, manage, maintain, repair and
protect the Property. Without limiting the generality of the foregoing and for
the purposes aforesaid, Borrower hereby appoints and constitutes Lender its
lawful attorney-in-fact with full power of substitution to (i) pay, settle or
compromise all existing bills and claims which may be liens upon or security
interests in the Property, or to avoid such bills and claims becoming liens or
security interests, against the Property or any fixtures or equipment thereon,
or as may be necessary or desirable for the clearance of title or otherwise,
(ii) use any funds of Borrower for purpose of completing the Renovation Work,
(iii) execute all applications and certificates in the name of Borrower which
may be required to carry out the intent and purpose hereof, (iv) employ such
contractors, subcontractors, architects and others as Lender may deem reasonably
appropriate, (v) do any and every act which Borrower might do on its own behalf,
including to enter into Leases of any portion of the Property, and (vi)
prosecute or defend any and all actions or proceedings involving the Property or
any fixtures, equipment or other installations thereon, it being understood and
agreed that this power of attorney shall be a power coupled with an interest and
cannot be revoked. Lender and its designees, representatives, agents, licensees
and contractors shall be entitled to the entry, possession and use contemplated
herein without the consent of any party and without any legal process or other
condition precedent whatsoever. Borrower acknowledges that any denial of such
entry, possession and use by Lender will cause irreparable injury and damage to
Lender and agrees that Lender may forthwith sue for any remedy to enforce the
immediate enjoyment of such right. Borrower hereby waives the posting of any
bond as a condition for exercising such remedy.
C. Apply the sum of any Reserved Funds and Capital Reserve payments then
being held by Lender to the repayment of the Loan in any order or priority.
D. Declare any or all of the Related Party Loans to be in default and to
pursue all of its rights and remedies with respect thereto.
<PAGE>
Anything in this Agreement to the contrary notwithstanding, all funds
advanced or disbursed by Lender pursuant to the provisions of this Article 7
shall be deemed advanced by Lender under an obligation to do so regardless of
the identity of the person or persons to whom such funds are owed and shall bear
interest at the Default Rate. Funds advanced or disbursed by Lender in the
exercise of its judgment that the same are needed to protect its security or to
otherwise perform any obligations of Borrower hereunder are to be deemed
obligatory advances hereunder and are to be added to the total indebtedness
evidenced by the Note and secured by the Mortgage and the other Loan Documents
and said indebtedness shall, if necessary, be increased accordingly.
In case of any Event of Default hereunder, Borrower will pay Lender's
attorneys' fees and disbursements and court costs (including those relating to
appeals) and all related expenses in connection with the enforcement of this
Agreement or any of the other Loan Documents.
ARTICLE 8
MISCELLANEOUS
8.1 Indemnification. Except for Losses (as hereinafter defined) which are
finally adjudicated by a court of competent jurisdiction to have arisen directly
and proximately from the gross negligence or willful misconduct of Lender or
have arisen solely and exclusively from acts or events occurring after the
Borrower has relinquished all possession, direction or control over the
Property, Borrower shall protect, defend, indemnify and hold Lender, and its
officers, directors, employees and agents (each, an "Indemnified Party")
harmless from and against any and all harm, loss, liability, damage, suit,
claim, demand, expense, fees, costs, judgments and penalties (including
reasonable attorneys' fees but excluding consequential damages) (each a "Loss")
suffered or incurred by an Indemnified Party in connection with (i) any claim,
demand, suit or proceeding brought or asserted by any person against an
Indemnified Party arising out of or relating to Lender's entering into or
carrying out the terms of this Agreement or any of the other Loan Documents or
being the holder of the Note, (ii) any default by Borrower or any other Loan
Party hereunder or under any other Loan Document, (iii) any bodily injury,
death, other personal injury or property damage occurring in or upon the
Property through any cause whatsoever, and (iv) any transaction otherwise
arising out of or in any way connected with the Property, this Agreement, any
other Loan Document or the Indebtedness, excluding a Loss arising out of
Lender's gross negligence or willful misconduct.
8.2 Defense of Claims. Lender may, at Borrower's sole cost and expense,
retain separate counsel to defend Lender against any claim relating to any Loss
or potential Loss. If Lender retains separate counsel in such an action,
Borrower will cooperate with Lender and provide Lender with copies of all
existing pleadings, discovery materials and other materials relating to said
claim. In any event, Borrower shall defend any such claim and shall provide
Lender with copies of all pleadings, filings and correspondence relating
thereto. <PAGE>
8.3 Performance by Lender. In the event that Borrower shall at any time
fail to duly and punctually pay, perform, observe or comply with any of its
covenants and agreements hereunder or under the other Loan Documents, or if any
Event of Default hereunder shall exist, then Lender may (but shall in no event
be required to) make any such payment or perform any such term, provision,
condition, covenant or agreement or cure any such Event of Default. Lender shall
not take action under this Section 8.3 prior to the occurrence of an Event of
Default unless in Lender's reasonable judgment, such action is necessary or
appropriate in order to preserve the value of the collateral, to protect persons
or property, or Borrower has abandoned the Property or any portion thereof.
Lender shall not be obligated to continue any such action having commenced the
same and may cease the same without notice to Borrower. Any amounts expended by
Lender in connection with such action shall constitute additional advances
hereunder, the payment of which is additional indebtedness, secured by the Loan
Documents and shall become due and payable upon demand by Lender, with interest
at the Default Rate from the date of disbursement thereof until fully paid. No
further direction or authorization from Borrower shall be necessary for such
disbursements. The execution of this Agreement by Borrower shall and hereby does
constitute an irrevocable direction and authorization to Lender to so disburse
such funds.
8.4 Transfer or Assignment. Lender may assign, negotiate, pledge or
otherwise hypothecate all or any portion of the Loan or grant participation
therein, or in any of its rights and security hereunder and under the other Loan
Documents, and Borrower shall accord full recognition thereto provided that if
the Loan is assigned to any party other than Nationwide Life Insurance Company
or any other life insurance company, financial institution or other commercial
or institutional lender, or affiliate thereof, then Borrower must consent to
such assignment which consent shall not be unreasonably withheld or delayed.
Lender agrees to provide Borrower with written notice of any assignment of the
Loan other than to Nationwide Life Insurance Company. Lender may deliver copies
to any potential participant or assignee or transferee of financial statements
and other information from time to time furnished to Lender pursuant hereto or
in connection therewith provided that Lender shall take such steps as may be
reasonably necessary to assure that such information remains confidential.
Borrower shall not assign or attempt to assign its rights or obligations under
this Agreement or any other Loan Document other than Permitted Transfers.
8.5 Lender's Actions. The authority herein conferred upon Lender and any
action taken by Lender hereunder or in any other Loan Document will be taken by
Lender for its own protection only, and Lender does not and shall not be deemed
to have assumed any responsibility to Borrower or to any other person or persons
with respect to any such action herein authorized or taken by Lender. No person
shall be entitled to rely upon, or claim to have relied upon, any action taken
or failed to have been taken by Lender or any of its representatives.
8.6 Time is of the Essence. TIME IS OF THE ESSENCE OF THIS AGREEMENT.
<PAGE>
8.7 Waivers. No waiver of any term, provision, condition, covenant or
agreement contained herein or in any other Loan Document shall be effective
unless set forth in a writing signed by Lender, and any such waiver shall be
effective only to the extent set forth in such writing. No failure by Lender to
exercise, or delay by Lender in exercising, any right, power or privilege
hereunder or in any other Loan Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof, or the exercise of any other
right or remedy provided by law. No notice to or demand on Borrower in any case
shall, in itself, entitle Borrower to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of Lender to
any other or further action in any circumstances without notice or demand.
8.8 Notices. Any notice which any party hereto may be required or may
desire to give hereunder shall be delivered personally, or by overnight express
courier, addressed in the case of Borrower to:
Island Motel Enterprises, Inc.
and Penmoco, Inc.
Two Live Oak Center
3445 Peachtree Road, NE
Suite 700
Atlanta, Georgia 30326
with a copy to:
Stearns, Weaver, Miller, Weissler,
Alhadeff & Sitterson, P.A.
Museum Tower
150 West Flagler Street
Miami, Florida 33130
Attention: Robert Weissler, Esq.
in the case of Lender to:
Banc One Capital Funding Corporation
150 East Gay Street
Columbus, Ohio 43215
Attention: Loan Servicing
with a copy to:
Banc One Capital Markets, Inc.
150 East Gay Street, 24th Floor
Columbus, Ohio 43215
Attn: Legal Department and Real Estate Investment Group
or at such other addresses or to the attention of such other persons as may from
time to time be designated by the party to be addressed by written notice to the
other in the manner herein provided. Notices, demands and requests given in the
manner aforesaid shall be deemed sufficiently served or given for all purposes
hereunder when received or when delivery is refused or when the same are
returned to sender for failure to be called for. <PAGE>
8.9 Successors and Assigns. This Agreement shall inure to the benefit of
the parties and their respective successors and permitted assigns. No assignment
made by Borrower in violation of this Agreement shall confer any rights on any
assignee of Borrower.
8.10 No Partnership. Nothing contained herein, or in any other Loan
Document, and no action or inaction whatsoever on the part of Lender, shall be
deemed to make Lender a partner or joint venturer with Borrower.
8.11. Brokerage Claims. Borrower shall, and shall cause the Guarantor, to
protect, defend, indemnify and hold Lender harmless from and against all loss,
cost, liability and expense incurred as a result of any claim for a broker's or
finder's fee against Lender or any person or entity in connection with the
transaction herein contemplated, provided such claim is made by or arises
through or under Borrower or the Guarantor or is based in whole or in part upon
alleged acts or omissions of Borrower or the Guarantor. Lender shall protect,
defend, indemnify and hold Borrower harmless from and against all loss, cost,
liability and expense incurred as a result of any claim for a broker's or
finder's fee against Borrower provided such claim is based upon alleged acts or
omissions of Lender.
8.12 Publicity. Lender and Borrower may each reasonably publicize the Loan
if it so elects. Borrower agrees to consult with Lender prior to any press
release concerning the Loan.
8.13 Documents Satisfactory to Lender. All documents and other matters
required by any of the provisions of this Agreement to be submitted or provided
to Lender shall be in form and substance reasonably satisfactory to Lender.
8.14 Additional Assurances. At any time or from time to time, upon the
written request of Lender, Borrower shall execute, and, if required, record,
file (and pay all fees, taxes or other expenses relating thereto) all such
further documents and do all such other acts and things as Lender may reasonably
request to effectuate the transaction contemplated herein in accordance with the
terms hereof.
8.15 Entire Agreement. This Agreement, the Exhibits hereto and the other
Loan Documents and other documents referred to herein constitute the entire
agreement between the Lender and Borrower with respect to the subject matter
hereof and may not be modified or amended in any manner other than by
supplemental written agreement executed by the parties hereto.
8.16 Severability. If any provision of this Agreement or any other Loan
Document or the application thereof to any person or situation shall, to any
extent, be held invalid or unenforceable, the remainder of this Agreement or any
other Loan Document, and the application of such provision to persons or
situations other than those to which it shall have been held invalid or
unenforceable, shall not be affected thereby, but shall continue valid and
enforceable to the fullest extent permitted by applicable law.
<PAGE>
8.17 No Third Party Beneficiary. Except as hereinafter expressly provided,
this Agreement is made for the sole benefit of Borrower and Lender, and no other
person shall be deemed to have any privity of contract hereunder nor any right
to rely hereon to any extent or for any purpose whatsoever, nor shall any other
person have any right of action of any kind hereon or be deemed to be a third
party beneficiary hereunder. Notwithstanding the foregoing, Banc One Capital
Partners VII, Ltd., its successors and assigns, shall be a third party
beneficiary of the representations, warranties, covenants and agreements of
Borrower and Guarantor under the Loan Documents for so long as it may own a
participation interest in the Loan.
8.18 CHOICE OF LAW. THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF OHIO,
ACCEPTED BY LENDER IN THE STATE OF OHIO, AND THE PROCEEDS OF THE LOAN EVIDENCED
HEREBY WERE OR ARE TO BE DISBURSED BY LENDER FROM THE STATE OF OHIO. BORROWER
AND LENDER AGREE THAT THE STATE OF OHIO HAS A SUBSTANTIAL RELATIONSHIP TO THE
TRANSACTION EVIDENCED HEREBY AND AGREE THAT THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF OHIO (WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW).
8.19 Limitation on Liability.
Subject to the limitations and exceptions contained in subsections
(b), (c), (d) and (e) below, Borrower shall not have any personal recourse
liability for amounts owing under the Note or any of the other Loan Documents
and no deficiency judgment therefor shall be enforced against Borrower. Lender's
recourse for such amounts shall, subject to the limitations and exceptions
contained in subsections (b), (c), (d) and (e) below, be limited to the
collateral and security provided under the Loan Documents. Anything herein to
the contrary notwithstanding, the Borrower acknowledges and agrees that the
collateral provided under the Pledge of Stock is intended to secure and
cross-collateralize both the Loan and the Related Party Loans.
A judgment may be sought, obtained, entered and enforced against
Borrower to the extent necessary to preserve or enforce the rights and remedies
of Lender in, to or against the collateral and security provided under the Loan
Documents, and nothing contained in this Section 8.19 shall be construed to
limit, prejudice or impair the rights of Lender to enforce its rights and
remedies against any real and personal property mortgaged, pledged, encumbered,
assigned or granted to secure payment or performance under this Agreement, the
Note, and the other Loan Documents. Notwithstanding anything to the contrary
herein or elsewhere Lender shall, to the fullest extent permitted by law, be
entitled to injunctive relief and to specific performance.
Anything contained herein or elsewhere to the contrary
notwithstanding, Borrower and Guarantor shall be liable to Lender, without
limitation, for Lender's harm, loss (including lost interest and principal on
the Loan), damage, costs and expenses (including Lender's reasonable attorneys'
fees and court and collection costs) arising out of or in connection with any of
the following circumstances: <PAGE>
any misapplication or misappropriation of any insurance or
condemnation proceeds;
revenues collected after an Event of Default or Incipient Default
and not properly applied to the Loan or normal operating expenses of
the Premises;
any waste respecting all or any part of the Property or any other
collateral;
real estate taxes, personal property taxes or Impositions, if any,
and insurance premiums with respect to the Property (except to the
extent resulting from the failure by Lender to disburse any deposits
received from Borrower with respect to such real estate or personal
property taxes in accordance with the provisions of Section 4.1(B));
fraud in connection with the Loan or any Loan Document;
any material breach of any representation or warranty made in
connection with the Loan (expressly excluding any representations or
warranties made by the Ground Lessor) known by Borrower or Guarantor
to have been false when made, or deemed made specifically including
any material misrepresentation or inaccuracy contained in any
financial statement or other document provided to Lender pursuant to
Section 4.1.K of this Agreement known by Borrower or Guarantor to
have been false or inaccurate when provided;
any destruction of the Property or any part thereof in or from an
uninsured or underinsured casualty for which Borrower was required
to obtain insurance under this Agreement;
any breach of any of the terms and provisions of Section 2.10
(Environmental Matters) of the Mortgage; or
any lien arising from the failure of the Borrower to pay or perform
any obligation with respect to taxes or employee benefits which lien
is superior in priority to the lien created by the Mortgage and the
Security Agreement upon the property encumbered thereby.
In the event of any filing by Borrower of any voluntary petition
under the Bankruptcy Code, or the taking by Borrower of any comparable action
under any federal or state law; or the filing of any involuntary petition under
the Bankruptcy Code against Borrower or the taking of comparable action under
any federal or state law against Borrower by any Affiliate of any of them, the
Loan shall become fully recourse against Borrower. <PAGE>
Nothing contained in this Section 8.19 shall be construed to release
Borrower or any Loan Party from liability under (i) the indemnifications
contained in Section 2.10 (Environmental Matters) of the Mortgage, (ii) the
Limited Guaranty, or (iii) the Environmental Indemnity.
8.20 WRITTEN AGREEMENT.
(a) THE RIGHTS AND OBLIGATIONS OF BORROWER AND LENDER SHALL BE
DETERMINED SOLELY FROM THIS WRITTEN LOAN AGREEMENT AND THE
OTHER LOAN DOCUMENTS, AND ANY PRIOR ORAL OR WRITTEN AGREEMENTS
BETWEEN LENDER AND BORROWER CONCERNING THE SUBJECT MATTER
HEREOF AND OF THE OTHER LOAN DOCUMENTS ARE SUPERSEDED BY AND
MERGED INTO THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS.
(b) THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY NOT BE
VARIED BY ANY ORAL AGREEMENTS OR DISCUSSIONS THAT OCCUR
BEFORE, CONTEMPORANEOUSLY WITH, OR SUBSEQUENT TO THE EXECUTION
OF THIS LOAN AGREEMENT OR THE LOAN DOCUMENTS.
(c) THIS WRITTEN LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENTS BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
8.21 Intentionally Omitted.
8.22 Intentionally Omitted.
8.23 Intentionally Omitted.
<PAGE>
8.24 WAIVER OF JURY TRIAL. LENDER AND BORROWER HEREBY WAIVE THE RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT
MATTER OF THIS AGREEMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND
VOLUNTARILY MADE BY LENDER AND BORROWER, AND LENDER AND BORROWER ACKNOWLEDGE
THAT NO PERSON ACTING ON BEHALF OF ANOTHER PARTY TO THIS AGREEMENT HAS MADE ANY
REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO
MODIFY OR NULLIFY ITS EFFECT. LENDER AND BORROWER FURTHER ACKNOWLEDGE THAT THEY
HAVE BEEN REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE
SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL
COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND THAT THEY HAVE HAD THE OPPORTUNITY
TO DISCUSS THIS WAIVER WITH COUNSEL.
8.25 Consent to Jurisdiction. The parties hereto submit to personal
jurisdiction in the State of Ohio for the enforcement of the provisions of this
Agreement and the other Loan Documents and irrevocably waive any and all rights
to object to such jurisdiction for the purposes of litigation to enforce any
provision of this Agreement and the other Loan Documents. Lender and Borrower
hereby consent to the jurisdiction of and agree that any action, suit or
proceeding to enforce this Agreement may be brought in any state or federal
court in the State of Ohio. Lender and Borrower hereby irrevocably waive any
objection which they may have to the laying of the venue of any such action,
suit, or proceeding in any such court and hereby further irrevocably waive any
claim that any such action, suit or proceeding brought in such a court has been
brought in an inconvenient forum. Borrower and Lender hereby consent that
service of process in any action, suit or proceeding may be made by service upon
the Borrower's agent for service of process (in the case of service to be made
upon Borrower), by personal service upon the party being served, or by delivery
in accordance with the notice requirements of Section 8.8 of this Agreement.
<PAGE>
IN WITNESS WHEREOF, Borrower and Lender have caused this Agreement to be
executed by their duly authorized representatives as of the day, month and year
first above written.
BORROWER:
ISLAND MOTEL ENTERPRISES, INC.,
a Georgia corporation
By: /s/ Toni Jones
--------------
Name: Toni Jones
Title: Vice President
PENMOCO, INC.,
a Michigan corporation
By: /s/ Toni Jones
--------------
Name: Toni Jones
Title: Vice President
LENDER:
BANC ONE CAPITAL FUNDING
CORPORATION, an Ohio corporation
By: /s/ Ronald L. Callentine
------------------------
Name: Ronald L. Callentine
Title: Vice President
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
<PAGE>
EXHIBIT B-1
ADDITIONAL NOTE
<PAGE>
EXHIBIT B-2
PRIMARY NOTE
<PAGE>
EXHIBIT C
PERMITTED ENCUMBRANCES
<PAGE>
EXHIBIT D
INSURANCE REQUIREMENTS
(i) Insurance against loss to the Property on an "All Risk" policy form,
covering insurance risks no less broad than those covered under a Standard Multi
Peril (SMP) policy form, which contains a 1987 Commercial 150 "Causes of Loss
Special Format and such other risks as Lender may reasonably require, including
risk of hurricane, insurance covering the cost of demolition of undamaged
portions of any portion of the Property when required by code or ordinance and
the increased cost of reconstruction to conform with current code or ordinance
requirements, in amounts equal to the full replacement cost of the Property
(other than the Land), including fixtures and equipment, Borrower's interest in
leasehold improvements, and the cost of debris removal, with 1008 co-insurance
with an agreed amount endorsement and deductibles of not more than $10,000.00;
(ii) Business interruption/extra expense insurance in amounts sufficient
to pay during any period in which the Property may be damaged or destroyed, on a
gross income basis for a period of twelve (12) months (i) all business income
derived from the Property and (ii) all amounts (including all impositions,
utility charges and insurance premiums) required to be paid by Borrower;
(iii) During the performance of the Renovation Work and the making of any
other alterations or improvements to the Property insurance covering claims
based on the owner's or employer's contingent liability not covered by the
insurance provided in subsection (f) below.
(iv) Insurance against loss or damage by flood or mud slide in compliance
with the Flood Disaster Protection Act of 1973, as amended from time to time, if
the Property or any portion thereof is now, or at any time while the Loan
remains outstanding shall be, situated in any area which an appropriate
Governmental Authority designates as a special flood hazard area, Zone A or Zone
V, in amounts equal to the full replacement value of all above grade structures
on the Property;
(v) Insurance against loss or damage by earthquake, if the Premises are
now, or at any time while the Loan remains outstanding shall be, situated in any
area which is classified as a Major Damage Zone, Zones 3 and 4, by the
International Conference of Building Officials in an amount equal to the
probable maximum loss for the Premises, fixtures and equipment, plus the cost of
debris removal;
(vi) Commercial general public liability insurance, with the location of
the Property designated thereon, against death, bodily injury and property
damage arising in connection with the Property with Borrower listed as the named
insured with such limits as Lender may reasonably require, but in no event less
than $1,000,000, and written on a 1986 Standard ISO occurrence basis form or
equivalent form, and excess umbrella liability insurance with such limits as
Lender may reasonably require, but in no event less than $10,000,000; and <PAGE>
(vii) Such other insurance relating to the Property and the use and
operation thereof, as Lender may, from time to time, reasonably require,
including dramshop, products liability and workers' compensation insurance.
All insurance shall: (i) be carried by companies qualified to do business
in the State with a Best's rating of A-6 or better; (ii) be in form and content
reasonably acceptable to Lender; (iii) provide thirty (30) days' advance written
notice to Lender before any cancellation, material modification or notice of
non-renewal.
All physical damage policies and renewals shall contain a standard
mortgagee clause naming Lender as mortgagee, which clause shall expressly state
that any breach of any condition or warranty by Borrower shall not prejudice the
rights of Lender under such insurance, and a loss payable clause in favor of
Lender for personal property, contents, inventory, equipment and business
interruption. All liability policies and renewals shall name Lender as an
additional insured with respect to policies in which Lender has an interest. No
additional parties shall appear in the mortgage or loss payable clause without
Lender's prior written consent. All deductibles shall be in amounts reasonably
acceptable to Lender. In the event of the foreclosure of the Mortgage or any
other transfer of title to the Property in full or partial satisfaction of the
Loan, all right, title and interest of Borrower in and to all insurance policies
and renewals thereof then in force shall pass to the purchaser or grantee.
During any period during which construction is conducted on the Premises
and during which period the construction and materials are not covered by the
existing policies, Borrower shall cause to be provided to Lender, premium
prepaid insurance policies covering the Property (which during construction
shall be on an "All-Risk" perils, including theft, "Builder's Risk", "Completed
Value" form) in companies and forms satisfactory to Lender, and in amounts equal
to the replacement costs of the Improvements (including construction materials
and personal property on or off site) covering insurance risks no less broad
than those covered under a Standard Multi Peril (SMP) policy form, which
contains a 1987 Commercial ISO "Causes of Loss Special Form", with coverage for
such other expenses as Lender may reasonably require, including: debris removal;
cost of demolition of the undamaged portion of a building when required by code
or ordinance; increased cost of reconstruction to conform with current code or
ordinance requirements; real estate property taxes; architect, engineering, and
consulting fees; legal and accounting fees, including the cost of in-house
attorneys and paralegals; advertising and promotional expenses; interest on
money borrowed; additional commissions incurred upon renegotiating leases and
any and all other expenses which may be incurred as a result of any property
loss or destruction by an insured peril. Such insurance shall contain an agreed
amount endorsement (such amount to include foundation and underground pipes) and
bear a 100% co-insurance clause. The deductible shall be not more than $10,000.
Said policies shall contain a standard mortgagee clause naming Lender as
mortgagee, and a permission to occupy endorsement. <PAGE>
In addition, Borrower shall cause to be furnished to Lender certificates
from the insurance carrier for each general contractor evidencing workers'
compensation, employers' liability, commercial auto liability, and commercial
general liability insurance (including contractual liability and completed
operations coverage) written on a 1986 standard "ISO" occurrence basis form or
equivalent and excess umbrella coverage, carried during the course of
construction, with general liability insurance limits as Lender may reasonably
require, but in no event less than $1,000,000. Lender shall be named as an
additional insured under such liability policies. Borrower shall cause each
subcontractor to maintain commercial general liability, commercial automobile
liability, workers' compensation, employers' liability, and excess umbrella
liability coverage in form and amount reasonably satisfactory to Lender.
The additional insurance provisions for construction periods do not
obviate or otherwise affect requirements of the Loan Agreement or the previous
portions of this Exhibit, which requirements remain a part of this Agreement in
their entirety.
<PAGE>
EXHIBIT E
RENOVATION WORK
<PAGE>
Exhibit 10.4.2
GUARANTY AND INDEMNITY AGREEMENT
THIS GUARANTY AND INDEMNITY AGREEMENT (this "Agreement"), made effective
as of the 8th day of December 1998, by SERVICO CONCORD, INC., a California
corporation ("SCI"), and LODGIAN AMI, INC., a Maryland corporation ("AMI"), each
with a principal place of business at Two Live Oak Center, 3445 Peachtree Road,
NE, Suite 700, Atlanta, Georgia 30326 (SCI and AMI are sometimes hereinafter
collectively referred to as "Guarantor"), to and for the benefit of BANC ONE
CAPITAL FUNDING CORPORATION, an Ohio corporation, having an office at 150 East
Gay Street, 24th Floor, Columbus, Ohio 43215 ("Lender").
RECITALS:
A. Lender and Island Motel Enterprises, Inc., a Georgia corporation, and
Penmoco, Inc., a Michigan corporation (collectively, the "Borrower") have
entered into a Loan Agreement of even date herewith (as the same may be amended
from time to time, the "Loan Agreement") pursuant to which Lender has agreed to
make a loan to Borrower in the amount of up to $4,199,869 (the "Loan"), which
Loan is evidenced by that certain Promissory Note of even date herewith in the
principal amount of $3,695,885 (the "Primary Note") and that certain Promissory
Note of even date herewith in the principal amount of $503,984 (the "Additional
Note" and, together with the Primary Note, the "Note"). The Loan is secured by,
inter alia, that certain Leasehold Deed to Secure Debt and Security Agreement of
even date herewith from Borrower to Lender encumbering Borrower's property
commonly known as Holiday Inn Jekyll Island, located at 200 South Beachview
Drive, Jekyll Island, Georgia 31527 (the "Mortgage") (the Note, the Loan
Agreement, the Mortgage and every other document, instrument and agreement
evidencing or securing the Loan are hereinafter sometimes collectively referred
to as the "Loan Documents");
B. Borrower is an affiliate of SCI and AMI.
C. Lender is extending financial accommodations to SCI and AMI
concurrently with the Loan and, in order to induce Lender to extend such
financial accommodations, SCI and AMI are willing to execute this Agreement;
D. Lender is unwilling to make the Loan without the execution and delivery
of this Agreement by SCI and AMI;
NOW, THEREFORE, to induce Lender to make the Loan and in consideration of
One Dollar ($1.00) and other good and valuable consideration, the receipt and
sufficiency of which
<PAGE>
are hereby acknowledged, Guarantor, intending to be legally bound hereby,
jointly and severally, agree as follows:
1. Liabilities.
(a) Notwithstanding any provision contained in the Note, the Loan
Agreement, the Mortgage or any other Loan Document to the contrary, Guarantor
hereby absolutely, primarily, unconditionally and irrevocably guarantees to
Lender, its successors and assigns, the full prompt and complete payment and
performance of all obligations and liabilities of Borrower arising under the
Loan Documents (all of which obligations and liabilities are collectively
hereinafter referred to as the "Liabilities"). All terms used and not otherwise
defined herein shall have the meanings ascribed to them in the Loan Agreement.
(b) The validity of this Agreement and the obligations of Guarantor
hereunder shall in no way be terminated, abated, affected or impaired by the
happening from time to time of any event or condition, including, without
limitation, any of the following: (i) the assertion or non-assertion by Lender
of any of the rights or remedies available to Lender pursuant to the provisions
of the Loan Documents or pursuant to any applicable statutes; (ii) the waiver by
Lender of, or the failure of Lender to enforce, or the lack of diligence by
Lender in connection with, the enforcement of any of its rights or remedies
under the Loan Documents; (iii) the granting by Lender of any indulgence or
extension of time; (iv) the exercise by Lender of any so-called self-help
remedies; (v) any other act, omission or conditions which might in any manner or
to any extent vary the risk to Guarantor or might otherwise operate as a
discharge or release of the Guarantor under applicable law; (vi) the invalidity
or unenforceability of all or any portion or provision of the Note; (vii) any
release or discharge of or accord and satisfaction with Borrower or any other
person or entity, by variation of the terms of the Note or otherwise; (viii) the
impairment, modification, change, release, discharge or limitation of the
liability of Borrower or the Guarantor or any of their estates in bankruptcy,
resulting from or pursuant to the application of the bankruptcy or insolvency
laws of or any decision of any court of the United States or any state thereof;
(ix) any present or future law or order of any government (de jure or de facto)
or of any agency thereof purporting to reduce, amend or otherwise affect the
Liabilities or to vary any terms of payment, satisfaction or discharge thereof;
(x) the waiver, compromise, settlement, release, extension, amendment, change,
modification or termination of the terms of the Liabilities or any or all of the
obligations, covenants or agreements of Borrower under the Loan Documents
(except by satisfaction in full of all Liabilities) or of the Guarantor under
this Agreement; (xi) the extension of the time for satisfaction, discharge or
payment of the Liabilities or any part thereof owing or payable by Borrower
under the Loan Documents or of the time for performance of any other
obligations, covenants or agreements under or arising out of this Agreement or
the extension or renewal of any thereof; (xii) the existence of any other
guaranty of the Liabilities in favor of Lender, or the enforcement or attempted
enforcement of such other guaranty; and (xiii) any event or action that would in
the absence of this paragraph result in the release or discharge of the
Guarantor from the performance or observance of any obligation,
<PAGE>
covenant or agreement contained in this Agreement or any other agreement.
2. Waivers. The Guarantor hereby waives all notice of any default in the
payment of or non-performance of any Liabilities, all protest, demands, notices
or presentments of any kind, notice of any acceptance of this Agreement and all
matters and rights which may be raised in avoidance of, or in defense against,
any action to enforce the obligations of the Guarantor hereunder; provided,
however, that nothing herein shall waive the Guarantor's right to assert payment
or performance of any Liabilities as a defense to a claim relating to such
Liabilities under this Agreement, to the extent of such payment or performance.
The Guarantor hereby waives any and all suretyship defenses or defenses in the
nature thereof without in any manner limiting any other provisions of this
Agreement. Notwithstanding anything to the contrary contained herein, the
Guarantor hereby irrevocably waives all rights the Guarantor may have at law or
in equity, including, without limitation, any law subrogating the Guarantor to
the rights of Lender, to seek contribution, indemnification or any other form of
reimbursement from Borrower and any other person now or hereafter primarily or
secondarily liable for any obligations of Borrower to Lender, including without
limitation, the Liabilities, for any payment or performance made by the
Guarantor under or in connection with this Agreement, unless and until
irrevocable payment in full of the Note has been received by Lender.
3. Primary Liability.
(a) The Guarantor's liability under this Agreement shall be primary,
and with respect to any right of action which shall accrue to Lender relating to
any Liabilities, Lender may at its sole option and without notice or demand,
proceed directly against the Guarantor without having proceeded against Borrower
or any other person or entity liable to any extent for any of the Liabilities or
against the collateral under the Loan Documents. The Guarantor's liability
hereunder shall continue without regard to whether or not Lender may have
instituted or prosecuted or obtained or realized any judgment in any suit,
action or proceeding or shall have exhausted any of its remedies or taken any
steps to enforce any of its rights under or pursuant to the Loan Documents or at
law or in equity, or otherwise, and without regard to any other condition or
contingency, so long as any of the Liabilities remains unsatisfied to any
extent. This Agreement is an agreement of payment and performance and not merely
of collection.
(b) Each default on any of the Liabilities shall give rise to a
separate cause of action and separate suits may be brought hereunder as each
cause of action arises or, at Lender's option, any or all causes of action which
arise prior to or after any suit is commenced hereunder may be included in such
suit.
4. Representations. The Guarantor further represents to Lender, as an
inducement to making the Loan, that there is not pending or threatened any
litigation, arbitration, administrative
<PAGE>
or governmental proceeding against the Guarantor which would in any way prohibit
or impede the adoption, execution, or performance of this Agreement by the
Guarantor or which would affect any of the undertakings herein; that compliance
by the Guarantor with the Guarantor's obligations under this Agreement has not
resulted and will not result in the violation of this Agreement or any agreement
or other instrument to which the Guarantor is a party or by which the Guarantor
or any of the Guarantor's assets are bound; that this Agreement and all actions
contemplated to be taken by the Guarantor hereunder have been duly authorized;
and that this Agreement and such actions and undertakings are valid and binding
upon the Guarantor and enforceable against the Guarantor in accordance with
their terms.
5. Borrower's Actions. No encumbrance, assignment, leasing, subletting,
sale or other transfer by Borrower of any of Borrower's assets shall operate to
extinguish or diminish the liability of the Guarantor under this Agreement.
6. Bankruptcy. If Borrower files a petition for reorganization,
arrangement, composition or similar relief under any present or future provision
of the Federal Bankruptcy Code, or if such a petition is filed against Borrower
by any member or partner of Borrower, by Guarantor or by any person or entity
affiliated with, related to or in which a beneficial interest is owned by such
member or partner or Guarantor (each, a "Bankruptcy Event"), Guarantor shall,
from and after the date of such filing, absolutely, primarily, unconditionally
and irrevocably guarantee to Lender, its successors and assigns, the full,
prompt and absolute payment, performance, observance and discharge of all of
Borrower's obligations and liabilities arising under the Loan Documents,
including the repayment of all principal and interest under the Note and the
payment of all other sums payable by Borrower under the Loan Documents.
7. No Reliance. The Guarantor assumes the responsibility for being and
keeping itself informed of the financial condition of Borrower and of all other
circumstances bearing upon the risk of failure to pay, perform or discharge any
of the obligations and liabilities of Borrower which diligent inquiry would
reveal, and Lender shall have no duty to advise the Guarantor of information
known to Lender regarding such condition or any such circumstance.
8. Payment of Expenses. The Guarantor shall be responsible to Lender for
all expenses (including reasonable attorneys' fees), incurred by Lender in
enforcing any obligations of the Guarantor under this Agreement.
9. Successors and Assigns. All references to Lender and Guarantor shall be
deemed to include references to the successors and assigns of Lender and
Guarantor.
10. Governing Law. In all respects, including without limitation, matters
of construction and performance of this Agreement and the obligations arising
hereunder, this Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of Ohio applicable to contracts and
obligations made and performed in such state and any applicable laws of the
United States of America. Interpretation and construction of this
<PAGE>
Agreement shall be according to the contents hereof and without presumption or
standard of construction in favor of or against Guarantor or Lender.
11. Severability. If any term or provision of this Agreement or the
application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Agreement shall be valid and enforced to the fullest
extent permitted by law; provided, however, all rights, powers and remedies
provided herein may be exercised only to the extent that the exercise thereof
does not violate any applicable law, and are intended to be limited to the
extent necessary so that they will not render this Agreement invalid or
unenforceable under any applicable law.
12. No Waiver. The waiver of any provision of this Agreement by Lender
shall constitute a waiver of that provision on that occasion only, and shall not
constitute a waiver of any other provision of this Agreement, or that provision
with respect to any other occasion.
13. Commercial Transaction.
(a) TO INDUCE LENDER TO ENTER INTO THE COMMERCIAL LOAN TRANSACTION
EVIDENCED BY AND SECURED BY THE LOAN DOCUMENTS, GUARANTOR AGREES THAT THE SAID
TRANSACTION IS COMMERCIAL AND NOT A CONSUMER TRANSACTION.
(b) Each of the waivers set forth in this Agreement is made with
knowledge of its significance and consequences, and under the circumstances the
waivers are reasonable. If any of said waivers is determined to be contrary to
any applicable law or public policy, such waiver shall be effective only to the
maximum extent permitted by law.
14. Jury Trial. LENDER AND GUARANTOR HEREBY WAIVE THE RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER
OF THIS AGREEMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE
BY LENDER AND GUARANTOR, AND LENDER AND GUARANTOR ACKNOWLEDGE THAT NO PERSON
ACTING ON BEHALF OF ANOTHER PARTY TO THIS AGREEMENT HAS MADE ANY REPRESENTATIONS
OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR
NULLIFY ITS EFFECT. LENDER AND GUARANTOR FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN
REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF
THIS AGREEMENT AND IN THE MAKING OF ALL WAIVERS CONTAINED HEREIN BY INDEPENDENT
LEGAL COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND THAT LENDER AND GUARANTOR
HAVE HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH
<PAGE>
COUNSEL.
15. Consent to Jurisdiction. GUARANTOR HEREBY SUBMITS TO PERSONAL
JURISDICTION IN THE STATE OF OHIO FOR THE ENFORCEMENT OF THE PROVISIONS OF THIS
AGREEMENT AND IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO OBJECT TO SUCH
JURISDICTION FOR THE PURPOSES OF LITIGATION TO ENFORCE ANY PROVISION OF THIS
AGREEMENT. GUARANTOR HEREBY CONSENTS TO THE JURISDICTION OF AND AGREES THAT ANY
ACTION, SUIT OR PROCEEDING TO ENFORCE THIS AGREEMENT MAY BE BROUGHT IN ANY STATE
OR FEDERAL COURT IN THE STATE OF OHIO. GUARANTOR HEREBY IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY HAVE TO THE LAYING OF THE VENUE OF ANY SUCH ACTION, SUIT,
OR PROCEEDING IN ANY SUCH COURT AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM
THAT ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. EACH GUARANTOR HEREBY APPOINTS CT CORPORATION
AS THEIR AGENT FOR SERVICE OF PROCESS. GUARANTOR HEREBY CONSENTS THAT SERVICE OF
PROCESS IN ANY ACTION, SUIT OR PROCEEDING MAY BE MADE BY SERVICE UPON THE
AFORESAID AGENT FOR SERVICE OF PROCESS, BY PERSONAL SERVICE UPON THE PARTY BEING
SERVED, OR BY DELIVERY IN ACCORDANCE WITH THE NOTICE REQUIREMENTS OF SECTION 16
OF THIS AGREEMENT.
16. Notices. Any notice which any party hereto may be required or may
desire to give hereunder shall be delivered personally, or by overnight express
courier, addressed in the case of Guarantor to:
Servico Concord, Inc. and
Lodgian AMI, Inc.
Two Live Oak Center
3445 Peachtree Road, NE
Suite 700
Atlanta, Georgia 30326
with a copy to:
Stearns, Weaver, Miller, Weissler,
Alhadeff & Sitterson, P.A.
Museum Tower
150 West Flagler Street
Miami, Florida 33130
Attention: Robert Weissler, Esq.
<PAGE>
in the case of Lender to:
Banc One Capital Funding Corporation
150 East Gay Street, 24th Floor
Columbus, Ohio 43215
Attention: Loan Servicing
<PAGE>
with a copy to:
Banc One Capital Markets, Inc.
150 East Gay Street, 24th Floor
Columbus, Ohio 43215
Attention: Legal Department and Real Estate Group
or at such other addresses or to the attention of such other persons as may from
time to time be designated by the party to be addressed by written notice to the
other in the manner herein provided. Notices, demands and requests given in the
manner aforesaid shall be deemed sufficiently served or given for all purposes
hereunder when received or when delivery is refused or when the same are
returned to sender for failure to be called for.
17. Miscellaneous.
(a) This Agreement may not be modified, altered or amended nor may
any provision hereof or rights hereunder be waived, except by an instrument in
writing signed by the person or entity against which such modification,
alteration, amendment or waiver is sought to be enforced.
(b) Except as provided in Section 6 above, this Agreement shall
terminate upon the irrevocable payment by Borrower to Lender of all amounts
evidenced by the Note and the other Loan Documents.
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this instrument to be duly
executed as of the date first written above.
GUARANTOR:
SERVICO CONCORD, INC.
a California corporation
By: /s/ Toni Jones
----------------------------------
Name: Toni Jones
Title: Vice President
LODGIAN AMI, INC.
a Maryland corporation
By: /s/ Toni Jones
----------------------------------
Name: Toni Jones
Title: Vice President
<PAGE>
Exhibit 10.4.3
LIMITED GUARANTY AND INDEMNITY AGREEMENT
THIS LIMITED GUARANTY AND INDEMNITY AGREEMENT (this "Agreement"), made
effective as of the 8th day of December 1998, by LODGIAN, INC., a Delaware
corporation, with a principal place of business at Two Live Oak Center, 3445
Peachtree Road, NE, Suite 700, Atlanta, Georgia 30326 ("Guarantor"), to and for
the benefit of BANC ONE CAPITAL FUNDING CORPORATION, an Ohio corporation, having
an office at 150 East Gay Street, 24th Floor, Columbus, Ohio 43215 ("Lender")
RECITALS:
A. Lender and ISLAND MOTEL ENTERPRISES, INC., a Georgia corporation, and
PENMOCO, INC., a Michigan corporation (collectively, "Borrower"), jointly and
severally ("Borrower"), have entered into a Loan Agreement of even date herewith
(as the same may be amended from time to time, the "Loan Agreement") pursuant to
which Lender has agreed to make a loan to Borrower in the amount of up to
$4,199,869 (the "Loan"), which Loan is evidenced by that certain Promissory Note
of even date herewith in the principal amount of $3,695,885 (the "Primary Note")
and that certain Promissory Note of even date herewith in the principal amount
of $503,984 (the "Additional Note," and together with the Primary Note, the
"Note"). The Loan is secured by, inter alia, that certain Leasehold Deed to
Secure Debt and Security Agreement of even date herewith from Borrower to Lender
encumbering Borrower's property commonly known as Holiday Inn Jekyll Island,
located at 200 South Beachview Drive, Jekyll Island, Georgia 31527 (the
"Mortgage") (the Note, the Loan Agreement, the Mortgage and every other
document, instrument and agreement evidencing or securing the Loan are
hereinafter sometimes collectively referred to as the "Loan Documents");
B. Borrower is a direct or indirect subsidiary of Guarantor;
C. Guarantor will directly benefit from the making of the Loan to
Borrower; and
D. Lender is unwilling to make the Loan without the execution and delivery
of this Agreement by Guarantor;
NOW, THEREFORE, to induce Lender to make the Loan and in consideration of
One Dollar ($1.00) and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Guarantor, intending to be legally
bound hereby, jointly and severally, agree as follows:
<PAGE>
1. Liabilities.
(a) Notwithstanding any provision contained in the Note, the Loan
Agreement, the Mortgage or any other Loan Document to the contrary, Guarantor
hereby absolutely, primarily, unconditionally and irrevocably guarantees to
Lender, its successors and assigns, (i) the full prompt and complete payment and
performance of all principal, interest, charges, fees and other monetary
obligations of Borrower under the Primary Note, provided, however, that upon
Renovation Completion and so long as no Event of Default then exists, such
obligation shall terminate and become null and void, and (ii) the full prompt
and complete payment and performance of all principal, interest, charges, fees
and other monetary obligations of Borrower under the Additional Note, and (iii)
the full, prompt and complete payment and performance of all obligations and
liabilities of Borrower arising under Section 8.19 (c) and (d) of the Loan
Agreement and Sections 2.10 and 4.13 of the Mortgage (all of which obligations
and liabilities are collectively hereinafter referred to as the "Liabilities").
All terms used and not otherwise defined herein shall have the meanings ascribed
to them in the Loan Agreement.
(b) The validity of this Agreement and the obligations of Guarantor
hereunder shall in no way be terminated, abated, affected or impaired by the
happening from time to time of any event or condition, including, without
limitation, any of the following: (i) the assertion or non-assertion by Lender
of any of the rights or remedies available to Lender pursuant to the provisions
of the Loan Documents or pursuant to any applicable statutes; (ii) the waiver by
Lender of, or the failure of Lender to enforce, or the lack of diligence by
Lender in connection with, the enforcement of any of its rights or remedies
under the Loan Documents; (iii) the granting by Lender of any indulgence or
extension of time; (iv) the exercise by Lender of any so-called self-help
remedies; (v) any other act, omission or conditions which might in any manner or
to any extent vary the risk to Guarantor or might otherwise operate as a
discharge or release of the Guarantor under applicable law; (vi) the invalidity
or unenforceability of all or any portion or provision of the Note; (vii) any
release or discharge of or accord and satisfaction with Borrower or any other
person or entity, by variation of the terms of the Note or otherwise; (viii) the
impairment, modification, change, release, discharge or limitation of the
liability of Borrower or the Guarantor or any of their estates in bankruptcy,
resulting from or pursuant to the application of the bankruptcy or insolvency
laws of or any decision of any court of the United States or any state thereof;
(ix) any present or future law or order of any government (de jure or de facto)
or of any agency thereof purporting to reduce, amend or otherwise affect the
Liabilities or to vary any terms of payment, satisfaction or discharge thereof;
(x) the waiver, compromise, settlement, release, extension, amendment, change,
modification or termination of the terms of the Liabilities or any or all of the
obligations, covenants or agreements of Borrower under the Loan Documents
(except by satisfaction in full of all Liabilities) or of the Guarantor under
this Agreement; (xi) the extension of the time for satisfaction, discharge or
payment of the Liabilities or any part thereof owing or payable by Borrower
under the Loan Documents or of the time for performance of any other
obligations, covenants or agreements under or arising out of this
<PAGE>
Agreement or the extension or renewal of any thereof; (xii) the existence of any
other guaranty of the Liabilities in favor of Lender, or the enforcement or
attempted enforcement of such other guaranty; and (xiii) any event or action
that would in the absence of this paragraph result in the release or discharge
of the Guarantor from the performance or observance of any obligation, covenant
or agreement contained in this Agreement or any other agreement.
2. Waivers. The Guarantor hereby waives all notice of any default in the
payment of or non-performance of any Liabilities, all protest, demands, notices
or presentments of any kind, notice of any acceptance of this Agreement and all
matters and rights which may be raised in avoidance of, or in defense against,
any action to enforce the obligations of the Guarantor hereunder; provided,
however, that nothing herein shall waive the Guarantor's right to assert payment
or performance of any Liabilities as a defense to a claim relating to such
Liabilities under this Agreement, to the extent of such payment or performance.
The Guarantor hereby waives any and all suretyship defenses or defenses in the
nature thereof without in any manner limiting any other provisions of this
Agreement. Notwithstanding anything to the contrary contained herein, the
Guarantor hereby irrevocably waives all rights the Guarantor may have at law or
in equity, including, without limitation, any law subrogating the Guarantor to
the rights of Lender, to seek contribution, indemnification or any other form of
reimbursement from Borrower and any other person now or hereafter primarily or
secondarily liable for any obligations of Borrower to Lender, including without
limitation, the Liabilities, for any payment or performance made by the
Guarantor under or in connection with this Agreement, unless and until
irrevocable payment in full of the Note has been received by Lender.
3. Primary Liability.
(a) The Guarantor's liability under this Agreement shall be primary,
and with respect to any right of action which shall accrue to Lender relating to
any Liabilities, Lender may at its sole option and without notice or demand,
proceed directly against the Guarantor without having proceeded against Borrower
or any other person or entity liable to any extent for any of the Liabilities or
against the collateral under the Loan Documents. The Guarantor's liability
hereunder shall continue without regard to whether or not Lender may have
instituted or prosecuted or obtained or realized any judgment in any suit,
action or proceeding or shall have exhausted any of its remedies or taken any
steps to enforce any of its rights under or pursuant to the Loan Documents or at
law or in equity, or otherwise, and without regard to any other condition or
contingency, so long as any of the Liabilities remains unsatisfied to any
extent. This Agreement is an agreement of payment and performance and not merely
of collection.
(b) Each default on any of the Liabilities shall give rise to a
separate cause of action and separate suits may be brought hereunder as each
cause of action arises or, at Lender's option, any or all causes of action which
arise prior to or after any suit is commenced hereunder may be included in such
suit.
<PAGE>
4. Representations. The Guarantor further represents to Lender, as an
inducement to making the Loan, that there is not pending or threatened any
litigation, arbitration, administrative or governmental proceeding against the
Guarantor which would in any way prohibit or impede the adoption, execution, or
performance of this Agreement by the Guarantor or which would affect any of the
undertakings herein; that compliance by the Guarantor with the Guarantor's
obligations under this Agreement has not resulted and will not result in the
violation of this Agreement or any agreement or other instrument to which the
Guarantor is a party or by which the Guarantor or any of the Guarantor's assets
are bound; that this Agreement and all actions contemplated to be taken by the
Guarantor hereunder have been duly authorized; and that this Agreement and such
actions and undertakings are valid and binding upon the Guarantor and
enforceable against the Guarantor in accordance with their terms.
5. Borrower's Actions. No encumbrance, assignment, leasing, subletting,
sale or other transfer by Borrower of any of Borrower's assets shall operate to
extinguish or diminish the liability of the Guarantor under this Agreement.
6. Bankruptcy. If Borrower files a petition for reorganization,
arrangement, composition or similar relief under any present or future provision
of the Federal Bankruptcy Code, or if such a petition is filed against Borrower
by any member or partner of Borrower, by Guarantor or by any person or entity
affiliated with, related to or in which a beneficial interest is owned by such
member or partner or Guarantor (each, a "Bankruptcy Event"), Guarantor shall,
from and after the date of such filing, absolutely, primarily, unconditionally
and irrevocably guarantee to Lender, its successors and assigns, the full,
prompt and absolute payment, performance, observance and discharge of all of
Borrower's obligations and liabilities arising under the Loan Documents,
including the repayment of all principal and interest under the Note and the
payment of all other sums payable by Borrower under the Loan Documents.
7. No Reliance. The Guarantor assumes the responsibility for being and
keeping itself informed of the financial condition of Borrower and of all other
circumstances bearing upon the risk of failure to pay, perform or discharge any
of the obligations and liabilities of Borrower which diligent inquiry would
reveal, and Lender shall have no duty to advise the Guarantor of information
known to Lender regarding such condition or any such circumstance.
8. Payment of Expenses. The Guarantor shall be responsible to Lender for
all expenses (including reasonable attorneys' fees), incurred by Lender in
enforcing any obligations of the Guarantor under this Agreement.
9. Successors and Assigns. All references to Lender and Guarantor shall be
deemed to include references to the successors and assigns of Lender and
Guarantor.
10. Governing Law. In all respects, including without limitation, matters
of construction and performance of this Agreement and the obligations arising
hereunder, this
<PAGE>
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of Ohio applicable to contracts and obligations made and
performed in such state and any applicable laws of the United States of America.
Interpretation and construction of this Agreement shall be according to the
contents hereof and without presumption or standard of construction in favor of
or against Guarantor or Lender.
11. Severability. If any term or provision of this Agreement or the
application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Agreement shall be valid and enforced to the fullest
extent permitted by law; provided, however, all rights, powers and remedies
provided herein may be exercised only to the extent that the exercise thereof
does not violate any applicable law, and are intended to be limited to the
extent necessary so that they will not render this Agreement invalid or
unenforceable under any applicable law.
12. No Waiver. The waiver of any provision of this Agreement by Lender
shall constitute a waiver of that provision on that occasion only, and shall not
constitute a waiver of any other provision of this Agreement, or that provision
with respect to any other occasion.
13. Commercial Transaction.
(a) TO INDUCE LENDER TO ENTER INTO THE COMMERCIAL LOAN TRANSACTION
EVIDENCED BY AND SECURED BY THE LOAN DOCUMENTS, GUARANTOR AGREES THAT THE SAID
TRANSACTION IS COMMERCIAL AND NOT A CONSUMER TRANSACTION.
(b) Each of the waivers set forth in this Agreement is made with
knowledge of its significance and consequences, and under the circumstances the
waivers are reasonable. If any of said waivers is determined to be contrary to
any applicable law or public policy, such waiver shall be effective only to the
maximum extent permitted by law.
14. Jury Trial. LENDER AND GUARANTOR HEREBY WAIVE THE RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER
OF THIS AGREEMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE
BY LENDER AND GUARANTOR, AND LENDER AND GUARANTOR ACKNOWLEDGE THAT NO PERSON
ACTING ON BEHALF OF ANOTHER PARTY TO THIS AGREEMENT HAS MADE ANY REPRESENTATIONS
OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR
NULLIFY ITS EFFECT. LENDER AND GUARANTOR FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN
REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF
THIS AGREEMENT AND IN THE MAKING OF ALL WAIVERS CONTAINED HEREIN BY INDEPENDENT
<PAGE>
LEGAL COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND THAT LENDER AND GUARANTOR
HAVE HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.
15. Consent to Jurisdiction. GUARANTOR HEREBY SUBMITS TO PERSONAL
JURISDICTION IN THE STATE OF OHIO FOR THE ENFORCEMENT OF THE PROVISIONS OF THIS
AGREEMENT AND IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO OBJECT TO SUCH
JURISDICTION FOR THE PURPOSES OF LITIGATION TO ENFORCE ANY PROVISION OF THIS
AGREEMENT. GUARANTOR HEREBY CONSENTS TO THE JURISDICTION OF AND AGREES THAT ANY
ACTION, SUIT OR PROCEEDING TO ENFORCE THIS AGREEMENT MAY BE BROUGHT IN ANY STATE
OR FEDERAL COURT IN THE STATE OF OHIO. GUARANTOR HEREBY IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY HAVE TO THE LAYING OF THE VENUE OF ANY SUCH ACTION, SUIT,
OR PROCEEDING IN ANY SUCH COURT AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM
THAT ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. EACH GUARANTOR HEREBY APPOINTS CT CORPORATION
AS THEIR AGENT FOR SERVICE OF PROCESS. GUARANTOR HEREBY CONSENTS THAT SERVICE OF
PROCESS IN ANY ACTION, SUIT OR PROCEEDING MAY BE MADE BY SERVICE UPON THE
AFORESAID AGENT FOR SERVICE OF PROCESS, BY PERSONAL SERVICE UPON THE PARTY BEING
SERVED, OR BY DELIVERY IN ACCORDANCE WITH THE NOTICE REQUIREMENTS OF SECTION 16
OF THIS AGREEMENT.
16. Notices. Any notice which any party hereto may be required or may
desire to give hereunder shall be delivered personally, or by overnight express
courier, addressed in the case of Guarantor to:
Lodgian, Inc.
Two Live Oak Center
3445 Peachtree Road, NE
Suite 700
Atlanta, Georgia 30326
with a copy to:
Stearns, Weaver, Miller, Weissler,
Alhadeff & Sitterson, P.A.
Museum Tower
150 West Flagler Street
Miami, Florida 33130
Attention: Robert Weissler, Esq.
<PAGE>
<PAGE>
in the case of Lender to:
Banc One Capital Funding Corporation
150 East Gay Street, 24th Floor
Columbus, Ohio 43215
Attention: Loan Servicing
with a copy to:
Banc One Capital Markets, Inc.
150 East Gay Street, 24th Floor
Columbus, Ohio 43215
Attention: Legal Department and Real Estate Group
or at such other addresses or to the attention of such other persons as may from
time to time be designated by the party to be addressed by written notice to the
other in the manner herein provided. Notices, demands and requests given in the
manner aforesaid shall be deemed sufficiently served or given for all purposes
hereunder when received or when delivery is refused or when the same are
returned to sender for failure to be called for.
17. Miscellaneous.
(a) This Agreement may not be modified, altered or amended nor may
any provision hereof or rights hereunder be waived, except by an instrument in
writing signed by the person or entity against which such modification,
alteration, amendment or waiver is sought to be enforced.
(b) Except as provided in Section 6 above, this Agreement shall
terminate upon the irrevocable payment by Borrower to Lender of all amounts
evidenced by the Note and the other Loan Documents.
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this instrument to be duly
executed as of the date first written above.
GUARANTOR:
LODGIAN, INC.,
a Delaware corporation
By: /s/ Toni Jones
----------------------------------
Name: Toni Jones
Title: Vice President
<PAGE>
Exhibit 10.5.1
LOAN AGREEMENT
IN THE AMOUNT OF $5,214,292
Dated December 8, 1998
BETWEEN
LODGIAN AMI, INC.
BORROWER
AND
BANC ONE CAPITAL FUNDING CORPORATION
LENDER
<PAGE>
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS 1
Defined Terms 1
ARTICLE 2 BORROWER'S REPRESENTATIONS, WARRANTIES AND
COVENANTS 8
Representations, Warranties and Covenants 8
Representations Remade 14
ARTICLE 3 GENERAL CONDITIONS OF LOAN 14
Loan Documents 14
Additional Requirements 14
ARTICLE 4 FURTHER COVENANTS OF BORROWER 17
Covenants 17
ARTICLE 5 AGREEMENT TO LEND 27
Agreement to Lend 27
ARTICLE 6 INSURANCE AND CASUALTY 27
Insurance Provisions 27
ARTICLE 6A RENOVATION WORK 32
6A.1 Construction 32
6A.2 Completion 33
6A.3 Compliance with Laws 33
6A.4 Other Remedies of Lender 33
ARTICLE 7 BORROWER'S DEFAULT 33
Events of Default 33
Remedies 35
ARTICLE 8 MISCELLANEOUS 37
Indemnification 37
Defense of Claims 37
Performance by Lender 37
Transfer or Assignment 38
Lender's Actions 38
Time is of the Essence 38
Waivers 38
Notices 39
Successors and Assigns 39
No Partnership 40
Brokerage Claims 40
Publicity 40
<PAGE>
Documents Satisfactory to Lender 40
Additional Assurances 40
Entire Agreement 40
Severability 40
No Third Party Beneficiary 40
CHOICE OF LAW 41
Limitation on Liability 41
WRITTEN AGREEMENT 43
Cross-Collateralizations. The Other Borrower Loans
and the Related Party Loans are 43
Intentionally Omitted 44
Intentionally Omitted 44
WAIVER OF JURY TRIAL 44
Consent to Jurisdiction 44
Exhibit A Legal Description
Exhibit B-1 Additional Note
Exhibit B-2 Primary Note
Exhibit C Permitted Encumbrances
Exhibit D Insurance Requirements
Exhibit E Renovation Work
Schedule 1 Description of Ground Lease
<PAGE>
THIS LOAN AGREEMENT (this "Agreement") is dated effective as of December
8, 1998 between LODGIAN AMI, INC., a Maryland corporation, with an office and
principal place of business at Two Live Oak Center, 3445 Peachtree Road, NE,
Suite 700, Atlanta, Georgia 30326 ("Borrower") and BANC ONE CAPITAL FUNDING
CORPORATION, an Ohio corporation having a principal place of business at 150
East Gay Street, 24th Floor, Columbus, Ohio 43215 ("Lender").
R E C I T A L S
The Borrower desires to borrow from Lender up to $5,214,292 for the
financing and renovation of that certain piece or parcel of real property
located at 521 Greenfield Road, Lancaster, Pennsylvania 17601 (the "Land"),
known as the Holiday Inn - Visitor Center/Lancaster East (the "Hotel")
consisting of a 189-room hotel and all other improvements located thereon and
together with all furniture, equipment and other personal property now or
hereafter used in the management and operation of the Hotel (the "Personal
Property"). The Land and the Improvements (as defined below) are hereinafter
collectively referred to as the "Premises." The Premises and the Personal
Property are hereinafter collectively referred to as the "Property." Lender has
agreed to make the loan to Borrower pursuant to the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the covenants,
conditions and agreements contained herein, Borrower and Lender agree as
follows:
ARTICLE 1
DEFINITIONS
1.1 Defined Terms. In this Agreement, the following terms shall have the
following meanings:
"Accounting Period" -- shall mean each of the four (4) week periods
designated by Borrower as a fiscal period of the Hotel, except that an
Accounting Period may occasionally contain five (5) weeks when necessary to
conform Borrower's accounting system to the calendar.
"Additional Note" -- the Promissory Note from Borrower to Lender of even
date herewith in the stated principal amount of Six Hundred Twenty Five Thousand
Seven Hundred Fifteen Dollars ($625,715). A copy of the Additional Note is
attached hereto as Exhibit B-1.
"Advance" -- an advance by Lender to Borrower in accordance with the Note
or this Agreement.
<PAGE>
"Affiliate" -- of any person or entity shall mean any other person or
entity directly or indirectly controlling, under common control with, or
controlled by such person or entity. For purposes of the definition of
Affiliate, "control" when used with respect to any person or entity means the
power to direct the management and policies of such person or entity, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
relative to the foregoing.
"Assignment of Accounts" -- the Assignment of Accounts and Security
Agreement of even date herewith from Borrower to Lender.
"Assignment of Permits and Contracts" -- the Assignment of Licenses,
Permits and Contracts, (specifically including the management agreement relating
to the Property) of even date herewith from Borrower to Lender.
"Assignment of Leases" -- the Assignment of Leases and Rents of even date
herewith from Borrower to Lender.
"Bankruptcy Code" -- the United States Bankruptcy Code and any similar
state or federal law now or hereafter in effect relating to bankruptcy,
reorganization or insolvency, or the arrangement or adjustment of debts.
"Business Day" -- any day other than a Saturday, Sunday or legal holiday
on which commercial banks are authorized or required to be closed in Columbus,
Ohio.
"Calculation Date" -- January 20, 2000, and the twentieth day of every
third Loan Month thereafter prior to the Maturity Date.
"Calculation Period" -- the period of twelve (12) full calendar months
immediately preceding the calendar month which includes the Calculation Date.
"Capital Reserve" -- the furniture, fixtures and equipment reserve to be
held by Lender pursuant to the terms and conditions of Section 4.1.T.
"Cash Management Agreement" -- that certain Cash Management Agreement
dated January 31, 1995 among Servico, Inc., Servico Management Corporation and
certain of their subsidiaries and affiliates, including Borrower, as amended
November 24, 1998.
"Closing" -- the closing of the Loan contemplated by this Agreement.
"Cross-Guaranty" -- the Guaranty Agreement of even date herewith from the
Related Parties to Lender in connection with the Loan.
"Code" -- the Internal Revenue Code of 1986, as amended, and the
Regulations
<PAGE>
promulgated thereunder.
"Costs" -- costs and expenses incurred directly relating to the Renovation
Work.
"Deferred Origination Fee" -- a deferred origination fee in the amount of
$91,771.54 payable to Lender in accordance with Section 4.Y.
"DSCR" -- the debt service coverage ratio as determined by Lender on each
Calculation Date by calculating the ratio of (x) the Net Operating Income from
the Property for the immediately preceding thirteen (13) Accounting Periods, to
(y) the sum of the payments of interest which are due and payable under the
Primary Note for the immediately following twelve (12) Loan Months.
"Default Rate" -- see Section 1 of the Primary Note.
"Environmental Indemnity" -- the Hazardous Substances Indemnity Agreement
of even date herewith from Borrower and Guarantors to Lender.
"Environmental Site Assessment Report" -- the Phase I Environmental Site
Assessment Report dated November 25, 1997, and updated September 23, 1998
prepared by Building Evaluation Services & Technology, Inc..
"Estoppel Agreement" -- an Estoppel Agreement with respect to the Ground
Lease executed by the Ground Lessor and in form and substance acceptable to the
Lender.
"Event of Default" -- the occurrence of any one or more of the events set
forth in Section 7.1.
"Financing Statements" -- the UCC-1 Financing Statements naming Borrower
as debtor and Lender as secured party and filed with the offices of the
Pennsylvania Department of State and the Lancaster County Prothonotary in
connection with the Mortgage, the Security Agreement, the Assignment of Leases,
the Assignment of Permits and Contracts and the Assignment of Accounts.
"Franchise Agreement" -- that certain Franchise Agreement dated May 28,
1998, between Borrower and Franchisor relating to the Property.
"Franchisor" -- Holiday Hospitality Franchising, Inc.
"Governmental Authority" -- the United States of America, the state in
which the Property is located, the state under the laws of which Borrower is
organized, any state in which (or to residents of which) Borrower offers to sell
or lease any portion of the Property or
<PAGE>
Improvements have been or will be made by or on behalf of Borrower, any
political subdivision of any of them, and any court, agency, department,
commission, board, bureau or instrumentality of any of them.
"Gross Revenues" -- for each Accounting Period shall mean all rents,
revenues and other payments earned by Borrower in cash or current funds or other
consideration from any source whatsoever in connection with its ownership,
operation and management of the Property, including all amounts earned by
Borrower from all tenants or other occupants of the Property. Gross Revenues
shall be determined on an accrual basis and in accordance with generally
accepted accounting principles consistently applied. "Ground Lease" -- that
certain lease more particularly described in Schedule 1.
"Ground Lessor" -- Dorothy H. Herr.
"Guarantor" -- Lodgian, Inc., a Delaware corporation.
"Impac Loan" -- collectively, all outstanding indebtedness owing to Banc
One Capital Partners III, Ltd. or its Affiliates by Impac Hotel Group, L.L.C.
"Impositions" -- all taxes of every kind and nature, sewer rents, charges
for water, for setting or repairing meters and for all other utilities serving
the Premises, and assessments, levies, inspection and license fees and all other
charges imposed upon or assessed against the Premises or any portion thereof
(including the income derived from the Premises), and any stamp or other taxes
which might be required to be paid with respect to any of the Loan Documents,
any of which might, if unpaid, result in a lien on the Premises or any portion
thereof, regardless of to whom assessed.
"Improvements" -- the improvements existing upon the Land.
"Incipient Default" -- the existence of any condition or state of facts
which with the giving of notice by Lender or the passage of time, or both, would
constitute an Event of Default.
"Indebtedness" -- all indebtedness, obligations, liabilities, amounts,
sums and expenses payable by Borrower under the Note, this Agreement and every
other Loan Document, together with interest thereon in accordance with the terms
and conditions of the Loan Documents.
"Interest Rate" -- shall mean the Interest Rate as defined in the Primary
Note.
"Knowledge of Borrower" -- any matter actually known or, with the exercise
of reasonable care or diligence, should have been known, to the Borrower or the
Guarantor.
"Lease" -- any lease (including any equipment lease) or other rental or
occupancy
<PAGE>
agreement, demising a portion of the Property, other than those with hotel
guests and the Ground Lease.
"Lender's Consultant" -- the architect or engineer retained by Lender to
inspect the Improvements or the Renovation Work on behalf of Lender; in the
event all or a portion of such functions are performed by Lender, references in
this Agreement to Lender's Consultant shall be deemed to such extent to be
references to Lender.
"Limited Guaranty" -- the Limited Guaranty and Indemnity Agreement of even
date herewith from Guarantor to Lender in connection with the Loan.
"Liquor License Agreement" -- the Liquor License Agreement of even date
herewith between Lender and Borrower.
"Loan" -- the loan evidenced by the Note and this Agreement.
"Loan Amount" -- Five Million Two Hundred Fourteen Thousand Two Hundred
and Ninety Two Dollars ($5,214,292).
"Loan Documents" -- this Agreement, the Note, the Mortgage, the Security
Agreement, the Assignment of Leases, the Stock Pledge, the Limited Guaranty, the
Environmental Indemnity, the Assignment of Permits and Contracts, the Assignment
of Accounts, the Cross Guaranty, the Liquor License Agreement, the Financing
Statements and such other documents and agreements as Lender may require in
connection with the Loan.
"Loan Month" -- See Section 1 of the Primary Note.
"Loan Party" -- Borrower or the Guarantor.
"Management Agreement" -- the Consulting Agreement effective August 21,
1998 and amended November 24, 1998, by and between Borrower and Manager.
"Manager" -- Servico Management Corp., a Florida corporation.
"Maturity Date" -- See Section 1 of the Additional Note and the Primary
Note, as applicable.
"Mortgage" -- the Purchase Money Open End Mortgage, Purchase Money
Leasehold Open- End Mortgage and Security Agreement of even date herewith from
Borrower to Lender on the Premises, securing the Note and Borrower's obligations
under the other Loan Documents.
"Net Cash Flow" -- for each Accounting Period shall mean Net Operating
Income
<PAGE>
reduced by all monthly payments of interest under the Note and all other
payments under the Note and the other Loan Documents actually paid by Borrower
and received by Lender during such Accounting Period.
"Net Operating Income" -- for each Accounting Period shall be calculated
by Lender based upon Lender's review of Borrower's monthly financial statements
provided to Lender pursuant to Section 4.1.K, together with such other
information as Lender may reasonably request, and shall mean the difference
between:
(1) the Gross Revenues for said Accounting Period; and
(2) all the Operating Expenses for said Accounting Period.
"Note" -- collectively, the Primary Note and the Additional Note.
"Operating Expenses" -- the reasonably necessary and customary costs and
expenses incurred, whether or not actually paid, by Borrower in connection with
its ownership, operation and management of the Property, determined on an
accrual basis and in accordance with generally accepted accounting principles
consistently applied and specifically including in Operating Expenses all
required payments made by Borrower into the Capital Reserve pursuant to Section
4.l.T of this Agreement, any payments made pursuant to Section 4.l.B of the
Agreement and any other reserve established pursuant to this Agreement;
specifically excluding from Operating Expenses, however (w) all capital
expenditures incurred by Borrower (x) principal, interest and all other payments
made under the Loan Documents, and costs and expenses incurred by Borrower in
connection with the closing of the Loan, and (y) depreciation and all other
non-cash expenses of the Property. For purposes of calculating DSCR, Lender
shall include Operating Expenses which were budgeted for the applicable
Accounting Period(s) and were incurred but not paid. Operating Expenses which
are paid less frequently than each Accounting Period and which are allocable
evenly to each Accounting Period may be prorated to reflect such allocation.
"Organizational Documents" -- Borrower's articles of incorporation, bylaws
and other organizational documents and any amendments or modifications thereto.
"Other Borrower Loans" -- that (i) certain loan to Borrower of even date
herewith in the original aggregate principal amount of $35,073,117 and secured
by the Holiday Inn - Inner Harbor, (ii) certain loan to Borrower of even date
herewith in the original aggregate principal amount of $3,322,817 and secured by
the Holiday Inn - Glen Burnie North and (iii) certain loan to Borrower of even
date herewith in the original aggregate principal amount of $15,740,722 and
secured by the Holiday Inn International Airport.
<PAGE>
"Other Borrower Loan Documents" -- all documents, instruments or
agreements securing or evidencing the Other Borrower Loans from the Lender to
Borrower.
"Other Hotel Properties" -- the Holiday Inn - Glen Burnie North, the
Holiday Inn - Inner Harbor, and the Holiday Inn International Airport.
"Permitted Encumbrances" -- the liens, claims, assessments, encumbrances
and rights of others encumbering title to the Premises and the Personal Property
which are set forth on Exhibit C.
"Permitted Transfers" -- any transfer, sale or issuance of stock in
Lodgian, Inc., a Delaware corporation.
"Primary Note" -- the Promissory Note from Borrower to Lender of even date
herewith in the stated principal amount of Four Million Five Hundred Eighty
Eight Thousand Five Hundred and Seventy Seven Dollars ($4,588,577). A copy of
the Primary Note is attached hereto as Exhibit B-2.
"Principal Amortization Reserve" -- the reserve of funds which may be held
and disbursed by Lender pursuant to Section 4.l.R.
"Proceeds" -- all proceeds, judgments, claims, compensation, awards or
damages and settlements with respect to the Property as a result of or in lieu
of any condemnation or taking of the Property or any portion thereof by eminent
domain or any casualty loss or damage to any of the Property or any portion
thereof.
"Related Parties" -- Servico Concord, Inc., a California corporation,
Penmoco, Inc., a Michigan corporation, and Island Motel Enterprises, Inc., a
Georgia corporation.
"Related Party Loan Documents" -- all documents, instruments or agreements
securing or evidencing the Related Party Loans from the Lender to the Related
Parties.
"Related Party Loans" -- that certain loan to Servico Concord, Inc. of
even date herewith in the original aggregate principal amount of $8,449,183 and
secured by the Sheraton Hotel Concord and that certain loan to Penmoco, Inc. and
Island Motel Enterprises, Inc. of even date herewith in the original aggregate
principal amount of $4,199,869 and secured by the Holiday Inn Jekyll Island.
"Related Party Properties" -- the Sheraton Hotel Concord in Concord,
California and the Holiday Inn Jekyll Island in Jekyll Island, Georgia.
"Renovation Budget" -- the budget for the Renovation Work to be prepared
by the
<PAGE>
Borrower and delivered to Lender for its review and approval prior to the
Closing.
"Renovation Completion" -- the completion of the Renovation Work in
accordance with the requirements of Article 6A.
"Renovation Completion Date" -- May 29, 1999, the date on which all of the
Renovation Work is required to be completed in accordance with Article 6A
hereof.
"Renovation Plans" -- the plans and specifications for the Renovation Work
to be prepared by the Borrower and delivered to the Lender for its review and
approval prior to the Closing.
"Renovation Work" -- the work and projects described in Exhibit E.
"Required Coverage Standard" shall mean 1.25:1 for all Calculation Dates
on or before January 20, 2000 and 1.40:1 for all Calculation Dates subsequent to
January 20, 2000.
"Reserved Funds" -- all Net Cash Flow held by Lender pursuant to the terms
and conditions of Section 4.1.R.
"Security Agreement" -- the Security Agreement of even date herewith from
Borrower, as debtor, to Lender, as secured party.
"Stock Pledge" -- the Pledge of Stock executed by Servico Operations
Corporation pursuant to which Servico Operations Corporation pledges the Stock
of the Borrower and each Related Party to secure the obligations of Borrower
with respect to the Loan, the Other Borrower Loans and the Related Party Loans.
"Title Company" -- Chicago Title Insurance Company.
"Title Policy" -- a mortgagee's policy of title insurance issued on the
1992 ALTA form by the Title Company in the aggregate face amount of $5,214,292,
guaranteeing as of the date of the Closing, the Mortgage to be a valid first and
prior lien on Borrower's leasehold interest in the Premises (including any
easements appurtenant thereto) subject only to the Permitted Encumbrances. The
Title Policy shall contain such endorsements as Lender may reasonably require.
In this Agreement, the word "including" shall mean "including without
limitation."
ARTICLE 2
BORROWER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
<PAGE>
1.2 Representations, Warranties and Covenants. Borrower hereby represents,
covenants and warrants as follows:
1. Accuracy of Recitals. Each of the recitals to this Agreement is true
and correct.
2. Organization of Borrower. Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the State of Maryland.
Borrower is and at all times prior to the repayment of the Loan shall remain a
single purpose entity, so called, whose sole assets are the Property and the
Other Hotel Properties and whose sole business interest is the ownership of a
leasehold interest in, and operation of, the Property and the Other Hotel
Properties. The Borrower has provided Lender with a true and accurate copy of
the Organizational Documents. The Borrower is duly registered as a foreign
corporation and currently in good standing under the laws of the State of
Pennsylvania. The status of Borrower as a duly organized and validly existing
corporation under Maryland law will not be terminated. The Borrower shall not
amend the Organizational Documents in any material respect, without the Lender's
prior written consent.
3. Authority and Enforceability. Borrower has full right, power and
authority to execute, deliver and carry out the terms and provisions of this
Agreement and the other Loan Documents and every other document and instrument
to be executed and delivered by Borrower pursuant to this Agreement. The person
executing and delivering this Agreement and the Loan Documents on behalf of
Borrower is duly authorized to so act on behalf of Borrower. This Agreement,
each other Loan Document and every other document and instrument to be executed
and delivered by any Loan Party, when executed and delivered shall constitute
the duly authorized, valid and legally binding obligation of the party or
parties executing the same, enforceable in accordance with their respective
terms, subject only to applicable bankruptcy, reorganization, moratorium and
similar laws affecting the enforceability of creditors' rights generally.
4. Maintenance of Existence. Borrower shall do all things necessary to
preserve and keep in full force and effect its existence and all franchises,
licenses, authorizations, registrations, permits and approvals under the laws of
the state of its incorporation and the State of Pennsylvania, and shall comply
with all regulations, rules, ordinances, statutes, orders and decrees of any
governmental authority or court applicable to Borrower and to the Property or
any portion thereof.
5. No Default. Neither Borrower nor any other Loan Party is in default
under any material contract, agreement or commitment to which it is a party or
by which it is bound. The execution and delivery of this Agreement and the other
Loan Documents and any other documents or instruments to be executed and
delivered by Borrower or any other Loan Party pursuant hereto or thereto, the
consummation of the transactions herein or therein contemplated and compliance
with the terms and provisions hereof or thereof, will not (i) violate any law or
any regulation, order, writ or injunction of any court or governmental or
administrative department, commission,
<PAGE>
board, bureau, agency or instrumentality, or (ii) conflict or be inconsistent
with, or result in a breach of any of the provisions of, or constitute a default
under, any instrument, document, agreement, or contract of any kind to which
Borrower or any other Loan Party is a party or by which Borrower or any other
Loan Party or any of their respective property is bound.
6. No Litigation. There are no petitions, actions, suits, or proceedings
pending or, to the Knowledge of Borrower, threatened against or affecting
Borrower or any other Loan Party or the Property, by or before any court or any
governmental, administrative, regulatory, adjudicatory or arbitrational body or
agency (including any such petition, action, suit or proceeding to alter or
declare invalid any laws, regulations, permits, certificates, restrictions or
agreements relating to the Property) which, if determined against the Property,
the Borrower or the Loan Party, would reasonably likely have a material adverse
effect on the condition (financial or otherwise) or business of the Borrower or
the Loan Party or the condition or ownership of the Property.
7. Compliance with Laws. To the Knowledge of Borrower and except as may be
disclosed to Lender in the Environmental Site Assessment Report, the Title
Policy, the survey or the zoning letter with respect to the Premises, the use of
the Property as a hotel with a restaurant and bar does not violate (i) any
applicable law, regulation, ordinance or order of any kind whatsoever (including
any such relating to zoning, building and environmental protection), (ii) any
permit or license issued with respect to the Property, or (iii) any condition,
easement, right-of-way, covenant or restriction affecting the Property.
8. Permits. To the Knowledge of Borrower, all necessary material and
required franchises, licenses, authorizations, registrations, permits and
approvals for the use and occupancy of the Premises have been obtained from all
Governmental Authorities having jurisdiction over the Premises so as to permit
the operation of the Property as herein contemplated. Borrower has provided
Lender with true and correct copies of all of the certificates of occupancy (to
the extent available) and the hotel operating license and liquor license
respecting the Property.
9. Title. Effective as of the Closing, Borrower will have good and
indefeasible leasehold interest in the Premises and good and indefeasible title
to all existing Personal Property, free and clear of all liens, claims,
assessments, encumbrances and rights of others other than the Permitted
Encumbrances. Borrower shall preserve such title to the Premises and the
Personal Property and will forever warrant and defend the same and the validity
and priority of the Mortgage to Lender against all claims whatsoever other than
the Permitted Encumbrances.
10. Easements. In addition to the Permitted Encumbrances, all proposed
easements, permits, licenses, and other instruments which would or might affect
the title to the Property have been submitted to Lender for Lender's approval
together with a survey showing the exact or, if applicable, proposed location
thereof. Borrower shall not subject the Property or any part thereof to any
restrictive covenant (including any restriction or exclusive use provision in
any lease or other occupancy agreement) without the prior written consent of
Lender.
<PAGE>
11. Zoning. To the Knowledge of Borrower, and subject to any disclosures
in the zoning letters delivered to the Lender, (i) the Premises are zoned for
hotel use, which zoning is final, unconditional and in full force and effect,
(ii) the Premises are in compliance with all applicable zoning and land use
laws, regulations and ordinances, (iii) in the event that all or any part of the
Improvements are destroyed or damaged, said Improvements can be legally
reconstructed to their condition prior to such damage or destruction, and
thereafter exist for the same use without violating any zoning or other
ordinances applicable thereto and without the necessity of obtaining any
variances or special permits, (iv) the Property contains enough permanent
parking spaces to satisfy all requirements imposed by applicable laws with
respect to parking, (v) no legal proceedings are pending or threatened with
respect to the zoning of the Premises, and (vi) neither the zoning nor any other
right to construct, use or operate the Premises is in any way dependent upon or
related to any real estate other than the Premises. No tract map, parcel map,
condominium plan, condominium declaration, or plat of subdivision will be
recorded by Borrower with respect to the Premises without Lender's prior written
consent.
12. Complete Disclosure. Neither this Agreement nor any document,
financial statement, credit information, certificate or statement provided to
Lender by Borrower contains any untrue statement of material fact or omits to
state a fact necessary to make any statements made herein not misleading.
13. Agreements Affecting the Property. Borrower has provided Lender with
true and complete copies of all material contracts and agreements affecting the
Property, including, (i) the Management Agreement, (ii) all lease financings or
purchase money financings for equipment incurred as of the date hereof, and
(iii) all other contracts or agreements relating to the maintenance,
development, operation or management of the Property which either involve space
in excess of 1,000 square feet or payment obligations on the part of Borrower in
excess of $25,000 in any twelve (12) month period.
14. Brokerage Commissions. No brokerage fees or commissions are payable in
connection with the Loan.
15. Condemnation. Borrower has not received any notice from any
Governmental Authority or quasi-governmental body or agency or from any person
or entity with respect to (and Borrower does not know of) any actual or
threatened taking of the Premises, or any portion thereof, for any public or
quasi-public purpose or of any moratorium which may affect the use or operation
of the Property.
16. Year 2000 Compliance. All devices, systems, machinery, information
technology, computer software and hardware, and other date sensitive technology
(jointly and severally the "Systems") necessary for Borrower to carry on its
business as presently conducted and as contemplated to be conducted in the
future are Year 2000 Compliant or will be Year 2000
<PAGE>
Compliant within a period of time calculated to result in no material disruption
of any of Borrower's business operations. For purposes of these provisions,
"Year 2000 Compliant" means that such Systems are designed to be used prior to,
during and after the Gregorian calendar year 2000 A.D. and will operate during
each such time period without error relating to date data, specifically
including any error relating to, or the product of, date data which represents
or references different centuries or more than one century. Borrower: (1) has
taken and continues to undertake a detailed inventory, review, and assessment of
all areas within its business and operations that could be adversely affected by
the failure of Borrower to be Year 2000 Compliant on a timely basis; (2) is
developing a detailed plan and time line for becoming Year 2000 Compliant on a
timely basis; and (3) to date, has implemented that plan in accordance with
timetable in all material respects. The fair market value of all real and
personal property, if any, pledged to Lender as collateral to secure the Loan
Agreement is not and shall not be less than currently anticipated or subject to
substantial deterioration in value because of the failure of such collateral to
be Year 2000 Compliant.
17. Access. Except as otherwise shown on the survey delivered to the
Lender, the Property has access to and full utilization of completed public
roads necessary for access to and full utilization of the Property for its
intended purposes.
18. Tax Division. A tax division has been effected with respect to the
Premises so that it is taxed for ad valorem taxation without regard to or
inclusion of any other property. No subdivision or other approval is necessary
with respect to the Premises in order for Borrower to mortgage, convey and
otherwise deal with the Premises as a separate lot or parcel.
19. Non-Foreign Status of Borrower. Borrower is not a non-resident alien
for purposes of U.S. income taxation and is not a foreign corporation,
partnership, foreign trust or foreign estate (as said terms are defined in the
Code).
20. ERISA. Neither Borrower nor any Loan Party is a party to any plan
defined and regulated under the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") or Section 4975 of the Code. None of the assets of Borrower
or any Loan Party are "plan assets"" as defined in 29 C.F.R. ss.2509.75-2 or
ss.2510.3-101.
21. Mortgage. The Mortgage constitutes a valid and enforceable first lien
on Borrower's leasehold interest in the Premises, subject only to the Permitted
Encumbrances.
22. Security Interest. The Security Agreement and the Mortgage, together
with the Financing Statements filed in connection therewith, create a valid,
enforceable and perfected first priority security interest in the Collateral (as
defined therein) including the Personal Property, subject to no other interests,
liens or encumbrances other than the Permitted Encumbrances.
23. Intentionally Omitted.
<PAGE>
24. Intentionally Omitted.
25. Bankruptcy. No petition in bankruptcy, whether voluntary or
involuntary, or assignment for the benefit of creditors, or any other action
involving debtors' and creditors' rights has been filed or threatened under the
laws of the United States of America or any state thereof, against the Borrower
or any other Loan Party or against any other entity in which the Borrower or any
other Loan Party is a shareholder, principal, managing member or general
partner.
26. Leases. There are no Leases affecting the Property. Borrower has not
executed any prior assignment of the Leases, nor has it performed any act or
executed any other instrument which might prevent Lender from operating under
any of the terms and conditions of the Assignment of Leases or which would limit
Lender in such operation; and Borrower further covenants and warrants to Lender
that Borrower has not executed or granted any modification whatsoever of the
Leases, except as herein indicated, and that the Leases are in full force and
effect, and that, except as otherwise disclosed to Lender in writing, there are
no defaults now existing under the Leases with respect to which Borrower has
notified the tenant under the Leases.
27. Physical Condition of Property. Subject to the Renovation Work, all of
the Improvements are in good condition and repair except as otherwise expressly
provided in the Property Condition Report dated as of January 16, 1998, prepared
by Building Evaluation Services & Technology, Inc. (the "Property Condition
Report"). Since the date of the Property Condition Report, there have been no
material adverse changes to the physical condition of the Improvements. Borrower
is aware of no latent or patent structural or other significant defect or
deficiency in such Improvements except as may be disclosed in the Property
Condition Report. Water supply, storm and sanitary sewers, and electrical, gas
and telephone facilities are available to the Property within the boundary lines
of the Property, are sufficient to meet the reasonable needs of the Property as
now used or contemplated to be used, no other utility facilities are necessary
to meet the reasonable needs of the Property as now used, and design and
as-built conditions of the Property are such that surface and storm water does
not accumulate on the Property and, except as otherwise disclosed in writing to
Lender, does not drain from the Property across land of adjacent property
owners. Except as otherwise disclosed in writing to Lender, no part of the
Property is within a flood plain and none of the Improvements create an
encroachment over, across or upon any of the Property's boundary lines, rights
of way or easements, and no building or other improvement on adjoining land
create such an encroachment.
28. Mechanics' Liens. There are no mechanics' or materialmen's liens,
alienable bills or other claims constituting or that may constitute a lien on
the Property or any part thereof, and no work for which any such lien could be
asserted has been performed within the last 90 days, except as otherwise
disclosed in writing to Lender.
<PAGE>
29. Payment of Liens. Borrower shall pay when due all payments and charges
due under or in connection with any liens and encumbrances on and security
interests in the Property or any portion thereof, all rents and charges under
any ground leases and other leases forming a part of the Property, and all
claims and demands of mechanics, materialmen, laborers and others which, if
unpaid, might result in or permit the creation of a lien on the Property or any
portion thereof, and shall cause the prompt (but in no event later than 30 days
after imposition), full and unconditional discharge of all liens imposed on or
against the Property or any portion thereof. Borrower shall do or cause to be
done, at the sole cost of Borrower, everything necessary to fully preserve the
initial priority of the Mortgage. If Borrower fails to make any such payment or
if a lien (other than a Permitted Encumbrance) attaches to the Property or any
portion thereof, Lender may (but shall not be obligated to) make such payment or
discharge such lien and Borrower shall reimburse Lender on demand for all such
Advances.
30. Commercial Purpose. Borrower holds its interests in the Property for
commercial or investment purposes.
31. Franchise Agreement. Borrower has provided Lender with a true and
complete copy of the Franchise Agreement and any other agreements with the
Franchisor related to the Property. The Franchise Agreement is in full force and
effect and free from default on the part of the Borrower. The Franchise
Agreement embodies the entire transaction between Borrower and the Franchisor
with respect to the operation of the Property. Borrower shall not modify, amend
or waive any provisions of the Franchise Agreement without Lender's prior
written consent. Borrower will promptly furnish Lender with copies of all
notices furnished to Borrower under the Franchise Agreement.
32. Management Agreement. Borrower has provided Lender with a true and
complete copy of the Management Agreement. The Management Agreement is in full
force and effect and free from default on the part of the Borrower and Manager.
The Management Agreement embodies the entire transaction between Borrower and
Manager with respect to the operation of the Property. Borrower shall not
terminate, modify, amend or waive any provisions of the Management Agreement
without Lender's prior written consent. Borrower will promptly furnish Lender
with copies of all notices furnished to Borrower under the Management Agreement.
33. Ground Lease. Borrower has provided Lender with a true and complete
copy of the Ground Lease, and there are no documents, agreements, or other
modifications to the Ground Lease other than those listed under the definition
of Ground Lease contained in this Agreement. The Ground Lease is in full force
and effect and free from default on the part of Borrower and the Ground Lessor,
and, to the Knowledge of Borrower, no events have occurred which, with the
passage of time, would constitute a default under the Ground Lease. The Borrower
shall provide to the Lender copies of all notices (including, without
limitation, notices of defaults by Borrower) received with respect to the Ground
Lease within five (5) Business Days of Borrower's receipt of the same. The
Ground Lease embodies the entire transaction between
<PAGE>
Borrower and the Ground Lessor with respect to the Property. The amount of
rental payable under the Ground Lease and the terms of the Ground Lease, are as
set forth under the definition of Ground Lease. Borrower shall not modify, amend
or waive any provisions of the Ground Lease without the Lender's prior written
consent.
34. Liquor License. Borrower has provided Lender with a true and complete
copy of the liquor license with respect to the Property. Said liquor license is
in full force and effect and free of all liens and encumbrances. To the
Knowledge of Borrower, Borrower is in compliance with all terms and conditions
of said liquor license.
1.3 Representations Remade. Borrower warrants and covenants that the
foregoing representations and warranties will be true and shall be deemed remade
as of the date of the Closing. All representations, warranties and covenants
made herein or in any other Loan Document or in any certificate or other
document delivered to Lender by or on behalf of Borrower pursuant to or in
connection with this Agreement or any other Loan Document shall be deemed to
have been relied upon by Lender, notwithstanding any investigation heretofore or
hereafter made by or on behalf of Lender. All such representations, warranties
and covenants shall survive the making of the Loan and any or all of the
Advances contemplated hereby and shall continue in full force and effect until
such time as the Loan has been paid in full.
ARTICLE 3
GENERAL CONDITIONS OF LOAN
1.4 Loan Documents. It shall be a condition precedent to Lender's
obligation to make the Loan that at or before the Closing, Borrower shall
execute and deliver or cause to be duly executed and delivered to Lender all of
the Loan Documents and that all of the Loan Documents shall be in form and
substance satisfactory to Lender.
1.5 Additional Requirements. In addition to the Loan Documents, prior to
the Closing, Borrower shall deliver or cause to be delivered to Lender each of
the following, all of which shall be in form and substance satisfactory to
Lender:
1. Title Policy. The Title Policy or a pro-forma policy evidencing the
same and satisfactory to the Lender in its sole discretion.
2. Survey. A current, as built survey of the Premises, certified to Lender
and the Title Company by a surveyor reasonably satisfactory to Lender, which
survey shall contain the minimum detail for land surveys as most recently
adopted by ALTA/ASCM, and which survey shall comply with Lender's survey
requirements and shall contain Lender's standard form certification. Said survey
shall show no state of facts or conditions reasonably objectionable to Lender.
<PAGE>
3. Opinion. An opinion of Borrower's and Guarantor's counsel dated the
date of the Closing and relating to such matters with respect to this Agreement
and the transaction contemplated hereby (including usury and choice of laws) as
Lender may reasonably require. By its execution and delivery of this Agreement,
Borrower authorizes and directs such counsel to render such opinion.
4. Insurance. The insurance policies described on Exhibit D or
certificates of insurance evidencing the same, including without limitation,
evidence of insurance protection against the risks of hurricanes, satisfactory
to Lender in its sole discretion.
5. UCC Searches. Uniform Commercial Code searches made in the State of
Maryland and the State of Pennsylvania showing no filings relating to (i) the
Personal Property, (ii) any fixtures on the Premises, or (iii) the Collateral
(as such term is defined in the Security Agreement), other than those made
pursuant to this Agreement or otherwise approved by Lender in its sole
discretion.
6. Organizational Documents. A certified copy of the Organizational
Documents, together with such other documents as Lender may require, including
evidence of the Borrower's good standing in the States of Maryland and
Pennsylvania, and resolutions authorizing the Loan transaction contemplated by
this Agreement.
7. Ground Lease. A copy of the Ground Lease certified by the Borrower to
be true, complete and accurate.
8. Appraisal and Engineer's Report. An independent appraisal of the
Property from a state certified appraiser engaged by Lender which indicates the
fair market value of the Property and is satisfactory to Lender in all respects,
and an engineer's report satisfactory to the Lender.
9. Environmental Assessment. The Environmental Site Assessment Report, a
letter from the consultant preparing the environmental site assessment stating
that Lender is authorized to rely on the information contained therein, and
evidence satisfactory to Lender of said environmental consultant's errors and
omissions insurance coverage.
10. Subordination of Management Agreement. A copy of the Management
Agreement (certified by the Borrower to be true, complete and accurate),
together with a subordination of the Management Agreement whereby the Management
Agreement is subordinated to the Mortgage and Lender is given the right to
terminate the Management Agreement or any replacement thereof upon the
occurrence of an Event of Default, without payment of any termination or other
fee or other liability on the part of Lender.
11. Leases/Subordination Agreements and Estoppels. Copies of all Leases,
which shall be satisfactory to Lender and certified by Borrower to be true,
complete and accurate, together with
<PAGE>
(i) an estoppel certificate executed by the tenant under each Lease in form and
substance reasonably satisfactory to Lender, and (ii) a subordination,
nondisturbance and attornment agreement executed by each such tenant in form and
substance reasonably satisfactory to Lender.
12. Licenses, Permits and Approvals. A final, unconditional certificate of
occupancy (if available) issued with respect to the Premises, together with the
hotel operating license and liquor license respecting the Property.
13. Agreements. Copies of all agreements described in Section 2.1M
certified by the Borrower to be true, complete and accurate.
14. Zoning. Evidence reasonably satisfactory to Lender as to the zoning
compliance of the Premises.
15. Lender's Inspection. A satisfactory inspection report of the Premises
prepared by an architect/engineer or other consultant reasonably satisfactory to
Lender.
16. Equity Contribution. Evidence satisfactory to Lender that the Borrower
or its Affiliate originally acquired the Property for not less than $4,700,000.
17. Financial Statements. Current financial statements satisfactory to the
Lender for the Borrower, and the Guarantor.
18. Renovation Budget and Plans. A copy of the Renovation Budget and the
Renovation Plans satisfactory to the Lender.
19. Franchise Agreement. A copy of the Franchise Agreement certified by
the Borrower to be true, complete and accurate.
20. Compliance with Laws. Evidence that the Property is in compliance with
all applicable laws, zoning and land use requirements, regulations and
ordinances, including all applicable environmental protection laws and the
Americans with Disabilities Act of 1990 (except as stated in the Environmental
Site Assessment Report).
21. Flood Hazards. Evidence as to whether or not the Property is or is to
be located in an area having special flood hazards as such term is used in the
federal Flood Disaster Protection Act of 1973. If any part of the Property is or
is to be located in an area having "special flood hazards," a flood insurance
policy or certificate thereof naming the Lender as mortgagee must be submitted
to the Lender.
22. Fees and Expenses. Payment by Borrower of all applicable mortgage and
recording taxes and all fees and charges in connection with the Loan, including
all fees and charges of Lender's
<PAGE>
legal counsel.
23. Ground Lease Estoppel. The originally executed Estoppel Agreement.
24. Application Fee. The application fee payable to Banc One Capital
Markets, Inc. in the amount of $25,000, which was earned upon Borrower's
acceptance of the term sheet, and which upon closing, shall be applied against
the fees and expenses referred to in Section 3.2(V), above.
25. Intentionally Omitted.
26. Payment of Impac Loan. Evidence of payment in full of the Impac Loan
and all fees associated therewith in accordance with the requirements of the
intercreditor agreement(s) executed in connection therewith.
27. Other Items. Such other documents and instruments as Lender may
reasonably require.
ARTICLE 4
FURTHER COVENANTS OF BORROWER
1.6 Covenants. Borrower hereby further covenants and agrees with Lender as
follows:
1. Taxes and Impositions.
(1) Borrower shall pay and discharge all Impositions prior to
delinquency. Borrower shall provide to Lender validated receipts or other
evidence satisfactory to Lender showing the payment of all real estate and
personal property taxes within 15 days after the same would otherwise have
become delinquent. Borrower's obligation to pay Impositions pursuant to this
Agreement shall include, to the extent permitted by applicable law, taxes
resulting from future changes in law which impose upon Lender an obligation to
pay any property taxes or other Impositions. Should Borrower default in the
payment of any Impositions, Lender may (but shall not be obligated to) pay such
Impositions or any portion thereof and Borrower shall reimburse Lender on demand
for all such Advances.
(2) Borrower shall not be required to pay, discharge or remove any
Imposition so long as Borrower contests in good faith such Imposition or the
validity, applicability or amount thereof by an appropriate legal proceeding
which operates to prevent the collection of such amounts and the sale of the
Property or any portion thereof; provided, however, that prior to the date on
which such Imposition would otherwise have become delinquent Borrower shall have
(i) given Lender prior written notice of such contest, and (ii) provided
reasonable evidence to Lender that Borrower has available funds to pay the
balance of such Imposition then remaining unpaid, and all interest, penalties,
costs and charges accrued or accumulated thereon. Any such
<PAGE>
contest shall be prosecuted with due diligence, and Borrower shall promptly pay
the amount of such Imposition as finally determined, together with all interest
and penalties payable in connection therewith. Notwithstanding any provision of
this Section 4.1.A to the contrary, Borrower shall pay any Imposition which it
might otherwise be entitled to contest if, in the reasonable discretion of
Lender, the Property is in jeopardy or in danger of being forfeited or
foreclosed. If Borrower refuses to pay any such Imposition, Lender may (but
shall not be obligated to) make such payment and Borrower shall reimburse Lender
on demand for all such Advances.
2. Deposits.
(1) Borrower shall provide Lender with evidence of the timely
payment of all insurance premiums. For so long as Borrower's insurance coverages
are part of blanket coverages with other properties, Borrower shall not be
required to deposit in escrow any insurance premiums. Initially, so long as (i)
Borrower provides Lender with evidence of the timely payment of all real estate
and personal property taxes and (ii) Borrower is not required to make payments
of Reserve Funds pursuant to Section 4.1.R as of the most recent Calculation
Date, Borrower shall not be required to deposit in escrow any funds for real
estate and personal property taxes as hereinafter provided; provided, however,
Lender, in its sole discretion, may at any time require Borrower to do the
following:
(1) Deposit with Lender (or such agent of Lender as Lender may
designate in writing to Borrower from time to time), monthly,
on the due date of each monthly installment under the Note,
1/12th of the annual charges (as estimated by Lender) for all
real estate and personal property taxes; and
(2) Deposit with Lender, simultaneously with such above-referenced
monthly deposits, a sum of money which together with such
monthly deposits will be sufficient to make the payment of
each such charge at least 30 days prior to the date initially
due. Should such charges not be ascertainable at the time any
deposit is required to be made, the deposit shall be made on
the basis of the charges for the prior year or payment period,
as reasonably estimated by Lender. When the charges are fixed
for the then current year or period, Borrower shall deposit
any deficiency on demand.
(2) Any interest earned on the sums held by Lender pursuant to this
Section 4.1.B shall be added to said sums and shall be taxable to Borrower, and
shall, so long as no Event of Default shall have occurred, be disbursed by
Lender for the payment of the applicable real estate and personal property
taxes. Should an Event of Default occur, the funds so deposited may be
<PAGE>
applied in payment of the charges for which such funds shall have been deposited
or to the payment of the Indebtedness or any other charges affecting the
Property, as Lender in its sole and absolute discretion may determine, but no
such application shall be deemed to have been made by operation of law or
otherwise until actually made by Lender as herein provided. Borrower shall
provide Lender with bills and all other documents necessary for the payment of
the foregoing charges at least 30 days prior to the date on which each payment
thereof shall first become due or promptly upon receipt of such bill.
3. Mortgage Taxes. Borrower shall pay any and all taxes, charges, filing,
registration and recording fees, excises and levies imposed upon Lender by
reason of their respective interests in, or measured by amounts payable under,
the Note, this Agreement, the Mortgage or any other Loan Document (other than
income, franchise and doing business taxes), and shall pay all stamp taxes and
other taxes required to be paid on the Note, this Agreement, the Mortgage or the
other Loan Documents. If Borrower fails to make such payment within five days
after notice thereof from Lender, Lender may (but shall not be obligated to) pay
the amount due, and Borrower shall reimburse Lender on demand for all such
Advances. If applicable law prohibits Borrower from paying such taxes, charges,
filing, registration and recording fees, excises, levies, stamp taxes or other
taxes, then Lender may declare the Indebtedness then unpaid to be due and
payable upon one hundred twenty (120) days prior written notice. In such event,
no prepayment fee shall be charged.
4. No Liens. Except for Permitted Encumbrances, and except as provided in
Section 4.1.F and Section 4.1.O, the Property shall be kept free and clear of
all liens, security interests and encumbrances of every nature or description
(whether for taxes or assessments, or charges for labor, materials, supplies or
services or any other thing). Other than the Permitted Encumbrances, Borrower
will not cause or permit any instrument or document affecting the Property to be
recorded without Lender's prior written consent thereto.
5. Condition of Premises. Consistent with current practice and industry
standards, Borrower shall keep and maintain the Property in good order,
condition and repair and shall make, as and when the same shall become
necessary, all structural and non-structural, exterior and interior, ordinary
and extraordinary, foreseen and unforeseen, repairs and maintenance necessary or
appropriate. Borrower shall suffer or commit no waste upon the Premises or any
portion thereof. Borrower shall, at its expense, promptly repair, restore,
replace or rebuild any part of the Property which may be damaged or destroyed by
any casualty (provided that, to the extent Borrower is entitled to receive
insurance Proceeds in accordance with the provisions of Article 6, such proceeds
are made available to Borrower) or as the result of any taking under the power
of eminent domain to the extent permitted given the size, scope and extent of
the taking. Borrower shall cause all repairs, maintenance, rebuilding,
replacement or restoration to be (in the reasonable opinion of Lender) of
substantially equivalent quality and to be performed in compliance with all
applicable requirements of any Governmental Authorities having jurisdiction,
including without limitation all federal, state, and local environmental laws.
<PAGE>
Borrower shall not cause, suffer or permit the construction of any material
buildings, structures, or improvements on the Premises without the prior written
consent of Lender to the proposed construction as well as the plans and
specifications relating thereto. None of the buildings, structures, or
improvements erected or located on the Premises shall be removed, demolished or
substantially or structurally altered in any material respect without the prior
written consent of Lender. Lender's consents hereunder shall not be unreasonably
withheld or delayed.
6. Personal Property. Effective as of the Closing, all of the Personal
Property will be owned by Borrower in Borrower's name except for those items
identified on Schedule 4.1.F attached hereto, which are leased by Borrower.
7. Compliance. Borrower shall comply with all (i) building, zoning, fire,
health, environmental, disability and use laws, and all other laws, codes,
ordinances, rules and regulations applicable to the Premises, the Improvements
or any part thereof or the construction of any improvements thereon, or the use
or enjoyment thereof, (ii) covenants and restrictions of record, and (iii)
easements which are in any way applicable to the Premises, the Improvements or
any part thereof or to the construction of any improvements thereon and the use
or enjoyment thereof. Without limiting the generality of the foregoing, any
asbestos or lead-based paint (or any other hazardous substance) located at the
Premises shall be handled and managed in compliance with all applicable federal,
state, and local laws and requirements.
8. Performance of Agreements. Borrower shall duly and punctually perform,
observe and comply with all of the terms, provisions, conditions, covenants and
agreements on its part to be performed, observed and complied with hereunder and
under (i) the other Loan Documents, (ii) the Permitted Encumbrances, (iii) the
Management Agreement, (iv) the Franchise Agreement, (v) the Ground Lease and
(vi) all agreements entered into or assumed by Borrower in connection with the
Property, and Borrower will not suffer or permit any default or Event of Default
(giving effect to any applicable notice requirements and cure periods) to exist
under any of the foregoing.
9. Lender's Expenses. Borrower shall, or shall cause the Guarantor to,
pay, on demand by Lender, all reasonable expenses, charges, costs and fees in
connection with the negotiation and documentation of the Loan, including all
registration and recording fees, insurance consultant fees, if any,
environmental consultant fees, costs of appraisals, costs or fees incurred in
connection with market studies, costs of engineering reports, cost of credit
reports, cost of audits, fees and disbursements of all counsel (both local and
special) for Lender, escrow fees, cost of surveys, fees and expenses of Lender's
Consultant or others employed by Lender to inspect the Premises from time to
time, and travel expenses incurred by Lender and Lender's agents and employees
in connection with the Loan. Notwithstanding the foregoing, so long as no Event
of Default exists, Borrower shall have no obligation to pay or reimburse Lender
for travel expenses in excess of $1,500 in any twelve month period. At Closing,
Lender may pay directly from the proceeds of the Loan each of the foregoing
expenses.
<PAGE>
10. Intentionally Omitted.
11. Financial Statements.
(1) Borrower shall provide to Lender (i) annual financial statements
of Borrower and Guarantor and all such financial statements shall be prepared in
accordance with generally accepted accounting principles, consistently applied
and shall be prepared by a certified public accountant reasonably satisfactory
to Lender, (ii) Loan Month (or, if applicable, Accounting Period) and quarterly
cash flow and operating statements for the Property prepared by and certified by
Borrower (which quarterly statements shall include the calculation of DSCR),
(iii) such other financial information as Lender may from time to time
reasonably request, and (iv) copies of all Federal income tax returns for
Borrower and Guarantor certified by Borrower and Guarantor, respectively, to be
true and correct. All such financial statements, cash flow statements and
operating statements shall be delivered to Lender as soon as possible but not
later than thirty (30) days after the close of each Loan Month (or, if
applicable, Accounting Period), and in the case of annual financial statements,
not later than one hundred twenty (120) days after the close of each fiscal
year. Said copies of Borrower's and Guarantor's federal income tax returns shall
be provided to Lender within thirty (30) days following their filing with the
Internal Revenue Service.
(2) Lender may, at Borrower's sole cost and expense and following
written notice to Borrower, require that any or all of the foregoing annual
financial statements be prepared on an "audited" basis, so called.
12. Management and Cash Management. Borrower shall provide competent and
responsible management for the Property by a management company, and pursuant to
a written management agreement, reasonably satisfactory to Lender. The existing
Manager and Management Agreement are satisfactory to Lender. Borrower shall not
enter into any other management agreement or arrangement with any other party
with respect to the management of the Property without Lender's prior written
consent. Borrower shall not modify, amend or terminate the Management Agreement
without Lender's prior written consent. Borrower shall provide Lender with
written notice of the occurrence of any event of default or condition which with
the giving of notice or passage of time, or both, would constitute an event of
default under the Management Agreement or any subsequent management agreement
which Lender may have approved. The Management Fee(s) shall not exceed a base
fee(s) in an amount equal to 5% of Gross Revenues. The payment of any Management
Fees over and above an amount equal to 3% of Gross Revenues shall be subordinate
to all payments to be made to Lender as provided in the Management,
Subordination and Estoppel Agreement among Lender, Borrower and Manager of even
date herewith. Borrower shall not modify, amend or terminate the Cash Management
Agreement in any material respect without Lender's prior written consent.
13. Due on Sale or Encumbrance. Except as otherwise expressly provided in
Section 8.4,
<PAGE>
Borrower shall not and shall not permit others to convey, assign, sell,
mortgage, encumber, pledge, hypothecate, grant a security interest in, grant
options with respect to, or otherwise dispose of (directly or indirectly,
voluntarily or involuntarily, by operation of law or otherwise, and whether or
not for consideration or of record) all or any portion of any legal or
beneficial interest in all or any portion of the Property or the Leases. Any
such transfer or encumbrance, as aforesaid, shall be deemed to be an Event of
Default hereunder, and shall entitle Lender to declare the Loan immediately due
and payable.
14. Estoppel Certificates. Within ten (10) Business Days following a
request by Lender, Borrower shall provide to Lender a duly acknowledged written
statement confirming the amount of the outstanding Indebtedness, the terms of
payment and maturity date of the Note, the date to which interest has been paid,
and whether any offsets or defenses exist against the Indebtedness. If any such
offsets or defenses are alleged to exist, the nature thereof shall be set forth
in detail. The Lender agrees to provide the Borrower, within ten (10) Business
Days following a request by Borrower, a payoff letter affirming the amount of
the Loan then outstanding.
15. Space Leases, Service Agreements and Equipment Leases. Borrower shall
not, without the prior written consent of Lender, enter into or modify, amend or
terminate (except upon a default by tenant) any lease of space (including
restaurants) with respect to the Premises or any portion thereof in excess of
1,000 square feet. Any lease of space entered into by Borrower with respect to
the Premises or any portion thereof shall (a) be subordinate to the lien of the
Mortgage, (b) be pursuant to an arms' length transaction and (c) not contain any
term which would materially affect Lender's rights under the Loan Documents.
Borrower shall not, without the prior written consent of Lender, enter into any
operating agreements or service contracts with respect to the Property ("Service
Agreements") other than (i) agreements or contracts to provide customary guest
services such as laundry, gift shop, or television cable services, or (ii) other
agreements the aggregate annual payments for which do not exceed $50,000. All
Service Agreements shall (a) be subordinate to the lien of the Mortgage and (b)
be pursuant to an arms' length transaction. Borrower shall not, without the
prior written consent of Lender, enter into any equipment lease which would
cause the aggregate annual payments by Borrower for all equipment leases to
exceed $25,000. All equipment leases shall be pursuant to an arms' length
transaction.
Within ten (10) days following the execution by Borrower of any new Lease,
Borrower shall deliver to Lender a Subordination, Non-Disturbance and Attornment
Agreement executed by the tenant under such Lease which is in form satisfactory
to Lender unless the Lease contains subordination, non-disturbance and
attornment provisions otherwise satisfactory to the Lender.
Borrower shall perform and comply with all of the landlord's obligations
under each Lease and shall not suffer or permit any breach or default on the
part of the landlord to occur thereunder.
<PAGE>
16. Condemnation. Borrower shall not enter into any agreement for the
taking of the Premises or any part thereof with anyone authorized to acquire the
same in or by condemnation proceedings, or by the exercise of any power of
eminent domain, unless and until Lender shall have consented thereto in writing.
17. Litigation. Borrower shall promptly provide Lender with written notice
of any material litigation in which Borrower, any other Loan Party or the
Property is named as defendant which is not fully covered by insurance for which
the insurer has assumed the defense and acknowledged coverage, and Borrower
shall provide Lender with copies of all pleadings or orders filed or entered
therein or with respect thereto.
18. Principal Amortization Reserve.
(1) The DSCR shall be calculated by Lender on each Calculation Date
for the most recent Calculation Period. At all times prior to the Maturity Date,
if the DSCR on the most recent Calculation Date is less than the Required
Coverage Standard, Borrower shall, in addition to the regularly scheduled
monthly payments of interest due under the Note, deposit with Lender on or
before the twenty-fifth (25th) day of each month 100% of the Net Cash Flow for
the immediately preceding Accounting Period.
(2) Borrower shall make and Lender shall hold all such payments of
Reserved Funds in accordance with the following terms and conditions:
(1) All Reserved Funds held by Lender upon the Maturity Date or
upon the occurrence of an Event of Default may be applied by
Lender to the repayment of the Loan in accordance with the
terms and conditions of the Note.
(2) Provided that no Event of Default or Incipient Default exists,
if, on the next Calculation Date, the DSCR is greater than or
equal to the Required Coverage Standard, Lender shall return
to Borrower the Reserved Funds then held by Lender, and
Borrower's obligation to deposit the Reserved Funds with
Lender shall be suspended until any subsequent Calculation
Date when the DSCR is less than the Required Coverage
Standard.
(3) If Borrower is required to make payments of Reserved Funds
pursuant to this Section 4.1.R for four (4) consecutive
Calculation Dates, so long as no Event of Default or Incipient
Default exists, Lender may, on such fourth consecutive
Calculation Date, apply all Reserved Funds to the repayment of
the Loan. No such repayment shall be subject to any prepayment
fee or premium. Thereafter, all Reserved Funds may be applied
by Lender, upon receipt, to the repayment of the Loan, as
aforesaid; provided, however, if
<PAGE>
on any subsequent Calculation Date the DSCR shall be equal to
or greater than the Required Coverage Standard, Borrower's
obligation to deposit the Reserved Funds with Lender shall be
suspended until any Calculation Date thereafter when the DSCR
is less than the Required Coverage Standard.
(4) All interest accrued on the Reserved Funds shall be added to
the Reserved Funds and shall be disbursed in accordance with
the foregoing terms and conditions. All interest earned on the
Reserved Funds shall be taxable to Borrower.
19. Application of Gross Revenues; Distributions. Borrower shall promptly
apply all Gross Revenues to the payment of all current and past due Operating
Expenses and to the repayment of all sums currently due or past due under this
Loan, including all payments of Capital Reserve pursuant to Section 4.1T and
real estate tax escrow payments pursuant to Section 4.1.B of this Agreement, if
any. After the Renovation Completion and so long as no Event of Default or
Incipient Default exists, and subject to the provisions of Section 4.1.R,
Borrower may make dividends to its shareholders of Net Cash Flow after the
payment of all current and past due Operating Expenses, debt service on the
Loan, Capital Reserve payments, real estate tax escrow payments pursuant to
Section 4.1.B, if any, and all sums due and payable to Lender (for its own
account or to be held by it) at or prior to the time of said dividend.
20. Capital Reserve. Beginning on January 25, 1999, and continuing on the
twenty-fifth (25th) day of each Loan Month thereafter, Borrower shall deposit
with Lender on a monthly basis a reserve of not less than four percent (4%) of
Gross Revenues for the preceding Accounting Period. So long as no Event of
Default or Incipient Default (other than an Incipient Default which is
susceptible to cure and as to which Borrower is diligently pursuing such cure)
shall exist, Lender shall make said funds available to Borrower on the following
terms and conditions: (i) all Capital Reserve funds released by Lender to
Borrower shall be used to pay Borrower for the reasonable expenses actually
incurred by Borrower for the acquisition, repair, or replacement of furniture,
fixtures or equipment necessary for the management and operation of the Property
(based on invoices furnished by Borrower) under an annual budget approved by
Lender for said acquisitions, repairs and replacements; (ii) all requests by
Borrower for a disbursement of Capital Reserve funds shall be in writing and
shall not be made more frequently than once per Loan Month; (iii) each such
request for a disbursement shall be in an amount of not less than $10,000.00;
and (iv) Borrower shall provide Lender with invoices, contracts providing for
progress payments or paid receipts covering the expenses for which Borrower
seeks payment or reimbursement from the Capital Reserve funds. Prior to the
disbursement of any Capital Reserve funds, Borrower shall also provide Lender
with (i) evidence satisfactory to Lender that Borrower has accepted possession
of said items and commenced using the same in the management and operation of
the Property, or the applicable contract requires an advance payment prior to
manufacture or delivery and (ii) paid receipts covering the expenses for which
<PAGE>
Capital Reserve funds were previously disbursed.
21. Funds Deposited with Lender. All funds of Borrower which are deposited
with Lender pursuant to this Agreement or any other Loan Document shall be held
in a separate account and invested in an interest-bearing account (at not less
than money market rates). Any interest which accrues on said funds shall, at
Lender's sole option, be paid to Borrower or be held as part of the applicable
funds being held by Lender for the same purpose for which the principal sum of
said funds is being held by Lender. The Capital Reserve fund shall be reviewed
by the Lender annually on the anniversary of the Loan to determine if sufficient
sums are being funded for the expenses provided for herein. If the Lender
determines, in its reasonable discretion, that the Capital Reserve fund is
insufficient, Borrower shall pay all funding shortages within thirty (30) days
after notice by Lender. To secure all of Borrower's obligations to Lender under
the Loan Documents, Borrower hereby grants to Lender a security interest in all
funds now or hereafter deposited with Lender or otherwise in Lender's
possession, custody or control pursuant to the provisions of this Agreement or
any other Loan Document, including all funds deposited pursuant to Sections
4.1.B, 4.1.R, and 4.1.T of this Agreement. So long as any Event of Default
exists, Lender shall have such rights with respect to such funds and any
interest accrued thereon as are provided by applicable law and may apply such
funds towards the satisfaction of Borrower's obligations hereunder or under any
other Loan Documents. Without limiting any of the foregoing provisions, at the
request of Lender, Borrower shall execute and deliver from time to time such
documents as may be necessary or appropriate, in Lender's sole judgment, to
assure Lender that it has a first priority perfected security interest in and
lien on all funds deposited pursuant to Sections 4.1.B, 4.1.R, and 4.1.T of this
Agreement, including the creation of a deposit account in the name of Borrower
in a banking institution approved by Lender either within or outside of the
State of Ohio, as directed by Lender, into which any or all of such funds will
be deposited and maintained, subject to the rights of Lender with respect to
such funds as provided herein. Lender reserves the right to inspect such repairs
or replacements prior to the release of funds at Borrower's expense provided
that such inspection expenses shall not exceed $1,500 in any twelve (12) month
period.
22. Audit and Inspection by Lender. Lender shall have the right, upon
reasonable prior notice, and Borrower shall permit and shall cooperate with
Lender in arranging for, at any reasonable time and from time to time, Lender
and its representatives (i) to inspect the Property, and (ii) to review and
audit all books, records and financial statements of Borrower (including all
supporting data and any other records from which the Net Cash Flow may be
determined); and Borrower shall make all such books of account and records
available for such examination at the office where the same are regularly
maintained. Lender shall have the right to copy, duplicate and make abstracts
from such books and records as Lender may require. If any audit by Lender
discloses that payments of Net Cash Flow which should have been made by Borrower
exceeds the sums which were actually made by Borrower, then Borrower shall,
within ten (10) days following written notice from Lender, pay to Lender the
difference between said amounts, together with interest on such amount at the
Default Rate from the date such amounts should
<PAGE>
have been paid to the date of post-audit payment. Borrower shall pay Lender's
costs and expenses incurred in connection with no more than one (1) such audit
per year. Borrower acknowledges and agrees that (i) all of such audits,
inspections and reports shall be made for the sole benefit of Lender, and not
for the benefit of Borrower or any third party, and neither Lender nor Lender's
auditors or inspectors or any of Lender's representatives, agents or contractors
assumes any responsibility or liability (except to Lender) by reason of such
audits, inspections or reports, (ii) Borrower will not rely upon any of such
audits, inspections or reports for any purpose whatsoever, and (iii) the
performance of such audits, inspections and reports will not constitute a waiver
of any of the provisions of this Agreement or any other Loan Document or any of
the obligations of Borrower hereunder or thereunder. Borrower further
acknowledges and agrees that neither Lender nor Lender's inspectors,
representatives, agents or contractors shall be deemed to be in any way
responsible for any matters related to design or construction of the
Improvements.
23. Appraisal. At any time during the term of the Loan, Borrower shall
cooperate with Lender and use reasonable efforts to assist Lender in obtaining
an appraisal of the Property. Such cooperation and assistance from Borrower
shall include but not be limited to the obligation to provide Lender or Lender's
appraiser with the following: (i) reasonable access to the Property, (ii) a
current certified rent roll for the Property in form and substance satisfactory
to Lender, current asking rents and a history of change in asking rents and
historical vacancy for the past three years, (iii) current and budgeted income
and expense statements for the prior three years, (iv) a site plan and survey of
Property (to the extent available and at no cost to Borrower), (v) the building
plans and specifications, including typical elevation and floor plans (to the
extent available and at no cost to Borrower), (vi) a photocopy of the deed
conveying the Property to Borrower, together with the legal description of the
Property, (vii) the current and prior year real estate tax bills, (viii) a
detailed list of past and scheduled capital improvements made during Borrower's
period of ownership and the costs thereof, (ix) a summary of the then current
ownership entity, (x) all environmental reports and other applicable information
relating to the Property, and (xi) copies of all recent appraisals/property
description information or brochures, including descriptions of amenities and
services relating to the Property. The appraiser performing any such appraisal
shall be engaged by Lender, and Lender shall be responsible for any fees payable
to said appraiser in connection with an appraisal of the Property.
24. Accounts. Borrower agrees that, at any time requested by Lender in
writing after an Incipient Default or Event of Default has occurred, Borrower
will do all acts requested by Lender to perfect or confirm the continued
perfection of Lender's security interest in all of Borrower's bank accounts,
including, without limitation, appointing a collateral agent satisfactory to
Lender and segregating all of Borrower's funds from those of Manager or any
Affiliates.
25. Deferred Origination Fee. Borrower acknowledges that the Lender has
earned the Deferred Origination Fee as of the date hereof although the Lender
has agreed to defer its payment as hereinafter provided. Borrower agrees that it
shall pay the Deferred Origination Fee to the Lender when the Loan is paid or
becomes payable in full whether at the Maturity Date or
<PAGE>
upon earlier prepayment or acceleration.
26. Limitation on Indebtedness. Borrower shall not, without the prior
written consent of Lender, create, assume, incur or guaranty, directly or
indirectly, any indebtedness or obligation, except for (i) lease financing or
purchase money financing for equipment, incurred after the date hereof, which is
secured by the equipment so leased or purchased and which lease or purchase
money financings do not contain payment obligations, in the aggregate, in excess
of $25,000 per year, or (ii) the Other Borrower Loans.
ARTICLE 5
AGREEMENT TO LEND
1.7 Agreement to Lend. On the basis of the covenants, agreements and
representations of Borrower contained in, and subject to the terms and
conditions set forth in, this Agreement and the other Loan Documents, Lender
agrees to lend to Borrower the principal sum of up to $5,214,292. The entire
proceeds of the Loan shall be disbursed by Lender at Closing. Borrower shall use
the Loan proceeds for the purpose for which they were advanced and for no other
purpose.
ARTICLE 6
INSURANCE AND CASUALTY
1.8 Insurance Provisions.
1. Insurance. Borrower, at its sole cost and expense, shall insure and
keep insured the Property against such perils and hazards, and in such amounts
and with such limits, as Lender may from time to time reasonably require. At the
time of the Closing, Lender's requirements for said insurance are set forth in
Exhibit D, which requirements Borrower acknowledges are reasonable and
customary. Borrower shall also carry such other insurance, and in such amounts,
as Lender may from time to time reasonably require, against insurable risks
which at the time are commonly insured against in the case of premises similarly
situated, due regard being given to the availability of insurance and to the
type of construction, location, utilities, use and occupancy of the Premises or
any replacements or substitutions therefor ("Additional Insurance"). Such
Additional Insurance may include flood, hurricane, earthquake, war risk, nuclear
explosion, demolition and contingent liability from the operation of
"nonconforming improvements" on the Premises, and shall be obtained within 30
days after demand by Lender. Otherwise, Borrower shall not obtain any separate
or additional insurance which is contributing in the event of loss, unless it is
properly endorsed and otherwise reasonably satisfactory to Lender in all
respects. The Proceeds (as defined in the Mortgage) of insurance paid on account
of any damage to or
<PAGE>
destruction of the Premises or any portion thereof shall be paid over to Lender
to be applied as hereinafter provided.
2. Evidence of Coverage. The insurance shall be evidenced by the original
policy or a true and certified copy of the original policy, or by certificates
of insurance. Said certified copies, original policies or certificates shall be
delivered to Lender at or prior to Closing. On or before the Closing and each
stated due date thereafter, Borrower shall pay all premiums and fees for the
insurance policies required hereunder. Borrower shall deliver certified copies
of all policies and renewals (or certificates evidencing the same) to Lender at
least thirty (30) days before the expiration of existing policies. Each such
policy shall provide that such policy may not be canceled or materially changed
except upon 30 days prior written notice of intention of non-renewal,
cancellation or material change to Lender, and that no act or thing done by
Borrower shall invalidate the policy as against Lender. Notwithstanding anything
to the contrary contained herein or in any provision of law, the Proceeds of
insurance policies coming into the possession of Lender and which are not to be
used for the Work (as hereinafter defined) shall not be deemed trust funds and
Lender shall be entitled to dispose of such Proceeds as hereinafter provided. If
Lender has not received satisfactory evidence of such renewal or substitute
insurance in the time frame herein specified, Lender shall have the right, but
not the obligation, to purchase such insurance for Lender's interest only. Any
amounts so disbursed by Lender pursuant to this Section 6.1.B shall be deemed to
be a part of the Loan and shall bear interest at the Default Rate. Nothing
contained in this Article 6 shall require Lender to incur any expense or take
any action hereunder, and inaction by Lender shall never be deemed a waiver of
any rights accruing to Lender on account of this Article 6.
3. Separate Insurance. Borrower shall not carry any separate insurance on
the Property concurrent in kind or form with any insurance required hereunder or
contributing in the event of loss without Lender's prior written consent, and
any such policy shall have attached a standard non-contributing mortgagee
clause, with loss payable to Lender, and shall meet all other requirements set
forth herein.
4. Damage to or Destruction of Premises. In the event of any damage to or
destruction of the Premises, Borrower shall give prompt written notice to Lender
and, provided Lender makes the Proceeds available for the costs of repair,
restoration and rebuilding, Borrower shall promptly commence and diligently
continue to completion the repair, restoration and rebuilding of the Premises so
damaged or destroyed in full compliance with all legal requirements and with the
provisions of Section 6.1.F below, and free and clear from any and all liens and
claims. Such repair, restoration and rebuilding of the Premises are sometimes
hereinafter collectively referred to as the "Work." Borrower shall not adjust,
compromise or settle any claim(s) for insurance Proceeds without the prior
written consent of Lender unless such claim(s) does not exceed $100,000 in the
aggregate in which case no consent of Lender is required. Subject to Sections
6.1E and F, below, Lender shall have the option in its sole discretion to apply
any insurance Proceeds it may receive pursuant to the Mortgage (less any cost to
Lender of recovering and
<PAGE>
paying out such Proceeds, including reasonable attorneys' fees) to the payment
of the Indebtedness or to allow all or a portion of such Proceeds to be used for
the Work. If any insurance Proceeds are applied to reduce the Indebtedness,
Lender shall apply the same in the following order:
(1) first, to the payment of interest due on any Advances;
(2) next, to the principal amount of any Advances;
(3) next, to any Late Charges (as provided in the Note);
(4) next, to accrued interest then due under the Note; and
(5) finally, to the unpaid principal balance of the Note.
If Lender applies insurance Proceeds to reduce the Indebtedness, no
prepayment fee shall be due with respect to any prepayment effected thereby.
5. Restoration. Notwithstanding the provisions of Section 6.1.D above, if,
in Lender's reasonable judgment, the Work can be completed within 18 months of
the occurrence of said damage or destruction, then Lender shall, upon request by
Borrower, permit Borrower to use the insurance Proceeds for the Work (subject to
the provisions of, and less Lender's costs described in, Section 6.1.F below),
so long as Lender, in its reasonable judgment, is satisfied that as of each date
on which such insurance Proceeds are to be applied to payment thereof:
(1) The insurance Proceeds held by Lender in respect of the
applicable casualty equal or exceed such estimated cost of
effecting such repair and restoration, or such portion thereof
as then remains to be completed and paid for or Borrower
provides evidence satisfactory to Lender that Borrower has
funds available to pay any shortfall, and, if required by
Lender, escrows such funds with Lender for disbursement in
accordance with the requirements of Section 6.1.F;
(2) The Management Agreement shall remain in full force and effect
and all material Leases, if any, shall remain in full force
and effect, and no tenant thereunder shall be entitled to
cancel or terminate its Lease as a consequence of such
casualty;
(3) Upon completion of the Work, the monthly revenues from the
Property shall, in Lender's reasonable judgment, be sufficient
to pay all interest and other sums due and payable under the
Note, this Agreement and the other Loan Documents;
<PAGE>
(4) The Work will, in Lender's reasonable judgment, be completed
on or prior to May 31, 2000;
(5) There is in force and effect for the benefit of Borrower and
Lender rental or business interruption insurance sufficient to
provide coverage for one hundred percent (100%) of all income
lost as a consequence of such casualty for not less than the
projected period for the completion of the Work or Borrower
provides evidence satisfactory to Lender that Borrower has
funds available to pay all interest and other sums due and
payable under the Note, this Agreement and the other Loan
Documents, as well as all other expenses of the Property
during such period and, if required by Lender, escrows such
funds with Lender for application to the payment of such
obligations as they come due;
(6) The Work will be effected pursuant to plans and specifications
reasonably approved in writing by Lender, and by a general
contractor and major subcontractors, and pursuant to
contracts, reasonably approved in writing by Lender; and
(7) The Work can be effected in compliance with all applicable
laws and Borrower has obtained all licenses, permits, consents
and approvals from all applicable governmental authorities or
private parties required to permit Borrower to effect such
restoration and repair and to use, operate and occupy the
repaired and restored premises upon completion thereof (other
than those which will issue in the ordinary course upon
completion) and that the same are in full force and effect.
Lender shall have no obligation to make such insurance Proceeds available to pay
for the Work if (A) the Loan shall have been accelerated and the principal and
accrued interest owing on the Loan have become due and payable, or (B) there
shall exist an Event of Default or Incipient Default other than an Incipient
Default which is susceptible to cure and as to which Borrower is diligently
pursuing such cure.
6. Distribution of Proceeds. If any insurance Proceeds are used for the
Work, then such Proceeds shall be held by Lender and shall be paid out from time
to time to Borrower as the Work progresses (less any cost to Lender of
recovering and paying out such Proceeds, including reasonable attorneys' fees
and costs allocable to inspecting the Work and the plans and specifications
therefor), subject to each of the following conditions:
(1) If the Work is structural or if the cost of the Work is
reasonably estimated by Lender to exceed $250,000, the Work
shall be conducted under the
<PAGE>
supervision of a certified and registered architect or
engineer unless otherwise waived in writing by the Lender.
Before Borrower commences any Work, other than temporary work
to protect property or prevent interference with business,
Lender shall have approved in writing the plans and
specifications for the Work, which approval shall not be
unreasonably withheld or delayed, it being nevertheless
understood that such plans and specifications shall provide
for Work so that, upon completion thereof, the Premises shall
be at least equal in value and general utility to the Premises
prior to the damage or destruction.
(2) Each request for payment shall be made on not less than ten
(10) Business Days prior notice to Lender and shall be
accompanied by a certificate of the architect or engineer in
(i) above (or a certificate given by Borrower if no architect
or engineer is so required) stating (A) that all of the Work
completed has been done in substantial compliance with the
approved plans and specifications, if required under (i)
above, (B) that the sum requested is justly required to
reimburse the Borrower for payments by Borrower, or is justly
due to the contractor, subcontractors, materialmen, laborers,
engineers, architects or other persons rendering services or
materials for the Work (giving a brief description of such
services and materials), and that when added to all sums
previously paid out by Lender does not exceed the value of the
Work done to the date of such certificate, (C) if the sum
requested is to cover payment relating to repair and
restoration of personal property required or relating to the
Premises, that title to the personal property items covered by
the request for payment is vested in Borrower, and (D) that
the amount of such Proceeds remaining in the hands of Lender
will be sufficient on completion of the Work to pay for the
same in full (giving in such reasonable detail as Lender may
require an estimate of the cost of such completion).
Additionally, each request for payment shall contain a
statement signed by Borrower approving both the Work done to
date and the Work covered by the request for payment in
question. Each request for payment shall be accompanied by
waivers of lien satisfactory to Lender covering that part of
the Work for which payment or reimbursement is being requested
and, if required by Lender, a search prepared by a title
company or an attorney authorized to practice law in the
State, or by other evidence satisfactory to Lender that there
has not been filed with respect to the Premises any mechanics'
or other lien or instrument for the retention of title
relating to any part of the Work not discharged of record.
Additionally, as to any personal property covered by the
request for payment, Lender shall be furnished with evidence
of payment therefor and such further evidence satisfactory to
assure Lender of its valid first lien on the personal
property.
<PAGE>
(3) Lender or its designee shall have the right to inspect the
Work at all reasonable times and may condition any
disbursement of Proceeds upon the satisfactory completion, as
determined in Lender's reasonable discretion, of any portion
of the Work for which payment or reimbursement is being
requested. The cost of any such inspection of the Work shall
be paid by Borrower prior to or simultaneously with the next
disbursement of any portion of the Proceeds. Neither the
approval by Lender of the plans and specifications for the
Work nor the inspection by Lender of the Work shall make
Lender responsible for the preparation of such plans and
specifications or the compliance of such plans and
specifications, or of the Work, with any applicable law,
regulation, ordinance, covenant or agreement.
(4) Proceeds shall not be disbursed more frequently than every 30
days.
(5) Any request for payment made after the Work has been completed
shall be accompanied by a copy or copies of any certificate or
certificates required by law to render occupancy and full
operation of the Premises legal.
(6) Upon completion of the Work and payment in full therefor, or
upon any failure on the part of Borrower to promptly commence
the Work, or upon the failure on the part of Borrower to
proceed diligently and continuously to completion of the Work
(subject to allowance for reasonable delays and interruptions
in the supply of materials and labor not caused by any act or
omission of Borrower), Lender may apply any such proceeds it
then or thereafter holds to the payment of the Indebtedness;
provided, however, that Lender shall be entitled to apply at
any time all or any portion of insurance Proceeds it then
holds to the curing of any Event of Default. Upon completion
of the Work, so long as no Event of Default exists, any
remaining insurance Proceeds held by Lender shall be paid to
Borrower.
7. Miscellaneous Insurance Provisions.
(1) Notwithstanding any other provision of this Section 6.1, if in
Lender's reasonable judgment the cost of the Work is less than
$250,000 and such Work can be completed in less than 60 days
and provided no Event of Default has occurred and is
continuing, then Lender shall, upon request by Borrower,
permit Borrower to apply for and receive the insurance
Proceeds directly from the insurer (and Lender shall advise
the insurer to pay over such Proceeds directly to Borrower),
provided that Borrower shall apply such insurance Proceeds
solely to the prompt and diligent commencement and completion
of such Work.
<PAGE>
(2) In the event of the foreclosure of the Mortgage or other
transfer of title to or assignment of the Property in
extinguishment of the Indebtedness in whole or in part, all
right, title and interest of Borrower in and to any insurance
Proceeds shall inure to the benefit of and pass to Lender or
any purchaser or transferee of the Property.
(3) Borrower hereby authorizes Lender, during all periods in which
an Event of Default has occurred and remains uncured, to
settle any insurance claims, to obtain insurance Proceeds, and
to endorse any checks, drafts or other instruments
representing any insurance Proceeds whether payable by reason
of loss thereunder or otherwise.
ARTICLE 6A
RENOVATION WORK
6A.1 Construction. During the pendency of the Renovation Work, Borrower
shall provide Lender with monthly reports which include, as applicable, (i)
evidence reasonably satisfactory to Lender that the Renovation Work complies
with all building, zoning and other laws and governmental codes, rules and
regulations, (ii) copies of all necessary licenses, permits, approvals and
consents required for the use, occupancy and operation of the Premises, as
altered by the Renovation Work, (iii) evidence satisfactory to Lender that all
Renovation Work completed as of the date of such report has been inspected and
approved by each required Governmental Authority and by each other person or
entity (including any tenants) having the right to inspect and approve the
Renovation Work and (iv) all contractors and subcontractors have been paid
current. Borrower shall provide Lender with such other information and material
relating to the Renovation Work as Lender reasonably requests.
6A.2 Completion. Borrower shall: (i) cause the Renovation Work to be
completed in a good and workmanlike manner in accordance with the reasonable
requirements of Lender's Consultant, and the requirements of this Agreement, the
Renovation Budget and the Renovation Plans; (ii) cause the Renovation Work to be
completed so that the Premises remain free and clear of all liens and
encumbrances other than Permitted Exceptions; (iii) cause Renovation Completion
to be achieved on or before the Renovation Completion Date; and (iv) commence
the Renovation Work within 90 days following the Closing and pursue the
Renovation Work diligently to completion.
6A.3 Compliance with Laws. Borrower shall cause the Renovation Work to be
constructed in accordance with all applicable requirements of any Governmental
Authority having jurisdiction with respect thereto including, without
limitation, obtaining all licenses, permits, approvals and consents for the use,
occupancy and operation of the Premises, as altered
<PAGE>
by the Renovation Work.
6A.4 Other Remedies of Lender. Upon the occurrence of an Event of Default,
in addition to any other remedies available to Lender by the terms of this
Agreement or any other Loan Document or by law, Lender may at its sole
discretion: (a) complete the Renovation Work (with such changes as Lender shall
deem appropriate), all at the risk, cost and expense of Borrower; (b)
discontinue at any time the Renovation Work; (c) engage builders, contractors,
engineers, architects and others for the purpose of furnishing labor, material
and equipment in connection with the Renovation Work, which personnel may, but
need not, be the same as those engaged by Borrower; (d) pay, compromise or
settle all bills or claims incurred in connection with the Renovation Work; and
(e) take or refrain from taking such action with respect to the Renovation Work
as Lender may from time to time reasonably determine. All such action shall be
at Borrower's sole cost and expense, such sums being secured by the Mortgage.
ARTICLE 7
BORROWER'S DEFAULT
1.9 Events of Default. Each of the following shall constitute an "Event of
Default" under this Agreement:
1. Borrower fails (i) to pay any installment of interest on the Note when
due and continuing for more than five (5) days after written notice thereof from
Lender or (ii) to pay the Note in full on or before the Maturity Date;
2. Borrower or the Guarantor fails to pay within ten (10) days following
written notice from Lender any amounts due hereunder or under any of the other
Loan Documents, other than installments of interest on the Note; or
3. Any representation or warranty made by Borrower or any other Loan Party
in or pursuant to this Agreement or otherwise made in writing in connection with
or as contemplated by this Agreement shall be incorrect or false or misleading
in any material respect as to the period of time to which it relates; or
4. An Event of Default exists under any other Loan Document; or
5. Any representation to Lender by Borrower or any other Loan Party as to
the financial condition or credit standing of Borrower or any other Loan Party,
or any financial statement provided to Lender pursuant to any Loan Document, is
or proves to be false or misleading in any material respect; or
6. Except for Permitted Transfers, any interest in Borrower or the
Property (or any part
<PAGE>
thereof) is sold, conveyed, transferred, assigned, disposed of or further
encumbered, either directly or indirectly, or any agreement for any of the
foregoing is entered into; or
7. The Premises or any portion thereof is rezoned either voluntarily or
involuntarily, so as to no longer permit the Premises or any portion thereof to
be used as a hotel; or
8. Any order or decree is entered by any court of competent jurisdiction
directly or indirectly enjoining or prohibiting Lender or Borrower from
performing any of their obligations under this Agreement; or
9. Borrower or any other Loan Party makes an assignment for the benefit of
creditors; or petitions or applies to any court for the appointment of a trustee
or receiver for itself or for any part of its assets or for the Property or any
portion thereof, or commences any proceedings under any bankruptcy, insolvency,
readjustment of debt or reorganization statute or law of any jurisdiction,
whether now or hereafter in effect; or if any such petition or application is
filed or any such proceedings are commenced, and Borrower or any other Loan
Party by any act indicates any approval thereof, consent thereto, or
acquiescence therein; or an order is entered appointing any such trustee or
receiver, or adjudicating Borrower or any other Loan Party bankrupt or
insolvent, or approving the petition in any such proceeding; or if any petition
or application for any such proceeding or for the appointment of a trustee or
receiver is filed by any third party against Borrower or any other Loan Party or
their respective assets or the Property, or any portion thereof, and any of the
aforesaid proceedings is not dismissed within ninety (90) days of its filing; or
10. Any representation or warranty made by the Ground Lessor in the
Estoppel Agreement shall be incorrect or false or misleading in any material
respect; or
11. A default or event of default occurs under the Franchise Agreement and
Franchisor has taken affirmative action to enforce its rights under the
Franchise Agreement, or has affirmatively declared a default under the Franchise
Agreement, or has otherwise expressly indicated that it deems such default
material, or the Franchise Agreement or any related arrangement with Franchisor
is terminated without the prior written consent of Lender, in its sole
discretion; or
12. A final non-appealable judgment or judgments for the payment of money
in excess of an aggregate of $50,000 shall be rendered against Borrower and such
judgment or judgments shall remain undischarged or unbonded (to Lender's
satisfaction) for a period of 60 consecutive days during which the execution
shall not be effectively stayed; or
13. The Management Agreement is amended or terminated for any reason
without the prior written consent of Lender; or
14. Borrower or any other Loan Party fails to comply with, keep or perform
any of its other
<PAGE>
obligations, agreements, undertakings, covenants, conditions or warranties under
(i) this Agreement, (ii) any other Loan Document, or (iii) any other document or
instrument executed and delivered to Lender by Borrower or any other Loan Party
pursuant to this Agreement, and such failure continues for a period of thirty
(30) days after written notice thereof by Lender to Borrower, provided, however,
if such failure is susceptible to cure by Borrower but cannot be cured within
such thirty (30) day period, but Borrower commences to cure the same within such
thirty (30) day period and thereafter diligently proceeds to cure the same,
Borrower shall have an additional reasonable period of time in which to cure
such failure (but in no event longer than ninety (90) days after the date of
notice thereof); or
15. An event of default occurs under the Other Borrower Loan Documents and
is not cured by Borrower within any applicable grace or cure period; or
16. An event of default occurs under the Related Party Loan Documents and
is not cured by the Related Party within any applicable grace or cure period.
1.10 Remedies. Upon the happening of an Event of Default, Lender shall
have the right, in addition to all the remedies conferred upon Lender by law or
equity or the terms of any Loan Document, to do any or all of the following,
concurrently or successively, without notice to Borrower:
1. Declare the Note to be, and such Note shall thereupon become,
immediately due and payable, together with the Prepayment Fees (as defined in
the Primary Note), if applicable, without presentment, demand, protest, notice
of intention to accelerate, notice of acceleration or notice of any kind, all of
which are hereby expressly waived, anything contained herein or in the Note to
the contrary notwithstanding, and exercise any one or more of its rights and
remedies under the Loan Documents.
2. Enter upon and take possession of the Property and all material,
equipment and supplies thereon and do anything necessary or desirable to fulfill
the obligations of Borrower hereunder and to sell, manage, maintain, repair and
protect the Property. Without limiting the generality of the foregoing and for
the purposes aforesaid, Borrower hereby appoints and constitutes Lender its
lawful attorney-in-fact with full power of substitution to (i) pay, settle or
compromise all existing bills and claims which may be liens upon or security
interests in the Property, or to avoid such bills and claims becoming liens or
security interests, against the Property or any fixtures or equipment thereon,
or as may be necessary or desirable for the clearance of title or otherwise,
(ii) use any funds of Borrower for purpose of completing the Renovation Work,
(iii) execute all applications and certificates in the name of Borrower which
may be required to carry out the intent and purpose hereof, (iv) employ such
contractors, subcontractors, architects and others as Lender may deem reasonably
appropriate, (v) do any and every act which Borrower might do on its own behalf,
including to enter into Leases of any portion of the Property, and (vi)
prosecute or defend any and all actions or proceedings involving the Property or
any fixtures,
<PAGE>
equipment or other installations thereon, it being understood and agreed that
this power of attorney shall be a power coupled with an interest and cannot be
revoked. Lender and its designees, representatives, agents, licensees and
contractors shall be entitled to the entry, possession and use contemplated
herein without the consent of any party and without any legal process or other
condition precedent whatsoever. Borrower acknowledges that any denial of such
entry, possession and use by Lender will cause irreparable injury and damage to
Lender and agrees that Lender may forthwith sue for any remedy to enforce the
immediate enjoyment of such right. Borrower hereby waives the posting of any
bond as a condition for exercising such remedy.
3. Apply the sum of any Reserved Funds and Capital Reserve payments then
being held by Lender to the repayment of the Loan in any order or priority.
4. Declare any or all of the Other Borrower Loans and the Related Party
Loans to be in default and to pursue all of its rights and remedies with respect
thereto.
Anything in this Agreement to the contrary notwithstanding, all funds
advanced or disbursed by Lender pursuant to the provisions of this Article 7
shall be deemed advanced by Lender under an obligation to do so regardless of
the identity of the person or persons to whom such funds are owed and shall bear
interest at the Default Rate. Funds advanced or disbursed by Lender in the
exercise of its judgment that the same are needed to protect its security or to
otherwise perform any obligations of Borrower hereunder are to be deemed
obligatory advances hereunder and are to be added to the total indebtedness
evidenced by the Note and secured by the Mortgage and the other Loan Documents
and said indebtedness shall, if necessary, be increased accordingly.
In case of any Event of Default hereunder, Borrower will pay Lender's
attorneys' fees and disbursements and court costs (including those relating to
appeals) and all related expenses in connection with the enforcement of this
Agreement or any of the other Loan Documents.
ARTICLE 8
MISCELLANEOUS
1.11 Indemnification. Except for Losses (as hereinafter defined) which are
finally adjudicated by a court of competent jurisdiction to have arisen directly
and proximately from the gross negligence or willful misconduct of Lender or
have arisen solely and exclusively from acts or events occurring after the
Borrower has relinquished all possession, direction or control over the
Property, Borrower shall protect, defend, indemnify and hold Lender, and its
officers, directors, employees and agents (each, an "Indemnified Party")
harmless from and against any and all harm, loss, liability, damage, suit,
claim, demand, expense, fees, costs, judgments and penalties (including
reasonable attorneys' fees but excluding consequential damages) (each a "Loss")
<PAGE>
suffered or incurred by an Indemnified Party in connection with (i) any claim,
demand, suit or proceeding brought or asserted by any person against an
Indemnified Party arising out of or relating to Lender's entering into or
carrying out the terms of this Agreement or any of the other Loan Documents or
being the holder of the Note, (ii) any default by Borrower or any other Loan
Party hereunder or under any other Loan Document, (iii) any bodily injury,
death, other personal injury or property damage occurring in or upon the
Property through any cause whatsoever, and (iv) any transaction otherwise
arising out of or in any way connected with the Property, this Agreement, any
other Loan Document or the Indebtedness, excluding a Loss arising out of
Lender's gross negligence or willful misconduct.
1.12 Defense of Claims. Lender may, at Borrower's sole cost and expense,
retain separate counsel to defend Lender against any claim relating to any Loss
or potential Loss. If Lender retains separate counsel in such an action,
Borrower will cooperate with Lender and provide Lender with copies of all
existing pleadings, discovery materials and other materials relating to said
claim. In any event, Borrower shall defend any such claim and shall provide
Lender with copies of all pleadings, filings and correspondence relating
thereto.
1.13 Performance by Lender. In the event that Borrower shall at any time
fail to duly and punctually pay, perform, observe or comply with any of its
covenants and agreements hereunder or under the other Loan Documents, or if any
Event of Default hereunder shall exist, then Lender may (but shall in no event
be required to) make any such payment or perform any such term, provision,
condition, covenant or agreement or cure any such Event of Default. Lender shall
not take action under this Section 8.3 prior to the occurrence of an Event of
Default unless in Lender's reasonable judgment, such action is necessary or
appropriate in order to preserve the value of the collateral, to protect persons
or property, or Borrower has abandoned the Property or any portion thereof.
Lender shall not be obligated to continue any such action having commenced the
same and may cease the same without notice to Borrower. Any amounts expended by
Lender in connection with such action shall constitute additional advances
hereunder, the payment of which is additional indebtedness, secured by the Loan
Documents and shall become due and payable upon demand by Lender, with interest
at the Default Rate from the date of disbursement thereof until fully paid. No
further direction or authorization from Borrower shall be necessary for such
disbursements. The execution of this Agreement by Borrower shall and hereby does
constitute an irrevocable direction and authorization to Lender to so disburse
such funds.
1.14 Transfer or Assignment. Lender may assign, negotiate, pledge or
otherwise hypothecate all or any portion of the Loan or grant participation
therein, or in any of its rights and security hereunder and under the other Loan
Documents, and Borrower shall accord full recognition thereto provided that if
the Loan is assigned to any party other than Nationwide Life Insurance Company
or any other life insurance company, financial institution or other commercial
or institutional lender, or affiliate thereof, then Borrower must consent to
such assignment which consent shall not be unreasonably withheld or delayed.
Lender agrees to provide Borrower with
<PAGE>
written notice of any assignment of the Loan other than to Nationwide Life
Insurance Company. Lender may deliver copies to any potential participant or
assignee or transferee of financial statements and other information from time
to time furnished to Lender pursuant hereto or in connection therewith provided
that Lender shall take such steps as may be reasonably necessary to assure that
such information remains confidential. Borrower shall not assign or attempt to
assign its rights or obligations under this Agreement or any other Loan Document
other than Permitted Transfers.
1.15 Lender's Actions. The authority herein conferred upon Lender and any
action taken by Lender hereunder or in any other Loan Document will be taken by
Lender for its own protection only, and Lender does not and shall not be deemed
to have assumed any responsibility to Borrower or to any other person or persons
with respect to any such action herein authorized or taken by Lender. No person
shall be entitled to rely upon, or claim to have relied upon, any action taken
or failed to have been taken by Lender or any of its representatives.
1.16 Time is of the Essence. TIME IS OF THE ESSENCE OF THIS AGREEMENT.
1.17 Waivers. No waiver of any term, provision, condition, covenant or
agreement contained herein or in any other Loan Document shall be effective
unless set forth in a writing signed by Lender, and any such waiver shall be
effective only to the extent set forth in such writing. No failure by Lender to
exercise, or delay by Lender in exercising, any right, power or privilege
hereunder or in any other Loan Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof, or the exercise of any other
right or remedy provided by law. No notice to or demand on Borrower in any case
shall, in itself, entitle Borrower to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of Lender to
any other or further action in any circumstances without notice or demand.
1.18 Notices. Any notice which any party hereto may be required or may
desire to give hereunder shall be delivered personally, or by overnight express
courier, addressed in the case of Borrower to:
Lodgian AMI, Inc.
Two Live Oak Center
3445 Peachtree Road, NE
Suite 700
Atlanta, Georgia 30326
with a copy to:
Stearns, Weaver, Miller, Weissler,
Alhadeff & Sitterson, P.A.
<PAGE>
Museum Tower
150 West Flagler Street
Miami, Florida 33130
Attention: Robert Weissler, Esq.
in the case of Lender to:
Banc One Capital Funding Corporation
150 East Gay Street
Columbus, Ohio 43215
Attention: Loan Servicing
with a copy to:
Banc One Capital Markets, Inc.
150 East Gay Street, 24th Floor
Columbus, Ohio 43215
Attn: Legal Department and Real Estate Investment Group
or at such other addresses or to the attention of such other persons as may from
time to time be designated by the party to be addressed by written notice to the
other in the manner herein provided. Notices, demands and requests given in the
manner aforesaid shall be deemed sufficiently served or given for all purposes
hereunder when received or when delivery is refused or when the same are
returned to sender for failure to be called for.
1.19 Successors and Assigns. This Agreement shall inure to the benefit of
the parties and their respective successors and permitted assigns. No assignment
made by Borrower in violation of this Agreement shall confer any rights on any
assignee of Borrower.
1.20 No Partnership. Nothing contained herein, or in any other Loan
Document, and no action or inaction whatsoever on the part of Lender, shall be
deemed to make Lender a partner or joint venturer with Borrower.
1.21 Brokerage Claims. Borrower shall, and shall cause the Guarantor, to
protect, defend, indemnify and hold Lender harmless from and against all loss,
cost, liability and expense incurred as a result of any claim for a broker's or
finder's fee against Lender or any person or entity in connection with the
transaction herein contemplated, provided such claim is made by or arises
through or under Borrower or the Guarantor or is based in whole or in part upon
alleged acts or omissions of Borrower or the Guarantor. Lender shall protect,
defend, indemnify and hold Borrower harmless from and against all loss, cost,
liability and expense incurred as a result of any claim for a broker's or
finder's fee against Borrower provided such claim is based upon alleged acts or
omissions of Lender.
<PAGE>
1.22 Publicity. Lender and Borrower may each reasonably publicize the Loan
if it so elects. Borrower agrees to consult with Lender prior to any press
release concerning the Loan.
1.23 Documents Satisfactory to Lender. All documents and other matters
required by any of the provisions of this Agreement to be submitted or provided
to Lender shall be in form and substance reasonably satisfactory to Lender.
1.24 Additional Assurances. At any time or from time to time, upon the
written request of Lender, Borrower shall execute, and, if required, record,
file (and pay all fees, taxes or other expenses relating thereto) all such
further documents and do all such other acts and things as Lender may reasonably
request to effectuate the transaction contemplated herein in accordance with the
terms hereof.
1.25 Entire Agreement. This Agreement, the Exhibits hereto and the other
Loan Documents and other documents referred to herein constitute the entire
agreement between the Lender and Borrower with respect to the subject matter
hereof and may not be modified or amended in any manner other than by
supplemental written agreement executed by the parties hereto.
1.26 Severability. If any provision of this Agreement or any other Loan
Document or the application thereof to any person or situation shall, to any
extent, be held invalid or unenforceable, the remainder of this Agreement or any
other Loan Document, and the application of such provision to persons or
situations other than those to which it shall have been held invalid or
unenforceable, shall not be affected thereby, but shall continue valid and
enforceable to the fullest extent permitted by applicable law.
1.27 No Third Party Beneficiary. Except as hereinafter expressly provided,
this Agreement is made for the sole benefit of Borrower and Lender, and no other
person shall be deemed to have any privity of contract hereunder nor any right
to rely hereon to any extent or for any purpose whatsoever, nor shall any other
person have any right of action of any kind hereon or be deemed to be a third
party beneficiary hereunder. Notwithstanding the foregoing, Banc One Capital
Partners, VII, Ltd., its successors and assigns, shall be a third party
beneficiary of the representations, warranties, covenants and agreements of
Borrower and Guarantor under the Loan Documents for so long as it may own a
participation interest in the Loan.
1.28 CHOICE OF LAW. THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF OHIO,
ACCEPTED BY LENDER IN THE STATE OF OHIO, AND THE PROCEEDS OF THE LOAN EVIDENCED
HEREBY WERE OR ARE TO BE DISBURSED BY LENDER FROM THE STATE OF OHIO. BORROWER
AND LENDER AGREE THAT THE STATE OF OHIO HAS A SUBSTANTIAL RELATIONSHIP TO THE
TRANSACTION EVIDENCED HEREBY AND AGREE THAT THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND
<PAGE>
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF OHIO (WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAW).
1.29 Limitation on Liability.
(1) Subject to the limitations and exceptions contained in
subsections (b), (c), (d) and (e) below and as otherwise provided in Section
8.21, Borrower shall not have any personal recourse liability for amounts owing
under the Note or any of the other Loan Documents and no deficiency judgment
therefor shall be enforced against Borrower. Lender's recourse for such amounts
shall, subject to the limitations and exceptions contained in subsections (b),
(c), (d) and (e) below, be limited to the collateral and security provided under
the Loan Documents and the Other Borrower Loan Documents. Anything herein to the
contrary notwithstanding, the Borrower acknowledges and agrees that the
collateral and security provided under the Loan Documents and the Other Borrower
Loan Documents are intended to cross-collateralize both the Loan and the Other
Borrower Loans as described in Section 8.21.
(2) A judgment may be sought, obtained, entered and enforced against
Borrower to the extent necessary to preserve or enforce the rights and remedies
of Lender in, to or against the collateral and security provided under the Loan
Documents and the Other Borrower Loan Documents, and nothing contained in this
Section 8.19 shall be construed to limit, prejudice or impair the rights of
Lender to enforce its rights and remedies against any real and personal property
mortgaged, pledged, encumbered, assigned or granted to secure payment or
performance under this Agreement, the Note, the other Loan Documents and the
Other Borrower Loan Documents. Notwithstanding anything to the contrary herein
or elsewhere Lender shall, to the fullest extent permitted by law, be entitled
to injunctive relief and to specific performance.
(3) Anything contained herein or elsewhere to the contrary
notwithstanding, Borrower and Guarantor shall be liable to Lender, without
limitation, for Lender's harm, loss (including lost interest and principal on
the Loan), damage, costs and expenses (including Lender's reasonable attorneys'
fees and court and collection costs) arising out of or in connection with any of
the following circumstances:
(1) any misapplication or misappropriation of any insurance or
condemnation proceeds;
(2) revenues collected after an Event of Default or Incipient
Default and not properly applied to the Loan or normal
operating expenses of the Premises;
(3) any waste respecting all or any part of the Property or any
other collateral;
(4) real estate taxes, personal property taxes or Impositions, if
any, and insurance premiums with respect to the Property
(except to the extent resulting
<PAGE>
from the failure by Lender to disburse any deposits received
from Borrower with respect to such real estate or personal
property taxes in accordance with the provisions of Section
4.1(B));
(5) fraud in connection with the Loan or any Loan Document;
(6) any material breach of any representation or warranty made in
connection with the Loan (expressly excluding any
representations or warranties made by the Ground Lessor) known
by Borrower or Guarantor to have been false when made, or
deemed made specifically including any material
misrepresentation or inaccuracy contained in any financial
statement or other document provided to Lender pursuant to
Section 4.1.K of this Agreement known by Borrower or Guarantor
to have been false or inaccurate when provided;
(7) any destruction of the Property or any part thereof in or from
an uninsured or underinsured casualty for which Borrower was
required to obtain insurance under this Agreement;
(8) any breach of any of the terms and provisions of Section 2.10
(Environmental Matters) of the Mortgage; or
(9) any lien arising from the failure of the Borrower to pay or
perform any obligation with respect to taxes or employee
benefits which lien is superior in priority to the lien
created by the Mortgage and the Security Agreement upon the
property encumbered thereby.
(4) In the event of any filing by Borrower of any voluntary petition
under the Bankruptcy Code, or the taking by Borrower of any comparable action
under any federal or state law; or the filing of any involuntary petition under
the Bankruptcy Code against Borrower or the taking of comparable action under
any federal or state law against Borrower by any Affiliate of any of them, the
Loan shall become fully recourse against Borrower.
(5) Nothing contained in this Section 8.19 shall be construed to
release Borrower or any Loan Party from liability under (i) the indemnifications
contained in Section 2.10 (Environmental Matters) of the Mortgage, (ii) the
Limited Guaranty, (iii) the Environmental Indemnity, or (iv) the Other Borrower
Loan Documents.
1.30 WRITTEN AGREEMENT.
(a) THE RIGHTS AND OBLIGATIONS OF BORROWER AND LENDER SHALL BE
DETERMINED SOLELY FROM THIS WRITTEN LOAN
<PAGE>
AGREEMENT AND THE OTHER LOAN DOCUMENTS, AND ANY PRIOR ORAL OR
WRITTEN AGREEMENTS BETWEEN LENDER AND BORROWER CONCERNING THE
SUBJECT MATTER HEREOF AND OF THE OTHER LOAN DOCUMENTS ARE
SUPERSEDED BY AND MERGED INTO THIS LOAN AGREEMENT AND THE
OTHER LOAN DOCUMENTS.
(b) THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY NOT BE
VARIED BY ANY ORAL AGREEMENTS OR DISCUSSIONS THAT OCCUR
BEFORE, CONTEMPORANEOUSLY WITH, OR SUBSEQUENT TO THE EXECUTION
OF THIS LOAN AGREEMENT OR THE LOAN DOCUMENTS.
(c) THIS WRITTEN LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENTS BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
1.31 Cross-Collateralizations. The Other Borrower Loans and the Related
Party Loans are cross-defaulted with the Loan and with each other. The Other
Borrower Loans are cross- collateralized with the Loan and each other.
Accordingly, the Other Borrower Loans are secured by the Property and the other
collateral contemplated by the Loan Documents (the "Loan Collateral"), and the
Loan is secured by the Other Hotel Properties and other collateral serving as
security for such Other Borrower Loans (the "Other Borrower Loan Collateral").
Without limitation to any other right or remedy provided to Lender in this
Agreement, or any of the other Loan Documents, Borrower acknowledges and agrees
that, to the full extent permitted under applicable law, upon the occurrence of
an Event of Default (i) Lender shall have the right to pursue all of its rights
and remedies in one proceeding, or separately and independently in separate
proceedings which it, as Lender, in its discretion, shall determine from time to
time, (ii) Lender is not required to either marshall assets, sell the Loan
Collateral or any Other Borrower Loan Collateral in any inverse order of
alienation, or be subjected to any "one action" or "election of remedies" law or
rule, (iii) the exercise by Lender of any remedies against any Loan Collateral
or any Other Borrower Loan Collateral, will not impede Lender from subsequently
or simultaneously exercising remedies against any other collateral, (iv) all
liens and other rights, remedies and privileges provided to Lender in this
Agreement, and in the other Loan Documents (except to the extent such documents
have terminated or expired pursuant to their terms) or otherwise shall remain in
full force and effect until Lender has exhausted all of its remedies against the
Loan Collateral and all Other Borrower Loan Collateral has been foreclosed, sold
and/or otherwise realized upon and (v) the Loan Collateral and all the Other
Borrower Loan Collateral shall be security for the performance of all of
Borrower's obligations hereunder.
<PAGE>
1.32 Intentionally Omitted.
1.33 Intentionally Omitted.
1.34 WAIVER OF JURY TRIAL. LENDER AND BORROWER HEREBY WAIVE THE RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT
MATTER OF THIS AGREEMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND
VOLUNTARILY MADE BY LENDER AND BORROWER, AND LENDER AND BORROWER ACKNOWLEDGE
THAT NO PERSON ACTING ON BEHALF OF ANOTHER PARTY TO THIS AGREEMENT HAS MADE ANY
REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO
MODIFY OR NULLIFY ITS EFFECT. LENDER AND BORROWER FURTHER ACKNOWLEDGE THAT THEY
HAVE BEEN REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE
SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL
COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND THAT THEY HAVE HAD THE OPPORTUNITY
TO DISCUSS THIS WAIVER WITH COUNSEL.
1.35 Consent to Jurisdiction. The parties hereto submit to personal
jurisdiction in the State of Ohio for the enforcement of the provisions of this
Agreement and the other Loan Documents and irrevocably waive any and all rights
to object to such jurisdiction for the purposes of litigation to enforce any
provision of this Agreement and the other Loan Documents. Lender and Borrower
hereby consent to the jurisdiction of and agree that any action, suit or
proceeding to enforce this Agreement may be brought in any state or federal
court in the State of Ohio. Lender and Borrower hereby irrevocably waive any
objection which they may have to the laying of the venue of any such action,
suit, or proceeding in any such court and hereby further irrevocably waive any
claim that any such action, suit or proceeding brought in such a court has been
brought in an inconvenient forum. Borrower and Lender hereby consent that
service of process in any action, suit or proceeding may be made by service upon
the Borrower's agent for service of process (in the case of service to be made
upon Borrower), by personal service upon the party being served, or by delivery
in accordance with the notice requirements of Section 8.8 of this Agreement.
<PAGE>
IN WITNESS WHEREOF, Borrower and Lender have caused this Agreement to be
executed by their duly authorized representatives as of the day, month and year
first above written.
BORROWER:
LODGIAN AMI, INC., a
Maryland corporation
By: /s/ Toni Jones
----------------------------------
Name: Toni Jones
Title: Vice President
LENDER:
BANC ONE CAPITAL FUNDING
CORPORATION, an Ohio corporation
By: /s/ Ronald L. Callentine
----------------------------------
Name: Ronald L. Callentine
Title: Vice President
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
<PAGE>
EXHIBIT B-1
ADDITIONAL NOTE
<PAGE>
EXHIBIT B-2
PRIMARY NOTE
<PAGE>
EXHIBIT C
PERMITTED ENCUMBRANCES
<PAGE>
EXHIBIT D
INSURANCE REQUIREMENTS
(i) Insurance against loss to the Property on an "All Risk" policy form,
covering insurance risks no less broad than those covered under a Standard Multi
Peril (SMP) policy form, which contains a 1987 Commercial 150 "Causes of Loss
Special Format and such other risks as Lender may reasonably require, including
risk of hurricane, insurance covering the cost of demolition of undamaged
portions of any portion of the Property when required by code or ordinance and
the increased cost of reconstruction to conform with current code or ordinance
requirements, in amounts equal to the full replacement cost of the Property
(other than the Land), including fixtures and equipment, Borrower's interest in
leasehold improvements, and the cost of debris removal, with 1008 co-insurance
with an agreed amount endorsement and deductibles of not more than $10,000.00;
(ii) Business interruption/extra expense insurance in amounts sufficient
to pay during any period in which the Property may be damaged or destroyed, on a
gross income basis for a period of twelve (12) months (i) all business income
derived from the Property and (ii) all amounts (including all impositions,
utility charges and insurance premiums) required to be paid by Borrower;
(iii) During the performance of the Renovation Work and the making of any
other alterations or improvements to the Property insurance covering claims
based on the owner's or employer's contingent liability not covered by the
insurance provided in subsection (f) below.
(iv) Insurance against loss or damage by flood or mud slide in compliance
with the Flood Disaster Protection Act of 1973, as amended from time to time, if
the Property or any portion thereof is now, or at any time while the Loan
remains outstanding shall be, situated in any area which an appropriate
Governmental Authority designates as a special flood hazard area, Zone A or Zone
V, in amounts equal to the full replacement value of all above grade structures
on the Property;
(v) Insurance against loss or damage by earthquake, if the Premises are
now, or at any time while the Loan remains outstanding shall be, situated in any
area which is classified as a Major Damage Zone, Zones 3 and 4, by the
International Conference of Building Officials in an amount equal to the
probable maximum loss for the Premises, fixtures and equipment, plus the cost of
debris removal;
(vi) Commercial general public liability insurance, with the location of
the Property designated thereon, against death, bodily injury and property
damage arising in connection with the Property with Borrower listed as the named
insured with such limits as Lender may reasonably require, but in no event less
than $1,000,000, and written on a 1986 Standard ISO
<PAGE>
occurrence basis form or equivalent form, and excess umbrella liability
insurance with such limits as Lender may reasonably require, but in no event
less than $10,000,000; and
(vii) Such other insurance relating to the Property and the use and
operation thereof, as Lender may, from time to time, reasonably require,
including dramshop, products liability and workers' compensation insurance.
All insurance shall: (i) be carried by companies qualified to do business
in the State with a Best's rating of A-6 or better; (ii) be in form and content
reasonably acceptable to Lender; (iii) provide thirty (30) days' advance written
notice to Lender before any cancellation, material modification or notice of
non-renewal.
All physical damage policies and renewals shall contain a standard
mortgagee clause naming Lender as mortgagee, which clause shall expressly state
that any breach of any condition or warranty by Borrower shall not prejudice the
rights of Lender under such insurance, and a loss payable clause in favor of
Lender for personal property, contents, inventory, equipment and business
interruption. All liability policies and renewals shall name Lender as an
additional insured with respect to policies in which Lender has an interest. No
additional parties shall appear in the mortgage or loss payable clause without
Lender's prior written consent. All deductibles shall be in amounts reasonably
acceptable to Lender. In the event of the foreclosure of the Mortgage or any
other transfer of title to the Property in full or partial satisfaction of the
Loan, all right, title and interest of Borrower in and to all insurance policies
and renewals thereof then in force shall pass to the purchaser or grantee.
During any period during which construction is conducted on the Premises
and during which period the construction and materials are not covered by the
existing policies, Borrower shall cause to be provided to Lender, premium
prepaid insurance policies covering the Property (which during construction
shall be on an "All-Risk" perils, including theft, "Builder's Risk", "Completed
Value" form) in companies and forms satisfactory to Lender, and in amounts equal
to the replacement costs of the Improvements (including construction materials
and personal property on or off site) covering insurance risks no less broad
than those covered under a Standard Multi Peril (SMP) policy form, which
contains a 1987 Commercial ISO "Causes of Loss Special Form", with coverage for
such other expenses as Lender may reasonably require, including: debris removal;
cost of demolition of the undamaged portion of a building when required by code
or ordinance; increased cost of reconstruction to conform with current code or
ordinance requirements; real estate property taxes; architect, engineering, and
consulting fees; legal and accounting fees, including the cost of in-house
attorneys and paralegals; advertising and promotional expenses; interest on
money borrowed; additional commissions incurred upon renegotiating leases and
any and all other expenses which may be incurred as a result of any property
loss or destruction by an insured peril. Such insurance shall contain an agreed
amount endorsement (such amount to include foundation and underground pipes) and
bear a 100% co-insurance clause. The deductible shall be not more than $10,000.
Said policies shall contain a
<PAGE>
standard mortgagee clause naming Lender as mortgagee, and a permission to occupy
endorsement.
In addition, Borrower shall cause to be furnished to Lender certificates
from the insurance carrier for each general contractor evidencing workers'
compensation, employers' liability, commercial auto liability, and commercial
general liability insurance (including contractual liability and completed
operations coverage) written on a 1986 standard "ISO" occurrence basis form or
equivalent and excess umbrella coverage, carried during the course of
construction, with general liability insurance limits as Lender may reasonably
require, but in no event less than $1,000,000. Lender shall be named as an
additional insured under such liability policies. Borrower shall cause each
subcontractor to maintain commercial general liability, commercial automobile
liability, workers' compensation, employers' liability, and excess umbrella
liability coverage in form and amount reasonably satisfactory to Lender.
The additional insurance provisions for construction periods do not
obviate or otherwise affect requirements of the Loan Agreement or the previous
portions of this Exhibit, which requirements remain a part of this Agreement in
their entirety.
<PAGE>
EXHIBIT E
RENOVATION WORK
<PAGE>
Exhibit 10.5.2
GUARANTY AND INDEMNITY AGREEMENT
THIS GUARANTY AND INDEMNITY AGREEMENT (this "Agreement"), made effective
as of the 8th day of December 1998, by SERVICO CONCORD, INC., a California
corporation ("SCI"), PENMOCO, INC., a Michigan corporation ("PI"), and ISLAND
MOTEL ENTERPRISES, INC., a Georgia corporation ("IME"), each with a principal
place of business at Two Live Oak Center, 3445 Peachtree Road, NE, Suite 700,
Atlanta, Georgia 30326 (SCI, PI and IME are sometimes hereinafter collectively
referred to as "Guarantor"), to and for the benefit of BANC ONE CAPITAL FUNDING
CORPORATION, an Ohio corporation, having an office at 150 East Gay Street, 24th
Floor, Columbus, Ohio 43215 ("Lender").
RECITALS:
A. Lender and Lodgian AMI, Inc., a Maryland corporation ("Borrower"), have
entered into a Loan Agreement of even date herewith (as the same may be amended
from time to time, the "Loan Agreement") pursuant to which Lender has agreed to
make a loan to Borrower in the amount of up to $5,214,292 (the "Loan"), which
Loan is evidenced by that certain Promissory Note of even date herewith in the
principal amount of $4,588,577 (the "Primary Note") and that certain Promissory
Note of even date herewith in the principal amount of $625,715 (the "Additional
Note" and, together with the Primary Note, the "Note"). The Loan is secured by,
inter alia, that certain Purchase Money Open End Mortgage, Purchase Money
Leasehold Open-End Mortgage and Security Agreement of even date herewith from
Borrower to Lender encumbering Borrower's property commonly known as Holiday Inn
- - Visitor Center/Lancaster East, located at 521 Greenfield Road, Lancaster,
Pennsylvania 17601 (the "Mortgage") (the Note, the Loan Agreement, the Mortgage
and every other document, instrument and agreement evidencing or securing the
Loan are hereinafter sometimes collectively referred to as the "Loan
Documents");
B. Borrower is an affiliate of PI, SCI and IME;
C. Lender is extending financial accommodations to PI, SCI and IME
concurrently with the Loan and, in order to induce Lender to extend such
financial accommodations, PI, SCI and IME are willing to execute this Agreement;
D. Lender is unwilling to make the Loan without the execution and delivery
of this Agreement by PI, SCI and IME;
NOW, THEREFORE, to induce Lender to make the Loan and in consideration of
One Dollar ($1.00) and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Guarantor, intending to be legally
bound hereby, jointly and severally, agree as follows:
<PAGE>
1. Liabilities.
(a) Notwithstanding any provision contained in the Note, the Loan
Agreement, the Mortgage or any other Loan Document to the contrary, Guarantor
hereby absolutely, primarily, unconditionally and irrevocably guarantees to
Lender, its successors and assigns, the full prompt and complete payment and
performance of all obligations and liabilities of Borrower arising under the
Loan Documents (all of which obligations and liabilities are collectively
hereinafter referred to as the "Liabilities"). All terms used and not otherwise
defined herein shall have the meanings ascribed to them in the Loan Agreement.
(b) The validity of this Agreement and the obligations of Guarantor
hereunder shall in no way be terminated, abated, affected or impaired by the
happening from time to time of any event or condition, including, without
limitation, any of the following: (i) the assertion or non-assertion by Lender
of any of the rights or remedies available to Lender pursuant to the provisions
of the Loan Documents or pursuant to any applicable statutes; (ii) the waiver by
Lender of, or the failure of Lender to enforce, or the lack of diligence by
Lender in connection with, the enforcement of any of its rights or remedies
under the Loan Documents; (iii) the granting by Lender of any indulgence or
extension of time; (iv) the exercise by Lender of any so-called self-help
remedies; (v) any other act, omission or conditions which might in any manner or
to any extent vary the risk to Guarantor or might otherwise operate as a
discharge or release of the Guarantor under applicable law; (vi) the invalidity
or unenforceability of all or any portion or provision of the Note; (vii) any
release or discharge of or accord and satisfaction with Borrower or any other
person or entity, by variation of the terms of the Note or otherwise; (viii) the
impairment, modification, change, release, discharge or limitation of the
liability of Borrower or the Guarantor or any of their estates in bankruptcy,
resulting from or pursuant to the application of the bankruptcy or insolvency
laws of or any decision of any court of the United States or any state thereof;
(ix) any present or future law or order of any government (de jure or de facto)
or of any agency thereof purporting to reduce, amend or otherwise affect the
Liabilities or to vary any terms of payment, satisfaction or discharge thereof;
(x) the waiver, compromise, settlement, release, extension, amendment, change,
modification or termination of the terms of the Liabilities or any or all of the
obligations, covenants or agreements of Borrower under the Loan Documents
(except by satisfaction in full of all Liabilities) or of the Guarantor under
this Agreement; (xi) the extension of the time for satisfaction, discharge or
payment of the Liabilities or any part thereof owing or payable by Borrower
under the Loan Documents or of the time for performance of any other
obligations, covenants or agreements under or arising out of this Agreement or
the extension or renewal of any thereof; (xii) the existence of any other
guaranty of the Liabilities in favor of Lender, or the enforcement or attempted
enforcement of such other guaranty; and (xiii) any event or action that would in
the absence of this paragraph result in the release or discharge of the
Guarantor from the performance or observance of any obligation, covenant or
agreement contained in this Agreement or any other agreement.
<PAGE>
2. Waivers. The Guarantor hereby waives all notice of any default in the
payment of or non-performance of any Liabilities, all protest, demands, notices
or presentments of any kind, notice of any acceptance of this Agreement and all
matters and rights which may be raised in avoidance of, or in defense against,
any action to enforce the obligations of the Guarantor hereunder; provided,
however, that nothing herein shall waive the Guarantor's right to assert payment
or performance of any Liabilities as a defense to a claim relating to such
Liabilities under this Agreement, to the extent of such payment or performance.
The Guarantor hereby waives any and all suretyship defenses or defenses in the
nature thereof without in any manner limiting any other provisions of this
Agreement. Notwithstanding anything to the contrary contained herein, the
Guarantor hereby irrevocably waives all rights the Guarantor may have at law or
in equity, including, without limitation, any law subrogating the Guarantor to
the rights of Lender, to seek contribution, indemnification or any other form of
reimbursement from Borrower and any other person now or hereafter primarily or
secondarily liable for any obligations of Borrower to Lender, including without
limitation, the Liabilities, for any payment or performance made by the
Guarantor under or in connection with this Agreement, unless and until
irrevocable payment in full of the Note has been received by Lender.
3. Primary Liability.
(a) The Guarantor's liability under this Agreement shall be primary,
and with respect to any right of action which shall accrue to Lender relating to
any Liabilities, Lender may at its sole option and without notice or demand,
proceed directly against the Guarantor without having proceeded against Borrower
or any other person or entity liable to any extent for any of the Liabilities or
against the collateral under the Loan Documents. The Guarantor's liability
hereunder shall continue without regard to whether or not Lender may have
instituted or prosecuted or obtained or realized any judgment in any suit,
action or proceeding or shall have exhausted any of its remedies or taken any
steps to enforce any of its rights under or pursuant to the Loan Documents or at
law or in equity, or otherwise, and without regard to any other condition or
contingency, so long as any of the Liabilities remains unsatisfied to any
extent. This Agreement is an agreement of payment and performance and not merely
of collection.
(b) Each default on any of the Liabilities shall give rise to a
separate cause of action and separate suits may be brought hereunder as each
cause of action arises or, at Lender's option, any or all causes of action which
arise prior to or after any suit is commenced hereunder may be included in such
suit.
4. Representations. The Guarantor further represents to Lender, as an
inducement to making the Loan, that there is not pending or threatened any
litigation, arbitration, administrative or governmental proceeding against the
Guarantor which would in any way prohibit or impede the adoption, execution, or
performance of this Agreement by the Guarantor or which would affect any of the
undertakings herein; that compliance by the Guarantor with the Guarantor's
obligations under this Agreement has not resulted and will not result in the
violation of this
<PAGE>
Agreement or any agreement or other instrument to which the Guarantor is a party
or by which the Guarantor or any of the Guarantor's assets are bound; that this
Agreement and all actions contemplated to be taken by the Guarantor hereunder
have been duly authorized; and that this Agreement and such actions and
undertakings are valid and binding upon the Guarantor and enforceable against
the Guarantor in accordance with their terms.
5. Borrower's Actions. No encumbrance, assignment, leasing, subletting,
sale or other transfer by Borrower of any of Borrower's assets shall operate to
extinguish or diminish the liability of the Guarantor under this Agreement.
6. Bankruptcy. If Borrower files a petition for reorganization,
arrangement, composition or similar relief under any present or future provision
of the Federal Bankruptcy Code, or if such a petition is filed against Borrower
by any member or partner of Borrower, by Guarantor or by any person or entity
affiliated with, related to or in which a beneficial interest is owned by such
member or partner or Guarantor (each, a "Bankruptcy Event"), Guarantor shall,
from and after the date of such filing, absolutely, primarily, unconditionally
and irrevocably guarantee to Lender, its successors and assigns, the full,
prompt and absolute payment, performance, observance and discharge of all of
Borrower's obligations and liabilities arising under the Loan Documents,
including the repayment of all principal and interest under the Note and the
payment of all other sums payable by Borrower under the Loan Documents.
7. No Reliance. The Guarantor assumes the responsibility for being and
keeping itself informed of the financial condition of Borrower and of all other
circumstances bearing upon the risk of failure to pay, perform or discharge any
of the obligations and liabilities of Borrower which diligent inquiry would
reveal, and Lender shall have no duty to advise the Guarantor of information
known to Lender regarding such condition or any such circumstance.
8. Payment of Expenses. The Guarantor shall be responsible to Lender for
all expenses (including reasonable attorneys' fees), incurred by Lender in
enforcing any obligations of the Guarantor under this Agreement.
9. Successors and Assigns. All references to Lender and Guarantor shall be
deemed to include references to the successors and assigns of Lender and
Guarantor.
10. Governing Law. In all respects, including without limitation, matters
of construction and performance of this Agreement and the obligations arising
hereunder, this Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of Ohio applicable to contracts and
obligations made and performed in such state and any applicable laws of the
United States of America. Interpretation and construction of this Agreement
shall be according to the contents hereof and without presumption or standard of
construction in favor of or against Guarantor or Lender.
<PAGE>
11. Severability. If any term or provision of this Agreement or the
application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Agreement shall be valid and enforced to the fullest
extent permitted by law; provided, however, all rights, powers and remedies
provided herein may be exercised only to the extent that the exercise thereof
does not violate any applicable law, and are intended to be limited to the
extent necessary so that they will not render this Agreement invalid or
unenforceable under any applicable law.
12. No Waiver. The waiver of any provision of this Agreement by Lender
shall constitute a waiver of that provision on that occasion only, and shall not
constitute a waiver of any other provision of this Agreement, or that provision
with respect to any other occasion.
13. Commercial Transaction.
(a) TO INDUCE LENDER TO ENTER INTO THE COMMERCIAL LOAN TRANSACTION
EVIDENCED BY AND SECURED BY THE LOAN DOCUMENTS, GUARANTOR AGREES THAT THE SAID
TRANSACTION IS COMMERCIAL AND NOT A CONSUMER TRANSACTION.
(b) Each of the waivers set forth in this Agreement is made with
knowledge of its significance and consequences, and under the circumstances the
waivers are reasonable. If any of said waivers is determined to be contrary to
any applicable law or public policy, such waiver shall be effective only to the
maximum extent permitted by law.
14. Jury Trial. LENDER AND GUARANTOR HEREBY WAIVE THE RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER
OF THIS AGREEMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE
BY LENDER AND GUARANTOR, AND LENDER AND GUARANTOR ACKNOWLEDGE THAT NO PERSON
ACTING ON BEHALF OF ANOTHER PARTY TO THIS AGREEMENT HAS MADE ANY REPRESENTATIONS
OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR
NULLIFY ITS EFFECT. LENDER AND GUARANTOR FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN
REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF
THIS AGREEMENT AND IN THE MAKING OF ALL WAIVERS CONTAINED HEREIN BY INDEPENDENT
LEGAL COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND THAT LENDER AND GUARANTOR
HAVE HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.
<PAGE>
15. Consent to Jurisdiction. GUARANTOR HEREBY SUBMITS TO PERSONAL
JURISDICTION IN THE STATE OF OHIO FOR THE ENFORCEMENT OF THE PROVISIONS OF THIS
AGREEMENT AND IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO OBJECT TO SUCH
JURISDICTION FOR THE PURPOSES OF LITIGATION TO ENFORCE ANY PROVISION OF THIS
AGREEMENT. GUARANTOR HEREBY CONSENTS TO THE JURISDICTION OF AND AGREES THAT ANY
ACTION, SUIT OR PROCEEDING TO ENFORCE THIS AGREEMENT MAY BE BROUGHT IN ANY STATE
OR FEDERAL COURT IN THE STATE OF OHIO. GUARANTOR HEREBY IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY HAVE TO THE LAYING OF THE VENUE OF ANY SUCH ACTION, SUIT,
OR PROCEEDING IN ANY SUCH COURT AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM
THAT ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. EACH GUARANTOR HEREBY APPOINTS CT CORPORATION
AS THEIR AGENT FOR SERVICE OF PROCESS. GUARANTOR HEREBY CONSENTS THAT SERVICE OF
PROCESS IN ANY ACTION, SUIT OR PROCEEDING MAY BE MADE BY SERVICE UPON THE
AFORESAID AGENT FOR SERVICE OF PROCESS, BY PERSONAL SERVICE UPON THE PARTY BEING
SERVED, OR BY DELIVERY IN ACCORDANCE WITH THE NOTICE REQUIREMENTS OF SECTION 16
OF THIS AGREEMENT.
16. Notices. Any notice which any party hereto may be required or may
desire to give hereunder shall be delivered personally, or by overnight express
courier, addressed in the case of Guarantor to:
Penmoco, Inc., Servico Concord, Inc. and
Island Motel Enterprises, Inc.
Two Live Oak Center
3445 Peachtree Road, NE
Suite 700
Atlanta, Georgia 30326
with a copy to:
Stearns, Weaver, Miller, Weissler,
Alhadeff & Sitterson, P.A.
Museum Tower
150 West Flagler Street
Miami, Florida 33130
Attention: Robert Weissler, Esq.
in the case of Lender to:
<PAGE>
Banc One Capital Funding Corporation
150 East Gay Street, 24th Floor
Columbus, Ohio 43215
Attention: Loan Servicing
with a copy to:
Banc One Capital Markets, Inc.
150 East Gay Street, 24th Floor
Columbus, Ohio 43215
Attention: Legal Department and Real Estate Group
or at such other addresses or to the attention of such other persons as may from
time to time be designated by the party to be addressed by written notice to the
other in the manner herein provided. Notices, demands and requests given in the
manner aforesaid shall be deemed sufficiently served or given for all purposes
hereunder when received or when delivery is refused or when the same are
returned to sender for failure to be called for.
17. Miscellaneous.
(a) This Agreement may not be modified, altered or amended nor may
any provision hereof or rights hereunder be waived, except by an instrument in
writing signed by the person or entity against which such modification,
alteration, amendment or waiver is sought to be enforced.
(b) Except as provided in Section 6 above, this Agreement shall
terminate upon the irrevocable payment by Borrower to Lender of all amounts
evidenced by the Note and the other Loan Documents.
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this instrument to be duly
executed as of the date first written above.
GUARANTOR:
SERVICO CONCORD, INC.
a California corporation
By: /s/ Toni Jones
----------------------------------
Name: Toni Jones
Title: Vice President
ISLAND MOTEL ENTERPRISES, INC.
a Georgia corporation
By: /s/ Toni Jones
----------------------------------
Name: Toni Jones
Title: Vice President
PENMOCO, INC.
a Michigan corporation
By: /s/ Toni Jones
----------------------------------
Name: Toni Jones
Title: Vice President
<PAGE>
Exhibit 10.5.3
LIMITED GUARANTY AND INDEMNITY AGREEMENT
THIS LIMITED GUARANTY AND INDEMNITY AGREEMENT (this "Agreement"), made
effective as of the 8th day of December 1998, by LODGIAN, INC., a Delaware
corporation, with a principal place of business at Two Live Oak Center, 3445
Peachtree Road, NE, Suite 700, Atlanta, Georgia 30326 ("Guarantor"), to and for
the benefit of BANC ONE CAPITAL FUNDING CORPORATION, an Ohio corporation, having
an office at 150 East Gay Street, 24th Floor, Columbus, Ohio 43215 ("Lender")
RECITALS:
A. Lender and Lodgian AMI, Inc., a Maryland corporation ("Borrower"), have
entered into a Loan Agreement of even date herewith (as the same may be amended
from time to time, the "Loan Agreement") pursuant to which Lender has agreed to
make a loan to Borrower in the amount of up to $5,214,292 (the "Loan"), which
Loan is evidenced by that certain Promissory Note of even date herewith in the
principal amount of $4,588,577 (the "Primary Note") and that certain Promissory
Note of even date herewith in the principal amount of $625,715 (the "Additional
Note," and together with the Primary Note, the "Note"). The Loan is secured by,
inter alia, that certain Purchase Money Open End Mortgage, Purchase Money
Leasehold Open-End Mortgage and Security Agreement of even date herewith from
Borrower to Lender encumbering Borrower's property commonly known as Holiday Inn
Visitor Center/Lancaster East located at 521 Greenfield Road, Lancaster,
Pennsylvania 17601 (the "Mortgage") (the Note, the Loan Agreement, the Mortgage
and every other document, instrument and agreement evidencing or securing the
Loan are hereinafter sometimes collectively referred to as the "Loan
Documents");
B. Borrower is a direct or indirect subsidiary of Guarantor;
C. Guarantor will directly benefit from the making of the Loan to
Borrower; and
D. Lender is unwilling to make the Loan without the execution and delivery
of this Agreement by Guarantor;
NOW, THEREFORE, to induce Lender to make the Loan and in consideration of
One Dollar ($1.00) and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Guarantor, intending to be legally
bound hereby, jointly and severally, agree as follows:
1. Liabilities.
<PAGE>
(a) Notwithstanding any provision contained in the Note, the Loan
Agreement, the Mortgage or any other Loan Document to the contrary, Guarantor
hereby absolutely, primarily, unconditionally and irrevocably guarantees to
Lender, its successors and assigns, (i) the full prompt and complete payment and
performance of all principal, interest, charges, fees and other monetary
obligations of Borrower under the Primary Note, provided, however, that upon
Renovation Completion and so long as no Event of Default then exists, such
obligation shall terminate and become null and void, and (ii) the full prompt
and complete payment and performance of all principal, interest, charges, fees
and other monetary obligations of Borrower under the Additional Note, and (iii)
the full, prompt and complete payment and performance of all obligations and
liabilities of Borrower arising under Section 8.19 (c) and (d) of the Loan
Agreement and Sections 2.10 and 4.13 of the Mortgage (all of which obligations
and liabilities are collectively hereinafter referred to as the "Liabilities").
All terms used and not otherwise defined herein shall have the meanings ascribed
to them in the Loan Agreement.
(b) The validity of this Agreement and the obligations of Guarantor
hereunder shall in no way be terminated, abated, affected or impaired by the
happening from time to time of any event or condition, including, without
limitation, any of the following: (i) the assertion or non-assertion by Lender
of any of the rights or remedies available to Lender pursuant to the provisions
of the Loan Documents or pursuant to any applicable statutes; (ii) the waiver by
Lender of, or the failure of Lender to enforce, or the lack of diligence by
Lender in connection with, the enforcement of any of its rights or remedies
under the Loan Documents; (iii) the granting by Lender of any indulgence or
extension of time; (iv) the exercise by Lender of any so-called self-help
remedies; (v) any other act, omission or conditions which might in any manner or
to any extent vary the risk to Guarantor or might otherwise operate as a
discharge or release of the Guarantor under applicable law; (vi) the invalidity
or unenforceability of all or any portion or provision of the Note; (vii) any
release or discharge of or accord and satisfaction with Borrower or any other
person or entity, by variation of the terms of the Note or otherwise; (viii) the
impairment, modification, change, release, discharge or limitation of the
liability of Borrower or the Guarantor or any of their estates in bankruptcy,
resulting from or pursuant to the application of the bankruptcy or insolvency
laws of or any decision of any court of the United States or any state thereof;
(ix) any present or future law or order of any government (de jure or de facto)
or of any agency thereof purporting to reduce, amend or otherwise affect the
Liabilities or to vary any terms of payment, satisfaction or discharge thereof;
(x) the waiver, compromise, settlement, release, extension, amendment, change,
modification or termination of the terms of the Liabilities or any or all of the
obligations, covenants or agreements of Borrower under the Loan Documents
(except by satisfaction in full of all Liabilities) or of the Guarantor under
this Agreement; (xi) the extension of the time for satisfaction, discharge or
payment of the Liabilities or any part thereof owing or payable by Borrower
under the Loan Documents or of the time for performance of any other
obligations, covenants or agreements under or arising out of this Agreement or
the extension or renewal of any thereof; (xii) the existence of any other
guaranty of the Liabilities in favor of Lender, or the enforcement or attempted
enforcement of such other guaranty; and (xiii) any event or action that would in
the absence of this paragraph result in the release or discharge of the
Guarantor from the performance or observance of any obligation,
<PAGE>
covenant or agreement contained in this Agreement or any other agreement.
2. Waivers. The Guarantor hereby waives all notice of any default in the
payment of or non-performance of any Liabilities, all protest, demands, notices
or presentments of any kind, notice of any acceptance of this Agreement and all
matters and rights which may be raised in avoidance of, or in defense against,
any action to enforce the obligations of the Guarantor hereunder; provided,
however, that nothing herein shall waive the Guarantor's right to assert payment
or performance of any Liabilities as a defense to a claim relating to such
Liabilities under this Agreement, to the extent of such payment or performance.
The Guarantor hereby waives any and all suretyship defenses or defenses in the
nature thereof without in any manner limiting any other provisions of this
Agreement. Notwithstanding anything to the contrary contained herein, the
Guarantor hereby irrevocably waives all rights the Guarantor may have at law or
in equity, including, without limitation, any law subrogating the Guarantor to
the rights of Lender, to seek contribution, indemnification or any other form of
reimbursement from Borrower and any other person now or hereafter primarily or
secondarily liable for any obligations of Borrower to Lender, including without
limitation, the Liabilities, for any payment or performance made by the
Guarantor under or in connection with this Agreement, unless and until
irrevocable payment in full of the Note has been received by Lender.
3. Primary Liability.
(a) The Guarantor's liability under this Agreement shall be primary,
and with respect to any right of action which shall accrue to Lender relating to
any Liabilities, Lender may at its sole option and without notice or demand,
proceed directly against the Guarantor without having proceeded against Borrower
or any other person or entity liable to any extent for any of the Liabilities or
against the collateral under the Loan Documents. The Guarantor's liability
hereunder shall continue without regard to whether or not Lender may have
instituted or prosecuted or obtained or realized any judgment in any suit,
action or proceeding or shall have exhausted any of its remedies or taken any
steps to enforce any of its rights under or pursuant to the Loan Documents or at
law or in equity, or otherwise, and without regard to any other condition or
contingency, so long as any of the Liabilities remains unsatisfied to any
extent. This Agreement is an agreement of payment and performance and not merely
of collection.
(b) Each default on any of the Liabilities shall give rise to a
separate cause of action and separate suits may be brought hereunder as each
cause of action arises or, at Lender's option, any or all causes of action which
arise prior to or after any suit is commenced hereunder may be included in such
suit.
4. Representations. The Guarantor further represents to Lender, as an
inducement to making the Loan, that there is not pending or threatened any
litigation, arbitration, administrative
<PAGE>
or governmental proceeding against the Guarantor which would in any way prohibit
or impede the adoption, execution, or performance of this Agreement by the
Guarantor or which would affect any of the undertakings herein; that compliance
by the Guarantor with the Guarantor's obligations under this Agreement has not
resulted and will not result in the violation of this Agreement or any agreement
or other instrument to which the Guarantor is a party or by which the Guarantor
or any of the Guarantor's assets are bound; that this Agreement and all actions
contemplated to be taken by the Guarantor hereunder have been duly authorized;
and that this Agreement and such actions and undertakings are valid and binding
upon the Guarantor and enforceable against the Guarantor in accordance with
their terms.
5. Borrower's Actions. No encumbrance, assignment, leasing, subletting,
sale or other transfer by Borrower of any of Borrower's assets shall operate to
extinguish or diminish the liability of the Guarantor under this Agreement.
6. Bankruptcy. If Borrower files a petition for reorganization,
arrangement, composition or similar relief under any present or future provision
of the Federal Bankruptcy Code, or if such a petition is filed against Borrower
by any member or partner of Borrower, by Guarantor or by any person or entity
affiliated with, related to or in which a beneficial interest is owned by such
member or partner or Guarantor (each, a "Bankruptcy Event"), Guarantor shall,
from and after the date of such filing, absolutely, primarily, unconditionally
and irrevocably guarantee to Lender, its successors and assigns, the full,
prompt and absolute payment, performance, observance and discharge of all of
Borrower's obligations and liabilities arising under the Loan Documents,
including the repayment of all principal and interest under the Note and the
payment of all other sums payable by Borrower under the Loan Documents.
7. No Reliance. The Guarantor assumes the responsibility for being and
keeping itself informed of the financial condition of Borrower and of all other
circumstances bearing upon the risk of failure to pay, perform or discharge any
of the obligations and liabilities of Borrower which diligent inquiry would
reveal, and Lender shall have no duty to advise the Guarantor of information
known to Lender regarding such condition or any such circumstance.
8. Payment of Expenses. The Guarantor shall be responsible to Lender for
all expenses (including reasonable attorneys' fees), incurred by Lender in
enforcing any obligations of the Guarantor under this Agreement.
9. Successors and Assigns. All references to Lender and Guarantor shall be
deemed to include references to the successors and assigns of Lender and
Guarantor.
10. Governing Law. In all respects, including without limitation, matters
of construction and performance of this Agreement and the obligations arising
hereunder, this Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of Ohio applicable to contracts and
obligations made and performed in such state and any applicable laws of the
United States of America. Interpretation and construction of this
<PAGE>
Agreement shall be according to the contents hereof and without presumption or
standard of construction in favor of or against Guarantor or Lender.
11. Severability. If any term or provision of this Agreement or the
application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Agreement shall be valid and enforced to the fullest
extent permitted by law; provided, however, all rights, powers and remedies
provided herein may be exercised only to the extent that the exercise thereof
does not violate any applicable law, and are intended to be limited to the
extent necessary so that they will not render this Agreement invalid or
unenforceable under any applicable law.
12. No Waiver. The waiver of any provision of this Agreement by Lender
shall constitute a waiver of that provision on that occasion only, and shall not
constitute a waiver of any other provision of this Agreement, or that provision
with respect to any other occasion.
13. Commercial Transaction.
(a) TO INDUCE LENDER TO ENTER INTO THE COMMERCIAL LOAN TRANSACTION
EVIDENCED BY AND SECURED BY THE LOAN DOCUMENTS, GUARANTOR AGREES THAT THE SAID
TRANSACTION IS COMMERCIAL AND NOT A CONSUMER TRANSACTION.
(b) Each of the waivers set forth in this Agreement is made with
knowledge of its significance and consequences, and under the circumstances the
waivers are reasonable. If any of said waivers is determined to be contrary to
any applicable law or public policy, such waiver shall be effective only to the
maximum extent permitted by law.
14. Jury Trial. LENDER AND GUARANTOR HEREBY WAIVE THE RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER
OF THIS AGREEMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE
BY LENDER AND GUARANTOR, AND LENDER AND GUARANTOR ACKNOWLEDGE THAT NO PERSON
ACTING ON BEHALF OF ANOTHER PARTY TO THIS AGREEMENT HAS MADE ANY REPRESENTATIONS
OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR
NULLIFY ITS EFFECT. LENDER AND GUARANTOR FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN
REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF
THIS AGREEMENT AND IN THE MAKING OF ALL WAIVERS CONTAINED HEREIN BY INDEPENDENT
LEGAL COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND THAT LENDER AND GUARANTOR
HAVE HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH
<PAGE>
COUNSEL.
15. Consent to Jurisdiction. GUARANTOR HEREBY SUBMITS TO PERSONAL
JURISDICTION IN THE STATE OF OHIO FOR THE ENFORCEMENT OF THE PROVISIONS OF THIS
AGREEMENT AND IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO OBJECT TO SUCH
JURISDICTION FOR THE PURPOSES OF LITIGATION TO ENFORCE ANY PROVISION OF THIS
AGREEMENT. GUARANTOR HEREBY CONSENTS TO THE JURISDICTION OF AND AGREES THAT ANY
ACTION, SUIT OR PROCEEDING TO ENFORCE THIS AGREEMENT MAY BE BROUGHT IN ANY STATE
OR FEDERAL COURT IN THE STATE OF OHIO. GUARANTOR HEREBY IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY HAVE TO THE LAYING OF THE VENUE OF ANY SUCH ACTION, SUIT,
OR PROCEEDING IN ANY SUCH COURT AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM
THAT ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. EACH GUARANTOR HEREBY APPOINTS CT CORPORATION
AS THEIR AGENT FOR SERVICE OF PROCESS. GUARANTOR HEREBY CONSENTS THAT SERVICE OF
PROCESS IN ANY ACTION, SUIT OR PROCEEDING MAY BE MADE BY SERVICE UPON THE
AFORESAID AGENT FOR SERVICE OF PROCESS, BY PERSONAL SERVICE UPON THE PARTY BEING
SERVED, OR BY DELIVERY IN ACCORDANCE WITH THE NOTICE REQUIREMENTS OF SECTION 16
OF THIS AGREEMENT.
16. Notices. Any notice which any party hereto may be required or may
desire to give hereunder shall be delivered personally, or by overnight express
courier, addressed in the case of Guarantor to:
Lodgian, Inc.
Two Live Oak Center
3445 Peachtree Road, NE
Suite 700
Atlanta, Georgia 30326
with a copy to:
Stearns, Weaver, Miller, Weissler,
Alhadeff & Sitterson, P.A.
Museum Tower
150 West Flagler Street
Miami, Florida 33130
Attention: Robert Weissler, Esq.
<PAGE>
in the case of Lender to:
Banc One Capital Funding Corporation
150 East Gay Street, 24th Floor
Columbus, Ohio 43215
Attention: Loan Servicing
<PAGE>
with a copy to:
Banc One Capital Markets, Inc.
150 East Gay Street, 24th Floor
Columbus, Ohio 43215
Attention: Legal Department and Real Estate Group
or at such other addresses or to the attention of such other persons as may from
time to time be designated by the party to be addressed by written notice to the
other in the manner herein provided. Notices, demands and requests given in the
manner aforesaid shall be deemed sufficiently served or given for all purposes
hereunder when received or when delivery is refused or when the same are
returned to sender for failure to be called for.
17. Miscellaneous.
(a) This Agreement may not be modified, altered or amended nor may
any provision hereof or rights hereunder be waived, except by an instrument in
writing signed by the person or entity against which such modification,
alteration, amendment or waiver is sought to be enforced.
(b) Except as provided in Section 6 above, this Agreement shall
terminate upon the irrevocable payment by Borrower to Lender of all amounts
evidenced by the Note and the other Loan Documents.
IN WITNESS WHEREOF, the undersigned has caused this instrument to be duly
executed as of the date first written above.
GUARANTOR:
LODGIAN, INC., a Delaware corporation
By: /s/ Toni Jones
--------------------------
Name: Toni Jones
Title: Vice President
<PAGE>
Exhibit 10.6.1
LOAN AGREEMENT
IN THE AMOUNT OF $15,740,722
Dated December 8, 1998
BETWEEN
LODGIAN AMI, INC.
BORROWER
AND
BANC ONE CAPITAL FUNDING CORPORATION
LENDER
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS 1
1.1 Defined Terms. 1
ARTICLE 2 BORROWER'S REPRESENTATIONS, WARRANTIES AND COVENANTS 8
2.1 Representations, Warranties and Covenants 8
2.2 Representations Remade. 14
ARTICLE 3 GENERAL CONDITIONS OF LOAN 15
3.1 Loan Documents. 15
3.2 Additional Requirements 15
ARTICLE 4 FURTHER COVENANTS OF BORROWER 17
4.1 Covenants 17
ARTICLE 5 AGREEMENT TO LEND 27
5.1 Agreement to Lend. 27
ARTICLE 6 INSURANCE AND CASUALTY 27
6.1 Insurance Provisions 27
ARTICLE 6A RENOVATION WORK 33
6A.1 Construction 33
6A.2 Completion 33
6A.3 Compliance with Laws. 33
6A.4 Other Remedies of Lender 33
ARTICLE 7 BORROWER'S DEFAULT 34
7.1 Events of Default 34
7.2 Remedies. 35
ARTICLE 8 MISCELLANEOUS 37
8.1 Indemnification 37
8.2 Defense of Claims 37
8.3 Performance by Lender 37
8.4 Transfer or Assignment 38
8.5 Lender's Actions 38
8.6 Time is of the Essence 38
8.7 Waivers 38
8.8 Notices 39
8.9 Successors and Assigns 40
8.10 No Partnership 40
8.11 Brokerage Claims 40
8.12 Publicity 40
8.13 Documents Satisfactory to Lender 40
8.14 Additional Assurances 40
8.15 Entire Agreement 40
8.16 Severability 40
8.17 No Third Party Beneficiary 41
8.18 CHOICE OF LAW 41
8.19 Limitation on Liability 41
<PAGE>
8.20 WRITTEN AGREEMENT 43
8.21 Cross-Collateralizations 43
8.22 Intentionally Omitted 44
8.23 Intentionally Omitted 44
8.24 WAIVER OF JURY TRIAL 44
8.25 Consent to Jurisdiction 44
Exhibit A Legal Description
Exhibit B-1 Additional Note
Exhibit B-2 Primary Note
Exhibit C Permitted Encumbrances
Exhibit D Insurance Requirements
Exhibit E Renovation Work
Schedule 1 Description of Ground Lease
<PAGE>
THIS LOAN AGREEMENT (this "Agreement") is dated effective as of December
8, 1998 between LODGIAN AMI, INC., a Maryland corporation, with an office and
principal place of business at Two Live Oak Center, 3445 Peachtree Road, NE,
Suite 700, Atlanta, Georgia 30326 ("Borrower") and BANC ONE CAPITAL FUNDING
CORPORATION, an Ohio corporation having a principal place of business at 150
East Gay Street, 24th Floor, Columbus, Ohio 43215 ("Lender").
R E C I T A L S
The Borrower desires to borrow from Lender up to $15,740,722 for the
financing and renovation of that certain piece or parcel of real property
located at 890 Elkridge Landing Road, Linthicum Heights, Maryland 21090 (the
"Land"), known as the Holiday Inn International Airport (the "Hotel") consisting
of a 259-room hotel and all other improvements located thereon and together with
all furniture, equipment and other personal property now or hereafter used in
the management and operation of the Hotel (the "Personal Property"). The Land
and the Improvements (as defined below) are hereinafter collectively referred to
as the "Premises." The Premises and the Personal Property are hereinafter
collectively referred to as the "Property." Lender has agreed to make the loan
to Borrower pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the covenants,
conditions and agreements contained herein, Borrower and Lender agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. 1.1 Defined Terms. In this Agreement, the following
terms shall have the following meanings:
"Accounting Period" -- shall mean each of the four (4) week periods
designated by Borrower as a fiscal period of the Hotel, except that an
Accounting Period may occasionally contain five (5) weeks when necessary to
conform Borrower's accounting system to the calendar.
"Additional Note" -- the Promissory Note from Borrower to Lender of even
date herewith in the stated principal amount of One Million Eight Hundred Eighty
Eight Thousand Eight Hundred and Eighty Seven Dollars ($1,888,887). A copy of
the Additional Note is attached hereto as Exhibit B-1.
"Advance" -- an advance by Lender to Borrower in accordance with the Note
or this Agreement.
<PAGE>
"Affiliate" -- of any person or entity shall mean any other person or
entity directly or indirectly controlling, under common control with, or
controlled by such person or entity. For purposes of the definition of
Affiliate, "control" when used with respect to any person or entity means the
power to direct the management and policies of such person or entity, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
relative to the foregoing.
"Assignment of Accounts" -- the Assignment of Accounts and Security
Agreement of even date herewith from Borrower to Lender.
"Assignment of Permits and Contracts" -- the Assignment of Licenses,
Permits and Contracts, (specifically including the management agreement relating
to the Property) of even date herewith from Borrower to Lender.
"Assignment of Leases" -- the Assignment of Leases and Rents of even date
herewith from Borrower to Lender.
"Bankruptcy Code" -- the United States Bankruptcy Code and any similar
state or federal law now or hereafter in effect relating to bankruptcy,
reorganization or insolvency, or the arrangement or adjustment of debts.
"Business Day" -- any day other than a Saturday, Sunday or legal holiday
on which commercial banks are authorized or required to be closed in Columbus,
Ohio.
"Calculation Date" -- January 20, 2000, and the twentieth day of every
third Loan Month thereafter prior to the Maturity Date.
"Calculation Period" -- the period of twelve (12) full calendar months
immediately preceding the calendar month which includes the Calculation Date.
"Capital Reserve" -- the furniture, fixtures and equipment reserve to be
held by Lender pursuant to the terms and conditions of Section 4.1.T.
"Cash Management Agreement" -- that certain Cash Management Agreement
dated January 31, 1995 among Servico, Inc., Servico Management Corporation and
certain of their subsidiaries and affiliates, including Borrower, as amended
November 24, 1998.
"Closing" -- the closing of the Loan contemplated by this Agreement.
"Cross-Guaranty" -- the Guaranty Agreement of even date herewith from the
Related Parties to Lender in connection with the Loan.
"Code" -- the Internal Revenue Code of 1986, as amended, and the
Regulations
<PAGE>
promulgated thereunder.
"Costs" -- costs and expenses incurred directly relating to the Renovation
Work.
"Deferred Origination Fee" -- a deferred origination fee in the amount of
$277,036.70 payable to Lender in accordance with Section 4.Y.
"DSCR" -- the debt service coverage ratio as determined by Lender on each
Calculation Date by calculating the ratio of (x) the Net Operating Income from
the Property for the immediately preceding thirteen (13) Accounting Periods, to
(y) the sum of the payments of interest which are due and payable under the
Primary Note for the immediately following twelve (12) Loan Months.
"Default Rate" -- see Section 1 of the Primary Note.
"Environmental Indemnity" -- the Hazardous Substances Indemnity Agreement
of even date herewith from Borrower and Guarantors to Lender.
"Environmental Site Assessment Report" -- the Phase I Environmental Site
Assessment Report dated November 19, 1997, prepared by Building Evaluation
Services & Technology, Inc.
"Estoppel Agreement" -- an Estoppel Agreement with respect to the Ground
Lease executed by the Ground Lessor and in form and substance acceptable to the
Lender.
"Event of Default" -- the occurrence of any one or more of the events set
forth in Section 7.1.
"Financing Statements" -- the UCC-1 Financing Statements naming Borrower
as debtor and Lender as secured party and filed with the offices of Maryland
Department of Assessments and Taxation and Anne Arundel County Clerk of Circuit
Court, Maryland, in connection with the Mortgage, the Security Agreement, the
Assignment of Leases, the Assignment of Permits and Contracts, and the
Assignment of Accounts.
"Franchise Agreement" -- that certain Franchise Agreement dated May 28,
1998, between Borrower and Franchisor relating to the Property.
"Franchisor" -- Holiday Hospitality Franchising, Inc.
"Governmental Authority" -- the United States of America, the state in
which the Property is located, the state under the laws of which Borrower is
organized, any state in which (or to residents of which) Borrower offers to sell
or lease any portion of the Property or Improvements have been or will be made
by or on behalf of Borrower, any political subdivision
<PAGE>
of any of them, and any court, agency, department, commission, board, bureau or
instrumentality of any of them.
"Gross Revenues" -- for each Accounting Period shall mean all rents,
revenues and other payments earned by Borrower in cash or current funds or other
consideration from any source whatsoever in connection with its ownership,
operation and management of the Property, including all amounts earned by
Borrower from all tenants or other occupants of the Property. Gross Revenues
shall be determined on an accrual basis and in accordance with generally
accepted accounting principles consistently applied.
"Ground Lease" -- that certain lease more particularly described in
Schedule 1.
"Ground Lessor" -- Harry W. Rodgers, III, William Rodgers and W. Dale
Hess, Co-partners, trading as D.R.H. Investment Co.
"Guarantor" -- Lodgian, Inc., a Delaware corporation.
"Impac Loan" -- collectively, all outstanding indebtedness owing to Banc
One Capital Partners III, Ltd. or its Affiliates by Impac Hotel Group, L.L.C.
"Impositions" -- all taxes of every kind and nature, sewer rents, charges
for water, for setting or repairing meters and for all other utilities serving
the Premises, and assessments, levies, inspection and license fees and all other
charges imposed upon or assessed against the Premises or any portion thereof
(including the income derived from the Premises), and any stamp or other taxes
which might be required to be paid with respect to any of the Loan Documents,
any of which might, if unpaid, result in a lien on the Premises or any portion
thereof, regardless of to whom assessed.
"Improvements" -- the improvements existing upon the Land.
"Incipient Default" -- the existence of any condition or state of facts
which with the giving of notice by Lender or the passage of time, or both, would
constitute an Event of Default.
"Indebtedness" -- all indebtedness, obligations, liabilities, amounts,
sums and expenses payable by Borrower under the Note, this Agreement and every
other Loan Document, together with interest thereon in accordance with the terms
and conditions of the Loan Documents.
"Interest Rate" -- shall mean the Interest Rate as defined in the Primary
Note.
"Knowledge of Borrower" -- any matter actually known or, with the exercise
of reasonable care or diligence, should have been known, to the Borrower or the
Guarantor.
"Lease" -- any lease (including any equipment lease) or other rental or
occupancy
<PAGE>
agreement, demising a portion of the Property, other than those with hotel
guests and the Ground Lease.
"Lender's Consultant" -- the architect or engineer retained by Lender to
inspect the Improvements or the Renovation Work on behalf of Lender; in the
event all or a portion of such functions are performed by Lender, references in
this Agreement to Lender's Consultant shall be deemed to such extent to be
references to Lender.
"Limited Guaranty" -- the Limited Guaranty and Indemnity Agreement of even
date herewith from Guarantor to Lender in connection with the Loan.
"Liquor License Agreement" -- the Liquor License Agreement of even date
herewith between Lender and Borrower.
"Loan" -- the loan evidenced by the Note and this Agreement.
"Loan Amount" -- Fifteen Million Seven Hundred Forty Thousand Seven
Hundred and Twenty Two Dollars ($15,740,722).
"Loan Documents" -- this Agreement, the Note, the Mortgage, the Security
Agreement, the Assignment of Leases, the Stock Pledge, the Limited Guaranty, the
Environmental Indemnity, the Assignment of Permits and Contracts, the Assignment
of Accounts, the Cross Guaranty, the Liquor License Agreement, the Financing
Statements and such other documents and agreements as Lender may require in
connection with the Loan.
"Loan Month" -- See Section 1 of the Primary Note.
"Loan Party" -- Borrower or the Guarantor.
"Management Agreement" -- the Consulting Agreement effective August 21,
1998 and amended November 24, 1998, by and between Borrower and Manager.
"Manager" -- Servico Management Corp., a Florida corporation.
"Maturity Date" -- See Section 1 of the Additional Note and the Primary
Note, as applicable.
"Mortgage" -- the Purchase Money Leasehold Deed of Trust and Security
Agreement of even date herewith from Borrower to Lender on the Premises,
securing the Note and Borrower's obligations under the other Loan Documents.
"Net Cash Flow" -- for each Accounting Period shall mean Net Operating
Income reduced by all monthly payments of interest under the Note and all other
payments under the
<PAGE>
Note and the other Loan Documents actually paid by Borrower and received by
Lender during such Accounting Period.
"Net Operating Income" -- for each Accounting Period shall be calculated
by Lender based upon Lender's review of Borrower's monthly financial statements
provided to Lender pursuant to Section 4.1.K, together with such other
information as Lender may reasonably request, and shall mean the difference
between:
(1) the Gross Revenues for said Accounting Period; and
(2) all the Operating Expenses for said Accounting Period.
"Note" -- collectively, the Primary Note and the Additional Note.
"Operating Expenses" -- the reasonably necessary and customary costs and
expenses incurred, whether or not actually paid, by Borrower in connection with
its ownership, operation and management of the Property, determined on an
accrual basis and in accordance with generally accepted accounting principles
consistently applied and specifically including in Operating Expenses all
required payments made by Borrower into the Capital Reserve pursuant to Section
4.l.T of this Agreement, any payments made pursuant to Section 4.l.B of the
Agreement and any other reserve established pursuant to this Agreement;
specifically excluding from Operating Expenses, however (w) all capital
expenditures incurred by Borrower (x) principal, interest and all other payments
made under the Loan Documents, and costs and expenses incurred by Borrower in
connection with the closing of the Loan, and (y) depreciation and all other
non-cash expenses of the Property. For purposes of calculating DSCR, Lender
shall include Operating Expenses which were budgeted for the applicable
Accounting Period(s) and were incurred but not paid. Operating Expenses which
are paid less frequently than each Accounting Period and which are allocable
evenly to each Accounting Period may be prorated to reflect such allocation.
"Organizational Documents" -- Borrower's articles of incorporation, bylaws
and other organizational documents and any amendments or modifications thereto.
"Other Borrower Loans" -- that (i) certain loan to Borrower of even date
herewith in the original aggregate principal amount of $35,073,117 and secured
by the Holiday Inn - Inner Harbor, (ii) certain loan to Borrower of even date
herewith in the original aggregate principal amount of $3,322,817 and secured by
the Holiday Inn - Glen Burnie North and (iii) certain loan to Borrower of even
date herewith in the original aggregate principal amount of $5,214,292 and
secured by the Holiday Inn - Visitor Center/Lancaster East.
"Other Borrower Loan Documents" -- all documents, instruments or
agreements securing
<PAGE>
or evidencing the Other Borrower Loans from the Lender to Borrower.
"Other Hotel Properties" -- the Holiday Inn - Inner Harbor in Baltimore,
Maryland, the Holiday Inn Glen Burnie North in Glen Burnie, Maryland, and the
Holiday Inn - Visitor Center/Lancaster East in Lancaster, Pennsylvania.
"Permitted Encumbrances" -- the liens, claims, assessments, encumbrances
and rights of others encumbering title to the Premises and the Personal Property
which are set forth on Exhibit C.
"Permitted Transfers" -- any transfer, sale or issuance of stock in
Lodgian, Inc., a Delaware corporation.
"Primary Note" -- the Promissory Note from Borrower to Lender of even date
herewith in the stated principal amount of Thirteen Million Eight Hundred Fifty
One Thousand Eight Hundred and Thirty Five Dollars ($13,851,835). A copy of the
Primary Note is attached as Exhibit B-2.
"Principal Amortization Reserve" -- the reserve of funds which may be held
and disbursed by Lender pursuant to Section 4.l.R.
"Proceeds" -- all proceeds, judgments, claims, compensation, awards or
damages and settlements with respect to the Property as a result of or in lieu
of any condemnation or taking of the Property or any portion thereof by eminent
domain or any casualty loss or damage to any of the Property or any portion
thereof.
"Related Parties" -- Servico Concord, Inc., a California corporation,
Penmoco, Inc., a Michigan corporation, and Island Motel Enterprises, Inc., a
Georgia corporation.
"Related Party Loan Documents" -- all documents, instruments or agreements
securing or evidencing the Related Party Loans from the Lender to the Related
Parties.
"Related Party Loans" -- that certain loan to Servico Concord, Inc. of
even date herewith in the original aggregate principal amount of $8,449,183 and
secured by the Sheraton Hotel Concord and that certain loan to Penmoco, Inc. and
Island Motel Enterprises, Inc. of even date herewith in the original aggregate
principal amount of $4,199,869 and secured by the Holiday Inn Jekyll Island.
"Related Party Properties" -- the Sheraton Hotel Concord in Concord,
California and the Holiday Inn Jekyll Island in Jekyll Island, Georgia.
"Renovation Budget" -- the budget for the Renovation Work to be prepared
by the
<PAGE>
Borrower and delivered to Lender for its review and approval prior to the
Closing.
"Renovation Completion" -- the completion of the Renovation Work in
accordance with the requirements of Article 6A.
"Renovation Completion Date" -- April 26, 1999, the date on which all of
the Renovation Work is required to be completed in accordance with Article 6A
hereof.
"Renovation Plans" -- the plans and specifications for the Renovation Work
to be prepared by the Borrower and delivered to the Lender for its review and
approval prior to the Closing.
"Renovation Work" -- the work and projects described in Exhibit E.
"Required Coverage Standard" -- shall mean 1.25:1 for all Calculation
Dates on or before January 20, 2000 and 1.40:1 for all Calculation Dates
subsequent to January 20, 2000.
"Reserved Funds" -- all Net Cash Flow held by Lender pursuant to the terms
and conditions of Section 4.1.R.
"Security Agreement" -- the Security Agreement of even date herewith from
Borrower, as debtor, to Lender, as secured party.
"Stock Pledge" -- the Pledge of Stock executed by Servico Operations
Corporation pursuant to which Servico Operations Corporation pledges the Stock
of the Borrower and each Related Party to secure the obligations of Borrower
with respect to the Loan, the Other Borrower Loans and the Related Party Loans.
"Title Company" -- Chicago Title Insurance Company.
"Title Policy" -- a mortgagee's policy of title insurance issued on the
1992 ALTA form by the Title Company in the aggregate face amount of $15,740,722,
guaranteeing as of the date of the Closing, the Mortgage to be a valid first and
prior lien on Borrower's leasehold interest in the Premises (including any
easements appurtenant thereto) subject only to the Permitted Encumbrances. The
Title Policy shall contain such endorsements as Lender may reasonably require.
In this Agreement, the word "including" shall mean "including without
limitation."
ARTICLE 2
BORROWER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
<PAGE>
2.1 Representations, Warranties and Covenants. Borrower hereby represents,
covenants and warrants as follows:
A. Accuracy of Recitals. Each of the recitals to this Agreement is true
and correct.
B. Organization of Borrower. Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the State of Maryland.
Borrower is and at all times prior to the repayment of the Loan shall remain a
single purpose entity, so called, whose sole assets are the Property and the
Other Hotel Properties and whose sole business interest is the ownership of a
leasehold interest in, and operation of, the Property and the Other Hotel
Properties. The Borrower has provided Lender with a true and accurate copy of
the Organizational Documents. The Borrower is duly registered as a foreign
corporation and currently in good standing under the laws of the State of
Pennsylvania. The status of Borrower as a duly organized and validly existing
corporation under Maryland law will not be terminated. The Borrower shall not
amend the Organizational Documents in any material respect, without the Lender's
prior written consent.
C. Authority and Enforceability. Borrower has full right, power and
authority to execute, deliver and carry out the terms and provisions of this
Agreement and the other Loan Documents and every other document and instrument
to be executed and delivered by Borrower pursuant to this Agreement. The person
executing and delivering this Agreement and the Loan Documents on behalf of
Borrower is duly authorized to so act on behalf of Borrower. This Agreement,
each other Loan Document and every other document and instrument to be executed
and delivered by any Loan Party, when executed and delivered shall constitute
the duly authorized, valid and legally binding obligation of the party or
parties executing the same, enforceable in accordance with their respective
terms, subject only to applicable bankruptcy, reorganization, moratorium and
similar laws affecting the enforceability of creditors' rights generally.
D. Maintenance of Existence. Borrower shall do all things necessary to
preserve and keep in full force and effect its existence and all franchises,
licenses, authorizations, registrations, permits and approvals under the laws of
the state of its incorporation and the State of Maryland, and shall comply with
all regulations, rules, ordinances, statutes, orders and decrees of any
governmental authority or court applicable to Borrower and to the Property or
any portion thereof.
E. No Default. Neither Borrower nor any other Loan Party is in default
under any material contract, agreement or commitment to which it is a party or
by which it is bound. The execution and delivery of this Agreement and the other
Loan Documents and any other documents or instruments to be executed and
delivered by Borrower or any other Loan Party pursuant hereto or thereto, the
consummation of the transactions herein or therein contemplated
<PAGE>
and compliance with the terms and provisions hereof or thereof, will not (i)
violate any law or any regulation, order, writ or injunction of any court or
governmental or administrative department, commission, board, bureau, agency or
instrumentality, or (ii) conflict or be inconsistent with, or result in a breach
of any of the provisions of, or constitute a default under, any instrument,
document, agreement, or contract of any kind to which Borrower or any other Loan
Party is a party or by which Borrower or any other Loan Party or any of their
respective property is bound.
F. No Litigation. There are no petitions, actions, suits, or proceedings
pending or, to the Knowledge of Borrower, threatened against or affecting
Borrower or any other Loan Party or the Property, by or before any court or any
governmental, administrative, regulatory, adjudicatory or arbitrational body or
agency (including any such petition, action, suit or proceeding to alter or
declare invalid any laws, regulations, permits, certificates, restrictions or
agreements relating to the Property) which, if determined against the Property,
the Borrower or the Loan Party, would reasonably likely have a material adverse
effect on the condition (financial or otherwise) or business of the Borrower or
the Loan Party or the condition or ownership of the Property.
G. Compliance with Laws. To the Knowledge of Borrower and except as may be
disclosed to Lender in the Environmental Site Assessment Report, the Title
Policy, the survey or the zoning letter with respect to the Premises, the use of
the Property as a hotel with a restaurant and bar does not violate (i) any
applicable law, regulation, ordinance or order of any kind whatsoever (including
any such relating to zoning, building and environmental protection), (ii) any
permit or license issued with respect to the Property, or (iii) any condition,
easement, right-of-way, covenant or restriction affecting the Property.
H. Permits. To the Knowledge of Borrower, all necessary material and
required franchises, licenses, authorizations, registrations, permits and
approvals for the use and occupancy of the Premises have been obtained from all
Governmental Authorities having jurisdiction over the Premises so as to permit
the operation of the Property as herein contemplated. Borrower has provided
Lender with true and correct copies of all of the certificates of occupancy (to
the extent available) and the hotel operating license and liquor license
respecting the Property.
I. Title. Effective as of the Closing, Borrower will have good and
indefeasible leasehold interest in the Premises and good and indefeasible title
to all existing Personal Property, free and clear of all liens, claims,
assessments, encumbrances and rights of others other than the Permitted
Encumbrances. Borrower shall preserve such title to the Premises and the
Personal Property and will forever warrant and defend the same and the validity
and priority of the Mortgage to Lender against all claims whatsoever other than
the Permitted Encumbrances.
J. Easements. In addition to the Permitted Encumbrances, all proposed
easements,
<PAGE>
permits, licenses, and other instruments which would or might affect the title
to the Property have been submitted to Lender for Lender's approval together
with a survey showing the exact or, if applicable, proposed location thereof.
Borrower shall not subject the Property or any part thereof to any restrictive
covenant (including any restriction or exclusive use provision in any lease or
other occupancy agreement) without the prior written consent of Lender.
K. Zoning. To the Knowledge of Borrower, and subject to any disclosures in
the zoning letters delivered to the Lender, (i) the Premises are zoned for hotel
use, which zoning is final, unconditional and in full force and effect, (ii) the
Premises are in compliance with all applicable zoning and land use laws,
regulations and ordinances, (iii) in the event that all or any part of the
Improvements are destroyed or damaged, said Improvements can be legally
reconstructed to their condition prior to such damage or destruction, and
thereafter exist for the same use without violating any zoning or other
ordinances applicable thereto and without the necessity of obtaining any
variances or special permits, (iv) the Property contains enough permanent
parking spaces to satisfy all requirements imposed by applicable laws with
respect to parking, (v) no legal proceedings are pending or threatened with
respect to the zoning of the Premises, and (vi) neither the zoning nor any other
right to construct, use or operate the Premises is in any way dependent upon or
related to any real estate other than the Premises. No tract map, parcel map,
condominium plan, condominium declaration, or plat of subdivision will be
recorded by Borrower with respect to the Premises without Lender's prior written
consent.
L. Complete Disclosure. Neither this Agreement nor any document, financial
statement, credit information, certificate or statement provided to Lender by
Borrower contains any untrue statement of material fact or omits to state a fact
necessary to make any statements made herein not misleading.
M. Agreements Affecting the Property. Borrower has provided Lender with
true and complete copies of all material contracts and agreements affecting the
Property, including, (i) the Management Agreement, (ii) all lease financings or
purchase money financings for equipment incurred as of the date hereof, and
(iii) all other contracts or agreements relating to the maintenance,
development, operation or management of the Property which either involve space
in excess of 1,000 square feet or payment obligations on the part of Borrower in
excess of $25,000 in any twelve (12) month period.
N. Brokerage Commissions. No brokerage fees or commissions are payable in
connection with the Loan.
O. Condemnation. Borrower has not received any notice from any
Governmental Authority or quasi-governmental body or agency or from any person
or entity with respect to (and Borrower does not know of) any actual or
threatened taking of the Premises, or any portion thereof, for any public or
quasi-public purpose or of any moratorium which may affect the use or operation
of the Property.
<PAGE>
P. Year 2000 Compliance. All devices, systems, machinery, information
technology, computer software and hardware, and other date sensitive technology
(jointly and severally the "Systems") necessary for Borrower to carry on its
business as presently conducted and as contemplated to be conducted in the
future are Year 2000 Compliant or will be Year 2000 Compliant within a period of
time calculated to result in no material disruption of any of Borrower's
business operations. For purposes of these provisions, "Year 2000 Compliant"
means that such Systems are designed to be used prior to, during and after the
Gregorian calendar year 2000 A.D. and will operate during each such time period
without error relating to date data, specifically including any error relating
to, or the product of, date data which represents or references different
centuries or more than one century. Borrower: (1) has taken and continues to
undertake a detailed inventory, review, and assessment of all areas within its
business and operations that could be adversely affected by the failure of
Borrower to be Year 2000 Compliant on a timely basis; (2) is developing a
detailed plan and time line for becoming Year 2000 Compliant on a timely basis;
and (3) to date, has implemented that plan in accordance with timetable in all
material respects. The fair market value of all real and personal property, if
any, pledged to Lender as collateral to secure the Loan Agreement is not and
shall not be less than currently anticipated or subject to substantial
deterioration in value because of the failure of such collateral to be Year 2000
Compliant.
Q. Access. Except as otherwise shown on the survey delivered to the
Lender, the Property has access to and full utilization of completed public
roads necessary for access to and full utilization of the Property for its
intended purposes.
R. Tax Division. A tax division has been effected with respect to the
Premises so that it is taxed for ad valorem taxation without regard to or
inclusion of any other property. No subdivision or other approval is necessary
with respect to the Premises in order for Borrower to mortgage, convey and
otherwise deal with the Premises as a separate lot or parcel.
S. Non-Foreign Status of Borrower. Borrower is not a non-resident alien
for purposes of U.S. income taxation and is not a foreign corporation,
partnership, foreign trust or foreign estate (as said terms are defined in the
Code).
T. ERISA. Neither Borrower nor any Loan Party is a party to any plan
defined and regulated under the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") or Section 4975 of the Code. None of the assets of Borrower
or any Loan Party are "plan assets"" as defined in 29 C.F.R. ss.2509.75-2 or
ss.2510.3-101.
U. Mortgage. The Mortgage constitutes a valid and enforceable first lien
on Borrower's leasehold interest in the Premises, subject only to the Permitted
Encumbrances.
V. Security Interest. The Security Agreement and the Mortgage, together
with the
<PAGE>
Financing Statements filed in connection therewith, create a valid, enforceable
and perfected first priority security interest in the Collateral (as defined
therein) including the Personal Property, subject to no other interests, liens
or encumbrances other than the Permitted Encumbrances.
W. Intentionally Omitted.
X. Intentionally Omitted.
Y. Bankruptcy. No petition in bankruptcy, whether voluntary or
involuntary, or assignment for the benefit of creditors, or any other action
involving debtors' and creditors' rights has been filed or threatened under the
laws of the United States of America or any state thereof, against the Borrower
or any other Loan Party or against any other entity in which the Borrower or any
other Loan Party is a shareholder, principal, managing member or general
partner.
Z. Leases. There are no Leases affecting the Property. Borrower has not
executed any prior assignment of the Leases, nor has it performed any act or
executed any other instrument which might prevent Lender from operating under
any of the terms and conditions of the Assignment of Leases or which would limit
Lender in such operation; and Borrower further covenants and warrants to Lender
that Borrower has not executed or granted any modification whatsoever of the
Leases, except as herein indicated, and that the Leases are in full force and
effect, and that, except as otherwise disclosed to Lender in writing, there are
no defaults now existing under the Leases with respect to which Borrower has
notified the tenant under the Leases.
AA. Physical Condition of Property. Subject to the Renovation Work, all of
the Improvements are in good condition and repair except as otherwise expressly
provided in the Property Condition Report dated as of January 16, 1998, prepared
by Building Evaluation Services & Technology, Inc. (the "Property Condition
Report"). Since the date of the Property Condition Report, there have been no
material adverse changes to the physical condition of the Improvements. Borrower
is aware of no latent or patent structural or other significant defect or
deficiency in such Improvements except as may be disclosed in the Property
Condition Report. Water supply, storm and sanitary sewers, and electrical, gas
and telephone facilities are available to the Property within the boundary lines
of the Property, are sufficient to meet the reasonable needs of the Property as
now used or contemplated to be used, no other utility facilities are necessary
to meet the reasonable needs of the Property as now used, and design and
as-built conditions of the Property are such that surface and storm water does
not accumulate on the Property and, except as otherwise disclosed in writing to
Lender, does not drain from the Property across land of adjacent property
owners. Except as otherwise disclosed in writing to Lender, no part of the
Property is within a flood plain and none of the Improvements create an
encroachment over, across or upon any of the Property's boundary lines, rights
of way or easements, and no building or other improvement on adjoining land
create such an encroachment.
<PAGE>
BB. Mechanics' Liens. There are no mechanics' or materialmen's liens,
alienable bills or other claims constituting or that may constitute a lien on
the Property or any part thereof, and no work for which any such lien could be
asserted has been performed within the last 90 days, except as otherwise
disclosed in writing to Lender.
CC. Payment of Liens. Borrower shall pay when due all payments and charges
due under or in connection with any liens and encumbrances on and security
interests in the Property or any portion thereof, all rents and charges under
any ground leases and other leases forming a part of the Property, and all
claims and demands of mechanics, materialmen, laborers and others which, if
unpaid, might result in or permit the creation of a lien on the Property or any
portion thereof, and shall cause the prompt (but in no event later than 30 days
after imposition), full and unconditional discharge of all liens imposed on or
against the Property or any portion thereof. Borrower shall do or cause to be
done, at the sole cost of Borrower, everything necessary to fully preserve the
initial priority of the Mortgage. If Borrower fails to make any such payment or
if a lien (other than a Permitted Encumbrance) attaches to the Property or any
portion thereof, Lender may (but shall not be obligated to) make such payment or
discharge such lien and Borrower shall reimburse Lender on demand for all such
Advances.
DD. Commercial Purpose. Borrower holds its interests in the Property for
commercial or investment purposes.
EE. Franchise Agreement. Borrower has provided Lender with a true and
complete copy of the Franchise Agreement and any other agreements with the
Franchisor related to the Property. The Franchise Agreement is in full force and
effect and free from default on the part of the Borrower. The Franchise
Agreement embodies the entire transaction between Borrower and the Franchisor
with respect to the operation of the Property. Borrower shall not modify, amend
or waive any provisions of the Franchise Agreement without Lender's prior
written consent. Borrower will promptly furnish Lender with copies of all
notices furnished to Borrower under the Franchise Agreement.
FF. Management Agreement. Borrower has provided Lender with a true and
complete copy of the Management Agreement. The Management Agreement is in full
force and effect and free from default on the part of the Borrower and Manager.
The Management Agreement embodies the entire transaction between Borrower and
Manager with respect to the operation of the Property. Borrower shall not
terminate, modify, amend or waive any provisions of the Management Agreement
without Lender's prior written consent. Borrower will promptly furnish Lender
with copies of all notices furnished to Borrower under the Management Agreement.
GG. Ground Lease. Borrower has provided Lender with a true and complete
copy of the Ground Lease, and there are no documents, agreements, or other
modifications to the Ground
<PAGE>
Lease other than those listed under the definition of Ground Lease contained in
this Agreement. The Ground Lease is in full force and effect and free from
default on the part of Borrower and the Ground Lessor, and, to the Knowledge of
Borrower, no events have occurred which, with the passage of time, would
constitute a default under the Ground Lease. The Borrower shall provide to the
Lender copies of all notices (including, without limitation, notices of defaults
by Borrower) received with respect to the Ground Lease within five (5) Business
Days of Borrower's receipt of the same. The Ground Lease embodies the entire
transaction between Borrower and the Ground Lessor with respect to the Property.
The amount of rental payable under the Ground Lease and the terms of the Ground
Lease, are as set forth under the definition of Ground Lease. Borrower shall not
modify, amend or waive any provisions of the Ground Lease without the Lender's
prior written consent.
HH. Liquor License. Borrower has provided Lender with a true and complete
copy of the liquor license with respect to the Property. Said liquor license is
in full force and effect and free of all liens and encumbrances. To the
Knowledge of Borrower, Borrower is in compliance with all terms and conditions
of said liquor license.
2.2 Representations Remade. 2.2 Representations Remade. Borrower warrants
and covenants that the foregoing representations and warranties will be true and
shall be deemed remade as of the date of the Closing. All representations,
warranties and covenants made herein or in any other Loan Document or in any
certificate or other document delivered to Lender by or on behalf of Borrower
pursuant to or in connection with this Agreement or any other Loan Document
shall be deemed to have been relied upon by Lender, notwithstanding any
investigation heretofore or hereafter made by or on behalf of Lender. All such
representations, warranties and covenants shall survive the making of the Loan
and any or all of the Advances contemplated hereby and shall continue in full
force and effect until such time as the Loan has been paid in full.
ARTICLE 3
GENERAL CONDITIONS OF LOAN
3.1 Loan Documents. It shall be a condition precedent to Lender's
obligation to make the Loan that at or before the Closing, Borrower shall
execute and deliver or cause to be duly executed and delivered to Lender all of
the Loan Documents and that all of the Loan Documents shall be in form and
substance satisfactory to Lender.
3.2 Additional Requirements3.2Additional Requirements. In addition to the
Loan Documents, prior to the Closing, Borrower shall deliver or cause to be
delivered to Lender each of the following, all of which shall be in form and
substance satisfactory to Lender:
A. Title Policy. The Title Policy or a pro-forma policy evidencing the
same and satisfactory to the Lender in its sole discretion.
<PAGE>
B. Survey. A current, as built survey of the Premises, certified to Lender
and the Title Company by a surveyor reasonably satisfactory to Lender, which
survey shall contain the minimum detail for land surveys as most recently
adopted by ALTA/ASCM, and which survey shall comply with Lender's survey
requirements and shall contain Lender's standard form certification. Said survey
shall show no state of facts or conditions reasonably objectionable to Lender.
C. Opinion. An opinion of Borrower's and Guarantor's counsel dated the
date of the Closing and relating to such matters with respect to this Agreement
and the transaction contemplated hereby (including usury and choice of laws) as
Lender may reasonably require. By its execution and delivery of this Agreement,
Borrower authorizes and directs such counsel to render such opinion.
D. Insurance. The insurance policies described on Exhibit D or
certificates of insurance evidencing the same, including without limitation,
evidence of insurance protection against the risks of hurricanes, satisfactory
to Lender in its sole discretion.
E. UCC Searches. Uniform Commercial Code searches made in the State of
Maryland showing no filings relating to (i) the Personal Property, (ii) any
fixtures on the Premises, or (iii) the Collateral (as such term is defined in
the Security Agreement), other than those made pursuant to this Agreement or
otherwise approved by Lender in its sole discretion.
F. Organizational Documents. A certified copy of the Organizational
Documents, together with such other documents as Lender may require, including
evidence of the Borrower's good standing in the States of Maryland and
Pennsylvania, and resolutions authorizing the Loan transaction contemplated by
this Agreement.
G. Ground Lease. A copy of the Ground Lease certified by the Borrower to
be true, complete and accurate.
H. Appraisal and Engineer's Report. An independent appraisal of the
Property from a state certified appraiser engaged by Lender which indicates the
fair market value of the Property and is satisfactory to Lender in all respects,
and an engineer's report satisfactory to the Lender.
I. Environmental Assessment. The Environmental Site Assessment Report, a
letter from the consultant preparing the environmental site assessment stating
that Lender is authorized to rely on the information contained therein, and
evidence satisfactory to Lender of said environmental consultant's errors and
omissions insurance coverage.
J. Subordination of Management Agreement. A copy of the Management
Agreement (certified by the Borrower to be true, complete and accurate),
together with a
<PAGE>
subordination of the Management Agreement whereby the Management Agreement is
subordinated to the Mortgage and Lender is given the right to terminate the
Management Agreement or any replacement thereof upon the occurrence of an Event
of Default, without payment of any termination or other fee or other liability
on the part of Lender.
K. Leases/Subordination Agreements and Estoppels. Copies of all Leases,
which shall be satisfactory to Lender and certified by Borrower to be true,
complete and accurate, together with (i) an estoppel certificate executed by the
tenant under each Lease in form and substance reasonably satisfactory to Lender,
and (ii) a subordination, nondisturbance and attornment agreement executed by
each such tenant in form and substance reasonably satisfactory to Lender.
L. Licenses, Permits and Approvals. A final, unconditional certificate of
occupancy (if available) issued with respect to the Premises, together with the
hotel operating license and liquor license respecting the Property.
M. Agreements. Copies of all agreements described in Section 2.1M
certified by the Borrower to be true, complete and accurate.
N. Zoning. Evidence reasonably satisfactory to Lender as to the zoning
compliance of the Premises.
O. Lender's Inspection. A satisfactory inspection report of the Premises
prepared by an architect/engineer or other consultant reasonably satisfactory to
Lender.
P. Equity Contribution. Evidence satisfactory to Lender that the Borrower
or its Affiliate originally acquired the Property for not less than $11,700,000.
Q. Financial Statements. Current financial statements satisfactory to the
Lender for the Borrower, and the Guarantor.
R. Renovation Budget and Plans. A copy of the Renovation Budget and the
Renovation Plans satisfactory to the Lender.
S. Franchise Agreement. A copy of the Franchise Agreement certified by the
Borrower to be true, complete and accurate.
T. Compliance with Laws. Evidence that the Property is in compliance with
all applicable laws, zoning and land use requirements, regulations and
ordinances, including all applicable environmental protection laws and the
Americans with Disabilities Act of 1990 (except as stated in the Environmental
Site Assessment Report).
<PAGE>
U. Flood Hazards. Evidence as to whether or not the Property is or is to
be located in an area having special flood hazards as such term is used in the
federal Flood Disaster Protection Act of 1973. If any part of the Property is or
is to be located in an area having "special flood hazards," a flood insurance
policy or certificate thereof naming the Lender as mortgagee must be submitted
to the Lender.
V. Fees and Expenses. Payment by Borrower of all applicable mortgage and
recording taxes and all fees and charges in connection with the Loan, including
all fees and charges of Lender's legal counsel.
W. Ground Lease Estoppel. The originally executed Estoppel Agreement.
X. Application Fee. The application fee payable to Banc One Capital
Markets, Inc. in the amount of $25,000, which was earned upon Borrower's
acceptance of the term sheet, and which upon closing, shall be applied against
the fees and expenses referred to in Section 3.2(V), above.
Y. Intentionally Omitted.
Z. Payment of Impac Loan. Evidence of payment in full of the Impac Loan
and all fees associated therewith in accordance with the requirements of the
intercreditor agreement(s) executed in connection therewith.
AA. Other Items. Such other documents and instruments as Lender may
reasonably require.
ARTICLE 4
FURTHER COVENANTS OF BORROWER
4.1 Covenants. Borrower hereby further covenants and agrees with Lender as
follows:
A. Taxes and Impositions.
(a) Borrower shall pay and discharge all Impositions prior to delinquency.
Borrower shall provide to Lender validated receipts or other evidence
satisfactory to Lender showing the payment of all real estate and personal
property taxes within 15 days after the same would otherwise have become
delinquent. Borrower's obligation to pay Impositions pursuant to this Agreement
shall include, to the extent permitted by applicable law, taxes resulting from
future changes in law which impose upon Lender an obligation to pay any property
taxes or other Impositions. Should Borrower default in the payment of any
Impositions, Lender may (but shall
<PAGE>
not be obligated to) pay such Impositions or any portion thereof and Borrower
shall reimburse Lender on demand for all such Advances.
(b) Borrower shall not be required to pay, discharge or remove any
Imposition so long as Borrower contests in good faith such Imposition or the
validity, applicability or amount thereof by an appropriate legal proceeding
which operates to prevent the collection of such amounts and the sale of the
Property or any portion thereof; provided, however, that prior to the date on
which such Imposition would otherwise have become delinquent Borrower shall have
(i) given Lender prior written notice of such contest, and (ii) provided
reasonable evidence to Lender that Borrower has available funds to pay the
balance of such Imposition then remaining unpaid, and all interest, penalties,
costs and charges accrued or accumulated thereon. Any such contest shall be
prosecuted with due diligence, and Borrower shall promptly pay the amount of
such Imposition as finally determined, together with all interest and penalties
payable in connection therewith. Notwithstanding any provision of this Section
4.1.A to the contrary, Borrower shall pay any Imposition which it might
otherwise be entitled to contest if, in the reasonable discretion of Lender, the
Property is in jeopardy or in danger of being forfeited or foreclosed. If
Borrower refuses to pay any such Imposition, Lender may (but shall not be
obligated to) make such payment and Borrower shall reimburse Lender on demand
for all such Advances.
B. Deposits.
(a) Borrower shall provide Lender with evidence of the timely
payment of all insurance premiums. For so long as Borrower's insurance coverages
are part of blanket coverages with other properties, Borrower shall not be
required to deposit in escrow any insurance premiums. Initially, so long as (i)
Borrower provides Lender with evidence of the timely payment of all real estate
and personal property taxes and (ii) Borrower is not required to make payments
of Reserve Funds pursuant to Section 4.1.R as of the most recent Calculation
Date, Borrower shall not be required to deposit in escrow any funds for real
estate and personal property taxes as hereinafter provided; provided, however,
Lender, in its sole discretion, may at any time require Borrower to do the
following:
(i) Deposit with Lender (or such agent of Lender as Lender may
designate in writing to Borrower from time to time), monthly,
on the due date of each monthly installment under the Note,
1/12th of the annual charges (as estimated by Lender) for all
real estate and personal property taxes; and
(ii) Deposit with Lender, simultaneously with such above-referenced
monthly deposits, a sum of money which together with such
monthly deposits will be sufficient to make the payment of
each such charge at least 30 days prior to the date initially
due. Should such charges not be ascertainable at the time any
deposit is required to be made, the deposit shall be made on
<PAGE>
the basis of the charges for the prior year or payment period,
as reasonably estimated by Lender. When the charges are fixed
for the then current year or period, Borrower shall deposit
any deficiency on demand.
(b) Any interest earned on the sums held by Lender pursuant to this
Section 4.1.B shall be added to said sums and shall be taxable to Borrower, and
shall, so long as no Event of Default shall have occurred, be disbursed by
Lender for the payment of the applicable real estate and personal property
taxes. Should an Event of Default occur, the funds so deposited may be applied
in payment of the charges for which such funds shall have been deposited or to
the payment of the Indebtedness or any other charges affecting the Property, as
Lender in its sole and absolute discretion may determine, but no such
application shall be deemed to have been made by operation of law or otherwise
until actually made by Lender as herein provided. Borrower shall provide Lender
with bills and all other documents necessary for the payment of the foregoing
charges at least 30 days prior to the date on which each payment thereof shall
first become due or promptly upon receipt of such bill.
C. Mortgage Taxes. Borrower shall pay any and all taxes, charges, filing,
registration and recording fees, excises and levies imposed upon Lender by
reason of their respective interests in, or measured by amounts payable under,
the Note, this Agreement, the Mortgage or any other Loan Document (other than
income, franchise and doing business taxes), and shall pay all stamp taxes and
other taxes required to be paid on the Note, this Agreement, the Mortgage or the
other Loan Documents. If Borrower fails to make such payment within five days
after notice thereof from Lender, Lender may (but shall not be obligated to) pay
the amount due, and Borrower shall reimburse Lender on demand for all such
Advances. If applicable law prohibits Borrower from paying such taxes, charges,
filing, registration and recording fees, excises, levies, stamp taxes or other
taxes, then Lender may declare the Indebtedness then unpaid to be due and
payable upon one hundred twenty (120) days prior written notice. In such event,
no prepayment fee shall be charged.
D. No Liens. Except for Permitted Encumbrances, and except as provided in
Section 4.1.F and Section 4.1.O, the Property shall be kept free and clear of
all liens, security interests and encumbrances of every nature or description
(whether for taxes or assessments, or charges for labor, materials, supplies or
services or any other thing). Other than the Permitted Encumbrances, Borrower
will not cause or permit any instrument or document affecting the Property to be
recorded without Lender's prior written consent thereto.
E. Condition of Premises. Consistent with current practice and industry
standards, Borrower shall keep and maintain the Property in good order,
condition and repair and shall make, as and when the same shall become
necessary, all structural and non-structural, exterior and interior, ordinary
and extraordinary, foreseen and unforeseen, repairs and maintenance necessary or
appropriate. Borrower shall suffer or commit no waste upon the Premises or any
portion thereof. Borrower shall, at its expense, promptly repair, restore,
replace or rebuild any
<PAGE>
part of the Property which may be damaged or destroyed by any casualty (provided
that, to the extent Borrower is entitled to receive insurance Proceeds in
accordance with the provisions of Article 6, such proceeds are made available to
Borrower) or as the result of any taking under the power of eminent domain to
the extent permitted given the size, scope and extent of the taking. Borrower
shall cause all repairs, maintenance, rebuilding, replacement or restoration to
be (in the reasonable opinion of Lender) of substantially equivalent quality and
to be performed in compliance with all applicable requirements of any
Governmental Authorities having jurisdiction, including without limitation all
federal, state, and local environmental laws. Borrower shall not cause, suffer
or permit the construction of any material buildings, structures, or
improvements on the Premises without the prior written consent of Lender to the
proposed construction as well as the plans and specifications relating thereto.
None of the buildings, structures, or improvements erected or located on the
Premises shall be removed, demolished or substantially or structurally altered
in any material respect without the prior written consent of Lender. Lender's
consents hereunder shall not be unreasonably withheld or delayed.
F. Personal Property. Effective as of the Closing, all of the Personal
Property will be owned by Borrower in Borrower's name except for those items
identified on Schedule 4.1.F attached hereto, which are leased by Borrower.
G. Compliance. Borrower shall comply with all (i) building, zoning, fire,
health, environmental, disability and use laws, and all other laws, codes,
ordinances, rules and regulations applicable to the Premises, the Improvements
or any part thereof or the construction of any improvements thereon, or the use
or enjoyment thereof, (ii) covenants and restrictions of record, and (iii)
easements which are in any way applicable to the Premises, the Improvements or
any part thereof or to the construction of any improvements thereon and the use
or enjoyment thereof. Without limiting the generality of the foregoing, any
asbestos or lead-based paint (or any other hazardous substance) located at the
Premises shall be handled and managed in compliance with all applicable federal,
state, and local laws and requirements.
H. Performance of Agreements. Borrower shall duly and punctually perform,
observe and comply with all of the terms, provisions, conditions, covenants and
agreements on its part to be performed, observed and complied with hereunder and
under (i) the other Loan Documents, (ii) the Permitted Encumbrances, (iii) the
Management Agreement, (iv) the Franchise Agreement, (v) the Ground Lease and
(vi) all agreements entered into or assumed by Borrower in connection with the
Property, and Borrower will not suffer or permit any default or Event of Default
(giving effect to any applicable notice requirements and cure periods) to exist
under any of the foregoing.
I. Lender's Expenses. Borrower shall, or shall cause the Guarantor to,
pay, on demand by Lender, all reasonable expenses, charges, costs and fees in
connection with the negotiation and documentation of the Loan, including all
registration and recording fees, insurance consultant fees, if any,
environmental consultant fees, costs of appraisals, costs or fees
<PAGE>
incurred in connection with market studies, costs of engineering reports, cost
of credit reports, cost of audits, fees and disbursements of all counsel (both
local and special) for Lender, escrow fees, cost of surveys, fees and expenses
of Lender's Consultant or others employed by Lender to inspect the Premises from
time to time, and travel expenses incurred by Lender and Lender's agents and
employees in connection with the Loan. Notwithstanding the foregoing, so long as
no Event of Default exists, Borrower shall have no obligation to pay or
reimburse Lender for travel expenses in excess of $1,500 in any twelve month
period. At Closing, Lender may pay directly from the proceeds of the Loan each
of the foregoing expenses.
J. Intentionally Omitted.
K. Financial Statements.
(a) Borrower shall provide to Lender (i) annual financial statements
of Borrower and Guarantor and all such financial statements shall be prepared in
accordance with generally accepted accounting principles, consistently applied
and shall be prepared by a certified public accountant reasonably satisfactory
to Lender, (ii) Loan Month (or, if applicable, Accounting Period) and quarterly
cash flow and operating statements for the Property prepared by and certified by
Borrower (which quarterly statements shall include the calculation of DSCR),
(iii) such other financial information as Lender may from time to time
reasonably request, and (iv) copies of all Federal income tax returns for
Borrower and Guarantor certified by Borrower and Guarantor, respectively, to be
true and correct. All such financial statements, cash flow statements and
operating statements shall be delivered to Lender as soon as possible but not
later than thirty (30) days after the close of each Loan Month (or, if
applicable, Accounting Period), and in the case of annual financial statements,
not later than one hundred twenty (120) days after the close of each fiscal
year. Said copies of Borrower's and Guarantor's federal income tax returns shall
be provided to Lender within thirty (30) days following their filing with the
Internal Revenue Service.
(b) Lender may, at Borrower's sole cost and expense and following
written notice to Borrower, require that any or all of the foregoing annual
financial statements be prepared on an "audited" basis, so called.
L. Management and Cash Management. Borrower shall provide competent and
responsible management for the Property by a management company, and pursuant to
a written management agreement, reasonably satisfactory to Lender. The existing
Manager and Management Agreement are satisfactory to Lender. Borrower shall not
enter into any other management agreement or arrangement with any other party
with respect to the management of the Property without Lender's prior written
consent. Borrower shall not modify, amend or terminate the Management Agreement
without Lender's prior written consent. Borrower shall provide Lender with
written notice of the occurrence of any event of default or condition which with
the giving of notice or passage of time, or both, would constitute an event of
default under
<PAGE>
the Management Agreement or any subsequent management agreement which Lender may
have approved. The Management Fee(s) shall not exceed a base fee(s) in an amount
equal to 5% of Gross Revenues. The payment of any Management Fees over and above
an amount equal to 3% of Gross Revenues shall be subordinate to all payments to
be made to Lender as provided in the Management, Subordination and Estoppel
Agreement among Lender, Borrower and Manager of even date herewith. Borrower
shall not modify, amend or terminate the Cash Management Agreement in any
material respect without Lender's prior written consent.
M. Due on Sale or Encumbrance. Except as otherwise expressly provided in
Section 8.4, Borrower shall not and shall not permit others to convey, assign,
sell, mortgage, encumber, pledge, hypothecate, grant a security interest in,
grant options with respect to, or otherwise dispose of (directly or indirectly,
voluntarily or involuntarily, by operation of law or otherwise, and whether or
not for consideration or of record) all or any portion of any legal or
beneficial interest in all or any portion of the Property or the Leases. Any
such transfer or encumbrance, as aforesaid, shall be deemed to be an Event of
Default hereunder, and shall entitle Lender to declare the Loan immediately due
and payable.
N. Estoppel Certificates. Within ten (10) Business Days following a
request by Lender, Borrower shall provide to Lender a duly acknowledged written
statement confirming the amount of the outstanding Indebtedness, the terms of
payment and maturity date of the Note, the date to which interest has been paid,
and whether any offsets or defenses exist against the Indebtedness. If any such
offsets or defenses are alleged to exist, the nature thereof shall be set forth
in detail. The Lender agrees to provide the Borrower, within ten (10) Business
Days following a request by Borrower, a payoff letter affirming the amount of
the Loan then outstanding.
O. Space Leases, Service Agreements and Equipment Leases. Borrower shall
not, without the prior written consent of Lender, enter into or modify, amend or
terminate (except upon a default by tenant) any lease of space (including
restaurants) with respect to the Premises or any portion thereof in excess of
1,000 square feet. Any lease of space entered into by Borrower with respect to
the Premises or any portion thereof shall (a) be subordinate to the lien of the
Mortgage, (b) be pursuant to an arms' length transaction and (c) not contain any
term which would materially affect Lender's rights under the Loan Documents.
Borrower shall not, without the prior written consent of Lender, enter into any
operating agreements or service contracts with respect to the Property ("Service
Agreements") other than (i) agreements or contracts to provide customary guest
services such as laundry, gift shop, or television cable services, or (ii) other
agreements the aggregate annual payments for which do not exceed $50,000. All
Service Agreements shall (a) be subordinate to the lien of the Mortgage and (b)
be pursuant to an arms' length transaction. Borrower shall not, without the
prior written consent of Lender, enter into any equipment lease which would
cause the aggregate annual payments by Borrower for all equipment leases to
exceed $25,000. All equipment leases shall be pursuant to an arms' length
transaction.
<PAGE>
Within ten (10) days following the execution by Borrower of any new Lease,
Borrower shall deliver to Lender a Subordination, Non-Disturbance and Attornment
Agreement executed by the tenant under such Lease which is in form satisfactory
to Lender unless the Lease contains subordination, non-disturbance and
attornment provisions otherwise satisfactory to the Lender.
Borrower shall perform and comply with all of the landlord's obligations
under each Lease and shall not suffer or permit any breach or default on the
part of the landlord to occur thereunder.
P. Condemnation. Borrower shall not enter into any agreement for the
taking of the Premises or any part thereof with anyone authorized to acquire the
same in or by condemnation proceedings, or by the exercise of any power of
eminent domain, unless and until Lender shall have consented thereto in writing.
Q. Litigation. Borrower shall promptly provide Lender with written notice
of any material litigation in which Borrower, any other Loan Party or the
Property is named as defendant which is not fully covered by insurance for which
the insurer has assumed the defense and acknowledged coverage, and Borrower
shall provide Lender with copies of all pleadings or orders filed or entered
therein or with respect thereto.
R. Principal Amortization Reserve.
(a) The DSCR shall be calculated by Lender on each Calculation Date
for the most recent Calculation Period. At all times prior to the Maturity Date,
if the DSCR on the most recent Calculation Date is less than the Required
Coverage Standard, Borrower shall, in addition to the regularly scheduled
monthly payments of interest due under the Note, deposit with Lender on or
before the twenty-fifth (25th) day of each month 100% of the Net Cash Flow for
the immediately preceding Accounting Period.
(b) Borrower shall make and Lender shall hold all such payments of
Reserved Funds in accordance with the following terms and conditions:
(i) All Reserved Funds held by Lender upon the Maturity Date or
upon the occurrence of an Event of Default may be applied by
Lender to the repayment of the Loan in accordance with the
terms and conditions of the Note.
(ii) Provided that no Event of Default or Incipient Default exists,
if, on the next Calculation Date, the DSCR is greater than or
equal to the Required Coverage Standard, Lender shall return
to Borrower the Reserved Funds then held by Lender, and
Borrower's obligation to
<PAGE>
deposit the Reserved Funds with Lender shall be suspended
until any subsequent Calculation Date when the DSCR is less
than the Required Coverage Standard.
(iii) If Borrower is required to make payments of Reserved Funds
pursuant to this Section 4.1.R for four (4) consecutive
Calculation Dates, so long as no Event of Default or Incipient
Default exists, Lender may, on such fourth consecutive
Calculation Date, apply all Reserved Funds to the repayment of
the Loan. No such repayment shall be subject to any prepayment
fee or premium. Thereafter, all Reserved Funds may be applied
by Lender, upon receipt, to the repayment of the Loan, as
aforesaid; provided, however, if on any subsequent Calculation
Date the DSCR shall be equal to or greater than the Required
Coverage Standard, Borrower's obligation to deposit the
Reserved Funds with Lender shall be suspended until any
Calculation Date thereafter when the DSCR is less than the
Required Coverage Standard.
(iv) All interest accrued on the Reserved Funds shall be added to
the Reserved Funds and shall be disbursed in accordance with
the foregoing terms and conditions. All interest earned on the
Reserved Funds shall be taxable to Borrower.
S. Application of Gross Revenues; Distributions. Borrower shall promptly
apply all Gross Revenues to the payment of all current and past due Operating
Expenses and to the repayment of all sums currently due or past due under this
Loan, including all payments of Capital Reserve pursuant to Section 4.1T and
real estate tax escrow payments pursuant to Section 4.1.B of this Agreement, if
any. After the Renovation Completion and so long as no Event of Default or
Incipient Default exists, and subject to the provisions of Section 4.1.R,
Borrower may make dividends to its shareholders of Net Cash Flow after the
payment of all current and past due Operating Expenses, debt service on the
Loan, Capital Reserve payments, real estate tax escrow payments pursuant to
Section 4.1.B, if any, and all sums due and payable to Lender (for its own
account or to be held by it) at or prior to the time of said dividend.
T. Capital Reserve. Beginning on January 25, 1999, and continuing on the
twenty-fifth (25th) day of each Loan Month thereafter, Borrower shall deposit
with Lender on a monthly basis a reserve of not less than four percent (4%) of
Gross Revenues for the preceding Accounting Period. So long as no Event of
Default or Incipient Default (other than an Incipient Default which is
susceptible to cure and as to which Borrower is diligently pursuing such cure)
shall exist, Lender shall make said funds available to Borrower on the following
terms and conditions: (i) all Capital Reserve funds released by Lender to
Borrower shall be used to pay Borrower for the reasonable expenses actually
incurred by Borrower for the acquisition, repair,
<PAGE>
or replacement of furniture, fixtures or equipment necessary for the management
and operation of the Property (based on invoices furnished by Borrower) under an
annual budget approved by Lender for said acquisitions, repairs and
replacements; (ii) all requests by Borrower for a disbursement of Capital
Reserve funds shall be in writing and shall not be made more frequently than
once per Loan Month; (iii) each such request for a disbursement shall be in an
amount of not less than $10,000.00; and (iv) Borrower shall provide Lender with
invoices, contracts providing for progress payments or paid receipts covering
the expenses for which Borrower seeks payment or reimbursement from the Capital
Reserve funds. Prior to the disbursement of any Capital Reserve funds, Borrower
shall also provide Lender with (i) evidence satisfactory to Lender that Borrower
has accepted possession of said items and commenced using the same in the
management and operation of the Property, or the applicable contract requires an
advance payment prior to manufacture or delivery and (ii) paid receipts covering
the expenses for which Capital Reserve funds were previously disbursed.
U. Funds Deposited with Lender. All funds of Borrower which are deposited
with Lender pursuant to this Agreement or any other Loan Document shall be held
in a separate account and invested in an interest-bearing account (at not less
than money market rates). Any interest which accrues on said funds shall, at
Lender's sole option, be paid to Borrower or be held as part of the applicable
funds being held by Lender for the same purpose for which the principal sum of
said funds is being held by Lender. The Capital Reserve fund shall be reviewed
by the Lender annually on the anniversary of the Loan to determine if sufficient
sums are being funded for the expenses provided for herein. If the Lender
determines, in its reasonable discretion, that the Capital Reserve fund is
insufficient, Borrower shall pay all funding shortages within thirty (30) days
after notice by Lender. To secure all of Borrower's obligations to Lender under
the Loan Documents, Borrower hereby grants to Lender a security interest in all
funds now or hereafter deposited with Lender or otherwise in Lender's
possession, custody or control pursuant to the provisions of this Agreement or
any other Loan Document, including all funds deposited pursuant to Sections
4.1.B, 4.1.R, and 4.1.T of this Agreement. So long as any Event of Default
exists, Lender shall have such rights with respect to such funds and any
interest accrued thereon as are provided by applicable law and may apply such
funds towards the satisfaction of Borrower's obligations hereunder or under any
other Loan Documents. Without limiting any of the foregoing provisions, at the
request of Lender, Borrower shall execute and deliver from time to time such
documents as may be necessary or appropriate, in Lender's sole judgment, to
assure Lender that it has a first priority perfected security interest in and
lien on all funds deposited pursuant to Sections 4.1.B, 4.1.R, and 4.1.T of this
Agreement, including the creation of a deposit account in the name of Borrower
in a banking institution approved by Lender either within or outside of the
State of Ohio, as directed by Lender, into which any or all of such funds will
be deposited and maintained, subject to the rights of Lender with respect to
such funds as provided herein. Lender reserves the right to inspect such repairs
or replacements prior to the release of funds at Borrower's expense provided
that such inspection expenses shall not exceed $1,500 in any twelve (12) month
period.
<PAGE>
V. Audit and Inspection by Lender. Lender shall have the right, upon
reasonable prior notice, and Borrower shall permit and shall cooperate with
Lender in arranging for, at any reasonable time and from time to time, Lender
and its representatives (i) to inspect the Property, and (ii) to review and
audit all books, records and financial statements of Borrower (including all
supporting data and any other records from which the Net Cash Flow may be
determined); and Borrower shall make all such books of account and records
available for such examination at the office where the same are regularly
maintained. Lender shall have the right to copy, duplicate and make abstracts
from such books and records as Lender may require. If any audit by Lender
discloses that payments of Net Cash Flow which should have been made by Borrower
exceeds the sums which were actually made by Borrower, then Borrower shall,
within ten (10) days following written notice from Lender, pay to Lender the
difference between said amounts, together with interest on such amount at the
Default Rate from the date such amounts should have been paid to the date of
post-audit payment. Borrower shall pay Lender's costs and expenses incurred in
connection with no more than one (1) such audit per year. Borrower acknowledges
and agrees that (i) all of such audits, inspections and reports shall be made
for the sole benefit of Lender, and not for the benefit of Borrower or any third
party, and neither Lender nor Lender's auditors or inspectors or any of Lender's
representatives, agents or contractors assumes any responsibility or liability
(except to Lender) by reason of such audits, inspections or reports, (ii)
Borrower will not rely upon any of such audits, inspections or reports for any
purpose whatsoever, and (iii) the performance of such audits, inspections and
reports will not constitute a waiver of any of the provisions of this Agreement
or any other Loan Document or any of the obligations of Borrower hereunder or
thereunder. Borrower further acknowledges and agrees that neither Lender nor
Lender's inspectors, representatives, agents or contractors shall be deemed to
be in any way responsible for any matters related to design or construction of
the Improvements.
W. Appraisal. At any time during the term of the Loan, Borrower shall
cooperate with Lender and use reasonable efforts to assist Lender in obtaining
an appraisal of the Property. Such cooperation and assistance from Borrower
shall include but not be limited to the obligation to provide Lender or Lender's
appraiser with the following: (i) reasonable access to the Property, (ii) a
current certified rent roll for the Property in form and substance satisfactory
to Lender, current asking rents and a history of change in asking rents and
historical vacancy for the past three years, (iii) current and budgeted income
and expense statements for the prior three years, (iv) a site plan and survey of
Property (to the extent available and at no cost to Borrower), (v) the building
plans and specifications, including typical elevation and floor plans (to the
extent available and at no cost to Borrower), (vi) a photocopy of the deed
conveying the Property to Borrower, together with the legal description of the
Property, (vii) the current and prior year real estate tax bills, (viii) a
detailed list of past and scheduled capital improvements made during Borrower's
period of ownership and the costs thereof, (ix) a summary of the then current
ownership entity, (x) all environmental reports and other applicable information
relating to the Property, and (xi) copies of all recent appraisals/property
description information or brochures, including descriptions of amenities and
services relating to the Property. The appraiser performing any such appraisal
shall be engaged by Lender, and Lender shall be responsible for any fees payable
to said appraiser in connection with an appraisal of the Property.
<PAGE>
X. Accounts. Borrower agrees that, at any time requested by Lender in
writing after an Incipient Default or Event of Default has occurred, Borrower
will do all acts requested by Lender to perfect or confirm the continued
perfection of Lender's security interest in all of Borrower's bank accounts,
including, without limitation, appointing a collateral agent satisfactory to
Lender and segregating all of Borrower's funds from those of Manager or any
Affiliates.
Y. Deferred Origination Fee. Borrower acknowledges that the Lender has
earned the Deferred Origination Fee as of the date hereof although the Lender
has agreed to defer its payment as hereinafter provided. Borrower agrees that it
shall pay the Deferred Origination Fee to the Lender when the Loan is paid or
becomes payable in full whether at the Maturity Date or upon earlier prepayment
or acceleration.
Z. Limitation on Indebtedness. Borrower shall not, without the prior
written consent of Lender, create, assume, incur or guaranty, directly or
indirectly, any indebtedness or obligation, except for (i) lease financing or
purchase money financing for equipment, incurred after the date hereof, which is
secured by the equipment so leased or purchased and which lease or purchase
money financings do not contain payment obligations, in the aggregate, in excess
of $25,000 per year, or (ii) the Other Borrower Loans.
ARTICLE 5
AGREEMENT TO LEND
5.1 Agreement to Lend. On the basis of the covenants, agreements and
representations of Borrower contained in, and subject to the terms and
conditions set forth in, this Agreement and the other Loan Documents, Lender
agrees to lend to Borrower the principal sum of up to $15,740,722. The entire
proceeds of the Loan shall be disbursed by Lender at Closing. Borrower shall use
the Loan proceeds for the purpose for which they were advanced and for no other
purpose.
ARTICLE 6
INSURANCE AND CASUALTY
6.1 Insurance Provisions.
A. Insurance. Borrower, at its sole cost and expense, shall insure and
keep insured the Property against such perils and hazards, and in such amounts
and with such limits, as Lender
<PAGE>
may from time to time reasonably require. At the time of the Closing, Lender's
requirements for said insurance are set forth in Exhibit D, which requirements
Borrower acknowledges are reasonable and customary. Borrower shall also carry
such other insurance, and in such amounts, as Lender may from time to time
reasonably require, against insurable risks which at the time are commonly
insured against in the case of premises similarly situated, due regard being
given to the availability of insurance and to the type of construction,
location, utilities, use and occupancy of the Premises or any replacements or
substitutions therefor ("Additional Insurance"). Such Additional Insurance may
include flood, hurricane, earthquake, war risk, nuclear explosion, demolition
and contingent liability from the operation of "nonconforming improvements" on
the Premises, and shall be obtained within 30 days after demand by Lender.
Otherwise, Borrower shall not obtain any separate or additional insurance which
is contributing in the event of loss, unless it is properly endorsed and
otherwise reasonably satisfactory to Lender in all respects. The Proceeds (as
defined in the Mortgage) of insurance paid on account of any damage to or
destruction of the Premises or any portion thereof shall be paid over to Lender
to be applied as hereinafter provided.
B. Evidence of Coverage. The insurance shall be evidenced by the original
policy or a true and certified copy of the original policy, or by certificates
of insurance. Said certified copies, original policies or certificates shall be
delivered to Lender at or prior to Closing. On or before the Closing and each
stated due date thereafter, Borrower shall pay all premiums and fees for the
insurance policies required hereunder. Borrower shall deliver certified copies
of all policies and renewals (or certificates evidencing the same) to Lender at
least thirty (30) days before the expiration of existing policies. Each such
policy shall provide that such policy may not be canceled or materially changed
except upon 30 days prior written notice of intention of non-renewal,
cancellation or material change to Lender, and that no act or thing done by
Borrower shall invalidate the policy as against Lender. Notwithstanding anything
to the contrary contained herein or in any provision of law, the Proceeds of
insurance policies coming into the possession of Lender and which are not to be
used for the Work (as hereinafter defined) shall not be deemed trust funds and
Lender shall be entitled to dispose of such Proceeds as hereinafter provided. If
Lender has not received satisfactory evidence of such renewal or substitute
insurance in the time frame herein specified, Lender shall have the right, but
not the obligation, to purchase such insurance for Lender's interest only. Any
amounts so disbursed by Lender pursuant to this Section 6.1.B shall be deemed to
be a part of the Loan and shall bear interest at the Default Rate. Nothing
contained in this Article 6 shall require Lender to incur any expense or take
any action hereunder, and inaction by Lender shall never be deemed a waiver of
any rights accruing to Lender on account of this Article 6.
C. Separate Insurance. Borrower shall not carry any separate insurance on
the Property concurrent in kind or form with any insurance required hereunder or
contributing in the event of loss without Lender's prior written consent, and
any such policy shall have attached a standard non-contributing mortgagee
clause, with loss payable to Lender, and shall meet all other requirements set
forth herein.
<PAGE>
D. Damage to or Destruction of Premises. In the event of any damage to or
destruction of the Premises, Borrower shall give prompt written notice to Lender
and, provided Lender makes the Proceeds available for the costs of repair,
restoration and rebuilding, Borrower shall promptly commence and diligently
continue to completion the repair, restoration and rebuilding of the Premises so
damaged or destroyed in full compliance with all legal requirements and with the
provisions of Section 6.1.F below, and free and clear from any and all liens and
claims. Such repair, restoration and rebuilding of the Premises are sometimes
hereinafter collectively referred to as the "Work." Borrower shall not adjust,
compromise or settle any claim(s) for insurance Proceeds without the prior
written consent of Lender unless such claim(s) does not exceed $100,000 in the
aggregate in which case no consent of Lender is required. Subject to Sections
6.1E and F, below, Lender shall have the option in its sole discretion to apply
any insurance Proceeds it may receive pursuant to the Mortgage (less any cost to
Lender of recovering and paying out such Proceeds, including reasonable
attorneys' fees) to the payment of the Indebtedness or to allow all or a portion
of such Proceeds to be used for the Work. If any insurance Proceeds are applied
to reduce the Indebtedness, Lender shall apply the same in the following order:
(i) first, to the payment of interest due on any Advances;
(ii) next, to the principal amount of any Advances;
(iii) next, to any Late Charges (as provided in the Note);
(iv) next, to accrued interest then due under the Note; and
(v) finally, to the unpaid principal balance of the Note.
If Lender applies insurance Proceeds to reduce the Indebtedness, no
prepayment fee shall be due with respect to any prepayment effected thereby.
E. Restoration. Notwithstanding the provisions of Section 6.1.D above, if,
in Lender's reasonable judgment, the Work can be completed within 18 months of
the occurrence of said damage or destruction, then Lender shall, upon request by
Borrower, permit Borrower to use the insurance Proceeds for the Work (subject to
the provisions of, and less Lender's costs described in, Section 6.1.F below),
so long as Lender, in its reasonable judgment, is satisfied that as of each date
on which such insurance Proceeds are to be applied to payment thereof:
(i) The insurance Proceeds held by Lender in respect of the
applicable casualty equal or exceed such estimated cost of
effecting such repair and restoration, or such portion thereof
as then remains to be completed and paid for or Borrower
provides evidence satisfactory to Lender that Borrower has
funds available to pay any shortfall, and, if required by
<PAGE>
Lender, escrows such funds with Lender for disbursement in
accordance with the requirements of Section 6.1.F;
(ii) The Management Agreement shall remain in full force and effect
and all material Leases, if any, shall remain in full force
and effect, and no tenant thereunder shall be entitled to
cancel or terminate its Lease as a consequence of such
casualty;
(iii) Upon completion of the Work, the monthly revenues from the
Property shall, in Lender's reasonable judgment, be sufficient
to pay all interest and other sums due and payable under the
Note, this Agreement and the other Loan Documents;
(iv) The Work will, in Lender's reasonable judgment, be completed
on or prior to May 31, 2000;
(v) There is in force and effect for the benefit of Borrower and
Lender rental or business interruption insurance sufficient to
provide coverage for one hundred percent (100%) of all income
lost as a consequence of such casualty for not less than the
projected period for the completion of the Work or Borrower
provides evidence satisfactory to Lender that Borrower has
funds available to pay all interest and other sums due and
payable under the Note, this Agreement and the other Loan
Documents, as well as all other expenses of the Property
during such period and, if required by Lender, escrows such
funds with Lender for application to the payment of such
obligations as they come due;
(vi) The Work will be effected pursuant to plans and specifications
reasonably approved in writing by Lender, and by a general
contractor and major subcontractors, and pursuant to
contracts, reasonably approved in writing by Lender; and
(vii) The Work can be effected in compliance with all applicable
laws and Borrower has obtained all licenses, permits, consents
and approvals from all applicable governmental authorities or
private parties required to permit Borrower to effect such
restoration and repair and to use, operate and occupy the
repaired and restored premises upon completion thereof (other
than those which will issue in the ordinary course upon
completion) and that the same are in full force and effect.
Lender shall have no obligation to make such insurance Proceeds available to pay
for the Work if (A) the Loan shall have been accelerated and the principal and
accrued interest owing on the
<PAGE>
Loan have become due and payable, or (B) there shall exist an Event of Default
or Incipient Default other than an Incipient Default which is susceptible to
cure and as to which Borrower is diligently pursuing such cure.
F. Distribution of Proceeds. If any insurance Proceeds are used for the
Work, then such Proceeds shall be held by Lender and shall be paid out from time
to time to Borrower as the Work progresses (less any cost to Lender of
recovering and paying out such Proceeds, including reasonable attorneys' fees
and costs allocable to inspecting the Work and the plans and specifications
therefor), subject to each of the following conditions:
(i) If the Work is structural or if the cost of the Work is
reasonably estimated by Lender to exceed $250,000, the Work
shall be conducted under the supervision of a certified and
registered architect or engineer unless otherwise waived in
writing by the Lender. Before Borrower commences any Work,
other than temporary work to protect property or prevent
interference with business, Lender shall have approved in
writing the plans and specifications for the Work, which
approval shall not be unreasonably withheld or delayed, it
being nevertheless understood that such plans and
specifications shall provide for Work so that, upon completion
thereof, the Premises shall be at least equal in value and
general utility to the Premises prior to the damage or
destruction.
(ii) Each request for payment shall be made on not less than ten
(10) Business Days prior notice to Lender and shall be
accompanied by a certificate of the architect or engineer in
(i) above (or a certificate given by Borrower if no architect
or engineer is so required) stating (A) that all of the Work
completed has been done in substantial compliance with the
approved plans and specifications, if required under (i)
above, (B) that the sum requested is justly required to
reimburse the Borrower for payments by Borrower, or is justly
due to the contractor, subcontractors, materialmen, laborers,
engineers, architects or other persons rendering services or
materials for the Work (giving a brief description of such
services and materials), and that when added to all sums
previously paid out by Lender does not exceed the value of the
Work done to the date of such certificate, (C) if the sum
requested is to cover payment relating to repair and
restoration of personal property required or relating to the
Premises, that title to the personal property items covered by
the request for payment is vested in Borrower, and (D) that
the amount of such Proceeds remaining in the hands of Lender
will be sufficient on completion of the Work to pay for the
same in full (giving in such reasonable detail as Lender may
require an estimate of the cost of such completion).
Additionally, each request for payment shall contain a
statement signed by Borrower
<PAGE>
approving both the Work done to date and the Work covered by
the request for payment in question. Each request for payment
shall be accompanied by waivers of lien satisfactory to Lender
covering that part of the Work for which payment or
reimbursement is being requested and, if required by Lender, a
search prepared by a title company or an attorney authorized
to practice law in the State, or by other evidence
satisfactory to Lender that there has not been filed with
respect to the Premises any mechanics' or other lien or
instrument for the retention of title relating to any part of
the Work not discharged of record. Additionally, as to any
personal property covered by the request for payment, Lender
shall be furnished with evidence of payment therefor and such
further evidence satisfactory to assure Lender of its valid
first lien on the personal property.
(iii) Lender or its designee shall have the right to inspect the
Work at all reasonable times and may condition any
disbursement of Proceeds upon the satisfactory completion, as
determined in Lender's reasonable discretion, of any portion
of the Work for which payment or reimbursement is being
requested. The cost of any such inspection of the Work shall
be paid by Borrower prior to or simultaneously with the next
disbursement of any portion of the Proceeds. Neither the
approval by Lender of the plans and specifications for the
Work nor the inspection by Lender of the Work shall make
Lender responsible for the preparation of such plans and
specifications or the compliance of such plans and
specifications, or of the Work, with any applicable law,
regulation, ordinance, covenant or agreement.
(iv) Proceeds shall not be disbursed more frequently than every 30
days.
(v) Any request for payment made after the Work has been completed
shall be accompanied by a copy or copies of any certificate or
certificates required by law to render occupancy and full
operation of the Premises legal.
(vi) Upon completion of the Work and payment in full therefor, or
upon any failure on the part of Borrower to promptly commence
the Work, or upon the failure on the part of Borrower to
proceed diligently and continuously to completion of the Work
(subject to allowance for reasonable delays and interruptions
in the supply of materials and labor not caused by any act or
omission of Borrower), Lender may apply any such proceeds it
then or thereafter holds to the payment of the Indebtedness;
provided, however, that Lender shall be entitled to apply at
any time all or any portion of insurance Proceeds it then
holds to the curing of any Event of Default. Upon completion
of the Work, so long as no Event of Default exists, any
<PAGE>
remaining insurance Proceeds held by Lender shall be paid to
Borrower.
G. Miscellaneous Insurance Provisions.
(i) Notwithstanding any other provision of this Section 6.1, if in
Lender's reasonable judgment the cost of the Work is less than
$250,000 and such Work can be completed in less than 60 days
and provided no Event of Default has occurred and is
continuing, then Lender shall, upon request by Borrower,
permit Borrower to apply for and receive the insurance
Proceeds directly from the insurer (and Lender shall advise
the insurer to pay over such Proceeds directly to Borrower),
provided that Borrower shall apply such insurance Proceeds
solely to the prompt and diligent commencement and completion
of such Work.
(ii) In the event of the foreclosure of the Mortgage or other
transfer of title to or assignment of the Property in
extinguishment of the Indebtedness in whole or in part, all
right, title and interest of Borrower in and to any insurance
Proceeds shall inure to the benefit of and pass to Lender or
any purchaser or transferee of the Property.
(iii) Borrower hereby authorizes Lender, during all periods in which
an Event of Default has occurred and remains uncured, to
settle any insurance claims, to obtain insurance Proceeds, and
to endorse any checks, drafts or other instruments
representing any insurance Proceeds whether payable by reason
of loss thereunder or otherwise.
ARTICLE 6A
RENOVATION WORK
6A.1 Construction. During the pendency of the Renovation Work, Borrower
shall provide Lender with monthly reports which include, as applicable, (i)
evidence reasonably satisfactory to Lender that the Renovation Work complies
with all building, zoning and other laws and governmental codes, rules and
regulations, (ii) copies of all necessary licenses, permits, approvals and
consents required for the use, occupancy and operation of the Premises, as
altered by the Renovation Work, (iii) evidence satisfactory to Lender that all
Renovation Work completed as of the date of such report has been inspected and
approved by each required Governmental Authority and by each other person or
entity (including any tenants) having the right to inspect and approve the
Renovation Work and (iv) all contractors and subcontractors have been paid
current. Borrower shall provide Lender with such other information and material
relating to the Renovation Work as Lender reasonably requests.
<PAGE>
6A.2 Completion. Borrower shall: (i) cause the Renovation Work to be
completed in a good and workmanlike manner in accordance with the reasonable
requirements of Lender's Consultant, and the requirements of this Agreement, the
Renovation Budget and the Renovation Plans; (ii) cause the Renovation Work to be
completed so that the Premises remain free and clear of all liens and
encumbrances other than Permitted Exceptions; (iii) cause Renovation Completion
to be achieved on or before the Renovation Completion Date; and (iv) commence
the Renovation Work within 90 days following the Closing and pursue the
Renovation Work diligently to completion.
6A.3 Compliance with Laws. Borrower shall cause the Renovation Work to be
constructed in accordance with all applicable requirements of any Governmental
Authority having jurisdiction with respect thereto including, without
limitation, obtaining all licenses, permits, approvals and consents for the use,
occupancy and operation of the Premises, as altered by the Renovation Work.
6A.4 Other Remedies of Lender. Upon the occurrence of an Event of Default,
in addition to any other remedies available to Lender by the terms of this
Agreement or any other Loan Document or by law, Lender may at its sole
discretion: (a) complete the Renovation Work (with such changes as Lender shall
deem appropriate), all at the risk, cost and expense of Borrower; (b)
discontinue at any time the Renovation Work; (c) engage builders, contractors,
engineers, architects and others for the purpose of furnishing labor, material
and equipment in connection with the Renovation Work, which personnel may, but
need not, be the same as those engaged by Borrower; (d) pay, compromise or
settle all bills or claims incurred in connection with the Renovation Work; and
(e) take or refrain from taking such action with respect to the Renovation Work
as Lender may from time to time reasonably determine. All such action shall be
at Borrower's sole cost and expense, such sums being secured by the Mortgage.
ARTICLE 7
BORROWER'S DEFAULT
7.1 Events of Default. Each of the following shall constitute an "Event of
Default" under this Agreement:
A. Borrower fails (i) to pay any installment of interest on the Note when
due and continuing for more than five (5) days after written notice thereof from
Lender or (ii) to pay the Note in full on or before the Maturity Date;
B. Borrower or the Guarantor fails to pay within ten (10) days following
written notice from Lender any amounts due hereunder or under any of the other
Loan Documents, other than installments of interest on the Note; or
<PAGE>
C. Any representation or warranty made by Borrower or any other Loan Party
in or pursuant to this Agreement or otherwise made in writing in connection with
or as contemplated by this Agreement shall be incorrect or false or misleading
in any material respect as to the period of time to which it relates; or
D. An Event of Default exists under any other Loan Document; or
E. Any representation to Lender by Borrower or any other Loan Party as to
the financial condition or credit standing of Borrower or any other Loan Party,
or any financial statement provided to Lender pursuant to any Loan Document, is
or proves to be false or misleading in any material respect; or
F. Except for Permitted Transfers, any interest in Borrower or the
Property (or any part thereof) is sold, conveyed, transferred, assigned,
disposed of or further encumbered, either directly or indirectly, or any
agreement for any of the foregoing is entered into; or
G. The Premises or any portion thereof is rezoned either voluntarily or
involuntarily, so as to no longer permit the Premises or any portion thereof to
be used as a hotel; or
H. Any order or decree is entered by any court of competent jurisdiction
directly or indirectly enjoining or prohibiting Lender or Borrower from
performing any of their obligations under this Agreement; or
I. Borrower or any other Loan Party makes an assignment for the benefit of
creditors; or petitions or applies to any court for the appointment of a trustee
or receiver for itself or for any part of its assets or for the Property or any
portion thereof, or commences any proceedings under any bankruptcy, insolvency,
readjustment of debt or reorganization statute or law of any jurisdiction,
whether now or hereafter in effect; or if any such petition or application is
filed or any such proceedings are commenced, and Borrower or any other Loan
Party by any act indicates any approval thereof, consent thereto, or
acquiescence therein; or an order is entered appointing any such trustee or
receiver, or adjudicating Borrower or any other Loan Party bankrupt or
insolvent, or approving the petition in any such proceeding; or if any petition
or application for any such proceeding or for the appointment of a trustee or
receiver is filed by any third party against Borrower or any other Loan Party or
their respective assets or the Property, or any portion thereof, and any of the
aforesaid proceedings is not dismissed within ninety (90) days of its filing; or
J. Any representation or warranty made by the Ground Lessor in the
Estoppel Agreement shall be incorrect or false or misleading in any material
respect; or
K. A default or event of default occurs under the Franchise Agreement and
Franchisor has taken affirmative action to enforce its rights under the
Franchise Agreement, or
<PAGE>
has affirmatively declared a default under the Franchise Agreement, or has
otherwise expressly indicated that it deems such default material, or the
Franchise Agreement or any related arrangement with Franchisor is terminated
without the prior written consent of Lender, in its sole discretion; or
L. A final non-appealable judgment or judgments for the payment of money
in excess of an aggregate of $50,000 shall be rendered against Borrower and such
judgment or judgments shall remain undischarged or unbonded (to Lender's
satisfaction) for a period of 60 consecutive days during which the execution
shall not be effectively stayed; or
M. The Management Agreement is amended or terminated for any reason
without the prior written consent of Lender; or
N. Borrower or any other Loan Party fails to comply with, keep or perform
any of its other obligations, agreements, undertakings, covenants, conditions or
warranties under (i) this Agreement, (ii) any other Loan Document, or (iii) any
other document or instrument executed and delivered to Lender by Borrower or any
other Loan Party pursuant to this Agreement, and such failure continues for a
period of thirty (30) days after written notice thereof by Lender to Borrower,
provided, however, if such failure is susceptible to cure by Borrower but cannot
be cured within such thirty (30) day period, but Borrower commences to cure the
same within such thirty (30) day period and thereafter diligently proceeds to
cure the same, Borrower shall have an additional reasonable period of time in
which to cure such failure (but in no event longer than ninety (90) days after
the date of notice thereof); or
O. An event of default occurs under the Other Borrower Loan Documents and
is not cured by Borrower within any applicable grace or cure period; or
P. An event of default occurs under the Related Party Loan Documents and
is not cured by the Related Party within any applicable grace or cure period.
7.2 Remedies. Upon the happening of an Event of Default, Lender shall have
the right, in addition to all the remedies conferred upon Lender by law or
equity or the terms of any Loan Document, to do any or all of the following,
concurrently or successively, without notice to Borrower:
A. Declare the Note to be, and such Note shall thereupon become,
immediately due and payable, together with the Prepayment Fees (as defined in
the Primary Note), if applicable, without presentment, demand, protest, notice
of intention to accelerate, notice of acceleration or notice of any kind, all of
which are hereby expressly waived, anything contained herein or in the Note to
the contrary notwithstanding, and exercise any one or more of its rights and
remedies under the Loan Documents.
<PAGE>
B. Enter upon and take possession of the Property and all material,
equipment and supplies thereon and do anything necessary or desirable to fulfill
the obligations of Borrower hereunder and to sell, manage, maintain, repair and
protect the Property. Without limiting the generality of the foregoing and for
the purposes aforesaid, Borrower hereby appoints and constitutes Lender its
lawful attorney-in-fact with full power of substitution to (i) pay, settle or
compromise all existing bills and claims which may be liens upon or security
interests in the Property, or to avoid such bills and claims becoming liens or
security interests, against the Property or any fixtures or equipment thereon,
or as may be necessary or desirable for the clearance of title or otherwise,
(ii) use any funds of Borrower for purpose of completing the Renovation Work,
(iii) execute all applications and certificates in the name of Borrower which
may be required to carry out the intent and purpose hereof, (iv) employ such
contractors, subcontractors, architects and others as Lender may deem reasonably
appropriate, (v) do any and every act which Borrower might do on its own behalf,
including to enter into Leases of any portion of the Property, and (vi)
prosecute or defend any and all actions or proceedings involving the Property or
any fixtures, equipment or other installations thereon, it being understood and
agreed that this power of attorney shall be a power coupled with an interest and
cannot be revoked. Lender and its designees, representatives, agents, licensees
and contractors shall be entitled to the entry, possession and use contemplated
herein without the consent of any party and without any legal process or other
condition precedent whatsoever. Borrower acknowledges that any denial of such
entry, possession and use by Lender will cause irreparable injury and damage to
Lender and agrees that Lender may forthwith sue for any remedy to enforce the
immediate enjoyment of such right. Borrower hereby waives the posting of any
bond as a condition for exercising such remedy.
C. Apply the sum of any Reserved Funds and Capital Reserve payments then
being held by Lender to the repayment of the Loan in any order or priority.
D. Declare any or all of the Other Borrower Loans and the Related Party
Loans to be in default and to pursue all of its rights and remedies with respect
thereto.
Anything in this Agreement to the contrary notwithstanding, all funds
advanced or disbursed by Lender pursuant to the provisions of this Article 7
shall be deemed advanced by Lender under an obligation to do so regardless of
the identity of the person or persons to whom such funds are owed and shall bear
interest at the Default Rate. Funds advanced or disbursed by Lender in the
exercise of its judgment that the same are needed to protect its security or to
otherwise perform any obligations of Borrower hereunder are to be deemed
obligatory advances hereunder and are to be added to the total indebtedness
evidenced by the Note and secured by the Mortgage and the other Loan Documents
and said indebtedness shall, if necessary, be increased accordingly.
In case of any Event of Default hereunder, Borrower will pay Lender's
attorneys' fees and disbursements and court costs (including those relating to
appeals) and all related expenses in
<PAGE>
connection with the enforcement of this Agreement or any of the other Loan
Documents.
ARTICLE 8
MISCELLANEOUS
8.1 Indemnification. Except for Losses (as hereinafter defined) which are
finally adjudicated by a court of competent jurisdiction to have arisen directly
and proximately from the gross negligence or willful misconduct of Lender or
have arisen solely and exclusively from acts or events occurring after the
Borrower has relinquished all possession, direction or control over the
Property, Borrower shall protect, defend, indemnify and hold Lender, and its
officers, directors, employees and agents (each, an "Indemnified Party")
harmless from and against any and all harm, loss, liability, damage, suit,
claim, demand, expense, fees, costs, judgments and penalties (including
reasonable attorneys' fees but excluding consequential damages) (each a "Loss")
suffered or incurred by an Indemnified Party in connection with (i) any claim,
demand, suit or proceeding brought or asserted by any person against an
Indemnified Party arising out of or relating to Lender's entering into or
carrying out the terms of this Agreement or any of the other Loan Documents or
being the holder of the Note, (ii) any default by Borrower or any other Loan
Party hereunder or under any other Loan Document, (iii) any bodily injury,
death, other personal injury or property damage occurring in or upon the
Property through any cause whatsoever, and (iv) any transaction otherwise
arising out of or in any way connected with the Property, this Agreement, any
other Loan Document or the Indebtedness, excluding a Loss arising out of
Lender's gross negligence or willful misconduct.
8.2 Defense of Claims. Lender may, at Borrower's sole cost and expense,
retain separate counsel to defend Lender against any claim relating to any Loss
or potential Loss. If Lender retains separate counsel in such an action,
Borrower will cooperate with Lender and provide Lender with copies of all
existing pleadings, discovery materials and other materials relating to said
claim. In any event, Borrower shall defend any such claim and shall provide
Lender with copies of all pleadings, filings and correspondence relating
thereto.
8.3 Performance by Lender. In the event that Borrower shall at any time
fail to duly and punctually pay, perform, observe or comply with any of its
covenants and agreements hereunder or under the other Loan Documents, or if any
Event of Default hereunder shall exist, then Lender may (but shall in no event
be required to) make any such payment or perform any such term, provision,
condition, covenant or agreement or cure any such Event of Default. Lender shall
not take action under this Section 8.3 prior to the occurrence of an Event of
Default unless in Lender's reasonable judgment, such action is necessary or
appropriate in order to preserve the value of the collateral, to protect persons
or property, or Borrower has abandoned the Property or any portion thereof.
Lender shall not be obligated to continue any such action having commenced the
same and may cease the same without notice to Borrower. Any amounts expended by
Lender in connection with such action shall constitute additional advances
<PAGE>
hereunder, the payment of which is additional indebtedness, secured by the Loan
Documents and shall become due and payable upon demand by Lender, with interest
at the Default Rate from the date of disbursement thereof until fully paid. No
further direction or authorization from Borrower shall be necessary for such
disbursements. The execution of this Agreement by Borrower shall and hereby does
constitute an irrevocable direction and authorization to Lender to so disburse
such funds.
8.4 Transfer or Assignment. Lender may assign, negotiate, pledge or
otherwise hypothecate all or any portion of the Loan or grant participation
therein, or in any of its rights and security hereunder and under the other Loan
Documents, and Borrower shall accord full recognition thereto provided that if
the Loan is assigned to any party other than Nationwide Life Insurance Company
or any other life insurance company, financial institution or other commercial
or institutional lender, or affiliate thereof, then Borrower must consent to
such assignment which consent shall not be unreasonably withheld or delayed.
Lender agrees to provide Borrower with written notice of any assignment of the
Loan other than to Nationwide Life Insurance Company. Lender may deliver copies
to any potential participant or assignee or transferee of financial statements
and other information from time to time furnished to Lender pursuant hereto or
in connection therewith provided that Lender shall take such steps as may be
reasonably necessary to assure that such information remains confidential.
Borrower shall not assign or attempt to assign its rights or obligations under
this Agreement or any other Loan Document other than Permitted Transfers.
8.5 Lender's Actions. The authority herein conferred upon Lender and any
action taken by Lender hereunder or in any other Loan Document will be taken by
Lender for its own protection only, and Lender does not and shall not be deemed
to have assumed any responsibility to Borrower or to any other person or persons
with respect to any such action herein authorized or taken by Lender. No person
shall be entitled to rely upon, or claim to have relied upon, any action taken
or failed to have been taken by Lender or any of its representatives.
8.6 Time is of the Essence. TIME IS OF THE ESSENCE OF THIS AGREEMENT.
8.7 Waivers. No waiver of any term, provision, condition, covenant or
agreement contained herein or in any other Loan Document shall be effective
unless set forth in a writing signed by Lender, and any such waiver shall be
effective only to the extent set forth in such writing. No failure by Lender to
exercise, or delay by Lender in exercising, any right, power or privilege
hereunder or in any other Loan Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof, or the exercise of any other
right or remedy provided by law. No notice to or demand on Borrower in any case
shall, in itself, entitle Borrower to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of Lender to
any other or further action in any circumstances without notice or demand.
<PAGE>
8.8 Notices. Any notice which any party hereto may be required or may
desire to give hereunder shall be delivered personally, or by overnight express
courier, addressed in the case of Borrower to:
Lodgian AMI, Inc.
Two Live Oak Center
3445 Peachtree Road, NE
Suite 700
Atlanta, Georgia 30326
with a copy to:
Stearns, Weaver, Miller, Weissler,
Alhadeff & Sitterson, P.A.
Museum Tower
150 West Flagler Street
Miami, Florida 33130
Attention: Robert Weissler, Esq.
in the case of Lender to:
Banc One Capital Funding Corporation
150 East Gay Street
Columbus, Ohio 43215
Attention: Loan Servicing
with a copy to:
Banc One Capital Markets, Inc.
150 East Gay Street, 24th Floor
Columbus, Ohio 43215
Attn: Legal Department and Real Estate Investment Group
or at such other addresses or to the attention of such other persons as may from
time to time be designated by the party to be addressed by written notice to the
other in the manner herein provided. Notices, demands and requests given in the
manner aforesaid shall be deemed sufficiently served or given for all purposes
hereunder when received or when delivery is refused or when the same are
returned to sender for failure to be called for.
8.9 Successors and Assigns. This Agreement shall inure to the benefit of
the parties and their respective successors and permitted assigns. No assignment
made by Borrower in violation of this Agreement shall confer any rights on any
assignee of Borrower.
<PAGE>
8.10 No Partnership. Nothing contained herein, or in any other Loan
Document, and no action or inaction whatsoever on the part of Lender, shall be
deemed to make Lender a partner or joint venturer with Borrower.
8.11 Brokerage Claims. Borrower shall, and shall cause the Guarantor, to
protect, defend, indemnify and hold Lender harmless from and against all loss,
cost, liability and expense incurred as a result of any claim for a broker's or
finder's fee against Lender or any person or entity in connection with the
transaction herein contemplated, provided such claim is made by or arises
through or under Borrower or the Guarantor or is based in whole or in part upon
alleged acts or omissions of Borrower or the Guarantor. Lender shall protect,
defend, indemnify and hold Borrower harmless from and against all loss, cost,
liability and expense incurred as a result of any claim for a broker's or
finder's fee against Borrower provided such claim is based upon alleged acts or
omissions of Lender.
8.12 Publicity. Lender and Borrower may each reasonably publicize the Loan
if it so elects. Borrower agrees to consult with Lender prior to any press
release concerning the Loan.
8.13 Documents Satisfactory to Lender. All documents and other matters
required by any of the provisions of this Agreement to be submitted or provided
to Lender shall be in form and substance reasonably satisfactory to Lender.
8.14 Additional Assurances. At any time or from time to time, upon the
written request of Lender, Borrower shall execute, and, if required, record,
file (and pay all fees, taxes or other expenses relating thereto) all such
further documents and do all such other acts and things as Lender may reasonably
request to effectuate the transaction contemplated herein in accordance with the
terms hereof.
8.15 Entire Agreement. This Agreement, the Exhibits hereto and the other
Loan Documents and other documents referred to herein constitute the entire
agreement between the Lender and Borrower with respect to the subject matter
hereof and may not be modified or amended in any manner other than by
supplemental written agreement executed by the parties hereto.
8.16 Severability. If any provision of this Agreement or any other Loan
Document or the application thereof to any person or situation shall, to any
extent, be held invalid or unenforceable, the remainder of this Agreement or any
other Loan Document, and the application of such provision to persons or
situations other than those to which it shall have been held invalid or
unenforceable, shall not be affected thereby, but shall continue valid and
enforceable to the fullest extent permitted by applicable law.
8.17 No Third Party Beneficiary. Except as hereinafter expressly provided,
this
<PAGE>
Agreement is made for the sole benefit of Borrower and Lender, and no other
person shall be deemed to have any privity of contract hereunder nor any right
to rely hereon to any extent or for any purpose whatsoever, nor shall any other
person have any right of action of any kind hereon or be deemed to be a third
party beneficiary hereunder. Notwithstanding the foregoing, Banc One Capital
Partners, VII, Ltd., its successors and assigns, shall be a third party
beneficiary of the representations, warranties, covenants and agreements of
Borrower and Guarantor under the Loan Documents for so long as it may own a
participation interest in the Loan.
8.18 CHOICE OF LAW. THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF OHIO,
ACCEPTED BY LENDER IN THE STATE OF OHIO, AND THE PROCEEDS OF THE LOAN EVIDENCED
HEREBY WERE OR ARE TO BE DISBURSED BY LENDER FROM THE STATE OF OHIO. BORROWER
AND LENDER AGREE THAT THE STATE OF OHIO HAS A SUBSTANTIAL RELATIONSHIP TO THE
TRANSACTION EVIDENCED HEREBY AND AGREE THAT THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF OHIO (WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW).
8.19 Limitation on Liability.
(a) Subject to the limitations and exceptions contained in
subsections (b), (c), (d) and (e) below and as otherwise provided in Section
8.21, Borrower shall not have any personal recourse liability for amounts owing
under the Note or any of the other Loan Documents and no deficiency judgment
therefor shall be enforced against Borrower. Lender's recourse for such amounts
shall, subject to the limitations and exceptions contained in subsections (b),
(c), (d) and (e) below, be limited to the collateral and security provided under
the Loan Documents and the Other Borrower Loan Documents. Anything herein to the
contrary notwithstanding, the Borrower acknowledges and agrees that the
collateral and security provided under the Loan Documents and the Other Borrower
Loan Documents are intended to cross-collateralize both the Loan and the Other
Borrower Loans as described in Section 8.21.
(b) A judgment may be sought, obtained, entered and enforced against
Borrower to the extent necessary to preserve or enforce the rights and remedies
of Lender in, to or against the collateral and security provided under the Loan
Documents and the Other Borrower Loan Documents, and nothing contained in this
Section 8.19 shall be construed to limit, prejudice or impair the rights of
Lender to enforce its rights and remedies against any real and personal property
mortgaged, pledged, encumbered, assigned or granted to secure payment or
performance under this Agreement, the Note, the other Loan Documents and the
Other Borrower Loan Documents. Notwithstanding anything to the contrary herein
or elsewhere Lender shall, to the fullest extent permitted by law, be entitled
to injunctive relief and to specific performance.
<PAGE>
(c) Anything contained herein or elsewhere to the contrary
notwithstanding, Borrower and Guarantor shall be liable to Lender, without
limitation, for Lender's harm, loss (including lost interest and principal on
the Loan), damage, costs and expenses (including Lender's reasonable attorneys'
fees and court and collection costs) arising out of or in connection with any of
the following circumstances:
(i) any misapplication or misappropriation of any insurance or
condemnation proceeds;
(ii) revenues collected after an Event of Default or Incipient
Default and not properly applied to the Loan or normal
operating expenses of the Premises;
(iii) any waste respecting all or any part of the Property or any
other collateral;
(iv) real estate taxes, personal property taxes or Impositions, if
any, and insurance premiums with respect to the Property
(except to the extent resulting from the failure by Lender to
disburse any deposits received from Borrower with respect to
such real estate or personal property taxes in accordance with
the provisions of Section 4.1(B));
(v) fraud in connection with the Loan or any Loan Document;
(vi) any material breach of any representation or warranty made in
connection with the Loan (expressly excluding any
representations or warranties made by the Ground Lessor) known
by Borrower or Guarantor to have been false when made, or
deemed made specifically including any material
misrepresentation or inaccuracy contained in any financial
statement or other document provided to Lender pursuant to
Section 4.1.K of this Agreement known by Borrower or Guarantor
to have been false or inaccurate when provided;
(vii) any destruction of the Property or any part thereof in or from
an uninsured or underinsured casualty for which Borrower was
required to obtain insurance under this Agreement;
(viii)any breach of any of the terms and provisions of Section 2.10
(Environmental Matters) of the Mortgage; or
(ix) any lien arising from the failure of the Borrower to pay or
perform any obligation with respect to taxes or employee
benefits which lien is superior in priority to the lien
created by the Mortgage and the Security Agreement upon the
property encumbered thereby.
<PAGE>
(d) In the event of any filing by Borrower of any voluntary petition
under the Bankruptcy Code, or the taking by Borrower of any comparable action
under any federal or state law; or the filing of any involuntary petition under
the Bankruptcy Code against Borrower or the taking of comparable action under
any federal or state law against Borrower by any Affiliate of any of them, the
Loan shall become fully recourse against Borrower.
(e) Nothing contained in this Section 8.19 shall be construed to
release Borrower or any Loan Party from liability under (i) the indemnifications
contained in Section 2.10 (Environmental Matters) of the Mortgage, (ii) the
Limited Guaranty, (iii) the Environmental Indemnity, or (iv) the Other Borrower
Loan Documents.
8.20 WRITTEN AGREEMENT.
(a) THE RIGHTS AND OBLIGATIONS OF BORROWER AND LENDER SHALL BE
DETERMINED SOLELY FROM THIS WRITTEN LOAN AGREEMENT AND THE
OTHER LOAN DOCUMENTS, AND ANY PRIOR ORAL OR WRITTEN AGREEMENTS
BETWEEN LENDER AND BORROWER CONCERNING THE SUBJECT MATTER
HEREOF AND OF THE OTHER LOAN DOCUMENTS ARE SUPERSEDED BY AND
MERGED INTO THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS.
(b) THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY NOT BE
VARIED BY ANY ORAL AGREEMENTS OR DISCUSSIONS THAT OCCUR
BEFORE, CONTEMPORANEOUSLY WITH, OR SUBSEQUENT TO THE EXECUTION
OF THIS LOAN AGREEMENT OR THE LOAN DOCUMENTS.
(c) THIS WRITTEN LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENTS BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
8.21 Cross-Collateralizations. The Other Borrower Loans and the Related
Party Loans are cross-defaulted with the Loan and with each other. The Other
Borrower Loans are cross-collateralized with the Loan and each other.
Accordingly, the Other Borrower Loans are secured by the Property and the other
collateral contemplated by the Loan Documents (the "Loan Collateral"), and the
Loan is secured by the Other Hotel Properties and other collateral serving as
<PAGE>
security for such Other Borrower Loans (the "Other Borrower Loan Collateral").
Without limitation to any other right or remedy provided to Lender in this
Agreement, or any of the other Loan Documents, Borrower acknowledges and agrees
that, to the full extent permitted under applicable law, upon the occurrence of
an Event of Default (i) Lender shall have the right to pursue all of its rights
and remedies in one proceeding, or separately and independently in separate
proceedings which it, as Lender, in its discretion, shall determine from time to
time, (ii) Lender is not required to either marshall assets, sell the Loan
Collateral or any Other Borrower Loan Collateral in any inverse order of
alienation, or be subjected to any "one action" or "election of remedies" law or
rule, (iii) the exercise by Lender of any remedies against any Loan Collateral
or any Other Borrower Loan Collateral, will not impede Lender from subsequently
or simultaneously exercising remedies against any other collateral, (iv) all
liens and other rights, remedies and privileges provided to Lender in this
Agreement, and in the other Loan Documents (except to the extent such documents
have terminated or expired pursuant to their terms) or otherwise shall remain in
full force and effect until Lender has exhausted all of its remedies against the
Loan Collateral and all Other Borrower Loan Collateral has been foreclosed, sold
and/or otherwise realized upon and (v) the Loan Collateral and all the Other
Borrower Loan Collateral shall be security for the performance of all of
Borrower's obligations hereunder.
8.22 Intentionally Omitted.
8.23 Intentionally Omitted.
8.24 WAIVER OF JURY TRIAL. LENDER AND BORROWER HEREBY WAIVE THE RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT
MATTER OF THIS AGREEMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND
VOLUNTARILY MADE BY LENDER AND BORROWER, AND LENDER AND BORROWER ACKNOWLEDGE
THAT NO PERSON ACTING ON BEHALF OF ANOTHER PARTY TO THIS AGREEMENT HAS MADE ANY
REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO
MODIFY OR NULLIFY ITS EFFECT. LENDER AND BORROWER FURTHER ACKNOWLEDGE THAT THEY
HAVE BEEN REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE
SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL
COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND THAT THEY HAVE HAD THE OPPORTUNITY
TO DISCUSS THIS WAIVER WITH COUNSEL.
8.25 Consent to Jurisdiction. The parties hereto submit to personal
jurisdiction in the State of Ohio for the enforcement of the provisions of this
Agreement and the other Loan Documents and irrevocably waive any and all rights
to object to such jurisdiction for the purposes of litigation to enforce any
provision of this Agreement and the other Loan Documents. Lender and Borrower
hereby consent to the jurisdiction of and agree that any action, suit or
proceeding to enforce this Agreement may be brought in any state or federal
court in the State of Ohio. Lender and Borrower hereby irrevocably waive any
objection which they may have to the
<PAGE>
laying of the venue of any such action, suit, or proceeding in any such court
and hereby further irrevocably waive any claim that any such action, suit or
proceeding brought in such a court has been brought in an inconvenient forum.
Borrower and Lender hereby consent that service of process in any action, suit
or proceeding may be made by service upon the Borrower's agent for service of
process (in the case of service to be made upon Borrower), by personal service
upon the party being served, or by delivery in accordance with the notice
requirements of Section 8.8 of this Agreement.
<PAGE>
IN WITNESS WHEREOF, Borrower and Lender have caused this Agreement to be
executed by their duly authorized representatives as of the day, month and year
first above written.
BORROWER:
LODGIAN AMI, INC., a
Maryland corporation
By: /s/ Toni Jones
------------------------------
Name: Toni Jones
Title: Vice President
LENDER:
BANC ONE CAPITAL FUNDING CORPORATION, an Ohio
corporation
By: /s/ Ronald L. Callentine
------------------------------
Name: Ronald L. Callentine
Title: Vice President
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
<PAGE>
EXHIBIT B-1
ADDITIONAL NOTE
<PAGE>
EXHIBIT B-2
PRIMARY NOTE
<PAGE>
EXHIBIT C
PERMITTED ENCUMBRANCES
<PAGE>
EXHIBIT D
INSURANCE REQUIREMENTS
(i) Insurance against loss to the Property on an "All Risk" policy form,
covering insurance risks no less broad than those covered under a Standard Multi
Peril (SMP) policy form, which contains a 1987 Commercial 150 "Causes of Loss
Special Format and such other risks as Lender may reasonably require, including
risk of hurricane, insurance covering the cost of demolition of undamaged
portions of any portion of the Property when required by code or ordinance and
the increased cost of reconstruction to conform with current code or ordinance
requirements, in amounts equal to the full replacement cost of the Property
(other than the Land), including fixtures and equipment, Borrower's interest in
leasehold improvements, and the cost of debris removal, with 1008 co-insurance
with an agreed amount endorsement and deductibles of not more than $10,000.00;
(ii) Business interruption/extra expense insurance in amounts sufficient
to pay during any period in which the Property may be damaged or destroyed, on a
gross income basis for a period of twelve (12) months (i) all business income
derived from the Property and (ii) all amounts (including all impositions,
utility charges and insurance premiums) required to be paid by Borrower;
(iii) During the performance of the Renovation Work and the making of any
other alterations or improvements to the Property insurance covering claims
based on the owner's or employer's contingent liability not covered by the
insurance provided in subsection (f) below.
(iv) Insurance against loss or damage by flood or mud slide in compliance
with the Flood Disaster Protection Act of 1973, as amended from time to time, if
the Property or any portion thereof is now, or at any time while the Loan
remains outstanding shall be, situated in any area which an appropriate
Governmental Authority designates as a special flood hazard area, Zone A or Zone
V, in amounts equal to the full replacement value of all above grade structures
on the Property;
(v) Insurance against loss or damage by earthquake, if the Premises are
now, or at any time while the Loan remains outstanding shall be, situated in any
area which is classified as a Major Damage Zone, Zones 3 and 4, by the
International Conference of Building Officials in an amount equal to the
probable maximum loss for the Premises, fixtures and equipment, plus the cost of
debris removal;
(vi) Commercial general public liability insurance, with the location of
the Property designated thereon, against death, bodily injury and property
damage arising in connection with the Property with Borrower listed as the named
insured with such limits as Lender may reasonably require, but in no event less
than $1,000,000, and written on a 1986 Standard ISO occurrence basis form or
equivalent form, and excess umbrella liability insurance with such limits as
Lender may reasonably require, but in no event less than $10,000,000; and
(vii) Such other insurance relating to the Property and the use and
operation thereof, as
<PAGE>
Lender may, from time to time, reasonably require, including dramshop, products
liability and workers' compensation insurance.
All insurance shall: (i) be carried by companies qualified to do business
in the State with a Best's rating of A-6 or better; (ii) be in form and content
reasonably acceptable to Lender; (iii) provide thirty (30) days' advance written
notice to Lender before any cancellation, material modification or notice of
non-renewal.
All physical damage policies and renewals shall contain a standard
mortgagee clause naming Lender as mortgagee, which clause shall expressly state
that any breach of any condition or warranty by Borrower shall not prejudice the
rights of Lender under such insurance, and a loss payable clause in favor of
Lender for personal property, contents, inventory, equipment and business
interruption. All liability policies and renewals shall name Lender as an
additional insured with respect to policies in which Lender has an interest. No
additional parties shall appear in the mortgage or loss payable clause without
Lender's prior written consent. All deductibles shall be in amounts reasonably
acceptable to Lender. In the event of the foreclosure of the Mortgage or any
other transfer of title to the Property in full or partial satisfaction of the
Loan, all right, title and interest of Borrower in and to all insurance policies
and renewals thereof then in force shall pass to the purchaser or grantee.
During any period during which construction is conducted on the Premises
and during which period the construction and materials are not covered by the
existing policies, Borrower shall cause to be provided to Lender, premium
prepaid insurance policies covering the Property (which during construction
shall be on an "All-Risk" perils, including theft, "Builder's Risk", "Completed
Value" form) in companies and forms satisfactory to Lender, and in amounts equal
to the replacement costs of the Improvements (including construction materials
and personal property on or off site) covering insurance risks no less broad
than those covered under a Standard Multi Peril (SMP) policy form, which
contains a 1987 Commercial ISO "Causes of Loss Special Form", with coverage for
such other expenses as Lender may reasonably require, including: debris removal;
cost of demolition of the undamaged portion of a building when required by code
or ordinance; increased cost of reconstruction to conform with current code or
ordinance requirements; real estate property taxes; architect, engineering, and
consulting fees; legal and accounting fees, including the cost of in-house
attorneys and paralegals; advertising and promotional expenses; interest on
money borrowed; additional commissions incurred upon renegotiating leases and
any and all other expenses which may be incurred as a result of any property
loss or destruction by an insured peril. Such insurance shall contain an agreed
amount endorsement (such amount to include foundation and underground pipes) and
bear a 100% co-insurance clause. The deductible shall be not more than $10,000.
Said policies shall contain a standard mortgagee clause naming Lender as
mortgagee, and a permission to occupy endorsement.
In addition, Borrower shall cause to be furnished to Lender certificates
from the insurance carrier for each general contractor evidencing workers'
compensation, employers' liability, commercial auto liability, and commercial
general liability insurance (including contractual liability and completed
operations coverage) written on a 1986 standard "ISO" occurrence basis
<PAGE>
form or equivalent and excess umbrella coverage, carried during the course of
construction, with general liability insurance limits as Lender may reasonably
require, but in no event less than $1,000,000. Lender shall be named as an
additional insured under such liability policies. Borrower shall cause each
subcontractor to maintain commercial general liability, commercial automobile
liability, workers' compensation, employers' liability, and excess umbrella
liability coverage in form and amount reasonably satisfactory to Lender.
The additional insurance provisions for construction periods do not
obviate or otherwise affect requirements of the Loan Agreement or the previous
portions of this Exhibit, which requirements remain a part of this Agreement in
their entirety.
<PAGE>
EXHIBIT E
RENOVATION WORK
<PAGE>
Exhibit 10.6.2
GUARANTY AND INDEMNITY AGREEMENT
THIS GUARANTY AND INDEMNITY AGREEMENT (this "Agreement"), made effective
as of the 8th day of December 1998, by SERVICO CONCORD, INC., a California
corporation ("SCI"), PENMOCO, INC., a Michigan corporation ("PI"), and ISLAND
MOTEL ENTERPRISES, INC., a Georgia corporation ("IME"), each with a principal
place of business at Two Live Oak Center, 3445 Peachtree Road, NE, Suite 700,
Atlanta, Georgia 30326 (SCI, PI and IME are sometimes hereinafter collectively
referred to as "Guarantor"), to and for the benefit of BANC ONE CAPITAL FUNDING
CORPORATION, an Ohio corporation, having an office at 150 East Gay Street, 24th
Floor, Columbus, Ohio 43215 ("Lender").
RECITALS:
A. Lender and Lodgian AMI, Inc., a Maryland corporation ("Borrower"), have
entered into a Loan Agreement of even date herewith (as the same may be amended
from time to time, the "Loan Agreement") pursuant to which Lender has agreed to
make a loan to Borrower in the amount of up to $15,740,722 (the "Loan"), which
Loan is evidenced by that certain Promissory Note of even date herewith in the
principal amount of $13,851,835 (the "Primary Note") and that certain Promissory
Note of even date herewith in the principal amount of $1,888,887 (the
"Additional Note" and, together with the Primary Note, the "Note"). The Loan is
secured by, inter alia, that certain Purchase Money Leasehold Deed of Trust and
Security Agreement of even date herewith from Borrower to Lender encumbering
Borrower's property commonly known as Holiday Inn International Airport, located
at 890 Elkridge Landing Road, Linthicum Heights, Maryland (the "Mortgage") (the
Note, the Loan Agreement, the Mortgage and every other document, instrument and
agreement evidencing or securing the Loan are hereinafter sometimes collectively
referred to as the "Loan Documents");
B. Borrower is an affiliate of PI, SCI and IME;
C. Lender is extending financial accommodations to PI, SCI and IME
concurrently with the Loan and, in order to induce Lender to extend such
financial accommodations, PI, SCI and IME are willing to execute this Agreement;
D. Lender is unwilling to make the Loan without the execution and delivery
of this Agreement by PI, SCI and IME;
NOW, THEREFORE, to induce Lender to make the Loan and in consideration of
One Dollar ($1.00) and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Guarantor, intending to be legally
bound hereby, jointly and severally,
<PAGE>
agree as follows:
1. Liabilities.
(a) Notwithstanding any provision contained in the Note, the Loan
Agreement, the Mortgage or any other Loan Document to the contrary, Guarantor
hereby absolutely, primarily, unconditionally and irrevocably guarantees to
Lender, its successors and assigns, the full prompt and complete payment and
performance of all obligations and liabilities of Borrower arising under the
Loan Documents (all of which obligations and liabilities are collectively
hereinafter referred to as the "Liabilities"). All terms used and not otherwise
defined herein shall have the meanings ascribed to them in the Loan Agreement.
(b) The validity of this Agreement and the obligations of Guarantor
hereunder shall in no way be terminated, abated, affected or impaired by the
happening from time to time of any event or condition, including, without
limitation, any of the following: (i) the assertion or non-assertion by Lender
of any of the rights or remedies available to Lender pursuant to the provisions
of the Loan Documents or pursuant to any applicable statutes; (ii) the waiver by
Lender of, or the failure of Lender to enforce, or the lack of diligence by
Lender in connection with, the enforcement of any of its rights or remedies
under the Loan Documents; (iii) the granting by Lender of any indulgence or
extension of time; (iv) the exercise by Lender of any so-called self-help
remedies; (v) any other act, omission or conditions which might in any manner or
to any extent vary the risk to Guarantor or might otherwise operate as a
discharge or release of the Guarantor under applicable law; (vi) the invalidity
or unenforceability of all or any portion or provision of the Note; (vii) any
release or discharge of or accord and satisfaction with Borrower or any other
person or entity, by variation of the terms of the Note or otherwise; (viii) the
impairment, modification, change, release, discharge or limitation of the
liability of Borrower or the Guarantor or any of their estates in bankruptcy,
resulting from or pursuant to the application of the bankruptcy or insolvency
laws of or any decision of any court of the United States or any state thereof;
(ix) any present or future law or order of any government (de jure or de facto)
or of any agency thereof purporting to reduce, amend or otherwise affect the
Liabilities or to vary any terms of payment, satisfaction or discharge thereof;
(x) the waiver, compromise, settlement, release, extension, amendment, change,
modification or termination of the terms of the Liabilities or any or all of the
obligations, covenants or agreements of Borrower under the Loan Documents
(except by satisfaction in full of all Liabilities) or of the Guarantor under
this Agreement; (xi) the extension of the time for satisfaction, discharge or
payment of the Liabilities or any part thereof owing or payable by Borrower
under the Loan Documents or of the time for performance of any other
obligations, covenants or agreements under or arising out of this Agreement or
the extension or renewal of any thereof; (xii) the existence of any other
guaranty of the Liabilities in favor of Lender, or the enforcement or attempted
enforcement of such other guaranty; and (xiii) any event or action that would in
the absence of this paragraph result in the release or discharge of the
Guarantor from the performance or observance of any obligation, covenant or
agreement contained in this Agreement or any other agreement.
<PAGE>
2. Waivers. The Guarantor hereby waives all notice of any default in the
payment of or non-performance of any Liabilities, all protest, demands, notices
or presentments of any kind, notice of any acceptance of this Agreement and all
matters and rights which may be raised in avoidance of, or in defense against,
any action to enforce the obligations of the Guarantor hereunder; provided,
however, that nothing herein shall waive the Guarantor's right to assert payment
or performance of any Liabilities as a defense to a claim relating to such
Liabilities under this Agreement, to the extent of such payment or performance.
The Guarantor hereby waives any and all suretyship defenses or defenses in the
nature thereof without in any manner limiting any other provisions of this
Agreement. Notwithstanding anything to the contrary contained herein, the
Guarantor hereby irrevocably waives all rights the Guarantor may have at law or
in equity, including, without limitation, any law subrogating the Guarantor to
the rights of Lender, to seek contribution, indemnification or any other form of
reimbursement from Borrower and any other person now or hereafter primarily or
secondarily liable for any obligations of Borrower to Lender, including without
limitation, the Liabilities, for any payment or performance made by the
Guarantor under or in connection with this Agreement, unless and until
irrevocable payment in full of the Note has been received by Lender.
3. Primary Liability.
(a) The Guarantor's liability under this Agreement shall be primary,
and with respect to any right of action which shall accrue to Lender relating to
any Liabilities, Lender may at its sole option and without notice or demand,
proceed directly against the Guarantor without having proceeded against Borrower
or any other person or entity liable to any extent for any of the Liabilities or
against the collateral under the Loan Documents. The Guarantor's liability
hereunder shall continue without regard to whether or not Lender may have
instituted or prosecuted or obtained or realized any judgment in any suit,
action or proceeding or shall have exhausted any of its remedies or taken any
steps to enforce any of its rights under or pursuant to the Loan Documents or at
law or in equity, or otherwise, and without regard to any other condition or
contingency, so long as any of the Liabilities remains unsatisfied to any
extent. This Agreement is an agreement of payment and performance and not merely
of collection.
(b) Each default on any of the Liabilities shall give rise to a
separate cause of action and separate suits may be brought hereunder as each
cause of action arises or, at Lender's option, any or all causes of action which
arise prior to or after any suit is commenced hereunder may be included in such
suit.
4. Representations. The Guarantor further represents to Lender, as an
inducement to making the Loan, that there is not pending or threatened any
litigation, arbitration, administrative or governmental proceeding against the
Guarantor which would in any way prohibit or impede the adoption, execution, or
performance of this Agreement by the Guarantor or which would affect any of the
undertakings herein; that compliance by the Guarantor with the Guarantor's
obligations under this Agreement has not resulted and will not result in the
violation of this Agreement or any agreement or other instrument to which the
Guarantor is a party or by which
<PAGE>
the Guarantor or any of the Guarantor's assets are bound; that this Agreement
and all actions contemplated to be taken by the Guarantor hereunder have been
duly authorized; and that this Agreement and such actions and undertakings are
valid and binding upon the Guarantor and enforceable against the Guarantor in
accordance with their terms.
5. Borrower's Actions. No encumbrance, assignment, leasing, subletting,
sale or other transfer by Borrower of any of Borrower's assets shall operate to
extinguish or diminish the liability of the Guarantor under this Agreement.
6. Bankruptcy. If Borrower files a petition for reorganization,
arrangement, composition or similar relief under any present or future provision
of the Federal Bankruptcy Code, or if such a petition is filed against Borrower
by any member or partner of Borrower, by Guarantor or by any person or entity
affiliated with, related to or in which a beneficial interest is owned by such
member or partner or Guarantor (each, a "Bankruptcy Event"), Guarantor shall,
from and after the date of such filing, absolutely, primarily, unconditionally
and irrevocably guarantee to Lender, its successors and assigns, the full,
prompt and absolute payment, performance, observance and discharge of all of
Borrower's obligations and liabilities arising under the Loan Documents,
including the repayment of all principal and interest under the Note and the
payment of all other sums payable by Borrower under the Loan Documents.
7. No Reliance. The Guarantor assumes the responsibility for being and
keeping itself informed of the financial condition of Borrower and of all other
circumstances bearing upon the risk of failure to pay, perform or discharge any
of the obligations and liabilities of Borrower which diligent inquiry would
reveal, and Lender shall have no duty to advise the Guarantor of information
known to Lender regarding such condition or any such circumstance.
8. Payment of Expenses. The Guarantor shall be responsible to Lender for
all expenses (including reasonable attorneys' fees), incurred by Lender in
enforcing any obligations of the Guarantor under this Agreement.
9. Successors and Assigns. All references to Lender and Guarantor shall be
deemed to include references to the successors and assigns of Lender and
Guarantor.
10. Governing Law. In all respects, including without limitation, matters
of construction and performance of this Agreement and the obligations arising
hereunder, this Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of Ohio applicable to contracts and
obligations made and performed in such state and any applicable laws of the
United States of America. Interpretation and construction of this Agreement
shall be according to the contents hereof and without presumption or standard of
construction in favor of or against Guarantor or Lender.
<PAGE>
11. Severability. If any term or provision of this Agreement or the
application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Agreement shall be valid and enforced to the fullest
extent permitted by law; provided, however, all rights, powers and remedies
provided herein may be exercised only to the extent that the exercise thereof
does not violate any applicable law, and are intended to be limited to the
extent necessary so that they will not render this Agreement invalid or
unenforceable under any applicable law.
12. No Waiver. The waiver of any provision of this Agreement by Lender
shall constitute a waiver of that provision on that occasion only, and shall not
constitute a waiver of any other provision of this Agreement, or that provision
with respect to any other occasion.
13. Commercial Transaction.
(a) TO INDUCE LENDER TO ENTER INTO THE COMMERCIAL LOAN TRANSACTION
EVIDENCED BY AND SECURED BY THE LOAN DOCUMENTS, GUARANTOR AGREES THAT THE SAID
TRANSACTION IS COMMERCIAL AND NOT A CONSUMER TRANSACTION.
(b) Each of the waivers set forth in this Agreement is made with
knowledge of its significance and consequences, and under the circumstances the
waivers are reasonable. If any of said waivers is determined to be contrary to
any applicable law or public policy, such waiver shall be effective only to the
maximum extent permitted by law.
14. Jury Trial. LENDER AND GUARANTOR HEREBY WAIVE THE RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER
OF THIS AGREEMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE
BY LENDER AND GUARANTOR, AND LENDER AND GUARANTOR ACKNOWLEDGE THAT NO PERSON
ACTING ON BEHALF OF ANOTHER PARTY TO THIS AGREEMENT HAS MADE ANY REPRESENTATIONS
OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR
NULLIFY ITS EFFECT. LENDER AND GUARANTOR FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN
REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF
THIS AGREEMENT AND IN THE MAKING OF ALL WAIVERS CONTAINED HEREIN BY INDEPENDENT
LEGAL COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND THAT LENDER AND GUARANTOR
HAVE HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.
<PAGE>
15. Consent to Jurisdiction. GUARANTOR HEREBY SUBMITS TO PERSONAL
JURISDICTION IN THE STATE OF OHIO FOR THE ENFORCEMENT OF THE PROVISIONS OF THIS
AGREEMENT AND IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO OBJECT TO SUCH
JURISDICTION FOR THE PURPOSES OF LITIGATION TO ENFORCE ANY PROVISION OF THIS
AGREEMENT. GUARANTOR HEREBY CONSENTS TO THE JURISDICTION OF AND AGREES THAT ANY
ACTION, SUIT OR PROCEEDING TO ENFORCE THIS AGREEMENT MAY BE BROUGHT IN ANY STATE
OR FEDERAL COURT IN THE STATE OF OHIO. GUARANTOR HEREBY IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY HAVE TO THE LAYING OF THE VENUE OF ANY SUCH ACTION, SUIT,
OR PROCEEDING IN ANY SUCH COURT AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM
THAT ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. EACH GUARANTOR HEREBY APPOINTS CT CORPORATION
AS THEIR AGENT FOR SERVICE OF PROCESS. GUARANTOR HEREBY CONSENTS THAT SERVICE OF
PROCESS IN ANY ACTION, SUIT OR PROCEEDING MAY BE MADE BY SERVICE UPON THE
AFORESAID AGENT FOR SERVICE OF PROCESS, BY PERSONAL SERVICE UPON THE PARTY BEING
SERVED, OR BY DELIVERY IN ACCORDANCE WITH THE NOTICE REQUIREMENTS OF SECTION 16
OF THIS AGREEMENT.
16. Notices. Any notice which any party hereto may be required or may
desire to give hereunder shall be delivered personally, or by overnight express
courier, addressed in the case of Guarantor to:
Penmoco, Inc., Servico Concord, Inc. and
Island Motel Enterprises, Inc.
Two Live Oak Center
3445 Peachtree Road, NE
Suite 700
Atlanta, Georgia 30326
with a copy to:
Stearns, Weaver, Miller, Weissler,
Alhadeff & Sitterson, P.A.
Museum Tower
150 West Flagler Street
Miami, Florida 33130
Attention: Robert Weissler, Esq.
in the case of Lender to:
Banc One Capital Funding Corporation
<PAGE>
150 East Gay Street, 24th Floor
Columbus, Ohio 43215
Attention: Loan Servicing
with a copy to:
Banc One Capital Markets, Inc.
150 East Gay Street, 24th Floor
Columbus, Ohio 43215
Attention: Legal Department and Real Estate Group
or at such other addresses or to the attention of such other persons as may from
time to time be designated by the party to be addressed by written notice to the
other in the manner herein provided. Notices, demands and requests given in the
manner aforesaid shall be deemed sufficiently served or given for all purposes
hereunder when received or when delivery is refused or when the same are
returned to sender for failure to be called for.
17. Miscellaneous.
(a) This Agreement may not be modified, altered or amended nor may
any provision hereof or rights hereunder be waived, except by an instrument in
writing signed by the person or entity against which such modification,
alteration, amendment or waiver is sought to be enforced.
(b) Except as provided in Section 6 above, this Agreement shall
terminate upon the irrevocable payment by Borrower to Lender of all amounts
evidenced by the Note and the other Loan Documents.
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this instrument to be duly
executed as of the date first written above.
GUARANTOR:
SERVICO CONCORD, INC.
a California corporation
By: /s/ Toni Jones
-------------------------------
Name: Toni Jones
Title: Vice President
ISLAND MOTEL ENTERPRISES, INC.
a Georgia corporation
By: /s/ Toni Jones
-------------------------------
Name: Toni Jones
Title: Vice President
PENMOCO, INC.
a Michigan corporation
By: /s/ Toni Jones
-------------------------------
Name: Toni Jones
Title: Vice President
<PAGE>
Exhibit 10.6.3
LIMITED GUARANTY AND INDEMNITY AGREEMENT
THIS LIMITED GUARANTY AND INDEMNITY AGREEMENT (this "Agreement"), made
effective as of the 8th day of December 1998, by LODGIAN, INC., a Delaware
corporation, with a principal place of business at Two Live Oak Center, 3445
Peachtree Road, NE, Suite 700, Atlanta, Georgia 30326 ("Guarantor"), to and for
the benefit of BANC ONE CAPITAL FUNDING CORPORATION, an Ohio corporation, having
an office at 150 East Gay Street, 24th Floor, Columbus, Ohio 43215 ("Lender")
RECITALS:
A. Lender and Lodgian AMI, Inc., a Maryland corporation ("Borrower"), have
entered into a Loan Agreement of even date herewith (as the same may be amended
from time to time, the "Loan Agreement") pursuant to which Lender has agreed to
make a loan to Borrower in the amount of up to $15,740,722 (the "Loan"), which
Loan is evidenced by that certain Promissory Note of even date herewith in the
principal amount of $13,851,835 (the "Primary Note") and that certain Promissory
Note of even date herewith in the principal amount of $1,888,887 (the
"Additional Note," and together with the Primary Note, the "Note"). The Loan is
secured by, inter alia, that certain Purchase Money Leasehold Deed of Trust and
Security Agreement of even date herewith from Borrower to Lender encumbering
Borrower's property commonly known as Holiday Inn International Airport, located
at 890 Elkridge Landing Road, Linthicum Heights, Maryland 21090 (the "Mortgage")
(the Note, the Loan Agreement, the Mortgage and every other document, instrument
and agreement evidencing or securing the Loan are hereinafter sometimes
collectively referred to as the "Loan Documents");
B. Borrower is a direct or indirect subsidiary of Guarantor;
C. Guarantor will directly benefit from the making of the Loan to
Borrower; and
D. Lender is unwilling to make the Loan without the execution and delivery
of this Agreement by Guarantor;
NOW, THEREFORE, to induce Lender to make the Loan and in consideration of
One Dollar ($1.00) and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Guarantor, intending to be legally
bound hereby, jointly and severally,
<PAGE>
agree as follows:
1. Liabilities.
(a) Notwithstanding any provision contained in the Note, the Loan
Agreement, the Mortgage or any other Loan Document to the contrary, Guarantor
hereby absolutely, primarily, unconditionally and irrevocably guarantees to
Lender, its successors and assigns, (i) the full, prompt and complete payment
and performance of all principal, interest, charges, fees and other monetary
obligations of Borrower under the Primary Note, provided, however, that upon
Renovation Completion and so long as no Event of Default then exists, such
obligation shall terminate and become null and void, and (ii) the full, prompt
and complete payment and performance of the Guaranteed Principal Amount (as
hereinafter defined) together with all interest, charges, fees and other
monetary obligations of Borrower under the Additional Note, and (iii) the full,
prompt and complete payment and performance of all obligations and liabilities
of Borrower arising under Section 8.19 (c) and (d) of the Loan Agreement and
Sections 2.10 and 4.13 of the Mortgage (all of which obligations and liabilities
are collectively hereinafter referred to as the "Liabilities"). The Guaranteed
Principal Amount shall mean the outstanding principal amount of the Primary Note
up to a maximum principal amount of Thirteen Million Three Hundred Fifty One
Thousand Eight Hundred and Thirty Five Dollars ($13,351,835). All terms used and
not otherwise defined herein shall have the meanings ascribed to them in the
Loan Agreement.
(b) The validity of this Agreement and the obligations of Guarantor
hereunder shall in no way be terminated, abated, affected or impaired by the
happening from time to time of any event or condition, including, without
limitation, any of the following: (i) the assertion or non-assertion by Lender
of any of the rights or remedies available to Lender pursuant to the provisions
of the Loan Documents or pursuant to any applicable statutes; (ii) the waiver by
Lender of, or the failure of Lender to enforce, or the lack of diligence by
Lender in connection with, the enforcement of any of its rights or remedies
under the Loan Documents; (iii) the granting by Lender of any indulgence or
extension of time; (iv) the exercise by Lender of any so-called self-help
remedies; (v) any other act, omission or conditions which might in any manner or
to any extent vary the risk to Guarantor or might otherwise operate as a
discharge or release of the Guarantor under applicable law; (vi) the invalidity
or unenforceability of all or any portion or provision of the Note; (vii) any
release or discharge of or accord and satisfaction with Borrower or any other
person or entity, by variation of the terms of the Note or otherwise; (viii) the
impairment, modification, change, release, discharge or limitation of the
liability of Borrower or the Guarantor or any of their estates in bankruptcy,
resulting from or pursuant to the application of the bankruptcy or insolvency
laws of or any decision of any court of the United States or any state thereof;
(ix) any present or future law or order of any government (de jure or de facto)
or of any agency thereof purporting to reduce, amend or otherwise affect the
Liabilities or to vary any terms of payment, satisfaction or discharge thereof;
(x) the waiver, compromise, settlement,
<PAGE>
release, extension, amendment, change, modification or termination of the terms
of the Liabilities or any or all of the obligations, covenants or agreements of
Borrower under the Loan Documents (except by satisfaction in full of all
Liabilities) or of the Guarantor under this Agreement; (xi) the extension of the
time for satisfaction, discharge or payment of the Liabilities or any part
thereof owing or payable by Borrower under the Loan Documents or of the time for
performance of any other obligations, covenants or agreements under or arising
out of this Agreement or the extension or renewal of any thereof; (xii) the
existence of any other guaranty of the Liabilities in favor of Lender, or the
enforcement or attempted enforcement of such other guaranty; and (xiii) any
event or action that would in the absence of this paragraph result in the
release or discharge of the Guarantor from the performance or observance of any
obligation, covenant or agreement contained in this Agreement or any other
agreement.
2. Waivers. The Guarantor hereby waives all notice of any default in the
payment of or non-performance of any Liabilities, all protest, demands, notices
or presentments of any kind, notice of any acceptance of this Agreement and all
matters and rights which may be raised in avoidance of, or in defense against,
any action to enforce the obligations of the Guarantor hereunder; provided,
however, that nothing herein shall waive the Guarantor's right to assert payment
or performance of any Liabilities as a defense to a claim relating to such
Liabilities under this Agreement, to the extent of such payment or performance.
The Guarantor hereby waives any and all suretyship defenses or defenses in the
nature thereof without in any manner limiting any other provisions of this
Agreement. Notwithstanding anything to the contrary contained herein, the
Guarantor hereby irrevocably waives all rights the Guarantor may have at law or
in equity, including, without limitation, any law subrogating the Guarantor to
the rights of Lender, to seek contribution, indemnification or any other form of
reimbursement from Borrower and any other person now or hereafter primarily or
secondarily liable for any obligations of Borrower to Lender, including without
limitation, the Liabilities, for any payment or performance made by the
Guarantor under or in connection with this Agreement, unless and until
irrevocable payment in full of the Note has been received by Lender.
3. Primary Liability.
(a) The Guarantor's liability under this Agreement shall be primary,
and with respect to any right of action which shall accrue to Lender relating to
any Liabilities, Lender may at its sole option and without notice or demand,
proceed directly against the Guarantor without having proceeded against Borrower
or any other person or entity liable to any extent for any of the Liabilities or
against the collateral under the Loan Documents. The Guarantor's liability
hereunder shall continue without regard to whether or not Lender may have
instituted or prosecuted or obtained or realized any judgment in any suit,
action or proceeding or shall have exhausted any of its remedies or taken any
steps to enforce any of its rights under or pursuant to the Loan Documents or at
law or in equity, or otherwise, and without regard to any other condition or
contingency, so long as any of the Liabilities remains unsatisfied to any
extent. This
<PAGE>
Agreement is an agreement of payment and performance and not merely of
collection.
(b) Each default on any of the Liabilities shall give rise to a
separate cause of action and separate suits may be brought hereunder as each
cause of action arises or, at Lender's option, any or all causes of action which
arise prior to or after any suit is commenced hereunder may be included in such
suit.
4. Representations. The Guarantor further represents to Lender, as an
inducement to making the Loan, that there is not pending or threatened any
litigation, arbitration, administrative or governmental proceeding against the
Guarantor which would in any way prohibit or impede the adoption, execution, or
performance of this Agreement by the Guarantor or which would affect any of the
undertakings herein; that compliance by the Guarantor with the Guarantor's
obligations under this Agreement has not resulted and will not result in the
violation of this Agreement or any agreement or other instrument to which the
Guarantor is a party or by which the Guarantor or any of the Guarantor's assets
are bound; that this Agreement and all actions contemplated to be taken by the
Guarantor hereunder have been duly authorized; and that this Agreement and such
actions and undertakings are valid and binding upon the Guarantor and
enforceable against the Guarantor in accordance with their terms.
5. Borrower's Actions. No encumbrance, assignment, leasing, subletting,
sale or other transfer by Borrower of any of Borrower's assets shall operate to
extinguish or diminish the liability of the Guarantor under this Agreement.
6. Bankruptcy. If Borrower files a petition for reorganization,
arrangement, composition or similar relief under any present or future provision
of the Federal Bankruptcy Code, or if such a petition is filed against Borrower
by any member or partner of Borrower, by Guarantor or by any person or entity
affiliated with, related to or in which a beneficial interest is owned by such
member or partner or Guarantor (each, a "Bankruptcy Event"), Guarantor shall,
from and after the date of such filing, absolutely, primarily, unconditionally
and irrevocably guarantee to Lender, its successors and assigns, the full,
prompt and absolute payment, performance, observance and discharge of all of
Borrower's obligations and liabilities arising under the Loan Documents,
including the repayment of all principal and interest under the Note and the
payment of all other sums payable by Borrower under the Loan Documents.
7. No Reliance. The Guarantor assumes the responsibility for being and
keeping itself informed of the financial condition of Borrower and of all other
circumstances bearing upon the risk of failure to pay, perform or discharge any
of the obligations and liabilities of Borrower which diligent inquiry would
reveal, and Lender shall have no duty to advise the Guarantor of information
known to Lender regarding such condition or any such circumstance.
<PAGE>
8. Payment of Expenses. The Guarantor shall be responsible to Lender for
all expenses (including reasonable attorneys' fees), incurred by Lender in
enforcing any obligations of the Guarantor under this Agreement.
9. Successors and Assigns. All references to Lender and Guarantor shall be
deemed to include references to the successors and assigns of Lender and
Guarantor.
10. Governing Law. In all respects, including without limitation, matters
of construction and performance of this Agreement and the obligations arising
hereunder, this Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of Ohio applicable to contracts and
obligations made and performed in such state and any applicable laws of the
United States of America. Interpretation and construction of this Agreement
shall be according to the contents hereof and without presumption or standard of
construction in favor of or against Guarantor or Lender.
11. Severability. If any term or provision of this Agreement or the
application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Agreement shall be valid and enforced to the fullest
extent permitted by law; provided, however, all rights, powers and remedies
provided herein may be exercised only to the extent that the exercise thereof
does not violate any applicable law, and are intended to be limited to the
extent necessary so that they will not render this Agreement invalid or
unenforceable under any applicable law.
12. No Waiver. The waiver of any provision of this Agreement by Lender
shall constitute a waiver of that provision on that occasion only, and shall not
constitute a waiver of any other provision of this Agreement, or that provision
with respect to any other occasion.
13. Commercial Transaction.
(a) TO INDUCE LENDER TO ENTER INTO THE COMMERCIAL LOAN TRANSACTION
EVIDENCED BY AND SECURED BY THE LOAN DOCUMENTS, GUARANTOR AGREES THAT THE SAID
TRANSACTION IS COMMERCIAL AND NOT A CONSUMER TRANSACTION.
(b) Each of the waivers set forth in this Agreement is made with
knowledge of its significance and consequences, and under the circumstances the
waivers are reasonable. If any of said waivers is determined to be contrary to
any applicable law or public policy, such waiver shall be effective only to the
maximum extent permitted by law.
<PAGE>
14. Jury Trial. LENDER AND GUARANTOR HEREBY WAIVE THE RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER
OF THIS AGREEMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE
BY LENDER AND GUARANTOR, AND LENDER AND GUARANTOR ACKNOWLEDGE THAT NO PERSON
ACTING ON BEHALF OF ANOTHER PARTY TO THIS AGREEMENT HAS MADE ANY REPRESENTATIONS
OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR
NULLIFY ITS EFFECT. LENDER AND GUARANTOR FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN
REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF
THIS AGREEMENT AND IN THE MAKING OF ALL WAIVERS CONTAINED HEREIN BY INDEPENDENT
LEGAL COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND THAT LENDER AND GUARANTOR
HAVE HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.
15. Consent to Jurisdiction. GUARANTOR HEREBY SUBMITS TO PERSONAL
JURISDICTION IN THE STATE OF OHIO FOR THE ENFORCEMENT OF THE PROVISIONS OF THIS
AGREEMENT AND IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO OBJECT TO SUCH
JURISDICTION FOR THE PURPOSES OF LITIGATION TO ENFORCE ANY PROVISION OF THIS
AGREEMENT. GUARANTOR HEREBY CONSENTS TO THE JURISDICTION OF AND AGREES THAT ANY
ACTION, SUIT OR PROCEEDING TO ENFORCE THIS AGREEMENT MAY BE BROUGHT IN ANY STATE
OR FEDERAL COURT IN THE STATE OF OHIO. GUARANTOR HEREBY IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY HAVE TO THE LAYING OF THE VENUE OF ANY SUCH ACTION, SUIT,
OR PROCEEDING IN ANY SUCH COURT AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM
THAT ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. EACH GUARANTOR HEREBY APPOINTS CT CORPORATION
AS THEIR AGENT FOR SERVICE OF PROCESS. GUARANTOR HEREBY CONSENTS THAT SERVICE OF
PROCESS IN ANY ACTION, SUIT OR PROCEEDING MAY BE MADE BY SERVICE UPON THE
AFORESAID AGENT FOR SERVICE OF PROCESS, BY PERSONAL SERVICE UPON THE PARTY BEING
SERVED, OR BY DELIVERY IN ACCORDANCE WITH THE NOTICE REQUIREMENTS OF SECTION 16
OF THIS AGREEMENT.
16. Notices. Any notice which any party hereto may be required or may
desire to give hereunder shall be delivered personally, or by overnight express
courier, addressed in the case of Guarantor to:
Lodgian, Inc.
Two Live Oak Center
3445 Peachtree Road, NE
Suite 700
<PAGE>
Atlanta, Georgia 30326
with a copy to:
Stearns, Weaver, Miller, Weissler,
Alhadeff & Sitterson, P.A.
Museum Tower
150 West Flagler Street
Miami, Florida 33130
Attention: Robert Weissler, Esq.
in the case of Lender to:
Banc One Capital Funding Corporation
150 East Gay Street, 24th Floor
Columbus, Ohio 43215
Attention: Loan Servicing
with a copy to:
Banc One Capital Markets, Inc.
150 East Gay Street, 24th Floor
Columbus, Ohio 43215
Attention: Legal Department and Real Estate Group
or at such other addresses or to the attention of such other persons as may from
time to time be designated by the party to be addressed by written notice to the
other in the manner herein provided. Notices, demands and requests given in the
manner aforesaid shall be deemed sufficiently served or given for all purposes
hereunder when received or when delivery is refused or when the same are
returned to sender for failure to be called for.
17. Miscellaneous.
(a) This Agreement may not be modified, altered or amended nor may
any provision hereof or rights hereunder be waived, except by an instrument in
writing signed by the person or entity against which such modification,
alteration, amendment or waiver is sought to be enforced.
(b) Except as provided in Section 6 above, this Agreement shall
terminate upon the irrevocable payment by Borrower to Lender of all amounts
evidenced by the Note and the other Loan Documents.
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this instrument to be duly
executed as of the date first written above.
GUARANTOR:
LODGIAN, INC., a Delaware corporation
By: /s/ Toni Jones
-------------------------------
Name: Toni Jones
Title: Vice President
<PAGE>
Exhibit 10.7.1
================================================================================
LOAN AGREEMENT
between
GMAC COMMERCIAL MORTGAGE CORPORATION
Lender
and
SERVICO COUNCIL BLUFFS, INC., SERVICO WEST DES MOINES, INC.,
SERVICO OMAHA, INC., SERVICO OMAHA CENTRAL, INC.
and SERVICO WICHITA, INC.
Borrowers
Dated: as of July 18, 1996
Property Locations:
---------------------------------------------------------------
Best Western Holiday Inn - Wichita Airport
3537 West Broadway 5500 West Kellogg
Council Bluffs, Iowa 51501 Wichita, Kansas 67209
---------------------------------------------------------------
Best Western Sheraton Inn
11040 Hickman Rd. at I-80 4888 South 118 Street at I-80
West Des Moines, Iowa 50325 Omaha, Nebraska 68137
---------------------------------------------------------------
Best Western Central
3702 South 72nd Street at I-80
Omaha, Nebraska 68124
---------------------------------------------------------------
Shapiro, Shapses, Block & Stachenfeld LLP
156 West 56th Street
19th Floor
New York, New York 10019
Jill D. Block, Esq.
================================================================================
<PAGE>
TABLE OF CONTENTS
Section Page
1. DEFINED TERMS .......................................................... 1
2. PAYMENT OF DEBT; INCORPORATION OF COVENANTS, CONDITIONS AND AGREEMENTS . 6
3. WARRANTY OF TITLE ...................................................... 6
4. INSURANCE .............................................................. 7
5. PAYMENT OF TAXES ....................................................... 11
6. TAX AND INSURANCE ESCROW FUND .......................................... 11
7. REPLACEMENT RESERVE; REPAIR, CORE MODERNIZATION IMPROVEMENT ESCROWS .... 12
8. CONDEMNATION ........................................................... 13
9. LEASES AND RENTS ....................................................... 15
10. REPRESENTATIONS CONCERNING LOAN ....................................... 16
11. SINGLE PURPOSE ENTITY; AUTHORIZATION .................................. 18
12. MAINTENANCE OF MORTGAGED PROPERTY ..................................... 19
13. TRANSFER OR ENCUMBRANCE OF THE MORTGAGED PROPERTY ..................... 20
14. ESTOPPEL CERTIFICATES; AFFIDAVITS ..................................... 22
15. CHANGES IN THE LAWS REGARDING TAXATION ................................ 22
16. NO CREDITS ON ACCOUNT OF THE DEBT ..................................... 23
17. DOCUMENTARY STAMPS .................................................... 23
18. CONTROLLING AGREEMENT ................................................. 23
19. BOOKS AND RECORDS ..................................................... 23
20. PERFORMANCE OF OTHER AGREEMENTS ....................................... 24
21. FURTHER ASSURANCES; RIGHT TO SPLIT THE LOAN ........................... 24
22. RECORDING OF MORTGAGE ................................................. 25
23. REPORTING REQUIREMENTS ................................................ 25
24. EVENTS OF DEFAULT ..................................................... 26
25. LATE PAYMENT CHARGE ................................................... 27
i
<PAGE>
26. RIGHT TO CURE DEFAULTS ................................................ 28
27. REMEDIES .............................................................. 28
28. RIGHT OF ENTRY ........................................................ 31
29. SECURITY AGREEMENT .................................................... 31
30. ACTIONS AND PROCEEDINGS ............................................... 32
31. WAIVER OF SETOFF AND COUNTERCLAIM ..................................... 32
32. CONTEST OF CERTAIN CLAIMS ............................................. 32
33. RECOVERY OF SUMS REQUIRED TO BE PAID .................................. 33
34. MARSHALLING AND OTHER MATTERS ......................................... 33
35. HAZARDOUS SUBSTANCES .................................................. 33
36. ASBESTOS .............................................................. 34
37. ENVIRONMENTAL MONITORING .............................................. 35
38. MANAGEMENT OF THE HOTEL ............................................... 35
39. HANDICAPPED ACCESS .................................................... 37
40. ERISA.................................................................. 38
41. INDEMNIFICATION ....................................................... 38
42. NOTICE ................................................................ 39
43. AUTHORITY ............................................................. 39
44. WAIVER OF NOTICE ...................................................... 39
45. REMEDIES OF BORROWER .................................................. 39
46. SOLE DISCRETION OF LENDER ............................................. 40
47. NON-WAIVER ............................................................ 40
48. NO ORAL CHANGE ........................................................ 40
49. LIABILITY ............................................................. 40
50. INAPPLICABLE PROVISIONS ............................................... 41
51. SECTION HEADINGS ...................................................... 41
52. COUNTERPARTS .......................................................... 41
ii
<PAGE>
53. CERTAIN DEFINITIONS ................................................... 41
54. HOMESTEAD ............................................................. 41
55. ASSIGNMENTS ........................................................... 41
56. SUBMISSION TO JURISDICTION ............................................ 41
57. AGENT FOR RECEIPT OF PROCESS .......................................... 42
58. SERVICE OF PROCESS .................................................... 42
59. WAIVER OF JURY TRIAL .................................................. 42
60. CHOICE OF LAW ......................................................... 42
61. RELEASE OF PORTIONS OF THE MORTGAGED PROPERTY ......................... 43
62. LIMITATIONS ON RECOURSE ............................................... 43
63. CASH MANAGEMENT ARRANGEMENTS .......................................... 43
iii
<PAGE>
LOAN AGREEMENT
This LOAN AGREEMENT dated as of July 18, 1996, between SERVICO
COUNCIL BLUFFS, INC., an Iowa corporation, SERVICO WEST DES MOINES, INC., an
Iowa corporation, SERVICO OMAHA, INC., a Nebraska corporation, SERVICO OMAHA
CENTRAL, INC., a Nebraska corporation, and SERVICO WICHITA, INC., a Kansas
corporation, each having its principal place of business at c/o Servico, Inc.,
1601 Belvedere Road, West Palm Beach, Florida 33406 (collectively, "Borrower"),
and GMAC COMMERCIAL MORTGAGE CORPORATION, a California corporation, having an
address at 8614 Westwood Center Drive, Suite 630, Vienna, Virginia 22182
("Lender").
WITNESSETH:
WHEREAS, Lender is concurrently herewith making a loan to Borrower
in the original principal amount of $16,840,000.00 (the "Loan") secured by a
mortgage lien on, and security interest in, Borrower'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 a certain Mortgage Note dated the
date hereof made by Borrower in favor of Lender (the "Note") and secured by,
among other things, 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 to Lender (individually or
collectively as the context may require, the "Mortgage"; the Note, the Mortgage,
this Agreement and all other documents executed or delivered in connection with
the Loan, collectively, the "Loan Documents"); and
WHEREAS, Lender and Borrower 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.
(b) "Asbestos" has the meaning set forth in Section 36 hereof.
(c) "Assignment" has the meaning set forth in Section 2 hereof.
(d) "Borrower" has the meaning set forth in the preamble to this
Agreement.
(e) "Cash Management Agreement" has the meaning set forth in Section
11 hereof.
(f) "Collateral" has the meaning set forth in Section 29 hereof.
(g) "Condemnation" has the meaning set forth in Section 8 hereof.
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(h) "Core Modernization Escrow" has the meaning set forth in Section
7 hereof.
(i) "Debt" means the outstanding principal balance of the Note from
time to time, with all accrued and unpaid interest thereon, and all other sums
now or hereafter due under the Loan Documents.
(j) "Debt Service Coverage Ratio" shall mean the ratio of: (i) the
NOI produced by the operation of the Mortgaged Property during the 12 calendar
month period ending one month prior to the month immediately preceding the
calculation (regardless of whether Borrower owned the Mortgaged Property for
such 12-month period) to (ii) the payments of principal and interest due under
this Loan Agreement and the Note for the 12 calendar month period immediately
following the calculation (or imputed for such period if such payments have
actually accrued for less than 12 calendar months).
(k) "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.
(l) "Environmental Agreement" has the meaning set forth in Section 2
hereof.
(m) "Environmental Laws" has the meaning set forth in Section 35
hereof.
(n) "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 Borrower, or in which
Borrower 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 Borrower, or in which Borrower 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 Premises and the Improvements.
(o) "ERISA" has the meaning set forth in Section 40 hereof.
(p) "Event of Default" has the meaning set forth in Section 24
hereof.
(q) "Expenses" means the aggregate of the following items actually
incurred by Borrower, whether or not paid, during the 12 month period ending one
month prior to the date on which the NOI is to be calculated (except that
reserves set forth in subsection (viii) below shall be adjusted by Lender
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to reflect projected adjustments for the subsequent 12 month period beginning on
the date on which the NOI is to be calculated):
(i) Taxes and Other Charges (but specifically excluding
income tax);
(ii) personal property taxes;
(iii) management fees of four (4%) percent of the gross income
derived from the operation of the Mortgaged Property and disbursements;
(iv) wages, salaries, pension costs and all fringe and other
employee-related benefits and expenses;
(v) franchise fees and other fees due under the Franchise
Agreement;
(vi) Insurance Premiums;
(vii) the cost of utilities, and all other administrative,
management, ownership, operating, leasing and maintenance expenses
incurred in connection with the operation of the Mortgaged Property;
(viii) the cost of necessary repair of existing improvements
on the Mortgaged Property with repairs necessary to maintain the Mortgaged
Property to the same standards as competitive properties of similar size
and location to the Mortgaged Property or that are required under the
Franchise Agreement, together with adequate reserves for the repair of
capital improvements on the Mortgaged Property, not to exceed four (4%)
percent of gross income from the Mortgaged Property;
(ix) the cost of any other maintenance materials, heating,
ventilation and air conditioning (HVAC) repairs, parts and supplies, and
equipment; and
(x) all ordinary and customary expenses duly and appropriately
incurred in connection with the use and operation of the Mortgaged
Property but specifically excluding depreciation and other similar
non-cash items, distributions of earnings to members, partners or
shareholders of the entities comprising Borrower and debt service payable
in respect of the Loan and any other indebtedness of Borrower.
(r) "Franchise Agreement" means, collectively, the franchise
agreements set forth on Schedule A hereto, or any permitted successor or
replacement franchise agreement, pursuant to which Borrower has the right to
operate the hotel located on the Mortgaged Property under a name and/or hotel
system controlled by such franchisor.
(s) "Franchisor" means, for each of the individual hotels comprising
the Mortgaged Property, the franchisor under the respective Franchise Agreement.
(t) "Guarantor" means any guarantor of all or any part of the Debt.
(u) "Hazardous Substances" has the meaning set forth in Section 35
hereof.
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(v) "Improvements" means the buildings, structures, fixtures,
additions, enlargements, extensions, modifications, repairs, replacements and
improvements now or hereafter located on the Premises.
(w) "Insurance Premiums" has the meaning set forth in Section 4(d)
hereof.
(x) "Insured Casualty" has the meaning set forth in Section 4(e)(ii)
hereof.
(y) "Intangibles" means, without limitation, all of Borrower's
right, title and interest in and to all accounts, 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.
(z) "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.
(an) "Lender" has the meaning set forth in the preamble to this
Agreement.
(bb) "Loan" has the meaning set forth in the recitals of this
Agreement.
(cc) "Loan Documents" has the meaning set forth in the recitals of
this Agreement.
(dd) "Loan-to-Value Ratio" means the ratio of: (i) the Debt, plus
all other debt (or other liquidated economic obligations) which are then
outstanding and secured by the 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).
(ee) "Management Agreement" means, collectively, the Consulting
Agreements more particularly set forth on Schedule A hereto pursuant to which
the managers identified therein operate the Mortgaged Property as hotels.
(ff) "Maturity Date" means the Maturity Date (as such term is
defined in the Note).
(gg) "Mortgage" has the meaning set forth in the recitals of this
Agreement.
(hh) "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,
Condemnation awards, insurance proceeds, tradenames, trademarks,
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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, plans, specifications
and other documents, now or hereafter entered into, and all proceeds,
substitutions and replacements thereof.
(ii) "NOI" means the gross income derived from the operation of the
Mortgaged Property less Expenses. NOI shall include Rents and such other income,
including any rent loss, business interruption or business income insurance
proceeds, vending or concession income, late fees, forfeited security deposits
and other miscellaneous tenant charges, and Expenses booked during the period
for 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 generally accepted accounting principles consistently applied.
(jj) "Note" has the meaning set forth in the recitals of this
Agreement.
(kk) "O&M Plan" has the meaning set forth in Section 36 hereof.
(ll) "Other Charges" has the meaning set forth in Section 5 hereof.
(mm) "Policies" has the meaning set forth in Section 4(d) hereof.
(nn) "Premises" means, collectively, the real property comprising
the Mortgaged Property, more particularly described on Exhibits A to each of
instruments comprising the Mortgage.
(oo) "Release Conditions" means, immediately following the proposed
release of a portion of the Mortgaged Property as provided herein: (i) the Debt
Service Coverage Ratio with respect to the remaining Mortgaged Property is
projected to be not less than 1.65:1; and (ii) the Loan-to-Value Ratio with
respect to the remaining Mortgaged Property, expressed as a percentage, is not
more than sixty (60%) percent.
(pp) "Remedial Work" has the meaning set forth in Section 37 hereof.
(qq) "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 personally located thereon, or rendering of services by
Borrower 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.
(rr) "Repair Agreement" has the meaning set forth in Section 7
hereof.
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(ss) "Repair Escrow" has the meaning set forth in Section 7 hereof.
(tt) "Replacement Agreement" has the meaning set forth in Section 7
hereof.
(uu) "Replacement Reserve" has the meaning set forth in Section 7
hereof.
(vv) "Securities" has the meaning set forth in Section 21 hereof.
(ww) "Tax and Insurance Escrow Fund" has the meaning set forth in
Section 6 hereof.
(xx) "Taxes" has the meaning set forth in Section 5 hereof.
(yy) "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.
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; (ii) next, to required deposits to the
Replacement Reserve as provided in the Replacement Agreement; (iii) next, to
reimburse Lender for any unpaid costs and expenses incurred by Lender on
Borrower's behalf; (iv) next, to accrued and unpaid interest on the Loan; and
(v) last, to the reduction of the principal balance of the Loan; 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 Borrower to Lender (the "Assignment"), the Environmental
Indemnity Agreement dated as of the date hereof among Lender, Borrower and
Servico, Inc. (the "Environmental Agreement") 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.
3. Warranty of Title
Borrower represents and warrants that Borrower has good, marketable
and insurable fee simple title to the Premises 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 Borrower possesses an
unencumbered fee estate in the Premises and the Improvements, and 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, 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.
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4. Insurance
(a) Borrower, at its sole cost and expense, will keep the Mortgaged
Property insured during the entire term of this Agreement for the mutual benefit
of Borrower 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 nonconforming
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 Borrower a co-insurer under such
policies. The deductible in respect of such insurance shall be reasonably
satisfactory to Lender. From time to time, upon Lender's request, Borrower 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) Borrower shall also obtain and maintain during the entire term
of this Agreement, at its sole cost and expense, for the mutual benefit of
Borrower 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 (and any amendment or successor act
thereto) in an amount at least equal to the lesser of: (A) the outstanding
principal amount of the Note; 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 one year 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
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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 12 months
from the date of the loss, whichever first occurs, and notwithstanding
that the policy may expire prior to the end of such period; and (D) in an
amount equal to the sum of Expenses and NOI, in each case for the
preceding full calendar year. 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 Borrower'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 Borrower, 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) Borrower's personnel; (B) any employees
of outside firms that provided appraisal, legal, data processing, or other
services for Borrower; and (C) temporary contract employees or student
interns.
(ix) Earthquake insurance (including subsidence), if the
Mortgaged Property is located in an earthquake prone region 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) Borrower 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
F.W. Dodge Building Index 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.
(d) All policies of insurance required pursuant to this Section
(collectively, the "Policies") shall: (i) be issued by an insurer with an
investment grade rating for claims paying ability by Moody's Investors Service,
Inc., Standard & Poor's Rating Group, Fitch Investor Service and Duff &
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Phelps, Inc., if rated; (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 Borrower, 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. Borrower
shall pay the premiums for the Policies (the "Insurance Premiums") as they
become due and payable. Not later than 10 days prior to the expiration date of
each of the Policies, Borrower will deliver to Lender satisfactory evidence of
the renewal of each Policy.
(e) If the Mortgaged Property shall be damaged or destroyed, in
whole or in part, by fire or other casualty, Borrower 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 Borrower 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 Borrower 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 $100,000.00 such
proceeds shall be paid to Borrower 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 Borrower 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 $100,000.00 where: (A) the proceeds of insurance are sufficient to
enable Borrower to fully restore the Mortgaged Property (or Borrower
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, Borrower's business interruption insurance
(or other similar insurance) shall be sufficient to fully cover the period
that the Mortgaged Property is undergoing restoration (or Borrower
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 .6:1.0; (E) the Franchise Agreement has not
been, and cannot be, terminated as a result of the Insured Casualty; (F)
the restoration can be completed within 18 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 (H) the Debt Service Coverage
Ratio upon completion is reasonably anticipated to be at least 1.65:1,
then, if no Event of Default shall have occurred and be continuing, the
proceeds of insurance shall be paid to Borrower 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
Borrower 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
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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
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 Borrower 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. Any such
application to the Debt shall not be considered a voluntary prepayment requiring
payment of the prepayment consideration provided in the Note, except that if an
Event of Default, or an event which, with notice and/or the passage of time, or
both, would constitute an Event of Default, has occurred, then such application
shall be subject to the prepayment consideration computed in accordance with the
Note, if any. 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 Borrower for the restoring, repairing, replacing or rebuilding of
the Mortgaged Property, Borrower 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 Borrower 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.
(v) In the event Borrower 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 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 Borrower 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
Borrower is not then in default of its obligations under the Loan Documents.
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(f) Borrower 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 Borrower and Lender, as
their respective interests may appear, and shall be subject to all other
provisions of this Section.
5. Payment of Taxes
Borrower 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. Borrower
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. Borrower 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. Borrower shall furnish to
Lender or its designee receipts for the payment of the Taxes prior to the date
the such obligations shall become delinquent. Borrower 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
Borrower 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 and Insurance Escrow Fund
(a) Borrower 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) 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"). 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
Borrower to Lender. Borrower 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 Borrower
pursuant to Sections 4 and 5 hereof. Provided that sufficient funds are then
available to pay the current Taxes, 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 Borrower 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, Borrower 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
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and Insurance Escrow Fund shall not constitute a trust fund and may be
commingled with other monies held by Lender. No earnings or interest on the Tax
and Insurance Escrow Fund shall be payable to Borrower.
(b) Anything to the contrary contained herein notwithstanding,
Borrower shall be required to make the payments described in clause (ii) of
subsection (a) of this Section only upon Borrower's failure to maintain the
insurance required pursuant to Section 4 hereof or to furnish evidence of
payment as provided in Section 4 hereof.
7. Replacement Reserve; Repair, Core Modernization Improvement
Escrows
(a) Lender has this day established an interest bearing reserve
account at a federally insured institution (the "Replacement Reserve"), the
balance of which shall be maintained and disbursed in accordance with the
Replacement Reserve Agreement dated as of the date hereof between Borrower and
Lender (the "Replacement Agreement"). As more particularly set forth in the
Replacement Agreement, Borrower shall deposit monthly with Lender an amount
equal to one-twelfth of four (4%) percent of the gross income derived from the
Mortgaged Property during the preceding fiscal year. For the remaining portion
of Borrower's current fiscal year, Borrower shall deposit $45,131.65 monthly
into the Replacement Reserve. Notwithstanding anything to the contrary in this
Section, in no event shall the monthly payments in respect of the Replacement
Reserve ever fall below $45,131.65 as more particularly set forth in the
Replacement Agreement. Borrower hereby pledges to Lender any and all monies now
or hereafter deposited in the Replacement Reserve as additional security for the
payment of the Debt. All earnings or interest on the Replacement Reserve shall
be and become part of such Replacement Reserve and shall be disbursed as
provided in the Replacement Agreement and in this Section.
(b) Borrower has this day deposited with Lender, and Lender has this
day established, an interest bearing escrow account at a federally insured
institution the sum of $278,600.00 (the "Repair Escrow") to be maintained and
disbursed in accordance with the Repair Escrow Agreement dated as of the date
hereof between Borrower and Lender (the "Repair Agreement"). Borrower hereby
pledges to Lender any and all monies now or hereafter deposited in the Repair
Escrow as additional security for the payment of the Debt. All earnings or
interest on the Repair Escrow shall be and become part of such Repair Escrow and
shall be disbursed as provided in the Repair Agreement and in this Section.
(c) Borrower has this day deposited $3,361,705.00 with Lender, and
Lender has this day established, an interest bearing escrow account at a
federally insured institution (the "Core Modernization Escrow") to be maintained
and disbursed for core modernization improvements in accordance with the Repair
Agreement. Borrower hereby pledges to Lender any and all monies now or hereafter
deposited in the Core Modernization Escrow as additional security for the
payment of the Debt. All earnings or interest on the Core Modernization Escrow
shall be and become part of such Core Modernization Escrow and shall be
disbursed as provided in the Repair Agreement and in this Section.
(d) Funds on deposit with Lender shall be invested in direct
obligations of, or obligations fully guaranteed as to payment of principal and
interest by, the United States or any agency or instrumentality thereof,
provided that such obligations are backed by the full faith and credit of the
United States of America, or are fully FDIC-insured demand and time deposits.
Lender shall exercise best efforts to direct such investments to obtain for
Borrower the highest rate of return, given the amounts available for investment
and Borrower's timing requirements as communicated to Lender for access to the
funds.
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8. Condemnation
(a) Borrower 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
Borrower'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), Borrower
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.
(i) In the case of a Condemnation, Lender may participate in
the settlement and adjustment of any claim; provided, however, that
Borrower 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 $100,000.00 such award shall be paid to Borrower for the cost of
restoring, repairing, replacing or rebuilding the Mortgaged Property or
the part thereof subject to the Condemnation, as provided below, and
Borrower 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 $100,000.00
where: (A) the Condemnation award or proceeds are sufficient to enable
Borrower to fully restore the Mortgaged Property (or Borrower 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, Borrower's business interruption insurance (or
other similar insurance) shall be sufficient to fully cover the period
that the Mortgaged Property is undergoing restoration (or Borrower
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 .6:1.0; (E) the Franchise Agreement has not
been, and cannot be, terminated as a result of the Condemnation; (F) the
restoration can be completed within 18 months from the date that the
Condemnation 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 (H) the Debt Service Coverage
Ratio upon completion is reasonably anticipated to be at least 1.65:1,
then, if
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no Event of Default shall have occurred and be continuing, the
Condemnation award or proceeds shall be paid to Borrower 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
Borrower 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 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 Borrower 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. Any such application to the Debt shall not be considered a
voluntary prepayment requiring payment of the prepayment consideration
provided in the Note, except that if an Event of Default, or an event
which, with notice and/or the passage of time, or both, would constitute
an Event of Default, has occurred, then such application shall be subject
to the prepayment consideration computed in accordance with the Note, if
any. 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 Borrower for the restoring, repairing,
replacing or rebuilding of the Mortgaged Property, Borrower 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 Borrower 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.
(v) In the event Borrower 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 Borrower 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
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restoration, repair, replacement or rebuilding shall be delivered to
Borrower, provided such restoration was performed in accordance with the
provisions of this Section, and Borrower is not then in default of its
obligations under the Loan Documents.
9. Leases and Rents
(a) In connection with the Loan, Borrower has absolutely and
unconditionally assigned to Lender all of Borrower'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. Borrower 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 Borrower a revocable license to operate and manage the Mortgaged
Property and to collect the Rents. Borrower shall hold the Rents, 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 Borrower shall automatically be
revoked, and Lender shall immediately be entitled to possession of all Rents,
whether or not Lender enters upon or takes control of the Mortgaged Property.
Lender is hereby granted and assigned by Borrower 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. Any
Rents 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) Borrower shall furnish Lender with executed copies of all Leases
for space in excess of 2,000 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 2,000 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 shall provide that they are subordinate to the
Mortgage and that the lessee agrees to attorn to Lender. Borrower shall: (A)
observe and perform all the obligations imposed upon the lessor under the Leases
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 Borrower 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 (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, (E) not
execute any 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 cancelled 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
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terms as the cancelled 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, 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
2,000 square feet.
(c) All security deposits of lessees in excess of $5,000.00, whether
held in cash or any other form, shall not be commingled with any other funds of
Borrower and, if cash, shall be deposited by Borrower at such commercial or
savings bank or banks as may be reasonably satisfactory to Lender. Any bond or
other instrument which Borrower 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. Borrower shall, upon request, provide Lender
with evidence reasonably satisfactory to Lender of Borrower's compliance with
the foregoing. Following the occurrence and during the continuance of any Event
of Default, Borrower 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.
(d) Anything herein to the contrary notwithstanding, Lender's
consent shall not be required for any modification, amendment or termination of
the Lease to Bleu Ox, Inc. affecting the restaurant space at the Mortgaged
Property located in Council Bluffs, Iowa.
10. Representations Concerning Loan
Borrower 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 Borrower, 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.
(b) To the best of Borrower'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 Borrower's knowledge,
threatened for the total or partial condemnation of, or affecting, the Mortgaged
Property.
(c) 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 except as shown
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on the surveys furnished to Lender in connection with the Loan and, except as
shown on such surveys, 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 Borrower 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 Borrower'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 Borrower'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 Borrower's business.
(e) The survey of the Mortgaged Property delivered to Lender in
connection with this Agreement has been performed by a duly licensed surveyor or
registered professional engineer in the jurisdiction in which the Mortgaged
Property is situated, and to the best of Borrower'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 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 Borrower, and are prepared in
accordance with generally accepted accounting principles, consistently applied.
Borrower 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 Borrower and which, in Borrower'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
statements heretofore furnished to Lender or as otherwise disclosed to Lender
herein. Since the last date of such financial statements, there has been no
material adverse change in the financial condition, operations or business of
Borrower 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,
Borrower's performance thereunder, the recordation of the Mortgage, nor the
exercise of any remedies by Lender, will adversely affect (A) Borrower's rights
under either the Franchise Agreement or the Management Agreement or (B) the
licenses, registrations, permits, certificates, authorizations and approvals
necessary for the operation of the Mortgaged Property as a hotel.
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(j) The current Leases are in full force and effect and there are no
defaults thereunder by either party and there are no conditions which with the
passage of time and/or notice would constitute defaults thereunder.
11. Single Purpose Entity; Authorization
Except as otherwise provided for herein, in the other Loan Documents
or in that certain Cash Management Agreement dated as of January 31, 1995 among
Servico, Inc., Servico Management Corporation and various other affiliates of
Servico, Inc., as amended to date (as so amended, the "Cash Management
Agreement"), Borrower represents and warrants, and covenants for so long as any
obligations secured by the Mortgage remain outstanding, as follows:
(a) Each entity comprising Borrower does not and will not own any
asset or property other than: (i) its respective portion of the property
comprising the Mortgaged Property; and (ii) incidental personal property
necessary for the ownership or operation of the Mortgaged Property.
(b) Each entity comprising Borrower does not and will not engage in
any business other than the ownership, management and operation of its
respective portion of the property comprising the Mortgaged Property, and each
entity comprising Borrower will conduct and operate its business in all material
respects as presently conducted and operated.
(c) Except with respect to the Management Agreement and the Cash
Management Agreement which, in their present forms, are acceptable to Lender,
Borrower will not enter into any contract or agreement with any Guarantor or an
affiliate, except upon terms and conditions that are intrinsically fair and
substantially similar to those that would be available on an arms-length
third-party basis.
(d) Borrower has not incurred and will not incur any indebtedness,
secured or unsecured, direct or indirect, absolute or contingent (including
guaranteeing any obligation), other than: (i) the Debt; and (ii) trade and
operational debt incurred in the ordinary course of business with trade
creditors and in amounts as are customary and reasonable under the
circumstances. Except with Lender's prior written approval in each instance, no
indebtedness other than the Debt is or shall be secured by the Mortgaged
Property. Lender's approval shall be granted or withheld at Lender's sole
discretion. Notwithstanding the preceding sentence, Borrower may lease or
purchase on an installment basis, telephone systems, televisions, property
management systems, HVAC units, signage, copy machines, electronic lock systems,
laundry equipment and similar equipment in the ordinary course of its business
so long as: (A) the annual payments for all such equipment (excluding payments
in respect of such equipment under leases existing on and as of the date hereof
and to which leases Lender has consented) for any hotel comprising the Mortgaged
Property does not exceed $20,000; and (B) the Debt Service Coverage Ratio for
any such hotel is not less than 1.65:1.
(e) Borrower has not made and will not make any loans or advances to
any third party (including any constituent party, any Guarantor or any affiliate
of Borrower, of any constituent party or of any Guarantor), except in de minimus
amounts in the ordinary course of business and of the character of trade or
operational expenses.
(f) Borrower has done or caused to be done, and will do or cause to
be done, all things necessary to preserve its existence, and Borrower will not,
nor will Borrower permit any constituent party or Guarantor, to amend, modify or
otherwise change the articles of incorporation, bylaws or other organizational
documents of Borrower or such constituent party or Guarantor in a manner which
would adversely affect the Borrower's existence as a single purpose entity.
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(g) Borrower will maintain books and records and bank accounts
separate from those of its affiliates and any constituent party. Borrower shall
not change the principal place of its business without providing Lender with at
least 30 days prior written notice of such change to Lender.
(h) Borrower is and will be, and at all times will hold itself out
to the public as, a legal entity separate and distinct from any other entity
(including any affiliate of Borrower, any constituent party, any Guarantor or
any affiliate of any constituent party or Guarantor).
(i) Neither Borrower nor any constituent party will cause or seek
the dissolution or winding up, in whole or in part, of Borrower.
(j) Borrower will not commingle its funds and other assets with
those of any constituent party, any Guarantor, any affiliate of Borrower, of any
constituent party or of any Guarantor, or any other person.
(k) Borrower will not file or consent to the filing of any petition
to take advantage of any applicable insolvency, bankruptcy, liquidation or
reorganization statute, or make an assignment for the benefit of creditors.
(l) Borrower does not and will not hold itself out to be responsible
for the debts or obligations of any other person.
(m) Borrower shall at all times maintain at least one duly appointed
independent member of the Board of Directors of each of the Boards of Directors
of the constituent Borrower entities, which member has not been at the time of
such individual's appointment and may not have been at any time during the
preceding two years: (i) a stockholder of, or an officer or an employee of such
constituent Borrower entity; (ii) a customer of or supplier to any constituent
Borrower entity; (iii) a person or other entity controlling any such
stockholder, officer, employee, customer or supplier; or (iv) a member of the
immediate family of any such stockholder, officer, employee, customer or
supplier or any other director of any constituent Borrower entity. As used in
this subsection (m), the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such person or entity, whether through ownership of voting
securities by contract or otherwise. Notwithstanding anything to the contrary
provided herein, such independent director may serve as a member of each of the
Boards of Directors of the constituent Borrower entities and other entities
affiliated with Servico, Inc., Servico Operations Corp. or Servico Management
Corp.
12. Maintenance of Mortgaged Property
Borrower 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) without the consent of Lender. Borrower shall promptly comply
with all laws, orders and ordinances affecting the Mortgaged Property, or the
use thereof. Borrower 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, Borrower 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, Borrower shall
not initiate, join in, acquiesce in, or consent to any change in any private
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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, Borrower will not
cause or permit such nonconforming use to be discontinued or abandoned without
the prior written consent of Lender. Borrower shall not: (a) change the use of
the 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.
13. Transfer or Encumbrance of the Mortgaged Property
(a) Borrower acknowledges that Lender has examined and relied on the
creditworthiness and experience of Borrower, its principals and 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 Borrower's ownership of the Mortgaged Property as a means of
maintaining the value of the Mortgaged Property as security for repayment of the
Debt. Borrower acknowledges that Lender has a valid interest in maintaining the
value of the Mortgaged Property so as to ensure that, should Borrower 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, Borrower 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 Borrower agrees to sell the Mortgaged
Property or any part thereof for a price to be paid in installments; (ii) an
agreement by Borrower 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,
Borrower's right, title and interest in and to any Leases or any Rents; and
(iii) the voluntary or involuntary sale, conveyance or transfer to any entity or
"controlled group" (as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934) which is not affiliated with such corporation in excess of
forty-nine (49%) percent 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 by which an aggregate of stock representing more than
forty-nine (49%) percent of any such corporation's total outstanding stock
having the power to vote for the election of directors shall be vested in a
party or controlled group (as defined above) who are not now stockholders.
Anything herein to the contrary notwithstanding, any shareholder of the
corporations comprising Borrower may transfer its ownership interests in such
corporations so long as the principals of Borrower as of the date hereof
maintain controlling and voting ownership interest of no less than 51% of the
beneficial controlling and voting interests of such corporations.
(c) Except as expressly provided herein to the contrary, Lender may
predicate its decision to grant or withhold consent hereunder on Lender's
satisfaction, in its sole and absolute discretion, with all relevant factors
which shall include, without limitation, the creditworthiness of the proposed
transferee and such proposed transferee's management experience, and upon the
execution of an assumption agreement in form and substance acceptable to Lender,
the payment of an assumption fee equal to one (1%) percent of the then unpaid
principal balance of the Note and the payment of all costs and expenses incurred
by Lender in connection with the assumption including Lender's attorneys' fees.
Lender shall not be required to demonstrate any actual impairment of its
security or any increased risk of default hereunder in
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order to declare the Debt immediately due and payable upon Borrowers sale,
conveyance, alienation, mortgage, encumbrance, pledge or transfer of the
Mortgaged Property without Lender's consent. This provision shall apply to every
sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer of the
Mortgaged Property regardless of whether voluntary or not, or whether or not
Lender has consented to any previous sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Mortgaged Property.
(d) Notwithstanding anything contained herein to the contrary, but
subject to the requirements of subsection (f) of this Section, upon any transfer
of capital stock in Servico, Inc., Servico Operations Corp. or Servico
Management Corp. (collectively, the "Servico Entities") resulting in a change of
control thereof, or upon the sale of all or substantially all of the assets of
any of the Servico Entities, in either cash provided that Securities have not
been issued, which change of control or sale of assets, as the case may be, in
Lender's good faith judgment, would have an adverse effect on the Loan's ability
to support at least a BBB- rating from all of Moody's Investors Service, Inc.,
Standard & Poor's Rating Group, Fitch Investor Service and Duff & Phelps, Inc.
(or other nationally recognized rating agency) (the "Implied Rating"), Borrower
shall upon demand make a prepayment of the principal amount of the Debt in an
amount sufficient, in Lender's good faith judgment, to restore the Loan's
ability to support the Implied Rating, together with any prepayment
consideration payable under the Note. If the Loan's ability to support the
Implied Rating cannot, in Lender's good faith judgment, be restored by such
partial prepayment, the entire Debt, together with any prepayment consideration
payable under the Note, shall become due and payable upon ten days notice from
Lender. A transfer under this subsection (d) shall not constitute a transfer
prohibited under subsection (a) or (b) of this Section or with respect to which
subsections (c) and (h) of this Section shall apply.
(e) Notwithstanding anything contained herein to the contrary, but
subject to the requirements of subsection (f) of this Section, upon any transfer
of capital stock in any of the Servico Entities resulting in a change of control
thereof, or upon the sale of all or substantially all of the assets of any of
the Servico Entities, in either case when Securities have been issued, unless
such of Moody's Investors Service, Inc., Standard & Poor's Rating Group, Fitch
Investor Service and Duff & Phelps, Inc. (or other nationally recognized rating
agency) as have rated the Securities confirms in writing that as a result of
such change of control or sale of assets, as the case may be, its then current
rating of the Securities will not be downgraded, withdrawn or adversely
affected, then Borrower shall upon demand make a prepayment of the principal
amount of the Debt in an amount necessary to prevent such downgrade, withdrawal
or other adverse effect, together with any prepayment consideration payable
under the Note. If such downgrade, withdrawal or other adverse effect cannot be
prevented by such partial prepayment, the entire Debt, together with any
prepayment consideration payable under the Note, shall become due and payable
upon ten days notice from Lender. A transfer under this subsection (e) shall not
constitute a transfer prohibited under subsection (a) or (b) of this Section or
with respect to which subsections (c) and (h) of this Section shall apply.
(f) Any transferee of the capital stock of any of the Servico
Entities (which underlying transfer results in a change of control thereof), or
any transferee of all or substantially all of the assets of any of the Servico
Entities, in either case in accordance with subsections (d) and (e) of this
Section, shall satisfy each of the following requirements: (i) such transferee
shall execute an assumption agreement in form and substance reasonably
acceptable to Lender, (ii) such transferee shall have a minimum tangible net
worth of not less than $45 million; and (iii) such transferee shall have a
maximum debt-to-equity ratio of 3.5:1. Borrower shall reimburse Lender for all
of its actual out of pocket expenses and third-party costs (including attorneys
fees and expenses) in connection with such transfer and assumption, in no event
to exceed $50,000 with respect to each such transfer.
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(g) Lender's consent to one 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.
(h) Borrower 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.
(i) 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, Borrower 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 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 Borrower 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, Borrower shall furnish Lender
with a certificate reaffirming all representations and warranties of Borrower
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) Borrower shall deliver to Lender upon request, tenant estoppel
certificates from each tenant under a Lease for more than 2,000 square feet in
form and substance reasonably satisfactory to Lender; provided, however, that
Borrower shall not be required to deliver such certificates more frequently than
two times in any calendar year.
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 imposes a tax, either directly or indirectly,
on the Debt or Lender's interest in the Mortgaged Property, Borrower 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
Borrower 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.
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16. No Credits on Account of the Debt
Borrower 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, Borrower 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 Borrower
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 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
Borrower will maintain full and accurate books of accounts and other
records reflecting the independent operations of each of the individual hotels
comprising the Mortgaged Property. Borrower will furnish, or cause to be
furnished to Lender, within 30 days of the end of each calendar month, the
following items, each certified by a senior financial officer of Borrower as
true, correct and complete as of the end of and for such period (subject to
normal year-end adjustments), and as having been prepared in accordance with
generally accepted accounting principles, consistently applied: (a) if requested
by Lender, a written occupancy statement dated as of the last day of the most
recently ended calendar quarter identifying each of the Leases by the term,
space occupied, rental required to be paid, security deposit paid, any rental
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concessions, and identifying any defaults or payment delinquencies thereunder;
(b) monthly and year to date operating statements detailing the total revenues
received and total expenses incurred in connection with the ownership and
operation of each of the individual hotels comprising the Mortgaged Property,
including a comparison of the budgeted income and expenses and the actual income
and expenses for such month and the year to date (which operating information
shall include the hotel located thereon); and (c) a written statement for each
hotel dated as of the last day of the most recently ended month showing the
percentage of rooms rented and occupied during such month and the average daily
room rate charged during such month. Upon request by Lender, Borrower will
provide a detailed explanation of any variances of ten (10%) percent or more
between budgeted and actual amounts for such periods. Borrower shall furnish,
within 90 days following the end of each calendar year, an audited statement of
the financial affairs and condition of each of the individual hotels comprising
the Mortgaged Property, including a statement of profit and loss and a balance
sheet, with supplementary profit and loss and balance sheet data, for each of
the individual hotels comprising the Mortgaged Property for the immediately
preceding fiscal year, prepared on a combined basis by an independent certified
public accountant acceptable to Lender. Borrower shall deliver to Lender on or
before December 31 of each calendar year an itemized operating budget and
capital expenditure budget for each of the individual hotels comprising the
Mortgaged Property and a management plan for each of the individual hotels
comprising the Mortgaged Property for the next succeeding calendar year in such
detail as Lender may reasonably request. Borrower shall promptly after receipt
deliver to Lender copies of all quality inspection reports or similar reports or
inspection results that are delivered to it by the Franchisor. At any time and
from time to time Borrower shall deliver to Lender or its agents such other
financial data as Lender or its agents shall reasonably request with respect to
Borrower and the ownership, maintenance, use and operation of each of the
individual hotels comprising the Mortgaged Property. All information required to
be furnished to Lender pursuant to this Section shall be on the form provided by
Lender (which form shall accompany Lender's request).
20. Performance of Other Agreements
Borrower shall observe and perform each and every term to be
observed or performed by Borrower 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
Borrower under the Loan Documents.
21. Further Assurances; Right to Split the Loan
(a) Borrower will, at the cost of Borrower, 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 Borrower 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. Borrower, on demand, will execute and deliver and hereby
authorizes Lender, upon the occurrence of an Event of Default, to execute in the
name of Borrower or without the signature of Borrower 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. Borrower 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 Borrower is in compliance with the
terms and
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conditions of this Agreement, Lender will first seek Borrower's assistance in
exercising and perfecting such rights and remedies.
(b) Borrower acknowledges that Lender intends to sell the loan
evidenced by the Note and the Loan Documents to a party who may pool the Loan
with a number of other loans and to have the holder of such loans grant
participations therein or 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 Borrower act as
issuer or depositor, or execute any registration statement, offering circular or
memorandum in connection with the offering of Securities. The Securities may be
rated by one or more national rating agencies. In this regard, Borrower agrees
to make available to Lender, at Lender's sole cost and expense, all information
concerning its business and operations which Lender reasonably requests. Lender
may share such information with the investment banking firms, rating agencies,
accounting firms, law firms and other third-party advisory firms involved with
the Loan or the Securities. It is understood that the information provided by
Borrower 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, Borrower shall have
no liability by reason of the offering or issuance of the Securities; provided,
however, that nothing herein shall operate in derogation of any obligation of
Borrower under the Loan Documents.
(c) Lender shall have the right, at any time in its sole and
absolute discretion, to split and sever the Loan into two or more separate
loans. Borrower 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 Borrower's liability or
obligations hereunder, and Lender shall pay all of Borrower's actual out of
pocket expenses and third-party costs (including attorneys fees and expenses
(including on appeal)) in connection with such splitter and severance.
22. Recording of Mortgage
Borrower 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. Borrower will pay all filing, registration or
recording fees, 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. Borrower 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
Borrower agrees to give prompt notice to Lender of the insolvency or
bankruptcy filing of Borrower or any constituent thereof, or the death,
insolvency or bankruptcy filing of any Guarantor.
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24. Events of Default
The term "Event of Default" as used herein shall mean the occurrence
or 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 tenth (10th)
day after the date such payment is due or if the entire Debt is not paid on or
before the Maturity Date;
(b) subject to Borrower'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 Borrower transfers or encumbers any portion of the Mortgaged
Property in a manner inconsistent with the terms of this Agreement;
(e) if any representation or warranty of Borrower, or of any
Guarantor, made herein, in any Loan Document, any 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 Borrower 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 Borrower or of any
Guarantor shall be appointed, or if Borrower 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, Borrower or any Guarantor or if any proceeding for the dissolution or
liquidation of Borrower or of any Guarantor shall be instituted; provided,
however, that such appointment, adjudication, petition or proceeding, if
involuntary and not consented to by Borrower or such Guarantor, shall constitute
an Event of Default only if not being discharged, stayed or dismissed within 90
days;
(h) if Borrower shall be in default under any ground lease or any
other mortgage or security agreement 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 Borrower'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 Borrower 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 Property;
(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 Borrower's
failure to maintain insurance required in
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accordance with this Agreement, which damage is not promptly repaired to
Lender's satisfaction at Borrower's cost and expense;
(m) if without Lender's prior written consent: (i) the manager under
the Management Agreement (or any succeeding 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 management agreement);
(n) if without Lender's prior written consent, there is any material
adverse change in the Franchise Agreement (or any succeeding franchise
agreement);
(o) if for more than 30 days after receipt of notice from Lender,
Borrower shall continue to be in default under any term, covenant, or condition
of this Agreement, the Assignment, the Environmental Agreement or any of the
other Loan Documents other than as specified in any of subsections (a) through
(n) of this Section; provided, however, that if the cure of any such default
cannot reasonably be cured within such 30 day period and Borrower 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 Borrower diligently and
continuously proceeds to cure such default to Lender's satisfaction;
(p) 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;
(q) 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;
(r) if Borrower 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); or
(s) if Borrower 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; provided, however, that within two years of the
date hereof any of Servico West Des Moines, Inc., Servico Council Bluffs, Inc.
or Servico Omaha Central, Inc. may enter into franchise arrangements for any
franchise listed on Schedule B hereto with respect to the hotel property owned
by such Borrower entity.
25. Late Payment Charge
If any portion of the Debt is not paid prior to the tenth (10th) day
after the date such payment is due (but not including the payment of the
principal balance due on the Maturity Date), 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.
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26. Right to Cure Defaults
Upon the occurrence of any Event of Default or, upon notice, if
Borrower 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 Borrower 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.
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 Borrower 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
Borrower 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 either before, during or
after any proceedings for the enforcement of the Mortgage; provided,
however, that nothing herein shall expand Lender's recourse as limited
pursuant to Section 8 of the Note;
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(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 Borrower, any Guarantor or of any person, firm
or other entity liable for the payment of the Debt;
(viii) revoke the license granted to Borrower 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 Borrower
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 Borrower with respect to the Mortgaged Property, whether in
the name of Borrower 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 Borrower 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 Borrower and require Borrower to vacate and surrender
possession of the Mortgaged Property to Lender or to such receiver and, in
default thereof, evict Borrower by summary proceedings or otherwise; and
(x) pursue such other rights and remedies as may be available
at law or in equity or under the Uniform Commercial Code, including the
right to establish a lock box for all Rents and other receivables of
Borrower relating to the Mortgaged Property.
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.
(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,
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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 Borrower,
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
Borrower in and to the properties and rights so sold, and shall be a perpetual
bar both at law and in equity against Borrower and against any and all persons
claiming or who may claim the same, or any part thereof from, through or under
Borrower.
(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 Borrower 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 Borrower is liable
hereunder shall be deemed to waive or cure any Event of Default with respect to
Borrower, or Borrower'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 Borrower, shall operate to release or in any
manner affect the interest of Lender in the remaining Mortgaged Property or the
liability of Borrower 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
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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 Borrower existing
at the time such earlier action was commenced. Nothing herein shall expand
Lender's recourse as limited pursuant to Section 8 of the Note.
34. Marshalling and Other Matters
Borrower 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, Borrower hereby expressly waives any and all
rights of redemption from sale under any order or decree of foreclosure of the
Mortgage on behalf of Borrower, 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.
35. Hazardous Substances
Borrower hereby represents and warrants to Lender that, to the best
of Borrower's knowledge, after due inquiry and investigation, and except as
disclosed in the environmental audits of the Mortgaged Property furnished to
Lender in connection with the Loan: (a) the Mortgaged Property is not in direct
or indirect violation of any local, state, federal or other governmental
authority, statute, ordinance, code, order, decree, law, rule or regulation
pertaining to or imposing liability or standards of conduct concerning
environmental regulation, contamination or clean-up including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act, as amended, the Resource Conservation and Recovery Act, as amended, and any
state super-lien and environmental clean-up statutes (collectively,
"Environmental Laws"); (b) the Mortgaged Property is not subject to any private
or governmental lien or judicial or administrative notice or action relating to
hazardous and/or toxic, dangerous and/or regulated, substances, solvents,
wastes, materials, pollutants or contaminants, petroleum, tremolite,
anthlophylie or actinolite or polychlorinated biphenyls (including, without
limitation, any raw materials which include hazardous constituents) and any
other substances, materials or solvents which are included under or regulated by
Environmental Laws (collectively, "Hazardous Substances"); (c) no Hazardous
Substances are or have been, prior to Borrower's acquisition of the Mortgaged
Property, discharged, generated, treated, disposed of or stored on, incorporated
in or removed or transported from the Mortgaged Property other than in
compliance with all Environmental Laws; and (d) no underground storage tanks
exist on any of the Mortgaged Property. So long as Borrower owns or is in
possession of the Mortgaged Property, Borrower shall keep or cause the Mortgaged
Property to be kept free from Hazardous Substances (other than de minimis
quantities of Hazardous Substances that are necessary and lawfully used in the
operation of the Mortgaged Property as a hotel or motel, and which are stored
and disposed of in compliance with all Environmental Laws) and in compliance
with all Environmental Laws, shall promptly notify Lender if Borrower shall
become aware of any Hazardous Substances on the Mortgaged Property and/or if
Borrower shall become aware that the Mortgaged Property is in direct or indirect
violation of any Environmental Laws and Borrower shall remove such Hazardous
Substances and/or cure such violations, as applicable, as required by law,
promptly after Borrower becomes aware of such Hazardous Substances or such
violations, at Borrower's sole expense. Nothing herein shall prevent Borrower
from recovering such
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expenses from any other party that may be liable for such removal or cure. Upon
Lender's request, at any time and from time to time while this Agreement is in
effect (but in no event more frequently than once in any three-year period or
more frequently if specific facts and circumstances reasonably dictate, or
otherwise at Lender's election but at Lender's expense), Borrower shall provide
at Borrower's sole expense, an inspection or audit of the Mortgaged Property
prepared by a licensed hydrogeologist or licensed environmental engineer
approved by Lender indicating the presence or absence of Hazardous Substances on
the Mortgaged Property. If Borrower fails to provide such inspection or audit
within 30 days after such request, Lender may order such inspection or audit,
and Borrower hereby grants to Lender and its employees and agents access to the
Mortgaged Property and a license to undertake such inspection or audit. The cost
of such inspection or audit shall be paid by Borrower and added to the principal
balance of the sums due under the Note and the Mortgage and shall bear interest
thereafter until paid at the Default Rate. The obligations and liabilities of
Borrower under this Section which relate to conditions created or arising during
Borrower's ownership of the Mortgaged Property and prior to Lender's taking
possession of the Mortgaged Property shall survive any termination,
satisfaction, or assignment of the Mortgage and the exercise by Lender of any of
its rights or remedies thereunder including, without limitation, the acquisition
of the Mortgaged Property by foreclosure or a conveyance in lieu of foreclosure.
36. Asbestos
(a) Borrower represents and warrants that, to the best of Borrower's
knowledge, after due inquiry and investigation, and except as disclosed in the
environmental audits of the Mortgaged Property furnished to Lender in connection
with the Loan, no asbestos or any substance containing asbestos (collectively,
"Asbestos") is located on the Mortgaged Property. Borrower shall not install in
the Mortgaged Property, nor permit to be installed in the Mortgaged Property,
Asbestos and shall remove any Asbestos promptly upon discovery to the
satisfaction of Lender, at Borrower's sole expense. Upon Lender's request, at
any time and from time to time (but in no event more frequently than once in any
three-year period or more frequently if specific facts and circumstances
reasonably dictate, or otherwise at Lender's election but at Lender's expense),
Borrower shall provide, at Borrower's sole expense, an inspection or audit of
the Mortgaged Property prepared by an engineering or consulting firm approved by
Lender, indicating the presence or absence of Asbestos on the Mortgaged
Property. If Borrower fails to provide such inspection or audit within 30 days
after such request, Lender may order such inspection or audit. The cost of such
inspection or audit shall be paid by Borrower and added to the principal balance
of the sums due under the Note and the Mortgage, and shall bear interest
thereafter until paid at the Default Rate. The obligations and liabilities of
Borrower under this Section which relate to conditions created or arising during
Borrower's ownership of the Mortgaged Property and prior to Lender's taking
possession of the Mortgaged Property shall survive any termination,
satisfaction, or assignment of the Mortgage and the exercise by Lender of any of
its rights or remedies thereunder, including but not limited to, the acquisition
of the Mortgaged Property by foreclosure or a conveyance in lieu of foreclosure.
(b) Borrower has developed an operations and maintenance plan (the
"O&M Plan") for the Mortgaged Property with respect to the presence of Asbestos
in the Improvements. Borrower covenants and agrees that it shall comply in all
respects with the terms and conditions of the O&M Plan. Borrower shall not
modify or amend the O&M Plan without Lender's prior written consent unless
required by Environmental Laws. Borrower shall not remove, disturb or
encapsulate or otherwise remediate the Asbestos in the Improvements except in
compliance with all Environmental Laws. If Borrower makes any alterations or
modifications to the Improvements that would disturb or expose any Asbestos in
the Improvements or cause any of such Asbestos to become friable, Borrower shall
remove or encapsulate such Asbestos in compliance with all applicable
Environmental Laws before allowing occupancy of such space or opening such space
to the public.
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37. Environmental Monitoring
Borrower shall give prompt written notices to Lender of: (a) any
proceeding or inquiry by any party with respect to the presence of any Hazardous
Substance on, under, from or about the Mortgaged Property; (b) all claims made
or threatened by any third party against Borrower or the Mortgaged Property
relating to any loss or injury resulting from any Hazardous Substance; and (c)
Borrower's discovery of any occurrence or condition on any real property
adjoining or in the vicinity of the Mortgaged Property that could cause the
Mortgaged Property to be subject to any investigation or cleanup pursuant to any
Environmental Law. Borrower shall permit Lender to join and participate, as a
party if it so elects, in any legal proceedings or actions initiated with
respect to the Mortgaged Property in connection with any Environmental Law or
Hazardous Substance, and Borrower shall pay all attorneys' fees (including on
appeal) incurred by Lender in connection therewith. In the event that any
environmental site assessment report prepared for the Mortgaged Property
recommends that an operations and maintenance plan be implemented for Asbestos
or any Hazardous Substance, Borrower shall cause such operations and maintenance
plan to be prepared and implemented at Borrower's expense upon request of Lender
and in accordance with the recommendation. In the event that any investigation,
site monitoring, containment, cleanup, removal, restoration, or other work of
any kind which is reasonably necessary or desirable under an applicable
Environmental Law ("Remedial Work"), Borrower shall, at its sole cost and
expense, commence and thereafter diligently prosecute to completion all such
Remedial Work within 30 days after written demand by Lender for performance
thereof (or such shorter period of time as may be required under applicable
law).
38. Management of the Hotel
Borrower further covenants and agrees with Lender as follows:
(a) Borrower shall cause the hotel located on the Mortgaged Property
to be operated pursuant to the Franchise Agreement and the Management Agreement.
(b) Borrower shall:
(i) pay all sums required to be paid by Borrower 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 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;
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(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 Borrower to be performed or observed to
be promptly performed or observed on behalf of Borrower, to the end that
the rights of Borrower in, to and under the Franchise Agreement shall be
kept unimpaired and free from default;
(vii) use its reasonable efforts to obtain, from time to time,
from the franchisor under the Franchise Agreement such certificates of
estoppel with respect to compliance by Borrower with the terms of the
Franchise Agreement as may be requested by Lender; and
(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 Borrower 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 Borrower, which power of attorney
shall be irrevocable and shall be deemed to be coupled with an interest.
Notwithstanding the foregoing, Borrower shall not be required to extend or
renew the Franchise Agreement if Lender consents to Borrower's request to
enter into franchise arrangements with a franchisor other than the
franchisor under the Franchise Agreement.
(c) Borrower 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.
Anything herein to the contrary notwithstanding, within two years of the date
hereof any of Servico West Des Moines, Inc., Servico Council Bluffs, Inc. or
Servico Omaha Central, Inc. may terminate its current affiliation with Best
Western International, Inc., and enter into franchise arrangements for any
franchise listed on Schedule B hereto with respect to the hotel property owned
by such Borrower entity.
(d) Except as set forth in the Management Agreement and the Cash
Management Agreement, Borrower 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, the rendering or receipt of services or the purchase or sale
of inventory, except any such transaction in the ordinary course of business of
Borrower if the monetary or business consideration arising therefrom would be
substantially as advantageous to Borrower as the monetary or business
consideration which would obtain in a comparable transaction with a person not
an affiliate of Borrower.
(e) Borrower irrevocably authorizes and directs Franchisor, from and
after an Event of Default, to deliver to Lender: (i) all operating information
concerning the Property submitted by Borrower to Franchisor; (ii) the written
results of all quality assurance inspections of the 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
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relating to Borrower 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 Borrower.
39. Handicapped Access
(a) Borrower 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").
(b) Notwithstanding any provisions set forth herein or in any other
document regarding Lender's approval of alterations of the Mortgaged Property,
Borrower shall not alter the Mortgaged Property in any manner which would
increase Borrower'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) Borrower agrees to give prompt notice to Lender of the receipt
by Borrower 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) Borrower 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) Borrower 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) Borrower 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) Borrower 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 Borrower 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 Borrower are held by "benefit plan investors" within the
meaning of 29 C.F.R. ss. 2510.3-101(f)(2); or
(C) Borrower 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.
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41. Indemnification
(a) In addition to any other indemnifications provided herein, in
the Assignment, the Environmental Agreement or in the other Loan Documents,
Borrower shall protect, 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 Borrower 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; and
(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. 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 Borrower 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 Borrower 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.
(c) Borrower 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
38
<PAGE>
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. Borrower 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 Borrower 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 Borrower following Borrower's receipt of notice of such settlement and
Borrower'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 Borrower or Lender, as the case may be, shall in like manner designate
in writing.
43. Authority
Borrower 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 Borrower's part to be performed; and (b) Borrower 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. 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
Borrower shall not be entitled to any notices of any nature
whatsoever from Lender except with respect to matters for which this Agreement
specifically and expressly provides for the giving of notice by Lender to
Borrower and except with respect to matters for which Lender is required by
applicable law to give notice, and Borrower 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 Borrower.
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
39
<PAGE>
reasonably or promptly, Lender shall not be liable for any monetary damages, and
Borrowers 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.
Borrower shall not be relieved of Borrower's obligations hereunder by reason of:
(a) the failure of Lender to comply with any request of Borrower 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 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
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 Borrower 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 Borrower 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 Borrower and Lender
and their respective successors and assigns forever.
40
<PAGE>
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 "Borrower" shall mean
"each Borrower, and each constituent party of Borrower, 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, 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
Borrower 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. SUBMISSION TO JURISDICTION
BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
NEBRASKA, KANSAS OR IOWA STATE OR FEDERAL COURT SITTING IN DOUGLAS
41
<PAGE>
COUNTY, NEBRASKA, SEDGWICK COUNTY, KANSAS OR POTTAWATTAMIE OR POLK COUNTY, IOWA
OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT. LENDER MAY, AT ITS SOLE DISCRETION, ELECT THE STATE OF NEBRASKA,
DOUGLAS COUNTY, STATE OF KANSAS, SEDGWICK COUNTY, STATE OF IOWA, POTTAWATTAMIE
OR POLK COUNTY, OR THE UNITED STATES OF AMERICA, FEDERAL DISTRICT COURT HAVING
JURISDICTION OVER ANY SUCH COUNTY, AS THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING. BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE TO SUCH VENUE AS BEING AN
INCONVENIENT FORUM.
57. Agent for Receipt of Process
Borrower hereby irrevocably appoints Popham, Haik, Schnobrich &
Kaufman, Ltd., 3300 Piper Jaffray Tower, 222 South Ninth Street, Minneapolis,
Minnesota 55402, Attn.: Lewis J. Rotman, Esq., as its authorized agent to accept
and acknowledge, on behalf of Borrower, service of any and all process which may
be served in any suit, action or proceeding of the nature referred to in Section
56 hereof in any State or Federal court within Douglas, Sedgwick, Pottawattamie
or Polk County. If such agent shall cease so to act, Borrower 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 of the nature referred to in Section 56 hereof may be
served: (a) by registered or certified mail, postage prepaid, to Borrower at the
address set forth above or to such other address of which Borrower shall have
given Lender written notice; or (b) if Borrower shall not have made an
appearance within 21 days after service in accordance with clause (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 Borrower in the courts of any other jurisdiction.
59. WAIVER OF JURY TRIAL
BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE
TRIABLE OF RIGHT BY JURY, AND WAIVES 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 BORROWER, 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 BORROWER.
60. CHOICE OF LAW
THIS LOAN AGREEMENT SHALL BE DEEMED TO BE A CONTRACT ENTERED INTO
PURSUANT TO THE LAWS OF THE STATE OF NEBRASKA AND SHALL IN
42
<PAGE>
ALL RESPECTS BE GOVERNED, CONSTRUED, APPLIED, AND ENFORCED IN ACCORDANCE WITH
THE LAWS OF SUCH JURISDICTION.
61. Release of Portions of the Mortgaged Property
(a) Any one or more individual hotels that comprises a portion of
the Mortgaged Property may be released from the lien of the Mortgage provided
that, in each instance: (i) no Event of Default shall have occurred and be
continuing; (ii) the Release Conditions are satisfied; (iii) Borrower pays to
Lender the applicable release price set forth on Schedule A with respect to such
hotel, together with all other sums then due and payable in respect of the Loan
(including, without limitation, the prepayment consideration payable under the
Note, and interest, late fees, costs and expenses payable in accordance
herewith); and (iv) Borrower shall deliver to Lender a current title search with
respect to the remaining Mortgaged Property showing no liens or other
encumbrances other than as permitted hereunder or to which Lender shall have
consented. In order to confirm or effect such release, Lender shall execute one
or more instruments, in recordable form, evidencing such release and the release
of the constituent Borrower party from liability in respect of the Loan.
(b) Nothing herein shall obligate Borrower to repay principal in
excess of the Loan.
(c) Upon a release of a portion of the Mortgaged Property pursuant
to this Section any balance remaining under the Replacement Agreement and under
the Repair Agreement in respect of such released property shall be promptly
returned to Borrower. Any balance remaining in the Tax and Insurance Escrow Fund
in respect of such released property shall also be promptly returned to
Borrower.
62. Limitations on Recourse
Anything herein to the contrary notwithstanding, Lender's recourse
upon the occurrence of an Event of Default hereunder is limited pursuant to the
express provisions of the Note.
63. Cash Management Arrangements
(a) As more particularly provided in the Cash Management Agreement,
upon the occurrence of an Event of Default Borrower shall cease to participate
in the cash management arrangements thereunder.
(b) Upon an Event of Default by reason of Borrower's failure to make
any payment to Lender when due under the Loan Documents, Lender may give written
notice to the manager under the Management Agreement and to Borrower directing
such manager thereafter to collect the gross income generated or otherwise
derived from each property comprising the Mortgaged Property for payment to
Lender. All such gross income so collected shall be wired to Lender within one
business day after receipt thereof. Upon curing such Event of Default and
provided that: (i) no other Event of Default has occurred by reason of
Borrower's failure to make any payment to Lender when due under the Loan
Documents; and (ii) Lender has not then accelerated the maturity of the Loan by
reason of any Event of Default, then Lender shall give notice to such manager
and to Borrower directing such manager thereafter to discontinue payment to
Lender of such gross income. For so long as gross income is being paid to Lender
as provided in this subsection (b) of this Section, such sums shall be applied
by Lender in the order of priority set forth in Section 2(a) hereof (provided,
however, that with respect to the application of any such sums to the reduction
of the principal balance of the Loan under Section 2(a)(v), such application
shall be only to the extent that such sums are then due and payable under the
Note), with the balance, if any, to be paid to Borrower.
43
<PAGE>
IN WITNESS WHEREOF, Borrower and Lender have executed this
instrument as of the day and year first above written.
BORROWERS:
SERVICO COUNCIL BLUFFS, INC.
By: /s/ David Buddemeyer (seal)
----------------------------
David Buddemeyer
President
SERVICO WEST DES MOINES, INC.
By: /s/ David Buddemeyer (seal)
----------------------------
David Buddemeyer
President
SERVICO OMAHA, INC.
By: /s/ David Buddemeyer (seal)
----------------------------
David Buddemeyer
President
SERVICO OMAHA CENTRAL, INC.
By: /s/ David Buddemeyer (seal)
----------------------------
David Buddemeyer
President
SERVICO WICHITA, INC.
By: /s/ David Buddemeyer (seal)
----------------------------
David Buddemeyer
President
LENDER:
GMAC COMMERCIAL MORTGAGE CORPORATION
By: /s/ Morgan G. Earnest, II (seal)
----------------------------
Morgan G. Earnest, II
Senior Vice President
44
<PAGE>
STATE OF MINNESOTA )
: ss.:
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this 17th day of
July, 1996, by David Buddemeyer, President of SERVICO COUNCIL BLUFFS, INC., an
Iowa corporation, SERVICO WEST DES MOINES, INC., an Iowa corporation, SERVICO
OMAHA, INC., a Nebraska corporation, SERVICO OMAHA CENTRAL, INC., a Nebraska
corporation, and SERVICO WICHITA, INC., a Kansas corporation, who is personally
known to me or who produced his driver's license as identification and who did
take oath, on behalf of each of the foregoing corporations.
/s/ Leeann K. Peterson
---------------------------
Notary Public
Print Name:
[NOTARY STAMP]
STATE OF Va. )
: ss.:
COUNTY OF Fairfax )
The foregoing instrument was acknowledged before me this 18th day of
July, 1996, by Morgan Earnest, S.V.P. of GMAC Commercial Mortgage Corporation, a
California corporation, who is personally known to me or who produced his
driver's license as identification and who did take oath, on behalf of the
corporation.
/s/ Gail V. Henson
---------------------------
Notary Public
Print Name:
[NOTARY STAMP]
<PAGE>
SCHEDULE A
List of Mortgaged Properties
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Name/Address Franchise Agreement Franchisor Management
Agreement
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Best Western License and Lease Agreement Best Western Consulting Agreement
11040 Hickman Road at I-80 dated July 27, 1993 International, Inc. dated as of the date
West Des Moines, Iowa 50325 hereof
- ---------------------------------------------------------------------------------------------------------------
Best Western License and Lease Agreement Best Western Consulting Agreement
3537 West Broadway dated November 8,1993 International, Inc. dated as of the date
Council Bluffs, Iowa 51501 hereof
- ---------------------------------------------------------------------------------------------------------------
Holiday Inn - Wichita Airport Holiday Inn Change of Holiday Inn Consulting Agreement
5500 West Kellogg Ownership Agreement Franchising, Inc. dated as of the date
Wichita, Kansas 67209 dated July __, 1996 hereof
- ---------------------------------------------------------------------------------------------------------------
Sheraton Four Points License Agreement Sheraton Inns, Inc. Consulting Agreement
4888 South 118 Street at I-80 dated as of July __, 1996 dated as of the date
Omaha, Nebraska 68137 hereof
- ---------------------------------------------------------------------------------------------------------------
Best Western Central License and Lease Agreement Best Western Consulting Agreement
3702 South 72nd Street at I-80 dated May 22, 1992 International, Inc. dated as of the date
Omaha, Nebraska 68124 hereof
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------
Name/Address Manager Release Price
- ----------------------------------------------------------------------------
<S> <C> <C>
Best Western Servico Management Corp. $3,825,000.00
11040 Hickman Road at I-80
West Des Moines, Iowa 50325
- ----------------------------------------------------------------------------
Best Western Servico Management Corp. $1,956,250.00
3537 West Broadway
Council Bluffs, Iowa 51501
- ----------------------------------------------------------------------------
Holiday Inn - Wichita Airport Servico Management Corp. $6,093,750.00
5500 West Kellogg
Wichita, Kansas 67209
- ----------------------------------------------------------------------------
Sheraton Four Points Servico Management Corp. $3,043,750.00
4888 South 118 Street at I-80
Omaha, Nebraska 68137
- ----------------------------------------------------------------------------
Best Western Central Servico Management Corp. $6,131,250.00
3702 South 72nd Street at I-80
Omaha, Nebraska 68124
- ----------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE B
List of Acceptable New Franchises for Current Best Western Properties
1. Sheraton
2. Sheraton Four Points
3. Radisson
4. Radisson Inn and Suites
5. Holiday Inn
6. Holiday Inn Express
7. Holiday Inn and Suites
8. Holiday Inn Select
9. Comfort Inn
10. Comfort Inn and Suites
11. Omni
12. Hilton
13. Hilton Inn
14. Marriott
15. Courtyard by Marriott
16. Hampton Inn
17. Hampton Inn and Suites
<PAGE>
Exhibit 10.7.2
MORTGAGE NOTE
$16,840,000.00 July 18, 1996
Minneapolis, Minnesota
FOR VALUE RECEIVED SERVICO COUNCIL BLUFFS, INC., an Iowa
corporation, SERVICO WEST DES MOINES, INC., an Iowa corporation, SERVICO OMAHA,
INC., a Nebraska corporation, SERVICO OMAHA CENTRAL, INC., a Nebraska
corporation, and SERVICO WICHITA, INC., a Kansas corporation, each having its
principal place of business at c/o Servico, Inc., 1601 Belvedere Road, West Palm
Beach, Florida 33406 (collectively, "Maker"), promises to pay to the order of
GMAC COMMERCIAL MORTGAGE CORPORATION, a California corporation ("Payee"), at its
principal place of business at 8614 Westwood Center Drive, Suite 630, Vienna,
Virginia 22182, or at such place as the holder hereof may from time to time
designate in writing, the principal sum of Sixteen Million Eight Hundred Forty
Thousand and 00/100 Dollars (the "Loan"), in lawful money of the United States
of America, with interest thereon to be computed on the unpaid principal balance
from time to time outstanding at the Applicable Interest Rate (as such term is
defined in Section 1(c) hereof), and to be paid in installments as follows:
(a) A payment of interest only on the first day of the first full
calendar month after the date hereof; and
(b) Equal monthly payments of principal and interest in the amount
of $151,543.85, on the first day of the second full calendar month after the
date hereof and on the first day of each of the next succeeding 83 calendar
months thereafter (each a "Monthly Payment Date");
with the entire outstanding principal balance, together with accrued and unpaid
interest and any other amounts due under this Note being due and payable on the
seventh anniversary of the first day of the first full calendar month after the
date hereof (the "Maturity Date").
1. Calculation of Interest; Application of Payments.
(a) Interest on the outstanding principal balance of this Note shall
be calculated on the basis of a 360-day year composed of 12 months of 30 days
each, except that interest payable in respect of any period less than a full
calendar month shall be calculated by multiplying the actual number of days
elapsed in such period by a daily rate based on a 360-day year.
(b) Payments under this Note shall be applied first, to the payment
of interest and other costs and charges due in connection with this Note or the
Debt (as such term is defined in Section 4 hereof), as Payee may determine in
its sole discretion, and then to reduction of the outstanding principal balance.
All amounts due under this Note shall be payable without setoff, counterclaim or
any other deduction whatsoever.
<PAGE>
(c) As used in this Note the term "Applicable Interest Rate" shall
mean, from the date of this Note through and including the Maturity Date, the
fixed rate of Nine and Seven-Eighths (9.875%) percent per annum.
2. Security for the Loan.
(a) This Note is secured by: (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 Maker to
Payee (individually or collectively as the context may require, the "Mortgage")
affecting the real property and improvements more particularly described on
Schedule A hereto (collectively, the "Mortgaged Property"); (ii) those certain
instruments titled Assignment of Leases and Rents each dated as of the date
hereof from each of the parties constituting Maker to Payee (collectively, the
"Assignment"); (iii) an Environmental Indemnity Agreement dated as of the date
hereof among Payee, Maker and Servico, Inc. (the "Environmental Agreement"); and
(iv) such other documents now or hereafter executed by Maker and/or others and
by or in favor of Payee, which wholly or partially secure or guarantee payment
of this Note including, without limitation, any collateral assignments and
reserve and/or escrow accounts (such other documents, collectively, the "Other
Security Documents").
(b) As used herein, the term "Loan Documents" means, collectively,
this Note, the Mortgage, the Loan Agreement dated as of the date hereof between
Maker and Payee (the "Loan Agreement"), the Assignment, the Environmental
Agreement, the Other Security Documents and any and all other documents executed
in connection with the Loan.
3. Late Charge. If any sum payable under this Note is not paid prior
to the tenth (10th) day after the date such payment is due (but not including
the payment of the principal balance due on the Maturity Date), Maker shall pay
to Payee on demand an additional amount equal to five (5%) percent of such
unpaid sum to defray the expenses incurred by Payee in handling and processing
such delinquent payment and to compensate Payee for the loss of the use of such
delinquent payment, and such additional amount shall be secured by the Mortgage,
the Assignment, the Environmental Agreement and the Other Security Documents.
4. Events of Default. The entire outstanding principal balance of
this Note, together with all accrued and unpaid interest thereon and all other
sums due under the Loan Documents (all such sums, collectively, the "Debt"), or
any portion thereof, shall without notice become immediately due and payable at
the option of Payee: (a) if any payment required in this Note is not paid prior
to the tenth (10th) day after the date when due or on the Maturity Date; (b)
upon the occurrence of any other default under this Note continuing beyond
applicable notice and cure periods; or (c) upon the happening of any other Event
of Default under and as defined in the Loan Agreement (each of the foregoing, an
"Event of Default"). In the event that Payee retains counsel to collect the Debt
(including on appeal), if Payee prevails in such action, Maker shall pay on
demand all costs of collection incurred by Payee, including reasonable
attorneys' fees for the services of counsel whether or not suit be brought.
5. Default Rate Interest. Maker does hereby agree that upon the
occurrence of an Event of Default, including Maker's failure to pay the Debt in
full on the Maturity Date, Payee shall be entitled to receive, and Maker shall
pay, interest on the entire outstanding principal balance and any other amounts
due at the rate equal to the lesser of (a) the
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<PAGE>
maximum rate permitted by applicable law; and (b) the greater of (i) the
Applicable Interest Rate plus three (3%) percent or (ii) the Prime Rate (as
hereinafter defined) plus four (4%) percent (the lesser of such rates in (a) or
(b), the "Default Rate"). The "Prime Rate" shall mean the annual rate of
interest publicly announced by Citibank, N.A. in New York, New York. as its base
rate, as such rate shall change from time to time. If Citibank N.A. ceases to
announce a base rate, Prime Rate shall mean the rate of interest published in
The Wall Street Journal from time to time as the Prime Rate. If more than one
Prime Rate is published in The Wall Street Journal for a day, the average of the
Prime Rates shall be used, and such average shall be rounded up to the nearest
one-quarter of one (1/4%) percent. Interest shall accrue and be payable at the
Default Rate from the occurrence of the Event of Default until all such Events
of Default have been fully cured. Interest at the Default Rate shall be added to
the Debt, and shall be deemed secured by the Mortgage. This provision, however,
shall not be construed as an agreement or privilege to extend the date of the
payment of the Debt, nor as a waiver of any other right or remedy accruing to
Payee by reason of the occurrence of any Event of Default.
6. Prepayment. (a) Payee is making the Loan at the Applicable
Interest Rate in reliance upon the Maker's repayment of the Debt over the full
stated term thereof. Payee would not otherwise be willing to make the Loan but
for Maker's covenant to repay the Loan over the full stated term. Accordingly,
in order to insure that Payee receives the full benefit of interest on the
outstanding principal balance hereunder in accordance with the terms hereof,
Maker will not prepay the principal balance hereunder prior to the Maturity Date
except in accordance with the terms, and upon the payment of a certain
additional prepayment consideration, as more particularly described below.
(b) Provided no Event of Default exists, the principal balance of
this Note may be prepaid, in whole or, in connection with a release of
collateral under Section 61 of the Loan Agreement, in part, upon: (i) not less
than 30 days prior written notice to Payee specifying the scheduled payment date
on which prepayment is to be made (the "Prepayment Date"); (ii) payment of
accrued interest to and including the Prepayment Date together with a payment of
all interest which would have accrued on the principal balance of this Note to
and including the first day of the calendar month immediately following the
Prepayment Date, if such prepayment occurs on a date which is not the first day
of a month (the "Shortfall Interest Payment"); (iii) payment of all other sums
then due under this Note, the Loan Agreement, the Mortgage, the Assignment and
the Other Security Documents; and (iv) payment of a prepayment consideration in
an amount equal to the greater of: (A) one (1%) percent of the principal amount
being prepaid; and (B) the present value of a series of payments each equal to
the Payment Differential (hereinafter defined) and payable on each Monthly
Payment Date over the remaining original term of this Note and on the Maturity
Date discounted at the Reinvestment Yield (hereinafter defined) for the number
of months remaining from the Prepayment Date to each such Monthly Payment Date
and the Maturity Date. The term "Reinvestment Yield" as used herein shall be
equal to the lesser of (1) the yield on the U.S. Treasury issue (primary issue)
with a maturity date closest to the Maturity Date; and (2) the yield on the U.S.
Treasury issue (primary issue) with a maturity equal to the remaining term of
this Note, with each such yield being based on the bid price for such issue as
published in The Wall Street Journal on the date that is 14 days prior to the
Prepayment Date set forth in the Prepayment Notice (or, if such bid price is not
published on that date, the next preceding date on which such bid price is so
published) and converted to a monthly compounded nominal yield. The term
"Payment Differential" as used herein shall be equal to (x) the Applicable
Interest Rate minus the Reinvestment Yield, divided by (y) 12 and multiplied by
(z) the Principal Sum outstanding after application of the Monthly Payment due
on
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<PAGE>
such Prepayment Date, provided that the Payment Differential shall in no event
be less than zero. In no event, however, shall Lender be required to reinvest
any prepayment proceeds in U.S. Treasury obligations or otherwise (such
prepayment consideration, the "Prepayment Consideration"). Payee shall notify
Maker of the amount, and the basis of determination, of the required Prepayment
Consideration. If any such notice of prepayment is given, such portion of the
principal balance of this Note and the other sums required under this Section in
accordance with such notice shall be due and payable on the Prepayment Date.
Payee shall not be obligated to accept any prepayment of the principal balance
of this Note unless it is accompanied by the Prepayment Consideration due in
connection therewith. The term "Loan Year" as used in this Section shall mean
each complete 365-day period beginning with the first day of the first full
calendar month following the date hereof. Notwithstanding the foregoing, no
Prepayment Consideration shall be payable in connection with a prepayment during
the six months immediately preceding the Maturity Date.
7. Acceleration Deemed Prepayment. If following the occurrence of
any Event of Default, Maker tenders payment of an amount sufficient to satisfy
the entire Debt at any time prior to a judicial or non-judicial foreclosure sale
or sale pursuant to a power of sale of any of the Mortgaged Property including
any redemption period, as applicable, and prior to the time prepayment of the
principal balance of this Note is permitted hereunder without prepayment
consideration, Maker shall, in addition to the entire Debt, also pay to Payee an
amount equal to the sum of: (a) interest calculated as set forth in subsection
(b)(ii) of Section 6; and (b) the Prepayment Consideration payable to Payee
pursuant to Section 6(b). An involuntary prepayment shall include any prepayment
made in connection with reinstatement of the Mortgage under foreclosure
proceedings, or exercise of a power of sale, any right of redemption exercised
by Maker or any other party having a right to redeem or prevent foreclosure, or
which is made or occurs upon the consummation of any sale in foreclosure or
under exercise of a power of sale.
8. Limitations on Recourse. (a) Subject to the qualifications set
forth in this Section, Payee shall not enforce the liability and obligation of
Maker to perform and observe the obligations contained in the Note, the Loan
Agreement, the Mortgage, the Assignment or the Other Security Documents by an
action or proceeding wherein a money judgment shall be sought against Maker,
except that Payee may bring a foreclosure action, an action for specific
performance or any other appropriate action or proceeding to enable Payee to
enforce and realize upon this Note, the Mortgage, the Assignment, the Other
Security Documents, and the interests in the Mortgaged Property and any other
collateral given to Payee pursuant to the Mortgage, the Assignment and the Other
Security Documents; provided, however, that, except as specifically provided in
this Section, any judgment in any such action or proceeding shall be enforceable
against Maker only to the extent of each Maker's respective interest in the
Mortgaged Property and in any other collateral given to Payee. Payee, by
accepting this Note, the Loan Agreement, the Assignment, the Mortgage and the
Other Security Documents, agrees that it shall not sue for, seek or demand any
deficiency judgment against Maker in any such action or proceeding, under, by
reason of or in connection with the Mortgage, the Loan Agreement, the
Assignment, the Other Security Documents or this Note. Except as may be
expressly provided for herein, the provisions of this Section shall not,
however: (i) constitute a waiver, release or impairment of any obligation
evidenced or secured by the Mortgage, the Loan Agreement, the Assignment, the
Environmental Agreement or the Other Security Documents or this Note; (ii)
impair the right of Payee to name Maker as a party defendant in any action or
suit for foreclosure and sale under the Mortgage; (iii) affect the validity or
enforceability of any guaranty or indemnity made in
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<PAGE>
connection with the Mortgage, the Loan Agreement, this Note, the Assignment or
the Other Security Documents; (iv) impair the right of Payee to obtain the
appointment of a receiver; (v) impair the enforcement of the Assignment; (vi)
impair the right of Payee to bring suit with respect to fraud or intentional
misrepresentation by Maker or any other person or entity in connection with the
Mortgage, the Loan Agreement, this Note, the Assignment, the Environmental
Agreement or the Other Security Documents; or (vii) affect the validity or
enforceability of the Environmental Agreement or limit the liability of Maker or
any other party thereunder. Nothing herein shall impair the right of Payee to
obtain a deficiency judgment in any action or proceeding in order to preserve
its rights and remedies including, without limitation, foreclosure, non-judicial
foreclosure or the exercise of a power of sale, under the Mortgage; provided,
however, that Payee shall not enforce any such deficiency judgment against Maker
or any assets of Maker other than the Mortgaged Property or in the exercise of
its rights and remedies under the Loan Documents.
(b) Nothing herein shall be deemed to be a waiver of any right which
Payee may have under Section 506(a), 506(b), 1111(b) or any other provisions of
the U.S. Bankruptcy Code to file a claim for the full amount of the Debt secured
by the Mortgage or to require that all collateral shall continue to secure all
of the debt owing to Payee in accordance with this Note, the Loan Agreement, the
Mortgage, the Assignment, the Environmental Agreement and the Other Security
Documents.
(c) Notwithstanding the foregoing provisions of this Section or any
other provision in the Loan Documents, Maker shall be fully liable for and shall
indemnify Payee for any or all loss, cost, liability, judgment, claim, damage or
expense sustained, suffered or incurred by Payee (including, without limitation,
Payee's attorneys' fees (including on appeal) if Payee prevails in the
applicable action or proceeding arising to which such fees relate) arising out
of or attributable or relating to:
(i) fraud or misrepresentation by Maker in connection with the Loan;
(ii) the gross negligence or willful misconduct of Maker, its agents
or employees, or physical waste of the Mortgaged Property;
(iii) the breach of provisions in the Loan Agreement concerning
Environmental Laws, Hazardous Substances and Asbestos, and any
indemnification of Payee therein with respect to such Environmental Laws,
Hazardous Substances and Asbestos;
(iv) except as permitted in the Loan Agreement, the removal or
disposal of any portion of the Mortgaged Property after default under this
Note, the Mortgage, the Loan Agreement, the Assignment, the Environmental
Agreement or any Other Security Document;
(v) the misapplication or misappropriation by Maker of: (A) any
insurance proceeds paid by reason of any loss, damage or destruction to
the Mortgaged Property; (B) any awards or other amounts received in
connection with the condemnation of all or a portion of the Mortgaged
Property; or (C) rents, issues, profits, proceeds, accounts, or other
amounts received by Maker (in the case of clause (C) following an Event of
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<PAGE>
Default under this Note, the Mortgage, the Loan Agreement, the
Assignment, the Environmental Agreement or the Other Security Documents);
(vi) Maker's failure to pay taxes, assessments, charges for labor or
materials or other charges that results in liens on any portion of the
Mortgaged Property; and
(vii) any security deposits or advance deposits collected with
respect to the Mortgaged Property (except to the extent such deposits are
required to be returned or refunded to the depositor), which are not
delivered to Payee upon a foreclosure of the Mortgaged Property or action
in lieu thereof.
(d) Notwithstanding the foregoing, the agreement of Payee not to
pursue recourse liability as set forth in Subsection (a) above SHALL BECOME NULL
AND VOID and shall be of no further force or effect in the event of: (i) Maker's
failure (after prior notice and the expiration of applicable cure periods) to
permit on-site inspections of the Mortgaged Property or to provide financial
reports and information pertaining to the Mortgaged Property as required by the
Loan Agreement which failure continues, with respect to reports required to be
furnished monthly, for 15 days beyond otherwise applicable cure periods, with
respect to reports required to be furnished quarterly, for 30 days beyond
otherwise applicable cure periods, and with respect to reports required to be
furnished annually, for 45 days beyond otherwise applicable cure periods; (ii)
Maker's failure to obtain Payee's written consent to any subordinate financing
not otherwise permitted under the Loan Agreement; (iii) Maker's failure to
obtain Payee's prior written consent to any transfer of the Mortgaged Property
or of any ownership interest in Maker not otherwise permitted under the Loan
Agreement; (iv) the Mortgaged Property or any part thereof becoming an asset in
a voluntary bankruptcy or insolvency proceeding; or (v) the failure of Maker to
comply with the provisions of Section 11 (SINGLE PURPOSE ENTITY) of the Loan
Agreement.
9. No Usury. It is expressly stipulated and agreed to be the intent
of Maker and Payee at all times to comply with applicable state law or
applicable United States federal law (to the extent that it permits Payee 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 Note 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 this Note or under any of the other Loan Documents, or
contracted for, charged, taken, reserved, or received with respect to the Debt,
or if Payee's exercise of the option to accelerate the maturity of this Note, or
if any prepayment by Maker results in Maker having paid any interest in excess
of that permitted by applicable law, then it is Maker's and Payee's express
intent that all excess amounts theretofore collected by Payee shall be credited
on the principal balance of this Note and all other Debt (or, if this Note and
all other Debt have been or would thereby be paid in full, refunded to Maker),
and the provisions of this 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 and 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 Payee 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 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.
6
<PAGE>
Notwithstanding anything to the contrary contained herein or in any of the other
Loan Documents, it is not the intention of Payee 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.
10. Transfers Not Permitted. Without the prior written consent of
Payee, Maker shall not sell, convey, alienate, mortgage, encumber, pledge or
otherwise transfer, or permit the transfer of, directly or indirectly, the
Mortgaged Property or ownership interests of Maker, except as permitted in the
Loan Agreement.
11. Authority. Maker represents that Maker has full power, authority
and legal right to execute, deliver and perform its obligations pursuant to this
Note, the Mortgage and the other Loan Documents and that this Note, the Mortgage
and the other Loan Documents constitute valid and binding obligations of Maker.
12. Notices. All notices or other communications required or
permitted to be given pursuant hereto shall be given in the manner specified in
the Loan Agreement directed to the parties at their respective addresses as
provided therein.
13. WAIVER OF JURY TRIAL. MAKER HEREBY AGREES NOT TO ELECT A TRIAL
BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY
JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH
REGARD TO THIS NOTE, THE LOAN AGREEMENT, THE MORTGAGE, 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 MAKER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE
AND EACH ISSUE AS TO WHICH THE RIGHT TO TRIAL BY JURY WOULD OTHERWISE ACCRUE.
PAYEE IS HEREBY AUTHORIZED TO FILE A COPY OF THIS SECTION IN ANY PROCEEDING AS
CONCLUSIVE EVIDENCE OF THIS WAIVER BY MAKER.
14. Governing Law. The Note shall be governed by and construed in
accordance with the laws of the State of Nebraska and the applicable laws of the
United States of America.
15. Miscellaneous
(a) No release of any security for the Debt or any person liable for
payment of the Debt, no extension of time for payment of this Note or any
installment hereof, and no alteration, amendment or waiver of any provision of
the Loan Documents made by agreement between Payee and any other person or party
shall release, modify, amend, waive, extend, change, discharge, terminate or
affect the liability of Maker, and any other person or party who might be or
become liable for the payment of all or any part of the Debt, under the Loan
Documents.
(b) Except as may be expressly provided for in the Loan Documents,
Maker and all others who may become liable for the payment of all or any part of
the Debt do hereby severally waive presentment and demand for payment, notice of
dishonor, protest, notice of
7
<PAGE>
protest, notice of non-payment, notice of intent to accelerate the maturity
hereof and of acceleration.
(c) This Note may not be modified, amended, waived, extended,
changed, discharged or terminated orally or by any act or failure to act on the
part of Maker or Payee, 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.
(d) Whenever used, the singular number shall include the plural, the
plural the singular, and the words "Payee" and "Maker" shall include their
respective successors, assigns, heirs, executors and administrators.
(e) If Maker consists of more than one person or party, the
obligations and liabilities of each such person or party shall be joint and
several.
(f) Upon a release of any of the hotel properties comprising the
Mortgaged Property pursuant to Section 61 of the Loan Agreement, the monthly
payments of principal and interest hereunder shall be recalculated on the basis
of the remaining principal balance of the Loan and the then remaining term of
the original 25-year amortization period.
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<PAGE>
IN WITNESS WHEREOF, Maker has duly executed this Note on the day and
year first above written.
MAKERS:
SERVICO COUNCIL BLUFFS, INC.
By: /s/ David Buddemeyer (seal)
----------------------------
David Buddemeyer
President
SERVICO WEST DES MOINES, INC.
By: /s/ David Buddemeyer (seal)
----------------------------
David Buddemeyer
President
SERVICO OMAHA, INC.
By: /s/ David Buddemeyer (seal)
----------------------------
David Buddemeyer
President
SERVICO OMAHA CENTRAL, INC.
By: /s/ David Buddemeyer (seal)
----------------------------
David Buddemeyer
President
SERVICO WICHITA, INC.
By: /s/ David Buddemeyer (seal)
----------------------------
David Buddemeyer
President
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<PAGE>
STATE OF MINNESOTA )
: ss.:
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this 17th day of
July, 1996, by David Buddemeyer, President of SERVICO COUNCIL BLUFFS, INC., an
Iowa corporation, SERVICO WEST DES MOINES, INC., an Iowa corporation, SERVICO
OMAHA, INC., a Nebraska corporation, SERVICO OMAHA CENTRAL, INC., a Nebraska
corporation, and SERVICO WICHITA, INC., a Kansas corporation, who is personally
known to me or who produced his driver's license as identification and who did
take oath, on behalf of each of the foregoing corporations.
/s/ Leeann K. Peterson
---------------------------
Notary Public
Print Name:
[NOTARY STAMP]
<PAGE>
SCHEDULE A
List of Mortgaged Property
- -------------------------------------------------------------------
Borrower Property Name & Address
- -------------------------------------------------------------------
Servico West Des Moines, Inc. Best Western
11040 Hickman Road at I-80
West Des Moines, Iowa 50325
- -------------------------------------------------------------------
Servico Council Bluffs, Inc. Best Western
3537 West Broadway
Council Bluffs, Iowa 51501
- -------------------------------------------------------------------
Servico Wichita, Inc. Holiday Inn - Wichita Airport
5500 West Kellogg
Wichita, Kansas 67209
- -------------------------------------------------------------------
Servico Omaha, Inc. Sheraton Inn
4888 South 118 Street at I-80
Omaha, Nebraska 68137
- -------------------------------------------------------------------
Servico Omaha Central, Inc. Best Western Central
3702 South 72nd Street at I-80
Omaha, Nebraska 68124
- -------------------------------------------------------------------
<PAGE>
Exhibit 10.8.1
================================================================================
LOAN AGREEMENT
between
GMAC COMMERCIAL MORTGAGE CORPORATION
Lender
and
SERVICO LANSING, INC.
Borrower
Dated: as of May 7, 1996
Property Location:
7501 West Saginaw Highway, Lansing, Michigan 48917
Shapiro, Shapses, Block & Stachenfeld LLP
1285 Avenue of the Americas
35th Floor
New York, New York 10019
Marc S. Shapiro, Esq.
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
Section
Page
1. DEFINED TERMS .......................................................... 1
2. PAYMENT OF DEBT; INCORPORATION OF COVENANTS, CONDITIONS AND AGREEMENTS . 6
3. WARRANTY OF TITLE ...................................................... 6
4. INSURANCE .............................................................. 6
5. PAYMENT OF TAXES ....................................................... 11
6. TAX AND INSURANCE ESCROW FUND .......................................... 11
7. REPLACEMENT RESERVE; REPAIR ESCROW ..................................... 12
8. CONDEMNATION ........................................................... 12
9. LEASES AND RENTS ....................................................... 14
10. REPRESENTATIONS CONCERNING LOAN ....................................... 16
11. SINGLE PURPOSE ENTITY; AUTHORIZATION .................................. 18
12. MAINTENANCE OF MORTGAGED PROPERTY ..................................... 19
13. TRANSFER OR ENCUMBRANCE OF THE MORTGAGED PROPERTY ..................... 20
14. ESTOPPEL CERTIFICATES; AFFIDAVITS ..................................... 22
15. CHANGES IN THE LAWS REGARDING TAXATION ................................ 22
16. NO CREDITS ON ACCOUNT OF THE DEBT ..................................... 22
17. DOCUMENTARY STAMPS .................................................... 22
18. CONTROLLING AGREEMENT ................................................. 23
19. BOOKS AND RECORDS ..................................................... 23
20. PERFORMANCE OF OTHER AGREEMENTS ....................................... 24
21. FURTHER ASSURANCES; RIGHT TO SPLIT THE LOAN ........................... 24
22. RECORDING OF MORTGAGE ................................................. 25
23. REPORTING REQUIREMENTS ................................................ 25
24. EVENTS OF DEFAULT ..................................................... 25
25. LATE PAYMENT CHARGE; SERVICING FEES ................................... 27
i
<PAGE>
26. RIGHT TO CURE DEFAULTS ................................................ 27
27. REMEDIES .............................................................. 27
28. RIGHT OF ENTRY ........................................................ 31
29. SECURITY AGREEMENT .................................................... 31
30. ACTIONS AND PROCEEDINGS ............................................... 31
31. WAIVER OF SETOFF AND COUNTERCLAIM ..................................... 32
32. CONTEST OF CERTAIN CLAIMS ............................................. 32
33. RECOVERY OF SUMS REQUIRED TO BE PAID .................................. 32
34. MARSHALLING AND OTHER MATTERS ......................................... 33
35. HAZARDOUS SUBSTANCES .................................................. 33
36. ASBESTOS .............................................................. 34
37. ENVIRONMENTAL MONITORING .............................................. 34
38. MANAGEMENT OF THE HOTEL ............................................... 35
39. HANDICAPPED ACCESS .................................................... 36
40. ERISA ................................................................. 37
41. INDEMNIFICATION ....................................................... 37
42. NOTICE ................................................................ 39
43. AUTHORITY ............................................................. 39
44. WAIVER OF NOTICE ...................................................... 39
45. REMEDIES OF BORROWER .................................................. 39
46. SOLE DISCRETION OF LENDER ............................................. 39
47. NON-WAIVER ............................................................ 39
48. NO ORAL CHANGE ........................................................ 40
49. LIABILITY ............................................................. 40
50. INAPPLICABLE PROVISIONS ............................................... 40
51. SECTION HEADINGS ...................................................... 40
52. COUNTERPARTS .......................................................... 40
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<PAGE>
53. CERTAIN DEFINITIONS ................................................... 40
54. HOMESTEAD ............................................................. 41
55. ASSIGNMENTS ........................................................... 41
56. SUBMISSION TO JURISDICTION ............................................ 41
57. AGENT FOR RECEIPT OF PROCESS .......................................... 41
58. SERVICE OF PROCESS .................................................... 42
59. WAIVER OF JURY TRIAL .................................................. 42
60. CHOICE OF LAW ......................................................... 42
61. LIMITATIONS ON RECOURSE ............................................... 42
62. CASH MANAGEMENT ARRANGEMENTS .......................................... 42
iii
<PAGE>
LOAN AGREEMENT
This LOAN AGREEMENT dated as of May 7, 1996, between SERVICO
LANSING, INC., a Michigan corporation having its principal place of business at
c/o Servico, Inc., 1601 Belvedere Road, West Palm Beach, Florida 33406
("Borrower"), and GMAC COMMERCIAL MORTGAGE CORPORATION, a California
corporation, having an address at 8614 Westwood Center Drive, Suite 630, Vienna,
Virginia 22182 ("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 $5,687,000.00 (the "Loan") secured by a
mortgage lien on, and security interest in, Borrower's interest in and to the
real and personal property comprising the hotel located at 750 1 West Saginaw
Highway, Lansing, Michigan 48917;
WHEREAS, the Loan is evidenced by a certain Mortgage Note dated the
date hereof made by Borrower in favor of Lender (the "Note") and secured by,
among other things, a certain Mortgage, Deed of Trust, Assignment of Leases and
Rents and Security Agreement dated as of the date hereof and encumbering the
Mortgaged Property (the "Mortgage"; the Note, the Mortgage, this Agreement and
all other documents executed or delivered in connection with the Loan,
collectively, the "Loan Documents"); and
WHEREAS, Lender and Borrower 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.
(b) "Asbestos" has the meaning set forth in Section 36 hereof.
(c) "Assignment" has the meaning set forth in Section 2 hereof.
(d) "Borrower" has the meaning set forth in the preamble to this
Agreement.
(e) "Cash Management Agreement" has the meaning set forth in Section
11 hereof.
(f) "Collateral" has the meaning set forth in Section 29 hereof.
(g) "Condemnation" has the meaning set forth in Section 8 hereof.
(h) "Debt" means the outstanding principal balance of the Note from
time to time, with all accrued and unpaid interest thereon, and all other sums
now or hereafter due under the Loan Documents.
<PAGE>
(i) "Debt Service Coverage Ratio" shall mean the ratio of: (i) the
NOI produced by the operation of the Mortgaged Property during the 12 calendar
month period ending one month prior to the month immediately preceding the
calculation to (ii) the payments of principal and interest due under this Loan
Agreement and the Note for the 12 calendar month period immediately following
the calculation (or imputed for such period if such payments have actually
accrued for less than 12 calendar months).
(j) "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.
(k) "Environmental Agreement" has the meaning set forth in Section 2
hereof.
(l) "Environmental Laws" has the meaning set forth in Section 35
hereof.
(m) "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 Borrower, or in which
Borrower 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 Borrower, or in which Borrower 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 Premises and the Improvements.
(n) "ERISA" has the meaning set forth in Section 40 hereof.
(o) "Event of Default" has the meaning set forth in Section 24
hereof.
(p) "Expenses" means the aggregate of the following items actually
incurred by Borrower, whether or not paid, dining the 12 month period ending one
month prior to the date on which the NOI is to be calculated (except that
reserves set forth in subsection (viii) below shall be adjusted by Lender to
reflect projected adjustments for the subsequent 12 month period beginning on
the date on which the NOI is to be calculated):
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(i) Taxes and Other Charges (but specifically excluding income
tax);
(ii) sales, use and personal property taxes;
(iii) management fees of four (4%) percent of the gross income
derived from the operation of the Mortgaged Property and disbursements;
(iv) wages, salaries, pension costs and all fringe and other
employee-related benefits and expenses;
(v) franchise fees and other fees due under the Franchise
Agreement;
(vi) Insurance Premiums;
(vii) the cost of utilities, and all other administrative,
management, ownership, operating, leasing and maintenance expenses
incurred in connection with the operation of the Mortgaged Property;
(viii) the cost of necessary repair of existing improvements
on the Mortgaged Property with repairs necessary to maintain the Mortgaged
Property to the same standards as competitive properties of similar size
and location to the Mortgaged Property or that are required under the
Franchise Agreement, together with adequate reserves for the repair of
capital improvements on the Mortgaged Property, not to exceed four (4%)
percent of gross income from the Mortgaged Property;
(ix) the cost of any other maintenance materials, heating,
ventilation and air conditioning (HVAC) repairs, parts and supplies, and
equipment; and
(x) all ordinary and customary expenses duly and appropriately
incurred in connection with the use and operation of the Mortgaged
Property but specifically excluding depreciation and other similar
non-cash items, distributions of earnings to members, partners or
shareholders of the entities comprising Borrower and debt service payable
in respect of the Loan and any other indebtedness of Borrower.
(q) "Franchise Agreement" means the ____________________ dated
_______________________ (or such other agreement governing the franchise
arrangements between Borrower and Holiday Inns Franchising, Inc. on and as of
the date hereof) between Borrower and Holiday Inns Franchising, Inc. pursuant to
which Borrower has the right to operate the hotel located on the Mortgaged
Property under a name and/or hotel system controlled by such franchisor.
(r) "Franchisor" means Holiday Inns Franchising, Inc..
(s) "Guarantor" means any guarantor of all or any part of the Debt.
(t) "Hazardous Substances" has the meaning set forth in Section 35
hereof.
(u) "Improvements" means the buildings, structures, fixtures,
additions, enlargements, extensions, modifications, repairs, replacements and
improvements now or hereafter located on the Premises.
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(v) "Insurance Premiums" has the meaning set forth in Section 4(d)
hereof.
(w) "Insured Casualty" has the meaning set forth in Section 4(e)(ii)
hereof.
(x) "Intangibles" means, without limitation, all of Borrower's
right, title and interest in and to all accounts, 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.
(y) "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.
(z) "Lender" has the meaning set forth in the preamble to this
Agreement.
(aa) "Loan" has the meaning set forth in the recitals of this
Agreement.
(bb) "Loan Documents" has the meaning set forth in the recitals of
this Agreement.
(cc) "Loan-to-Value Ratio" means the ratio of: (i) the Debt, plus
all other debt (or other liquidated economic obligations) which are then
outstanding and secured by the 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).
(dd) "Management Agreement" means the Consulting Agreement dated as
of the date hereof between Borrower and Servico Management Corp. pursuant to
which such manager operates the Mortgaged Property as a hotel.
(ee) "Maturity Date" means the Maturity Date (as such term is
defined in the Note).
(ff) "Mortgage" has the meaning set forth in the recitals of this
Agreement.
(gg) "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,
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,
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plans, specifications and other documents, now or hereafter entered into, and
all proceeds, substitutions and replacements thereof.
(hh) "NOI" means the gross income derived from the operation of the
Mortgaged Property less Expenses, adjusted as Lender deems reasonably necessary
to reflect the actual net operating income of the Mortgaged Property. NOI shall
include only Rents and such other income, including any rent loss, business
interruption or business income insurance proceeds, vending or concession
income, late fees, forfeited security deposits and other miscellaneous tenant
charges, and Expenses booked during the period for 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 generally accepted
accounting principles consistently applied.
(ii) "Note" has the meaning set forth in the recitals of this
Agreement.
(jj) "Other Charges" has the meaning set forth in Section 5 hereof.
(kk) "Policies" has the meaning set forth in Section 4(d) hereof.
(ll) "Premises" means the real property comprising the Mortgaged
Property, more particularly described on Exhibit A to the Mortgage.
(mm) "Remedial Work" has the meaning set forth in Section 37 hereof.
(nn) "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
Borrower 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.
(oo) "Repair Agreement" has the meaning set forth in Section 7
hereof.
(pp) "Repair Escrow" has the meaning set forth in Section 7 hereof.
(qq) "Replacement Agreement" has the meaning set forth in Section 7
hereof.
(rr) "Replacement Reserve" has the meaning set forth in Section 7
hereof.
(ss) "Securities" has the meaning set forth in Section 21 hereof.
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(tt) "Servicer" means the servicer of the Loan designated by Lender,
in its sole and absolute discretion, from time to time.
(uu) "Tax and Insurance Escrow Fund" has the meaning set forth in
Section 6 hereof
(vv) "Taxes" has the meaning set forth in Section 5 hereof.
(ww) "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.
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; (ii) next, to required deposits to the
Replacement Reserve as provided in the Replacement Agreement; (iii) next, to
reimburse Lender for any unpaid costs and expenses incurred by Lender on
Borrower's behalf; (iv) next, to accrued and unpaid interest on the Loan; and
(v) last, to the reduction of the principal balance of the Loan; 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 Borrower to Lender (the "Assignment"), the Environmental
Indemnity Agreement dated as of the date hereof among Lender, Borrower and
Servico, Inc. (the "Environmental Agreement") 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.
3. Warranty of Title
Borrower represents and warrants that Borrower has good, marketable
and insurable fee simple title to the Mortgaged Property 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, to the extent
that such non-assignable permits, licenses, contracts and franchises exist, each
has been disclosed to and approved by Lender) and that Borrower possesses an
unencumbered fee estate in the Premises and the Improvements, and 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, 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) Borrower, at its sole cost and expense, will keep the Mortgaged
Property insured during the entire term of this Agreement for the mutual benefit
of Borrower and Lender against loss or
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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 Borrower a co-insurer under such policies. The deductible in respect of
such insurance shall be reasonably satisfactory to Lender. From time to time,
upon Lender's request, Borrower 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) Borrower shall also obtain and maintain during the entire term
of this Agreement, at its sole cost and expense, for the mutual benefit of
Borrower 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 (and any amendment or successor act
thereto) in an amount at least equal to the lesser of: (A) the outstanding
principal amount of the Note; 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 one year 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 six months
from the date of the loss, whichever first occurs, and notwithstanding
that the policy
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may expire prior to the end of such period; and (D) in an amount equal to
the sum of Expenses and NOI, in each case for the preceding full calendar
year. 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 Borrower'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 Borrower, 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) Borrower's personnel; (B) any employees
of outside firms that provided appraisal, legal, data processing, or other
services for Borrower; and (C) temporary contract employees or student
interns.
(ix) Earthquake insurance (including subsidence), if the
Mortgaged Property is located in an earthquake prone region 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) Borrower 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
F.W. Dodge Building Index 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.
(d) All policies of insurance required pursuant to this Section
(collectively, the "Policies") shall: (i) be issued by an insurer with an
investment grade rating for claims paying ability by Moody's Investors Service,
Inc., Standard & Poor's Rating Group, Fitch Investor Service and Duff & Phelps,
Inc., if rated; (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
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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 Borrower, 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.
Borrower shall pay the premiums for the Policies (the "Insurance Premiums") as
they become due and payable. Not later than 10 days prior to the expiration date
of each of the Policies, Borrower will deliver to Lender satisfactory evidence
of the renewal of each Policy.
(e) If the Mortgaged Property shall be damaged or destroyed, in
whole or in part, by fire or other casualty, Borrower 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 Borrower 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 Borrower 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 $100,000.00 such
proceeds shall be paid to Borrower 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 Borrower 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 $100,000.00 where: (A) the proceeds of insurance are sufficient to
enable Borrower to fully restore the Mortgaged Property (or Borrower
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, Borrower's business interruption insurance
(or other similar insurance) shall be sufficient to fully cover the period
that the Mortgaged Property is undergoing restoration (or Borrower
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 .6:1.0; (E) the Franchise Agreement has not
been, and cannot be, terminated as a result of the Insured Casualty; (F)
the restoration can be completed within 18 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 (H) the Debt Service Coverage
Ratio upon completion is reasonably anticipated to be at least 1.65:1,
then, if no Event of Default shall have occurred and be continuing, the
proceeds of insurance shall be paid to Borrower 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
Borrower 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
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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 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 Borrower 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. Any such
application to the Debt shall not be considered a voluntary prepayment requiring
payment of the prepayment consideration provided in the Note, except that if an
Event of Default, or an event which, with notice and/or the passage of time, or
both, would constitute an Event of Default, has occurred, then such application
shall be subject to the prepayment consideration computed in accordance with the
Note, if any. 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 Borrower for the restoring, repairing, replacing or rebuilding of
the Mortgaged Property, Borrower 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 Borrower 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.
(v) In the event Borrower 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 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 Borrower 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
Borrower is not then in default of its obligations under the Loan Documents.
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(f) Borrower 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 Borrower and Lender, as
their respective interests may appear, and shall be subject to all other
provisions of this Section.
5. Payment of Taxes
Borrower 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, 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. Borrower 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.
Borrower 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. Borrower shall furnish to Lender or its designee
receipts for the payment of the Taxes prior to the date the such obligations
shall become delinquent. Borrower 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 Borrower 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 and Insurance Escrow Fund
(a) Borrower 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) 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"). 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
Borrower to Lender. Borrower 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 Borrower
pursuant to Sections 4 and 5 hereof. Provided that sufficient funds are then
available to pay the current Taxes, 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 Borrower 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, Borrower 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
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and Insurance Escrow Fund shall not constitute a trust fund and may be
commingled with other monies held by Lender. No earnings or interest on the Tax
and Insurance Escrow Fund shall be payable to Borrower.
(b) Anything to the contrary contained herein notwithstanding,
Borrower shall be required to make the payments described in clause (ii) of
subsection (a) of this Section only upon Borrower's failure to maintain the
insurance required pursuant to Section 4 hereof or to furnish evidence of
payment as provided in Section 4 hereof.
7. Replacement Reserve; Repair Escrow
(a) Lender has this day established an interest bearing reserve
account at a federally insured institution (the "Replacement Reserve"), the
balance of which shall be maintained and disbursed in accordance with the
Replacement Reserve Agreement dated as of the date hereof between Borrower and
Lender (the "Replacement Agreement"). Borrower shall deposit with Lender, on the
first day of each calendar month during any given fiscal year, an amount equal
to one-twelfth of four (4%) percent of the gross income derived from the
Mortgaged Property during the preceding fiscal year. For the remaining portion
of Borrower's current fiscal year, Borrower shall deposit $12,520.00 monthly
into the Replacement Reserve. Notwithstanding anything to the contrary in this
Section, in no event shall the monthly payments in respect of the Replacement
Reserve ever fall below $12,520.00 as more particularly set forth in the
Replacement Agreement. Borrower hereby pledges to Lender any and all monies now
or hereafter deposited in the Replacement Reserve as additional security for the
payment of the Debt. All earnings or interest on the Replacement Reserve shall
be and become part of such Replacement Reserve and shall be disbursed as
provided in the Replacement Agreement and in this Section.
(b) Borrower has this day deposited with Lender, and Lender has this
day established, an interest bearing escrow account at a federally insured
institution the sum of $1,079,000.00 (the "Repair Escrow") to be maintained and
disbursed in accordance with the Repair Escrow Agreement dated as of the date
hereof between Borrower and Lender (the "Repair Agreement"). Borrower hereby
pledges to Lender any and all monies now or hereafter deposited in the Repair
Escrow as additional security for the payment of the Debt. All earnings or
interest on the Repair Escrow shall be and become part of such Repair Escrow and
shall be disbursed as provided in the Repair Agreement and in this Section.
(c) Funds on deposit with Lender shall be invested in direct
obligations of, or obligations fully guaranteed as to payment of principal and
interest by, the United States or any agency or instrumentality thereof,
provided that such obligations are backed by the full faith and credit of the
United States of America, or are fully FDIC-insured demand and time deposits.
Lender shall exercise best efforts to direct such investments to obtain for
Borrower the highest rate of return, given the amounts available for investment
and Borrower's timing requirements as communicated to Lender for access to the
funds.
8. Condemnation
(a) Borrower 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
Borrower'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
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such taking), Borrower 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.
(i) In the case of a Condemnation, Lender may participate in
the settlement and adjustment of any claim; provided, however, that
Borrower 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 $100,000.00 such award shall be paid to Borrower for the cost of
restoring, repairing, replacing or rebuilding the Mortgaged Property or
the part thereof subject to the Condemnation, as provided below, and
Borrower 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 $100,000.00
where: (A) the Condemnation award or proceeds are sufficient to enable
Borrower to fully restore the Mortgaged Property (or Borrower 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, Borrower's business interruption insurance (or
other similar insurance) shall be sufficient to fully cover the period
that the Mortgaged Property is undergoing restoration (or Borrower
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 .6:1.0; (E) the Franchise Agreement has not
been, and cannot be, terminated as a result of the Condemnation; (F) the
restoration can be completed within 18 months from the date that the
Condemnation 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 (H) the Debt Service Coverage
Ratio upon completion is reasonably anticipated to be at least 1.65:1,
then, if no Event of Default shall have occurred and be continuing, the
Condemnation award or proceeds shall be paid to Borrower 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
Borrower 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 Debt Service Coverage Ratio shall be calculated using the
appraiser's estimate of NOI.
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(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 Borrower 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. Any such application to the Debt shall not be considered a
voluntary prepayment requiring payment of the prepayment consideration
provided in the Note, except that if an Event of Default, or an event
which, with notice and/or the passage of time, or both, would constitute
an Event of Default, has occurred, then such application shall be subject
to the prepayment consideration computed in accordance with the Note, if
any. 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 Borrower for the restoring, repairing,
replacing or rebuilding of the Mortgaged Property, Borrower 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 Borrower 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.
(v) In the event Borrower 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 Borrower 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 Borrower, provided such restoration was
performed in accordance with the provisions of this Section, and Borrower
is not then in default of its obligations under the Loan Documents.
9. Leases and Rents
(a) In connection with the Loan, Borrower has absolutely and
unconditionally assigned to Lender all of Borrower'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
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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. Borrower 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 Borrower a revocable license to operate and manage the Mortgaged
Property and to collect the Rents. Borrower shall hold the Rents, 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 Borrower shall automatically be
revoked, and Lender shall immediately be entitled to possession of all Rents,
whether or not Lender enters upon or takes control of the Mortgaged Property.
Lender is hereby granted and assigned by Borrower 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. Any
Rents 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) Borrower shall furnish Lender with executed copies of all Leases
for space in excess of 1,000 square feet at 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 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 shall provide that they
are subordinate to the Mortgage and that the lessee agrees to attorn to Lender.
Borrower shall: (A) observe and perform all the obligations imposed upon the
lessor under the Leases 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 Borrower 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 (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; (E) not execute any 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 cancelled 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 cancelled 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, 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.
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(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
Borrower and, if cash, shall be deposited by Borrower at such commercial or
savings bank or banks as may be reasonably satisfactory to Lender. Any bond or
other instrument which Borrower 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. Borrower shall, upon request, provide Lender
with evidence reasonably satisfactory to Lender of Borrower's compliance with
the foregoing. Following the occurrence and during the continuance of any Event
of Default, Borrower 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
Borrower 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 Borrower, 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.
(b) To the best of Borrower'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, with respect to the liquor license)
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 Borrower's knowledge, threatened for the total or partial
condemnation of, or affecting, the Mortgaged Property.
(c) 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 except as shown on the
surveys furnished to Lender in connection with the Loan and, except as shown on
such surveys, 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 Borrower 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 Borrower's knowledge after due
inquiry, all of the Improvements comply with all requirements of applicable
building codes, zoning and subdivision laws and ordinances.
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(d) To the best of Borrower'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 Borrower's business.
(e) The survey of the Mortgaged Property delivered to Lender in
connection with this Agreement has been performed by a duly licensed surveyor or
registered professional engineer in the jurisdiction in which the Mortgaged
Property is situated, and to the best of Borrower'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 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 Borrower, and are prepared in
accordance with generally accepted accounting principles, consistently applied.
Borrower 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 Borrower and which, in Borrower'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
statements heretofore furnished to Lender or as otherwise disclosed to Lender
herein. Since the last date of such financial statements, there has been no
material adverse change in the financial condition, operations or business of
Borrower 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,
Borrower's performance thereunder, the recordation of the Mortgage, nor the
exercise of any remedies by Lender, will adversely affect (A) Borrower's rights
under either the Franchise Agreement or the Management Agreement or (B) the
licenses, registrations, permits, certificates, authorizations and approvals
necessary for the operation of the Mortgaged Property as a hotel.
(j) The current Leases are in full force and effect and there are no
defaults thereunder by either party and there are no conditions which with the
passage of time and/or notice would constitute defaults thereunder.
(k) If requested by Lender from time to time, Borrower shall
cooperate with Lender and permit Lender to obtain, at Lender's sole cost and
expense, a current MAI appraisal of the Mortgaged Property.
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11. Single Purpose Entity; Authorization
Except as otherwise provided for herein, in the other Loan Documents
or in that certain Cash Management Agreement dated as of January 31, 1995 among
Servico, Inc., Servico Management Corporation and various other affiliates of
Servico, Inc., as amended to date (as so amended, the "Cash Management
Agreement"), Borrower represents and warrants, and covenants for so long as any
obligations secured by the Mortgage remain outstanding, as follows:
(a) Borrower does not and will not own any asset or property other
than: (i) the Mortgaged Property; and (ii) incidental personal property
necessary for the ownership or operation of the Mortgaged Property.
(b) Borrower does not and will not engage in any business other than
the ownership, management and operation of the Mortgaged Property, and Borrower
will conduct and operate its business in all material respects as presently
conducted and operated.
(c) Except with respect to the Management Agreement and the Cash
Management Agreement which, in their present forms, are acceptable to Lender,
Borrower will not enter into any contract or agreement with any Guarantor or an
affiliate, except upon terms and conditions that are intrinsically fair and
substantially similar to those that would be available on an arms-length
third-party basis.
(d) Borrower has not incurred and will not incur any indebtedness,
secured or unsecured, direct or indirect, absolute or contingent (including
guaranteeing any obligation), other than: (i) the Debt; and (ii) trade and
operational debt incurred in the ordinary course of business with trade
creditors and in amounts as are customary and reasonable under the
circumstances. Except with Lender's prior written approval in each instance, no
indebtedness other than the Debt is or shall be secured by the Mortgaged
Property. Lender's approval shall be granted or withheld at Lender's sole
discretion. Notwithstanding the preceding sentence, Borrower may lease or
purchase on an installment basis, telephone systems, televisions, property
management systems, HVAC units, signage, copy machines, electronic lock systems,
laundry equipment and similar equipment in the ordinary course of its business
so long as: (A) the annual payments for all such equipment (excluding payments
in respect of such equipment under leases existing on and as of the date hereof
and to which leases Lender has consented) for the Mortgaged Property does not
exceed $20,000; and (B) the Debt Service Coverage Ratio is not less than 1.40:1.
(e) Borrower has not made and will not make any loans or advances to
any third party (including any constituent party, any Guarantor or any affiliate
of Borrower, of any constituent party or of any Guarantor), except in de minimus
amounts in the ordinary course of business and of the character of trade or
operational expenses.
(f) Borrower has done or caused to be done, and will do or cause to
be done, all things necessary to preserve its existence, and Borrower will not,
nor will Borrower permit any constituent party or Guarantor, to amend, modify or
otherwise change the partnership certificate, partnership agreement, articles of
incorporation and bylaws, trust or other organizational documents, as the case
may be, of Borrower or such constituent party or Guarantor in a manner which
would adversely affect the Borrower's existence as a single purpose entity.
(g) Borrower will maintain books and records and bank accounts
separate from those of its affiliates and any constituent party. Borrower shall
not change the principal place of its business without providing Lender with at
least 30 days prior written notice of such change to Lender.
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(h) Borrower is and will be, and at all times will hold itself out
to the public as, a legal entity separate and distinct from any other entity
(including any affiliate of Borrower, any constituent party, any Guarantor or
any affiliate of any constituent party or Guarantor).
(i) Neither Borrower nor any constituent party will cause or seek
the dissolution or winding up, in whole or in part, of Borrower.
(j) Borrower will not commingle its funds and other assets with
those of any constituent party, any Guarantor, any affiliate of Borrower, of any
constituent party or of any Guarantor, or any other person.
(k) Borrower will not file or consent to the filing of any petition
to take advantage of any applicable insolvency, bankruptcy, liquidation or
reorganization statute, or make an assignment for the benefit of creditors.
(l) Borrower does not and will not hold itself out to be responsible
for the debts or obligations of any other person.
(m) Borrower shall at all times maintain at least one duly appointed
independent member of the Board of Directors of Borrower, which member has not
been at the time of such individual's appointment and may not have been at any
time during the preceding two years: (i) a stockholder of, or an officer or an
employee of Borrower; (ii) a customer of or supplier to Borrower; (iii) a person
or other entity controlling any such stockholder, officer, employee, customer or
supplier; or (iv) a member of the immediate family of any such stockholder,
officer, employee, customer or supplier or any other director of Borrower. As
used in this subsection (m), the term "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of such person or entity, whether through ownership of voting
securities by contract or otherwise. Notwithstanding anything to the contrary
provided herein, such independent director may serve as a member of the Boards
of Directors of other entities affiliated with the Servico Entities (as such
term is defined in Section 13(d)).
12. Maintenance of Mortgaged Property
Borrower 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) without the consent of Lender. Borrower shall promptly comply
with all laws, orders and ordinances affecting the Mortgaged Property, or the
use thereof. Borrower 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, Borrower 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, Borrower 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, Borrower will not
cause or permit such nonconforming use to be discontinued or abandoned without
the prior written consent of Lender. Borrower shall not: (a) change the use of
the Mortgaged Property as currently configured and
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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.
13. Transfer or Encumbrance of the Mortgaged Property
(a) Borrower acknowledges that Lender has examined and relied on the
creditworthiness and experience of Borrower and its principals 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 Borrower's
ownership of the Mortgaged Property as a means of maintaining the value of the
Mortgaged Property as security for repayment of the Debt. Borrower acknowledges
that Lender has a valid interest in maintaining the value of the Mortgaged
Property so as to ensure that, should Borrower default in the repayment of the
Debt, Lender can recover the Debt by a sale of the Mortgaged Property. Except in
accordance with the terms of the Loan Documents, Borrower 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) Subject to the express provisions of subsections (d) and (e) of
this Section, 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 Borrower agrees to sell the Mortgaged
Property or any part thereof for a price to be paid in installments; (ii) an
agreement by Borrower 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,
Borrower's right, title and interest in and to any Leases or any Rents; and
(iii) if Borrower or any Guarantor is a corporation, the voluntary or
involuntary sale, conveyance or transfer to any entity or "controlled group" (as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934) which is not
affiliated with such corporation in excess of forty-nine (49%) percent 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 by which an
aggregate of stock representing more than forty-nine (49%) percent of any such
corporation's total outstanding stock having the power to vote for the election
of directors shall be vested in a party or controlled group (as defined above)
who are not now stockholders.
(c) Except in accordance with the terms of the Loan Documents, no
sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer of the
Mortgaged Property, or of any interest therein, shall be permitted during the
term of the Loan without Lender's prior written approval. 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 Borrower's sale, conveyance, alienation, mortgage, encumbrance,
pledge or transfer of the Mortgaged Property without Lender's consent. This
provision shall apply to every sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Mortgaged Property regardless of whether
voluntary or not, or whether or not Lender has consented to any previous sale,
conveyance, alienation, mortgage, encumbrance, pledge or transfer of the
Mortgaged Property.
(d) Notwithstanding anything contained herein to the contrary, but
subject to the requirements of subsection (f) of this Section, upon any transfer
of capital stock in Servico, Inc., Servico Operations Corp. or Servico
Management Corp. (collectively, the "Servico Entities") resulting in a change of
control thereof, or upon the sale of all or substantially all of the assets of
any of the Servico Entities, in
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either case provided that Securities have not been issued, which change of
control or sale of assets, as the case may be, in Lender's good faith judgment,
would have an adverse effect on the Loan's ability to support at least a BBB-
rating from any nationally recognized rating agency such as Moody's Investors
Service, Inc., Standard & Poor's Rating Group, Fitch Investor Service or Duff &
Phelps, Inc. (the "Implied Rating"), Borrower shall upon demand make a
prepayment of the principal amount of the Debt in an amount sufficient, in
Lender's good faith judgment, to restore the Loan's ability to support the
Implied Rating, together with any prepayment consideration payable under the
Note. If the Loan's ability to support the Implied Rating cannot, in Lender's
good faith judgment, be restored by such partial prepayment, the entire Debt,
together with any prepayment consideration payable under the Note, shall become
due and payable upon ten days notice from Lender. A transfer under this
subsection (d) shall not constitute a transfer prohibited under subsection (a)
or (b) of this Section or with respect to which subsections (c) and (h) of this
Section shall apply.
(e) Notwithstanding anything contained herein to the contrary, but
subject to the requirements of subsection (f) of this Section, upon any transfer
of capital stock in any of the Servico Entities resulting in a change of control
thereof, or upon the sale of all or substantially all of the assets of any of
the Servico Entities, in either case when Securities have been issued, unless
such of Moody's Investors Service, Inc., Standard & Poor's Rating Group, Fitch
Investor Service and Duff & Phelps, Inc. (or other nationally recognized rating
agency) as have rated the Securities confirms in writing that as a result of
such change of control or sale of assets, as the case may be, its then current
rating of the Securities will not be downgraded, withdrawn or adversely
affected, then Borrower shall upon demand make a prepayment of the principal
amount of the Debt in an amount necessary to prevent such downgrade, withdrawal
or other adverse effect, together with any prepayment consideration payable
under the Note. If such downgrade, withdrawal or other adverse effect cannot be
prevented by such partial prepayment, the entire Debt, together with any
prepayment consideration payable under the Note, shall become due and payable
upon ten days notice from Lender. A transfer under this subsection (e) shall not
constitute a transfer prohibited under subsection (a) or (b) of this Section or
with respect to which subsections (c) and (h) of this Section shall apply.
(f) Any transferee of the capital stock of any of the Servico
Entities (which underlying transfer results in a change of control thereof), or
any transferee of all or substantially all of the assets of any of the Servico
Entities, in either case in accordance with subsections (d) and (e) of this
Section, shall satisfy each of the following requirements: (i) such transferee
shall execute an assumption agreement in form and substance reasonably
acceptable to Lender; (ii) such transferee shall have a minimum tangible net
worth of not less than $45 million; and (iii) such transferee shall have a
maximum debt-to-equity ratio of 3.5:1. Borrower shall reimburse Lender for all
of its actual out of pocket expenses and third-party costs (including attorneys
fees and expenses) in connection with such transfer and assumption, in no event
to exceed $50,000 with respect to each such transfer.
(g) Lender's consent to one 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.
(h) Borrower 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, title search costs and title
insurance endorsement premiums) incurred by Lender in
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connection with the review, approval or disapproval, and documentation of any
such sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer.
14. Estoppel Certificates; Affidavits
(a) Within ten (10) days after request, Borrower 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 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 Borrower 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, Borrower shall furnish Lender
with a certificate reaffirming all representations and warranties of Borrower
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) Borrower 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
Borrower shall not be required to deliver such certificates more frequently than
two times in any calendar year.
15. Changes in the Laws Retarding 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 imposes a tax, either directly or indirectly,
on the Debt or Lender's interest in the Mortgaged Property, Borrower 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
Borrower 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.
16. No Credits on Account of the Debt
Borrower 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
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mortgage filing privilege tax) to be affixed to the Note or the Mortgage, or
shall impose any other tax or charge on the same, Borrower 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 Borrower
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 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
Borrower will maintain full and accurate books of accounts and other
records reflecting the operations of the Mortgaged Property. Borrower will
furnish, or cause to be furnished to Lender, within 30 days of the end of each
calendar month, the following items, each certified by a senior financial
officer of Borrower as true, correct and complete as of the end of and for such
period (subject to normal year-end adjustments), and as having been prepared in
accordance with generally accepted accounting principles, consistently applied:
(a) if requested by Lender, a written occupancy statement dated as of the last
day of the most recently ended calendar quarter identifying each of the Leases
by the term, space occupied, rental required to be paid, security deposit paid,
any rental concessions, and identifying any defaults or payment delinquencies
thereunder; (b) monthly and year to date operating statements detailing the
total revenues received and total expenses incurred in connection with the
ownership and operation of the Mortgaged Property, including a comparison of the
budgeted income and expenses and the actual income and expenses for such month
and the year to date (which operating information shall include the
Improvements); and (c) a written statement dated as of the last day of the most
recently ended month showing the percentage of rooms rented and occupied during
such month and the average daily room rate charged during such month. Upon
request by Lender, Borrower will provide a detailed explanation of any variances
of ten (10%) percent or more between budgeted and actual amounts for such
periods. Borrower shall furnish, within 120 days following the end of each
calendar year, a statement of the financial affairs and condition of the
Mortgaged Property, including a statement of profit and loss and a balance sheet
for the Mortgaged Property for the immediately preceding fiscal year, prepared
by an independent certified public accountant acceptable to Lender. Borrower
shall deliver to Lender on or before December 31 of each calendar year an
itemized
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operating budget and capital expenditure budget for the Mortgaged Property and a
management plan for the Mortgaged Property for the next succeeding calendar year
in such detail as Lender may reasonably request. Borrower shall promptly after
receipt deliver to Lender copies of all quality inspection reports or similar
reports or inspection results that are delivered to it by the Franchisor. At any
time and from time to time Borrower shall deliver to Lender or its agents such
other financial data as Lender or its agents shall reasonably request with
respect to Borrower and the ownership, maintenance, use and operation of the
Mortgaged Property. All information required to be furnished to Lender pursuant
to this Section shall be on the form provided by Lender (which form shall
accompany Lender's request).
20. Performance of Other Agreements
Borrower shall observe and perform each and every term to be
observed or performed by Borrower 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
Borrower under the Loan Documents.
21. Further Assurances; Right to Split the Loan
(a) Borrower will, at the cost of Borrower, 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 Borrower 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. Borrower, on demand, will execute and deliver and hereby
authorizes Lender, whether or not there has occurred an Event of Default, to
execute in the name of Borrower or without the signature of Borrower 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. Borrower 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
Borrower is in compliance with the terms and conditions of this Agreement,
Lender will first seek Borrower's assistance in exercising and perfecting such
rights and remedies.
(b) Borrower acknowledges that Lender intends to sell the loan
evidenced by the Note and the Loan Documents to a party who may pool the Loan
with a number of other loans and to have the holder of such loans grant
participations therein or 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 Borrower act as issuer
or depositor, or execute any registration statement, offering circular or
memorandum in connection with the offering of Securities. The Securities may be
rated by one or more national rating agencies. In this regard, Borrower agrees
to make available to Lender, at Lender's sole cost and expense, all information
concerning its business and operations which Lender reasonably requests. Lender
may share such information with the investment banking firms, rating agencies,
accounting firms, law firms and other third-party advisory firms involved with
the Loan or the Securities. It is understood that the information provided by
Borrower 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
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notwithstanding, Borrower shall have no liability by reason of the offering or
issuance of the Securities: provided, however, that nothing herein shall operate
in derogation of any obligation of Borrower under the Loan Documents.
(c) Lender shall have the right, at any time in its sole and
absolute discretion, to split and sever the Loan into two or more separate
loans. Borrower 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 Borrower's liability or
obligations hereunder, and Lender shall pay all of Borrower's actual out of
pocket expenses and third-party costs (including attorneys fees and expenses
(including on appeal)) in connection with such splitter and severance.
22. Recording of Mortgage
Borrower 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. Borrower will pay all filing, registration or
recording fees, 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. Borrower 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
Borrower agrees to give prompt notice to Lender of the insolvency or
bankruptcy filing of Borrower or any constituent thereof, or the death,
insolvency or bankruptcy filing of any Guarantor.
24. Events of Default
The term "Event of Default" as used herein shall mean the occurrence
or 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 tenth (10th)
day after the date such payment is due or if the entire Debt is not paid on or
before the Maturity Date;
(b) subject to Borrower'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 Borrower transfers or encumbers any portion of the Mortgaged
Property in a manner inconsistent with the terms of this Agreement;
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(e) if any representation or warranty of Borrower, or of any
Guarantor, made herein, in any Loan Document, any 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 Borrower 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 Borrower or of any
Guarantor shall be appointed, or if Borrower 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, Borrower or any Guarantor or if any proceeding for the dissolution or
liquidation of Borrower or of any Guarantor shall be instituted; provided,
however, that such appointment, adjudication, petition or proceeding, if
involuntary and not consented to by Borrower or such Guarantor, shall constitute
an Event of Default only if not being discharged, stayed or dismissed within 90
days;
(h) if Borrower shall be in default under any ground lease or any
other mortgage or security agreement 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 Borrower'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 Borrower 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 Property;
(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 Borrower's
failure to maintain insurance required in accordance with this Agreement, which
damage is not promptly repaired to Lender's satisfaction at Borrower's cost and
expense;
(m) if without Lender's prior written consent: (i) the manager under
the Management Agreement (or any succeeding 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 management agreement);
(n) if without Lender's prior written consent, there is any material
adverse change in the Franchise Agreement (or any succeeding franchise
agreement);
(o) if for more than 30 days after receipt of notice from Lender,
Borrower shall continue to be in default under any term, covenant, or condition
of this Agreement, the Assignment, the Environmental Agreement or any of the
other Loan Documents other than as specified in any of subsections (a) through
(n) of this Section; provided, however, that if the cure of any such default
cannot reasonably be
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cured within such 30 day period and Borrower 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 Borrower diligently and continuously proceeds to cure
such default to Lender's satisfaction;
(p) 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;
(q) 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;
(r) if Borrower 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); or
(s) if Borrower terminates or cancels the Franchise Agreement or
operates the Mortgaged Property under the name of any hotel chain or system
other than Holiday Inns Franchising, Inc. without Lender's prior written
consent.
25. Late Payment Charge; Servicing Fees
(a) If any portion of the Debt is not paid prior to the tenth (10th)
day after the date such payment is due (but not including the payment of the
principal balance due on the Maturity Date), 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) Borrower shall pay all fees to the Servicer in respect of
servicing the Loan not to exceed eight basis points of the Loan.
26. Right to Cure Defaults
Upon the occurrence of any Event of Default or, upon notice, if
Borrower 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 Borrower 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.
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 Borrower and in and to the
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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 (except if nonjudicial foreclosure proceedings are not
permitted under applicable law), 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
Borrower 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 either before, during or
after any proceedings for the enforcement of the Mortgage; provided,
however, that nothing herein shall expand Lender's recourse as limited
pursuant to Section 8 of the Note;
(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 Borrower, any Guarantor or of any person, firm
or other entity liable for the payment of the Debt;
(viii) revoke the license granted to Borrower 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 Borrower
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 Borrower with respect to the Mortgaged Property, whether in
the name of Borrower 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,
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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); provided, however, that
such Lender's attorneys fees shall be payable only if Lender prevails in
any such action) 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 Borrower 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 Borrower and require Borrower to vacate and surrender
possession of the Mortgaged Property to Lender or to such receiver and, in
default thereof, evict Borrower by summary proceedings or otherwise; and
(x) pursue such other rights and remedies as may be available
at law or in equity or under the Uniform Commercial Code, including the
right to establish a lock box for all Rents and other receivables of
Borrower relating to the Mortgaged Property.
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.
(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 Borrower, 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 Borrower
in and to the properties and rights so sold, and shall be a perpetual bar both
at law and in equity against Borrower and against any and all persons claiming
or who may claim the same, or any part thereof from, through or under Borrower.
(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
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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 Borrower 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 Borrower is liable
hereunder shall be deemed to waive or cure any Event of Default with respect to
Borrower, or Borrower'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 Borrower, shall operate to release or in any
manner affect the interest of Lender in the remaining Mortgaged Property or the
liability of Borrower 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 (or as a matter of law in the jurisdiction
governing the Mortgage), then to the extent permitted as a matter of law in such
jurisdiction such inconsistency shall be resolved in favor of the interpretation
that would grant Lender the broadest possible remedies.
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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 Borrower in the Mortgaged Property. By executing and delivering this
Agreement, Borrower 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"). Borrower 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, Borrower 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 and Lender
prevails in such action, Borrower 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
Borrower in accordance with the provisions hereof at least 10 days prior to such
action, shall constitute commercially reasonable notice to Borrower. 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 any change in name,
identity or structure of any Borrower, such Borrower 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, Borrower 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 tiling and recording thereof, it being understood and agreed, however,
that no such additional documents shall increase Borrower's obligations under
the Note, the Mortgage, this Agreement, the Assignment, the Environmental
Agreement and the other Loan Documents. Borrower 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 Borrower fails to appear or defend, and
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upon an Event of Default, to bring any action or proceeding, in the name and on
behalf of Borrower, 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. Borrower 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,
Borrower 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) Borrower shall have notified Lender of such
nonpayment and the reasons therefor within 10 days of obtaining knowledge
thereof; (b) Borrower 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) Borrower 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 deposited into an interest-bearing account); (d) Borrower
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, Borrower shall immediately upon request of Lender
pay (and if Borrower 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 opinion of Lender, the
Mortgaged Property or any part thereof or interest therein may be in danger of
being sold, forfeited, foreclosed, terminated, cancelled 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 Borrower existing
at the time such earlier action was commenced. Nothing herein shall expand
Lender's recourse as limited pursuant to Section 8 of the Note.
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34. Marshalling and Other Matters
Borrower 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, Borrower hereby expressly waives any and all
rights of redemption from sale under any order or decree of foreclosure of the
Mortgage on behalf of Borrower, 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.
35. Hazardous Substances
Borrower hereby represents and warrants to Lender that, to the best
of Borrower's knowledge, after due inquiry and investigation, and except as
disclosed in the environmental audits of the Mortgaged Property furnished to
Lender in connection with the Loan: (a) the Mortgaged Property is not in direct
or indirect violation of any local, state, federal or other governmental
authority, statute, ordinance, code, order, decree, law, rule or regulation
pertaining to or imposing liability or standards of conduct concerning
environmental regulation, contamination or clean-up including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act, as amended, the Resource Conservation and Recovery Act, as amended, and any
state super-lien and environmental clean-up statutes (collectively,
"Environmental Laws"); (b) the Mortgaged Property is not subject to any private
or governmental lien or judicial or administrative notice or action relating to
hazardous and/or toxic, dangerous and/or regulated, substances, solvents,
wastes, materials, pollutants or contaminants, petroleum, tremolite,
anthlophylie or actinolite or polychlorinated biphenyls (including, without
limitation, any raw materials which include hazardous constituents) and any
other substances, materials or solvents which are included under or regulated by
Environmental Laws (collectively, "Hazardous Substances"); (c) no Hazardous
Substances are or have been, prior to Borrower's acquisition of the Mortgaged
Property, discharged, generated, treated, disposed of or stored on, incorporated
in or removed or transported from the Mortgaged Property other than in
compliance with all Environmental Laws; and (d) no underground storage tanks
exist on any of the Mortgaged Property. So long as Borrower owns or is in
possession of the Mortgaged Property, Borrower shall keep or cause the Mortgaged
Property to be kept free from Hazardous Substances (other than de minimis
quantities of Hazardous Substances that are necessary and lawfully used in the
operation of the Mortgaged Property as a hotel or motel, and which are stored
and disposed of in compliance with all Environmental Laws) and in compliance
with all Environmental Laws, shall promptly notify Lender if Borrower shall
become aware of any Hazardous Substances on the Mortgaged Property and/or if
Borrower shall become aware that the Mortgaged Property is in direct or indirect
violation of any Environmental Laws and Borrower shall remove such Hazardous
Substances and/or cure such violations, as applicable, as required by law,
promptly after Borrower becomes aware of such Hazardous Substances or such
violations, at Borrower's sole expense. Nothing herein shall prevent Borrower
from recovering such expenses from any other party that may be liable for such
removal or cure. Upon Lender's request, at any time and from time to time while
this Agreement is in effect (but in no event more frequently than once in any
three-year period or more frequently if specific facts and circumstances
reasonably dictate, or otherwise at Lender's election but at Lender's expense),
Borrower shall provide at Borrower's sole expense, an inspection or audit of the
Mortgaged Property prepared by a licensed hydrogeologist or licensed
environmental engineer approved by Lender indicating the presence or absence of
Hazardous Substances on the Mortgaged Property. If Borrower fails to provide
such inspection or audit within 30 days after such request, Lender may order
such inspection or audit, and Borrower hereby grants to Lender and its employees
and agents access to the Mortgaged Property and a license to undertake such
inspection or audit. The cost of such inspection or audit shall be paid by
Borrower and added to the principal balance of the sums due under the Note and
the Mortgage and shall bear interest thereafter until paid at the Default Rate.
The obligations
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and liabilities of Borrower under this Section which relate to conditions
created or arising during Borrower's ownership of the Mortgaged Property and
prior to Lender's taking possession of the Mortgaged Property shall survive any
termination, satisfaction, or assignment of the Mortgage and the exercise by
Lender of any of its rights or remedies thereunder including, without
limitation, the acquisition of the Mortgaged Property by foreclosure or a
conveyance in lieu of foreclosure.
36. Asbestos
(a) Borrower represents and warrants that, to the best of Borrower's
knowledge, after due inquiry and investigation, and except as disclosed in the
environmental audits of the Mortgaged Property furnished to Lender in connection
with the Loan, no asbestos or any substance containing asbestos (collectively,
"Asbestos") is located on the Mortgaged Property. Borrower shall not install in
the Mortgaged Property, nor permit to be installed in the Mortgaged Property,
Asbestos and shall remove any Asbestos promptly upon discovery to the
satisfaction of Lender, at Borrower's sole expense. Upon Lender's request, at
any time and from time to time (but in no event more frequently than once in any
three-year period or more frequently if specific facts and circumstances
reasonably dictate, or otherwise at Lender's election but at Lender's expense),
Borrower shall provide, at Borrower's sole expense, an inspection or audit of
the Mortgaged Property prepared by an engineering or consulting firm approved by
Lender, indicating the presence or absence of Asbestos on the Mortgaged
Property. If Borrower fails to provide such inspection or audit within 30 days
after such request, Lender may order such inspection or audit. The cost of such
inspection or audit shall be paid by Borrower and added to the principal balance
of the sums due under the Note and the Mortgage, and shall bear interest
thereafter until paid at the Default Rate. The obligations and liabilities of
Borrower under this Section which relate to conditions created or arising during
Borrower's ownership of the Mortgaged Property and prior to Lender's taking
possession of the Mortgaged Property shall survive any termination,
satisfaction, or assignment of the Mortgage and the exercise by Lender of any of
its rights or remedies thereunder, including but not limited to, the acquisition
of the Mortgaged Property by foreclosure or a conveyance in lieu of foreclosure.
(b) Borrower has developed an operations and maintenance plan (the
"O&M Plan") for the Mortgaged Property with respect to the presence of Asbestos
in the Improvements. Borrower covenants and agrees that it shall comply in all
respects with the terms and conditions of the O&M Plan. Borrower shall not
modify or amend the O&M Plan without Lender's prior written consent unless
required by Environmental Laws. Borrower shall not remove, disturb or
encapsulate or otherwise remediate the Asbestos in the Improvements except in
compliance with all Environmental Laws. If Borrower makes any alterations or
modifications to the Improvements that would disturb or expose any Asbestos in
the Improvements or cause any of such Asbestos to become friable, Borrower shall
remove or encapsulate such Asbestos in compliance with all applicable
Environmental Laws before allowing occupancy of such space or opening such space
to the public.
37. Environmental Monitoring
Borrower shall give prompt written notices to Lender of: (a) any
proceeding or inquiry by any party with respect to the presence of any Hazardous
Substance on, under, from or about the Mortgaged Property; (b) all claims made
or threatened by any third party against Borrower or the Mortgaged Property
relating to any loss or injury resulting from any Hazardous Substance; and (c)
Borrower's discovery of any occurrence or condition on any real property
adjoining or in the vicinity of the Mortgaged Property that could cause the
Mortgaged Property to be subject to any investigation or cleanup pursuant to any
Environmental Law. Borrower shall permit Lender to join and participate, as a
party if it so elects, in any legal proceedings or actions initiated with
respect to the Mortgaged Property in connection with any
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Environmental Law or Hazardous Substance, and Borrower shall pay all attorneys
fees (including on appeal) incurred by Lender in connection therewith. In the
event that any environmental site assessment report prepared for the Mortgaged
Property recommends that an operations and maintenance plan be implemented for
Asbestos or any Hazardous Substance, Borrower shall cause such operations and
maintenance plan to be prepared and implemented at Borrower's expense upon
request of Lender and in accordance with the recommendation. In the event that
any investigation, site monitoring, containment, cleanup, removal, restoration,
or other work of any kind which is reasonably necessary or desirable under an
applicable Environmental Law ("Remedial Work"), Borrower shall, at its sole cost
and expense, commence and thereafter diligently prosecute to completion all such
Remedial Work within 30 days after written demand by Lender for performance
thereof (or such shorter period of time as may be required under applicable
law).
38. Management of the Hotel
Borrower further covenants and agrees with Lender as follows:
(a) Borrower shall cause the hotel located on the Mortgaged Property
to be operated pursuant to the Franchise Agreement and the Management Agreement.
(b) Borrower shall:
(i) pay all sums required to be paid by Borrower 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 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 Borrower to be performed or observed to
be promptly performed or observed on behalf of Borrower, to the end that
the rights of Borrower in, to and under the Franchise Agreement shall be
kept unimpaired and free from default;
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(vii) use its reasonable efforts to obtain, from time to time,
from the franchisor under the Franchise Agreement such certificates of
estoppel with respect to compliance by Borrower with the terms of the
Franchise Agreement as may be requested by Lender; and
(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 Borrower 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 Borrower, which power of attorney
shall be irrevocable and shall be deemed to be coupled with an interest.
Notwithstanding the foregoing, Borrower shall not be required to extend or
renew the Franchise Agreement if Lender consents to Borrower's request to
enter into franchise arrangements with a franchisor other than the
franchisor under the Franchise Agreement.
(c) Borrower 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 Holiday Inns
Franchising, Inc..
(d) Except as set forth in the Management Agreement and the Cash
Management Agreement, Borrower 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, the rendering or receipt of services or the purchase or sale
of inventory, except any such transaction in the ordinary course of business of
Borrower if the monetary or business consideration arising therefrom would be
substantially as advantageous to Borrower as the monetary or business
consideration which would obtain in a comparable transaction with a person not
an affiliate of Borrower.
(e) Borrower irrevocably authorizes and directs Franchisor, from and
after an Event of Default, to deliver to Lender: (i) all operating information
concerning the Property submitted by Borrower to Franchisor; (ii) the written
results of all quality assurance inspections of the 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 Borrower 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 Borrower.
39. Handicapped Access
(a) Borrower 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").
(b) Notwithstanding any provisions set forth herein or in any other
document regarding Lender's approval of alterations of the Mortgaged Property,
Borrower shall not alter the Mortgaged Property in any manner which would
increase Borrower's responsibilities for compliance with the applicable Access
Laws without the prior written approval of Lender. The foregoing shall apply to
tenant improvements
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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) Borrower agrees to give prompt notice to Lender of the receipt
by Borrower 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) Borrower 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) Borrower 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) Borrower 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) Borrower 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 Borrower 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 Borrower are held by "benefit plan investors" within the
meaning of 29 C.F.R. ss. 2510.3-101(f)(2); or
(C) Borrower 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,
Borrower shall protect, 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 Borrower 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
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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; and
(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. 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 Borrower 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 Borrower 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.
(c) Borrower 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. Borrower 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 Borrower 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 Borrower following Borrower's receipt of notice of such settlement and
Borrower's consent to such settlement, which shall not be unreasonably withheld.
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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 Borrower or Lender, as the case may be, shall in like manner designate
in writing.
43. Authority
Borrower 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 Borrower's part to be performed; and (b) Borrower 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. 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
Borrower shall not be entitled to any notices of any nature
whatsoever from Lender except with respect to matters for which this Agreement
specifically and expressly provides for the giving of notice by Lender to
Borrower and except with respect to matters for which Lender is required by
applicable law to give notice, and Borrower 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 Borrower.
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
Borrower'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.
Borrower shall not be relieved of Borrower's obligations hereunder by reason of:
(a) the failure of Lender to comply with any request of Borrower or any
39
<PAGE>
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 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
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 Borrower 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 Borrower consists of more than one person, the obligations and
liabilities of each such person hereunder shall be joint and several. 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 Borrower 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
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the word "Borrower" shall mean "each Borrower 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, 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 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
Borrower 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. SUBMISSION TO JURISDICTION
BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
MICHIGAN STATE OR FEDERAL COURT SITTING IN EATON COUNTY OVER ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. LENDER MAY, AT ITS SOLE
DISCRETION, ELECT THE STATE OF MICHIGAN, EATON COUNTY, OR THE UNITED STATES OF
AMERICA, FEDERAL DISTRICT COURT HAVING JURISDICTION OVER EATON COUNTY, AS THE
VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING. BORROWER HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION IT MAY NOW OR
HEREAFTER RAVE TO SUCH VENUE AS BEING AN INCONVENIENT FORUM.
57. Agent for Receipt of Process
Borrower 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 Borrower, service of
any and all process which may be served in any suit, action or proceeding of the
nature referred to in Section 56 hereof in any State or Federal court within
Eaton County. If such agent shall cease so to act, Borrower 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.
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58. Service of Process
To the extent permitted by applicable law, process in any suit,
action or proceeding of the nature referred to in Section 56 hereof may be
served: (a) by registered or certified mail, postage prepaid, to Borrower at the
address set forth above or to such other address of which Borrower shall have
given Lender written notice; or (b) if Borrower shall not have made an
appearance within 21 days after service in accordance with clause (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 Borrower in the courts of any other jurisdiction. In addition to the
foregoing, service of process may be made in accordance with the rules of civil
procedure of the State of Michigan then in effect.
59. WAIVER OF JURY TRIAL
BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE
TRIABLE OF RIGHT BY JURY, AND WAIVES 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 BORROWER, 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 BORROWER
60. CHOICE OF LAW
THIS LOAN AGREEMENT SHALL BE DEEMED TO BE A CONTRACT ENTERED INTO
PURSUANT TO THE LAWS OF THE STATE OF MICHIGAN AND SHALL IN ALL RESPECTS BE
GOVERNED, CONSTRUED, APPLIED, AND ENFORCED IN ACCORDANCE WITH THE LAWS OF SUCH
JURISDICTION.
61. Limitations on Recourse
Anything herein to the contrary notwithstanding, Lender's recourse
upon the occurrence of an Event of Default hereunder is limited pursuant to the
express provisions of the Note.
62. Cash Management Arrangements
(a) As more particularly provided in the Cash Management Agreement,
upon the occurrence of an Event of Default Borrower shall cease to participate
in the cash management arrangements thereunder.
(b) Upon an Event of Default by reason of Borrower's failure to make
any payment to Lender when due under the Loan Documents, Lender may give written
notice to the manager under the Management Agreement and to Borrower directing
such manager thereafter to collect the gross income generated or otherwise
derived from the Mortgaged Property for payment to Lender. All such gross income
so collected shall be wired to Lender within one business day after receipt
thereof. Upon curing such Event
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of Default and provided that: (i) no other Event of Default has occurred by
reason of Borrower's failure to make any payment to Lender when due under the
Loan Documents; and (ii) Lender has not then accelerated the maturity of the
Loan by reason of any Event of Default, then Lender shall give notice to such
manager and to Borrower directing such manager thereafter to discontinue payment
to Lender of such gross income. For so long as gross income is being paid to
Lender as provided in this subsection (b) of this Section, such sums shall be
applied by Lender in the order of priority set forth in Section 2(a) hereof
(provided, however, that with respect to the application of any such sums to the
reduction of the principal balance of the Loan under Section 2(a)(v), such
application shall be only to the extent that such sums are then due and payable
under the Note), with the balance, if any, to be paid to Borrower.
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IN WITNESS WHEREOF, Borrower and Lender have executed this
instrument as of the day and year first above written.
BORROWER:
SERVICO LANSING, INC.
By: /s/ Robert D. Ruffin (seal)
---------------------------------------
Robert D. Ruffin
Vice President
LENDER:
GMAC COMMERCIAL MORTGAGE CORPORATION
By: /s/ Morgan G. Earnest (seal)
---------------------------------------
Morgan G. Earnest, II
Senior Vice President
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STATE OF FLORIDA )
: ss.:
COUNTY OF DADE )
The foregoing instrument was acknowledged before me this 7th day of
May, 1996, by Robert D. Ruffin, Vice President of SERVICO LANSING, INC., a
Michigan corporation, who is personally known to me or who produced his Florida
driver's license as identification and who did take oath, on behalf of the
corporation.
/s/ Maureen Cooper
--------------------------------------
Notary Public
Print Name:
COMMONWEALTH OF VIRGINIA )
: ss.: [STAMP]
COUNTY OF FAIRFAX )
The foregoing instrument was acknowledged before me this 7th day of
May, 1996, by Morgan G. Earnest, II as Senior Vice President of GMAC COMMERCIAL
MORTGAGE CORPORATION, a California corporation, who is personally known to me or
who produced his Virginia driver's license as identification and who did take
oath, on behalf of the corporation.
/s/ Judith Ann DiRienzo
--------------------------------------
Notary Public
Print Name: Judith Ann DiRienzo
<PAGE>
Exhibit 10.8.2
MORTGAGE NOTE
$5,687,000.00 May 7, 1996
Atlanta, Georgia
FOR VALUE RECEIVED SERVICO LANSING, INC., a Michigan corporation
having its principal place of business at 1601 Belvedere Road, West Palm Beach,
Florida 33406 ("Maker"), promises to pay to the order of GMAC COMMERCIAL
MORTGAGE CORPORATION, a California corporation ("Payee"), at its principal place
of business at 8614 Westwood Center Drive, Suite 630, Vienna, Virginia 22182, or
at such place as the holder hereof may from time to time designate in writing,
the principal sum of Five Million Six Hundred Eighty-Seven Thousand and 00/100
Dollars (the "Loan"), in lawful money of the United States of America, with
interest thereon to be computed on the unpaid principal balance from time to
time outstanding at the Applicable Interest Rate (as such term is defined in
Section 1(c) hereof), and to be paid in installments as follows:
(a) A payment of interest only on the first day of the first full
calendar month after the date hereof; and
(b) Equal monthly payments of principal and interest in the amount
of $51,177.54, on the first day of the second full calendar month after the date
hereof and on the first day of each of the next succeeding 83 calendar months
thereafter (each a "Monthly Payment Date");
with the entire outstanding principal balance, together with accrued and unpaid
interest and any other amounts due under this Note being due and payable on the
seventh anniversary of the first day of the first full calendar month after the
date hereof (the "Maturity Date").
1. Calculation of Interest; Application of Payments.
(a) Interest on the outstanding principal balance of this Note shall
be calculated on the basis of a 360-day year composed of 12 months of 30 days
each, except that interest payable in respect of any period less than a full
calendar month shall be calculated by multiplying the actual number of days
elapsed in such period by a daily rate based on a 360-day year.
(b) Payments under this Note shall be applied first, to the payment
of interest and other costs and charges due in connection with this Note or the
Debt (as such term is defined in Section 4 hereof), and then to reduction of the
outstanding principal balance; or upon an Event of Default (as such term is
defined in Section 4 hereof) in such order and priority as Payee shall determine
in its sole discretion. All amounts due under this Note shall be payable without
setoff, counterclaim or any other deduction whatsoever.
(c) As used in this Note the term "Applicable Interest Rate" shall
mean, from the date of this Note through and including the Maturity Date, the
fixed rate of nine and seven-eighths (9.875%) percent per annum.
<PAGE>
2. Security for the Loan.
(a) This Note is secured by: (i) a Mortgage, Deed of Trust,
Assignment of Leases and Rents and Security Agreement dated as of the date
hereof from Maker to Payee (the "Mortgage") affecting the real property and
improvements known as Holiday Inn -- West and located at 7501 West Saginaw
Highway, Lansing, Michigan 48917 (the "Mortgaged Property"); (ii) an Assignment
of Leases and Rents dated as of the date hereof from Maker to Payee (the
"Assignment"); (iii) an Environmental Indemnity Agreement dated as of the date
hereof among Payee, Maker and Servico, Inc. (the "Environmental Agreement"); and
(iv) such other documents now or hereafter executed by Maker and/or others and
by or in favor of Payee, which wholly or partially secure or guarantee payment
of this Note including, without limitation, any collateral assignments and
reserve and/or escrow accounts (such other documents, collectively, the "Other
Security Documents").
(b) As used herein, the term "Loan Documents" means, collectively,
this Note, the Mortgage, the Loan Agreement dated as of the date hereof between
Maker and Payee (the "Loan Agreement"), the Assignment, the Environmental
Agreement, the Other Security Documents and any and all other documents executed
in connection with the Loan.
3. Late Charge. If any sum payable under this Note is not paid prior
to the tenth (10th) day after the date such payment is due (but not including
the payment of the principal balance due on the Maturity Date), Maker shall pay
to Payee on demand an additional amount equal to five (5%) percent of such
unpaid sum to defray the expenses incurred by Payee in handling and processing
such delinquent payment and to compensate Payee for the loss of the use of such
delinquent payment, and such additional amount shall be secured by the Mortgage,
the Assignment, the Environmental Agreement and the Other Security Documents.
4. Events of Default. The entire outstanding principal balance of
this Note, together with all accrued and unpaid interest thereon and all other
sums due under the Loan Documents (all such sums, collectively, the "Debt"), or
any portion thereof, shall without notice become immediately due and payable at
the option of Payee: (a) if any payment required in this Note is not paid prior
to the tenth (10th) day after the date when due or on the Maturity Date; (b)
upon the occurrence of any other default under this Note; or (c) upon the
happening of any other Event of Default under and as defined in the Loan
Agreement (each of the foregoing, an "Event of Default"). In the event that
Payee retains counsel to collect the Debt (including on appeal), if Payee
prevails in such action, Maker shall pay on demand all costs of collection
incurred by Payee, including reasonable attorneys' fees for the services of
counsel whether or not suit be brought.
5. Default Rate Interest. Maker does hereby agree that upon the
occurrence of an Event of Default, including Maker's failure to pay the Debt in
full on the Maturity Date, Payee shall be entitled to receive, and Maker shall
pay, interest on the entire outstanding principal balance and any other amounts
due at the rate equal to the lesser of (a) the maximum rate permitted by
applicable law; and (b) the greater of (i) the Applicable Interest Rate plus
three percent (3%) or (ii) the Prime Rate (as hereinafter defined) plus four
percent (4%) (the lesser of such rates in (a) or (b), the "Default Rate").
Interest payable at the Default Rate shall be in lieu of interest payable at the
Applicable Interest Rate. The "Prime Rate" shall mean the annual rate of
interest publicly announced by Citibank, N.A. in New York, New York, as its base
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rate, as such rate shall change from time to time. If Citibank N.A. ceases to
announce a base rate, Prime Rate shall mean the rate of interest published in
The Wall Street Journal from time to time as the Prime Rate. If more than one
Prime Rate is published in The Wall Street Journal for a day, the average of the
Prime Rates shall be used, and such average shall be rounded up to the nearest
one-quarter of one percent (1/4%). Interest shall accrue and be payable at the
Default Rate from the occurrence of the Event of Default until all such Events
of Default have been fully cured. Interest at the Default Rate shall be added to
the Debt, and shall be deemed secured by the Mortgage. This provision, however,
shall not be construed as an agreement or privilege to extend the date of the
payment of the Debt, nor as a waiver of any other right or remedy accruing to
Payee by reason of the occurrence of any Event of Default.
6. Prepayment. (a) Payee is making the Loan at the Applicable
Interest Rate in reliance upon the Maker's repayment of the Debt over the full
stated term thereof. Payee would not otherwise be willing to make the Loan but
for Maker's covenant to repay the Loan over the full stated term. Accordingly,
in order to insure that Payee receives the full benefit of interest on the
outstanding principal balance hereunder in accordance with the terms hereof,
Maker will not prepay the principal balance hereunder prior to the Maturity Date
except in accordance with the terms, and upon the payment of a certain
additional prepayment consideration, as more particularly described below.
(b) Provided no Event of Default exists, the principal balance of
this Note may be prepaid, in whole but not in part, upon: (i) not less than 30
days prior written notice to Payee specifying the scheduled payment date on
which prepayment is to be made (the "Prepayment Date"); (ii) payment of accrued
interest to and including the Prepayment Date (provided, however, that if such
prepayment is received by Payee before 12:00 noon on the date of such
prepayment, then the accrued interest payable in respect thereof shall be
calculated through and including the day prior to the Prepayment Date) together
with a payment of all interest which would have accrued on the principal balance
of this Note to and including the last day of the calendar month in which the
Prepayment Date falls, if such prepayment occurs on a date which is not the last
day of a month (the "Shortfall Interest Payment"); (iii) payment of all other
sums then due under this Note, the Loan Agreement, the Mortgage, the Assignment
and the Other Security Documents; and (iv) payment of a prepayment consideration
in an amount equal to the greater of: (A) one (1%) percent of the principal
amount being prepaid; and (B) the present value of a series of payments each
equal to the Payment Differential (hereinafter defined) and payable on each
Monthly Payment Date over the remaining original term of this Note and on the
Maturity Date discounted at the Reinvestment Yield (hereinafter defined) for the
number of months remaining from the Prepayment Date to each such Monthly Payment
Date and the Maturity Date (such prepayment consideration, the "Prepayment
Consideration"). The term "Reinvestment Yield" as used herein shall be equal to
the lesser of (1) the yield on the U.S. Treasury issue (primary issue) with a
maturity date closest to the Maturity Date; and (2) the yield on the U.S.
Treasury issue (primary issue) with a maturity equal to the remaining term of
this Note, with each such yield being based on the bid price for such issue as
published in The Wall Street Journal on the date that is 14 days prior to the
Prepayment Date set forth in the Prepayment Notice (or, if such bid price is not
published on that date, the next preceding date on which such bid price is so
published) and converted to a monthly compounded nominal yield. The term
"Payment Differential" as used herein shall be equal to (x) the Applicable
Interest Rate minus the Reinvestment Yield, divided by (y) 12 and multiplied by
(z) the Principal Sum outstanding after application of the Monthly Payment due
on such Prepayment Date, provided that the Payment Differential shall in no
event be less than zero. In no event, however, shall
3
<PAGE>
Lender be required to reinvest any prepayment proceeds in U.S. Treasury
obligations or otherwise. Payee shall notify Maker of the amount, and the basis
of determination, of the required Prepayment Consideration. If any such notice
of prepayment is given, the principal balance of this Note and the other sums
required under this Section in accordance with such notice shall be due and
payable on the Prepayment Date. Payee shall not be obligated to accept any
prepayment of the principal balance of this Note unless it is accompanied by the
Prepayment Consideration due in connection therewith. The term "Loan Year" as
used in this Section shall mean each complete 365-day period beginning with the
first day of the first full calendar month following the date hereof.
Notwithstanding the foregoing, no Prepayment Consideration shall be payable in
connection with a prepayment during the six months immediately preceding the
Maturity Date.
7. Acceleration Deemed Prepayment. If following the occurrence of
any Event of Default, Maker tenders payment of an amount sufficient to satisfy
the entire Debt at any time prior to a judicial or non-judicial foreclosure sale
or sale pursuant to a power of sale of any of the Mortgaged Property, including
any redemption period, as applicable, and prior to the time prepayment of the
principal balance of this Note is permitted hereunder without prepayment
consideration, Maker shall, in addition to the entire Debt, also pay to Payee an
amount equal to the sum of: (a) the Shortfall Interest Payment; and (b) a
prepayment consideration equal to the Prepayment Consideration as of the date of
such tender. An involuntary prepayment shall include any prepayment made in
connection with reinstatement of the Mortgage under foreclosure proceedings, or
exercise of a power of sale, any right of redemption exercised by Maker or any
other party having a right to redeem or prevent foreclosure, or which is made or
occurs upon the consummation of any sale in foreclosure or under exercise of a
power of sale.
8. Limitations on Recourse. (a) Subject to the qualifications set
forth in this Section, Payee shall not enforce the liability and obligation of
Maker to perform and observe the obligations contained in the Note, the Loan
Agreement, the Mortgage, the Assignment or the Other Security Documents by an
action or proceeding wherein a money judgment shall be sought against Maker,
except that Payee may bring a foreclosure action, an action for specific
performance or any other appropriate action or proceeding to enable Payee to
enforce and realize upon this Note, the Mortgage, the Assignment, the Other
Security Documents, and the interests in the Mortgaged Property and any other
collateral given to Payee pursuant to the Mortgage, the Assignment and the Other
Security Documents; provided, however, that, except as specifically provided in
this Section, any judgment in any such action or proceeding shall be enforceable
against Maker only to the extent of Maker's interest in the Mortgaged Property
and in any other collateral given to Payee. Payee, by accepting this Note, the
Loan Agreement, the Assignment, the Mortgage and the Other Security Documents,
agrees that it shall not sue for, seek or demand any deficiency judgment against
Maker in any such action or proceeding, under, by reason of or in connection
with the Mortgage, the Loan Agreement, the Assignment, the Other Security
Documents or this Note. Except as may be expressly provided for herein, the
provisions of this Section shall not, however: (i) constitute a waiver, release
or impairment of any obligation evidenced or secured by the Mortgage, the Loan
Agreement, the Assignment, the Environmental Agreement or the Other Security
Documents or this Note; (ii) impair the right of Payee to name Maker as a party
defendant in any action or suit for foreclosure and sale under the Mortgage;
(iii) affect the validity or enforceability of any guaranty or indemnity made in
connection with the Mortgage, the Loan Agreement, this Note, the Assignment or
the Other Security Documents; (iv) impair the right of Payee to obtain the
appointment of a receiver; (v) impair the enforcement of the Assignment; (vi)
impair the right of Payee to bring suit with respect to fraud or intentional
4
<PAGE>
misrepresentation by Maker or any other person or entity in connection with the
Mortgage, the Loan Agreement, this Note, the Assignment, the Environmental
Agreement or the Other Security Documents; or (vii) affect the validity or
enforceability of the Environmental Agreement or limit the liability of Maker or
any other party thereunder.
(b) Nothing herein shall be deemed to be a waiver of any right which
Payee may have under Section 506(a), 506(b), 1111(b) or any other provisions of
the U.S. Bankruptcy Code to file a claim for the full amount of the Debt secured
by the Mortgage or to require that all collateral shall continue to secure all
of the debt owing to Payee in accordance with this Note, the Loan Agreement, the
Mortgage, the Assignment, the Environmental Agreement and the Other Security
Documents.
(c) Notwithstanding the foregoing provisions of this Section or any
other provision in the Loan Documents, Maker shall be fully liable for and shall
indemnify Payee for any or all loss, cost, liability, judgment, claim, damage or
expense sustained, suffered or incurred by Payee (including, without limitation,
Payee's attorneys' fees) (including on appeal) if Payee prevails in the
applicable action or proceeding to which such fees relate) arising out of or
attributable or relating to:
(i) fraud or misrepresentation by Maker in connection with the Loan;
(ii) the gross negligence or willful misconduct of Maker, its agents
or employees, or physical waste of the Mortgaged Property;
(iii) the breach of provisions in the Loan Agreement concerning
Environmental Laws, Hazardous Substances and Asbestos, and any
indemnification of Payee therein with respect to such Environmental Laws,
Hazardous Substances and Asbestos;
(iv) except as permitted in the Loan Agreement, the removal or
disposal of any portion of the Mortgaged Property after default under this
Note, the Mortgage, the Loan Agreement, the Assignment, the Environmental
Agreement or any Other Security Document;
(v) the misapplication or misappropriation by Maker of: (A) any
insurance proceeds paid by reason of any loss, damage or destruction to
the Mortgaged Property; (B) any awards or other amounts received in
connection with the condemnation of all or a portion of the Mortgaged
Property; or (C) rents, issues, profits, proceeds, accounts, or other
amounts received by Maker (in the case of clause (C) following an Event of
Default under this Note, the Mortgage, the Loan Agreement, the Assignment,
the Environmental Agreement or the Other Security Documents);
(vi) Maker's failure to pay taxes, assessments, charges for labor or
materials or other charges that can result in liens on any portion of the
Mortgaged Property; and
(vii) any security deposits or advance deposits collected with
respect to the Mortgaged Property (except to the extent such deposits are
required to be returned or refunded to the depositor), which are not
delivered to Payee upon a foreclosure of the Mortgaged Property or action
in lieu thereof.
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<PAGE>
(d) Notwithstanding the foregoing, the agreement of Payee not to
pursue recourse liability as set forth in subsection (a) above SHALL BECOME NULL
AND VOID and shall be of no further force or effect in the event of: (i) Maker's
failure (after prior notice and the expiration of applicable cure periods) to
permit on-site inspections of the Mortgaged Property or to provide financial
reports and information pertaining to the Mortgaged Property as required by the
Loan Agreement which failure continues, with respect to reports required to be
furnished monthly, for 15 days beyond otherwise applicable cure periods, with
respect to reports required to be furnished quarterly, for 30 days beyond
otherwise applicable cure periods, and with respect to reports required to be
furnished annually, for 45 days beyond otherwise applicable cure periods; (ii)
Maker's failure to obtain Payee's written consent to any subordinate financing
not otherwise permitted under the Loan Agreement; (iii) Maker's failure to
obtain Payee's prior written consent to any transfer of the Mortgaged Property
or of any ownership interest in Maker not otherwise permitted under the Loan
Agreement; (iv) the Mortgaged Property or any part thereof becoming an asset in
a voluntary bankruptcy or insolvency proceeding; or (v) the failure of Maker to
comply with the provisions of Section 11 (SINGLE PURPOSE ENTITY) of the Loan
Agreement.
9. No Usury. It is expressly stipulated and agreed to be the intent
of Maker and Payee at all times to comply with applicable state law or
applicable United States federal law (to the extent that it permits Payee 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 Note 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 this Note or under any of the other Loan Documents, or
contracted for, charged, taken, reserved, or received with respect to the Debt,
or if Payee's exercise of the option to accelerate the maturity of this Note, or
if any prepayment by Maker results in Maker having paid any interest in excess
of that permitted by applicable law, then it is Maker's and Payee's express
intent that all excess amounts theretofore collected by Payee shall be credited
on the principal balance of this Note and all other Debt (or, if this Note and
all other Debt have been or would thereby be paid in full, refunded to Maker),
and the provisions of this 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 and 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 Payee 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 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 Payee 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.
10. Transfers Not Permitted. Without the prior written consent of
Payee, Maker shall not sell, convey, alienate, mortgage, encumber, pledge or
otherwise transfer, or permit the transfer of, directly or indirectly, the
Mortgaged Property or ownership interests of Maker, except as permitted in the
Loan Agreement.
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<PAGE>
11. Authority. Maker represents that Maker has full power, authority
and legal right to execute, deliver and perform its obligations pursuant to this
Note, the Mortgage and the other Loan Documents and that this Note, the Mortgage
and the other Loan Documents constitute valid and binding obligations of Maker.
12. Notices. All notices or other communications required or
permitted to be given pursuant hereto shall be given in the manner specified in
the Loan Agreement directed to the parties at their respective addresses as
provided therein.
13. WAIVER OF JURY TRIAL. MAKER HEREBY AGREES NOT TO ELECT A TRIAL
BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY
JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH
REGARD TO THIS NOTE, THE LOAN AGREEMENT, THE MORTGAGE, 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 MAKER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE
AND EACH ISSUE AS TO WHICH THE RIGHT TO TRIAL BY JURY WOULD OTHERWISE ACCRUE.
PAYEE IS HEREBY AUTHORIZED TO FILE A COPY OF THIS SECTION IN ANY PROCEEDING AS
CONCLUSIVE EVIDENCE OF THIS WAIVER BY MAKER.
14. Governing Law. The Note shall be governed by and construed in
accordance with the laws of the State in which the real property encumbered by
the Mortgage is located and the applicable laws of the United States of America.
15. Miscellaneous.
(a) No release of any security for the Debt or any person liable for
payment of the Debt, no extension of time for payment of this Note or any
installment hereof, and no alteration, amendment or waiver of any provision of
the Loan Documents made by agreement between Payee and any other person or party
shall release, modify, amend, waive, extend, change, discharge, terminate or
affect the liability of Maker, and any other person or party who might be or
become liable for the payment of all or any part of the Debt, under the Loan
Documents.
(b) Except as may be expressly provided for in the Loan Documents,
Maker and all others who may become liable for the payment of all or any part of
the Debt do hereby severally waive presentment and demand for payment, notice of
dishonor, protest, notice of protest, notice of non-payment, notice of intent to
accelerate the maturity hereof and of acceleration.
(c) This Note may not be modified, amended, waived, extended,
changed, discharged or terminated orally or by any act or failure to act on the
part of Maker or Payee, 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.
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<PAGE>
(d) Whenever used, the singular number shall include the plural, the
plural the singular, and the words "Payee" and "Maker" shall include their
respective successors, assigns, heirs, executors and administrators.
(e) If Maker consists of more than one person or party, the
obligations and liabilities of each such person or party shall be joint and
several.
8
<PAGE>
IN WITNESS WHEREOF, Maker has duly executed this Note on the day and
year first above written.
MAKER:
SERVICO LANSING, INC.
By: /s/ David Buddemeyer
---------------------------------
David Buddemeyer
President
STATE OF GEORGIA )
: ss.:
COUNTY OF FULTON )
The foregoing instrument was acknowledged before me this 7th day of
May, 1996, by David Buddemeyer, President of SERVICO LANSING, INC., a Michigan
corporation, who is personally known to me or who produced his Florida driver's
license as identification and who did take oath, on behalf of the corporation.
/s/ Sybil Green
---------------------------------
Notary Public
Print Name: SYBIL GREEN
Notary Public, Cobb County Georgia
My Commission Expires Jan. 20, 1998
<PAGE>
AFFIDAVIT OF RECEIPT
(LENDER)
I, Paul M. Shapses, after being duly sworn, did depose and state:
1. I am legal counsel to GMAC Commercial Mortgage Corporation, a
California corporation ("Counsel").
2. On the date hereof, I, on behalf of Lender (as hereinafter defined)
received that certain original Mortgage Note in the amount of
$5,687,000 (the "Note") executed by the Servico Lansing, Inc., a
Michigan corporation (the "Borrower") and payable to the order of
GMAC Commercial Mortgage Corporation, a California corporation (the
"Lender").
3. The Note was delivered personally to the undersigned via federal
express from Atlanta, Georgia, as Counsel for Lender in New York
City, New York.
4. I, as Counsel for the Lender, upon closing, delivered the Note to
Lender in New York City, New York.
5. This Affidavit is made for the benefit of Lender for compliance with
the laws of the State of Florida relating to documentary stamp tax
laws.
FURTHER AFFIANT SAYETH NOT.
Executed this 8th day of May, 1996.
SHAPIRO, SHAPSES, BLOCK & STACHENFELD, LLP
By: /s/ Paul M. Shapses
---------------------------------------
Paul M. Shapses, Esq.
<PAGE>
Exhibit 10.9.1
- --------------------------------------------------------------------------------
LOAN AGREEMENT
between
LOAN SERVICES, INC.
Lender
and
BRECKSVILLE HOSPITALITY, L.P.,
SIOUX CITY HOSPITALITY, L.P. and
1075 HOSPITALITY, L.P.
Borrower
Dated: as of January 17, 1996
Property Location:
-------------------------
Holiday Inn
4742 Brecksville
Richfield Ohio
-------------------------
Hilton Hotel
707 4th Street
Sioux City, Iowa
-------------------------
Holiday Inn
1075 Stevens Creek
Augusta, Georgia
-------------------------
Beller & Keller LLP
415 Madison Avenue
New York, New York 10017
Marc S. Shapiro, Esq.
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Section Page
1. DEFINED TERMS ...........................................................1
2. PAYMENT OF DEBT; INCORPORATION OF COVENANTS, CONDITIONS AND AGREEMENTS...6
3. WARRANTY OF TITLE .......................................................6
4. INSURANCE ...............................................................6
5. PAYMENT OF TAXES .......................................................11
6. TAX AND INSURANCE ESCROW FUNDS .........................................11
7. REPLACEMENT RESERVE; REPAIR ESCROW .....................................12
8. CONDEMNATION ...........................................................12
9. LEASES AND RENTS .......................................................14
10. REPRESENTATIONS CONCERNING LOAN .......................................16
11. SINGLE PURPOSE ENTITY; AUTHORIZATION ..................................17
12. MAINTENANCE OF MORTGAGED PROPERTY .....................................19
13. TRANSFER OR ENCUMBRANCE OF THE MORTGAGED PROPERTY .....................19
14. ESTOPPEL CERTIFICATES; AFFIDAVITS .....................................22
15. CHANGES IN THE LAWS REGARDING TAXATION ................................22
16. NO CREDITS ON ACCOUNT OF THE DEBT .....................................22
17. DOCUMENTARY STAMPS ....................................................22
18. CONTROLLING AGREEMENT .................................................23
19. BOOKS AND RECORDS .....................................................23
20. PERFORMANCE OF OTHER AGREEMENTS .......................................24
21. FURTHER ASSURANCES; RIGHT TO SPLIT THE LOAN ...........................24
22. RECORDING OF MORTGAGE .................................................25
23. REPORTING REQUIREMENTS ................................................25
24. EVENTS OF DEFAULT .....................................................25
25. LATE PAYMENT CHARGE ...................................................27
<PAGE>
26. RIGHT TO CURE DEFAULTS ................................................27
27. REMEDIES ..............................................................27
28. RIGHT OF ENTRY ........................................................30
29. SECURITY AGREEMENT ....................................................30
30. ACTIONS AND PROCEEDINGS ...............................................30
31. WAIVER OF SETOFF AND COUNTERCLAIM .....................................31
32. CONTEST OF CERTAIN CLAIMS .............................................31
33. RECOVERY OF SUMS REQUIRED TO BE PAID ..................................32
34. MARSHALLING AND OTHER MATTERS .........................................32
35. HAZARDOUS SUBSTANCES ..................................................33
36. ASBESTOS ..............................................................33
37. ENVIRONMENTAL MONITORING ..............................................34
38. MANAGEMENT OF THE HOTEL ...............................................35
39. HANDICAPPED ACCESS ....................................................36
40. ERISA .................................................................37
41. INDEMNIFICATION .......................................................37
42. NOTICE ................................................................38
43. AUTHORITY .............................................................39
44. WAIVER OF NOTICE ......................................................39
45. REMEDIES OF BORROWER ..................................................39
46. SOLE DISCRETION OF LENDER .............................................39
48. NO ORAL CHANGE ........................................................40
49. LIABILITY .............................................................40
50. INAPPLICABLE PROVISIONS ...............................................40
51. SECTION HEADINGS ......................................................40
52.COUNTERPARTS ...........................................................40
<PAGE>
53. CERTAIN DEFINITIONS ...................................................40
54. HOMESTEAD .............................................................41
55. ASSIGNMENTS ...........................................................41
56. SUBMISSION TO JURISDICTION ............................................41
57. AGENT FOR RECEIPT OF PROCESS ..........................................41
58. SERVICE OF PROCESS ....................................................42
59. WAIVER OF JURY TRIAL ..................................................42
60. CHOICE OF LAW .........................................................42
61. RELEASE OF PORTIONS OF THE MORTGAGED PROPERTY .........................42
62. LIMITATIONS ON RECOURSE ...............................................42
<PAGE>
LOAN AGREEMENT
This LOAN AGREEMENT dated as of January 17. 1996. between
BRECKSVILLE HOSPITALITY, L.P., an Ohio limited partnership, SIOUX CITY
HOSPITALITY, L.P., an Iowa limited partnership and 1075 HOSPITALITY, L.P., a
Georgia limited partnership, each having its principal place of business at c/o
Servico, Inc., 1601 Belvedere Road, West Palm Beach, Florida 33406
(collectively, "Borrower"), and LOAN SERVICES, INC., a Virginia corporation,
having an address at 8614 Westwood Center Drive, Suite 620, Vienna, Virginia
22182 ("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 $12,910,000.00 (the "Loan") secured by a
mortgage lien on, and security interest in. Borrower'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 a certain Mortgage Note dated the
date hereof made by Borrower in favor of Lender (the "Note") and secured by,
among other things, a certain Mortgage, Deed of Trust, Assignment of Leases and
Rents and Security Agreement dated as of the date hereof and encumbering the
Mortgaged Property (the "Mortgage"; the Note, the Mortgage, this Agreement and
all other documents executed or delivered in connection with the Loan,
collectively, the "Loan Documents"); and
WHEREAS, Lender and Borrower 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:
I. Defined Terms
The following terms shall have the following meanings:
(a) "Access Laws" has the meaning set forth in Section 39 hereof.
(b) "Asbestos" has the meaning set forth in Section 36 hereof.
(c) "Assignment" has the meaning set forth in Section 2 hereof.
(d) "Borrower" has the meaning set forth in the preamble to this
Agreement.
(e) "Collateral" has the meaning set forth in Section 29 hereof.
(f) "Condemnation" has the meaning set forth in Section 8 hereof.
(g) "Debt" means the outstanding principal balance of the Note from
time to time, with all accrued and unpaid interest thereon, and all other sums
now or hereafter due under the Loan Documents.
<PAGE>
(h) "Debt Service Coverage Ratio" shall mean the ratio of (i) the
NOI produced by the operation of the Mortgaged Property during the 12 calendar
month period ending one month prior to the month immediately preceding the
calculation to (ii) the payments of principal and interest due under this Loan
Agreement and the Note for the 12 calendar month period immediately following
the calculation.
(i) "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.
(j) "Environmental Agreement" has the meaning set forth in Section 2
hereof.
(k) "Environmental Laws" has the meaning set forth in Section 35
hereof.
(l) "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 Borrower, or in which
Borrower 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 Borrower, or in which Borrower 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 Premises and the Improvements.
(m) "ERISA" has the meaning set forth in Section 40 hereof.
(n) "Event of Default" has the meaning set forth in Section 24
hereof.
(o) "Expenses" means the aggregate of the following items actually
incurred by Borrower, whether or not paid, during the 12 month period ending one
month prior to the date on which the NOI is to be calculated (except that
capital expenses and reserves set forth in subsection (viii) below shall be
adjusted by Lender to reflect projected adjustments for the subsequent I 2 month
period beginning on the date on which the NOI is to be calculated):
(i) Taxes and Other Charges (but specifically excluding income
tax);
(ii) personal property taxes;
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<PAGE>
(iii) management fees of four (4%) percent of the gross income
derived from the operation of the Mortgaged Property and disbursements;
(iv) wages, salaries, pension costs and all fringe and other
employee-related benefits and expenses;
(v) franchise fees and other fees due under the Franchise
Agreement;
(vi) Insurance Premiums;
(vii) the cost of utilities, and all other administrative,
management, ownership, operating, leasing and maintenance expenses
incurred in connection with the operation of the Mortgaged Property;
(viii) the cost of necessary repair-of existing improvements
on the Mortgaged Property with repairs or replacements of like kind and
quality or such kind or quality that is necessary to maintain the
Mortgaged Property to the same standards as competitive properties of
similar size and location to the Mortgaged Property or that are required
under the Franchise Agreement including, without limitation, amounts
payable under the Replacement Agreement;
(ix) the cost of any other maintenance materials, HVAC
repairs, parts and supplies, and equipment; and
(x) all ordinary and customary expenses duly and appropriately
incurred in connection with the use and operation of the Mortgaged
Property but specifically excluding depreciation and other similar
non-cash items, distributions of earnings to members, partners or
shareholders of the entities comprising Borrower and debt service payable
in respect of the Loan and any other indebtedness of Borrower.
(p) "Franchise Agreement" means, collectively, the franchise
Agreements more particularly set forth on Schedule A hereto pursuant to which
Borrower has the right to operate the hotels located on the Mortgaged Property
under the names and/or hotel systems controlled by such franchisors.
(q) "Guarantor" means any guarantor of all or any part of the Debt.
(r) "Hazardous Substances" has the meaning set forth in Section 35
hereof.
(s) "Improvements" means the buildings, structures, fixtures,
additions, enlargements, extensions, modifications, repairs, replacements and
improvements now or hereafter located on the Premises.
(t) "insurance Premiums" has the meaning set forth in Section 4(d)
hereof.
(u) "Insured Casualty" has the meaning set forth in Section 4(eXii)
hereof.
(v) "Intangibles" means, without limitation, all of Borrower's
right, title and interest in and to all accounts, 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,
3
<PAGE>
records, appraisals, architects and engineering plans, specifications,
environmental and other reports relating to the Premises, trademarks, trade
names, symbols, permits. licenses, 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.
(w) "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.
(x) "Lender" has the meaning set forth in the preamble to this
Agreement.
(y) "Loan" has the meaning set forth in the recitals of this
Agreement.
(z) "Loan Documents" has the meaning set forth in the recitals of
this Agreement.
(aa) "Loan-to-Value Ratio" means the ratio of: (i) the Debt, plus
all other debt (or other liquidated economic obligations) which are then
outstanding and secured by the Mortgaged Property, to (ii) the appraised value
of the Mortgaged Property as estimated by an appraiser acceptable to Lender.
(bb) "Management Agreement" means, collectively, the Hotel Operating
Agreements more particularly set forth on Schedule A hereto pursuant to which
such managers operate the Mortgaged Property as hotels.
(cc) "Maturity Date" means the Maturity Date (as such term is
defined in the Note).
(dd) "Mortgage" has the meaning set forth in the recitals of this
Agreement.
(cc) "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,
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, plans, specifications and other documents, now or
hereafter entered into, and all proceeds, substitutions and replacements
thereof.
(ff) "NOI" means the gross income derived from the operation of the
Mortgaged Property less Expenses. NOI shall include Rents and such other income,
including any rent loss, business interruption or business income insurance
proceeds, vending or concession income, late fees, forfeited security deposits
and other miscellaneous tenant charges, and Expenses booked during the period
for 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 generally accepted accounting principles consistently applied.
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(gg) "Note" has the meaning set forth in the recitals of this
Agreement.
(hh) "O&M Plan" has the meaning set forth in Section 36 hereof.
(ii) "Other Charges" has the meaning set forth in Section 5 hereof.
(jj) "Policies" has the meaning set forth Section 4(d) hereof.
(kk) "Premises" means the real property comprising the Mortgaged
Property, more particularly described on Exhibit A to the Mortgage.
(ll) "Release Conditions" means, immediately following the proposed
release of a portion of the Mortgaged Property as provided herein: (i) the Debt
Service Coverage Ratio with respect to the remaining Mortgaged Property is
projected to be not less than 1.65:1; and (ii) the Loan-to-Value Ratio with
respect to the remaining Mortgaged Property, expressed as a percentage, is not
more than sixty (60%) percent
(mm) "Remedial Work" has the meaning set forth in Section 37 hereof.
(nn) "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
Mortgagor 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.
(oo) "Repair Agreement" has the meaning set forth in Section 7
hereof.
(pp) "Repair Escrow" has the meaning set forth in Section 7 hereof.
(qq) "Replacement Agreement" has the meaning set forth in Section 7
hereof.
(rr) "Replacement Reserve" has the meaning set forth in Section 7
hereof.
(ss) "Securities" has the meaning set forth in Section 21 hereof.
(tt) "Tax and Insurance Escrow Fund" has the meaning set forth in
Section 6 hereof.
(uu) "Taxes" has the meaning set forth in Section 5 hereof.
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(vv) "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.
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; (ii) next, to required deposits to the
Replacement Reserve as provided in the Replacement Agreement; (iii) next, to
reimburse Lender for any unpaid costs and expenses incurred by Lender on
Borrower's behalf; (iv) next, to accrued and unpaid interest on the Loan; and
(v) last, to the reduction of the principal balance of the Loan; 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 Borrower to Lender (the "Assignment"), the Environmental
Indemnity Agreement dated as of the date hereof among Lender, Borrower and
Servico, Inc. (the "Environmental Agreement") 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.
3. Warranty of Title
Borrower represents and warrants that Borrower has good, marketable
and insurable fee simple title 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 Borrower possesses an unencumbered fee estate in the Premises and the
Improvements, and 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, 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) Borrower, at its sole cost and expense, will keep the Mortgaged
Property insured during the entire term of this Agreement for the mutual benefit
of Borrower 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 nonconforming
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
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for physical depreciation; and (ii) such that the insurer would not deem
Borrower a co-insurer under such policies. The deductible in respect of such
insurance shall be reasonably satisfactory to Lender. From time to time, upon
Lender's request, Borrower 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) Borrower shall also obtain and maintain during the entire term
of this Agreement, at its sole cost and expense, for the mutual benefit of
Borrower 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 (and any amendment or successor act
thereto) in an amount at least equal to the lesser of: (A) the outstanding
principal amount of the Note; 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 one year 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 12 months
from the date of the loss, whichever first occurs, and notwithstanding
that the policy may expire prior to the end of such period; and (D) in an
amount equal to the sum of Expenses and NOI, in each case for the
preceding full calendar year. 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
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<PAGE>
Borrower's obligations hereunder Lender shall make available from time to
time upon Borrower'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 Borrower, 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) Borrower's personnel; (B) any employees
of outside firms that provided appraisal, legal, data processing, or other
services for Borrower; and (C) temporary contract employees or student
interns.
(ix) Earthquake insurance (including subsidence), if the
Mortgaged Property is located in an earthquake prone region 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) Borrower 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
F.W. Dodge Building Index 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.
(d) All policies of insurance required pursuant to this Section
(collectively, the "Policies") shall: (i) be issued by an insurer with an
investment grade rating for claims paying ability by Moody's Investors Service,
Inc., Standard & Poor's Rating Group, Fitch Investor Service and Duff & Phelps,
Inc., if rated; (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 Borrower, 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
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Lender as to amounts, form, risk coverage, deductible, loss payees and insureds.
Borrower shall pay the premiums for the Policies (the "Insurance Premiums") as
they become due and payable. Not later than 10 days prior to the expiration date
of each of the Policies, Borrower will deliver to Lender satisfactory evidence
of the renewal of each Policy.
(e) If the Mortgaged Property shall be damaged or destroyed, in
whole or in part, by fire or other casualty, Borrower 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 Borrower 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 Borrower 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 $100,000.00 such
proceeds shall be paid to Borrower 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 Borrower 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 $100,000.00 where: (A) the proceeds of insurance are sufficient to
enable Borrower to fully restore the Mortgaged Property (or Borrower
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, Borrower's business interruption insurance
(or other similar insurance) shall be sufficient to fully cover the period
that the Mortgaged Property is undergoing restoration; (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 .6:1.0; (E) the Franchise Agreement has not
been, and cannot be, terminated as a result of the Insured Casualty; (F)
the restoration can be completed within 18 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 (H) the Debt Service Coverage
Ratio upon completion is reasonably anticipated to be at least 1.65:1,
then, if no Event of Default shall have occurred and be continuing, the
proceeds of insurance shall be paid to Borrower 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
Borrower 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 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 Borrower
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. Any such
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<PAGE>
application to the Debt shall not be considered a voluntary prepayment
requiring payment of the prepayment consideration provided in the Note,
except that if an Event of Default, or an event which, with notice and/or
the passage of time, or both, would constitute an Event of Default, has
occurred, then such application shall be subject to the prepayment
consideration computed in accordance with the Note, if any. 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 Borrower for the restoring, repairing, replacing or
rebuilding of the Mortgaged Property. Borrower 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 Borrower 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.
(v) In the event Borrower 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 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
Borrower 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 Borrower
is not then in default of its obligations under the Loan Documents.
(f) Borrower 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 Borrower and Lender, as
their respective interests may appear, and shall be subject to all other
provisions of this Section.
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5. Payment of Taxes
Borrower shall pay all taxes, assessments, water rates and sewer
rents, now or hereafter levied, assessed or imposed against the Mortgaged
Property or any part thereof (collectively, the "Taxes") and all ground rents,
maintenance charges, 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. Borrower
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. Borrower 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. Borrower shall furnish to
Lender or its designee receipts for the payment of the Taxes prior to the date
the such obligations shall become delinquent. Borrower 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
Borrower 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 and Insurance Escrow Fund
(a) Borrower 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) 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"). 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
Borrower to Lender. Borrower 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 Borrower
pursuant to Sections 4 and 5 hereof. Provided that sufficient funds are then
available to pay the current Taxes, 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 Borrower 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, Borrower 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. No earnings or interest on the Tax and Insurance Escrow Fund shall be
payable to Borrower.
(b) Anything to the contrary contained herein notwithstanding,
Borrower shall be required to make the payments described in clause (ii) of
subsection (a) of this Section only upon Borrower's failure to maintain the
insurance required pursuant to Section 4 hereof or to furnish evidence of
payment as provided in Section 4 hereof.
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7. Replacement Reserve: Repair Escrow
(a) Lender has this day established an interest bearing reserve
account at a federally insured institution (the "Replacement Reserve"), the
balance of which shall be maintained and disbursed in accordance with the
Replacement Reserve Agreement dated as of the date hereof between Borrower and
Lender (the "Replacement Agreement"). Borrower shall deposit with Lender, on the
first day of each calendar month during any given fiscal year, an amount equal
to one-twelfth of four (4%) percent of the gross income derived from the
Mortgaged Property during the preceding fiscal year. For the remaining portion
of Borrower's current fiscal year, Borrower shall deposit $37,246.00 monthly
into the Replacement Reserve. Notwithstanding anything to the contrary in this
Section, in no event shall the monthly payments in respect of the Replacement
Reserve ever fall below $37,246.00 as more particularly set forth in the
Replacement Agreement. Borrower hereby pledges to Lender any and all monies now
or hereafter deposited in the Replacement Reserve as additional security for the
payment of the Debt. All earnings or interest on the Replacement Reserve, shall
be and become part of such Replacement Reserve and shall be disbursed as
provided in the Replacement Agreement and in this Section.
(b) Borrower has this day deposited with Lender, and Lender has this
day established, an interest bearing escrow account at a federally insured
institution the sum of $1,583,000.00 (the "Repair Escrow") to be maintained and
disbursed in accordance with the Repair Escrow Agreement dated as of the date
hereof between Borrower and Lender (the "Repair Agreement"). Borrower shall
deposit with Lender, on or before August 1, 1996, an additional $1,583,000.00
for deposit by Lender into the Repair Escrow. Borrower hereby pledges to Lender
any and all monies now or hereafter deposited in the Repair Escrow as additional
security for the payment of the Debt. All earnings or interest on the Repair
Escrow shall be and become part of such Repair Escrow and shall be disbursed as
provided in the Repair Agreement and in this Section.
(c) Funds on deposit with Lender shall be invested in direct
obligations of, or obligations fully guaranteed as to payment of principal and
interest by, the United States or any agency or instrumentality thereof,
provided that such obligations are backed by the full faith and credit of the
United States of America, and are fully FDIC-insured demand and time deposits.
Lender shall exercise best efforts to direct such investments to obtain for
Borrower the highest rate of return, given the amounts available for investment
and Borrower's timing requirements as communicated to Lender for access to the
funds.
8. Condemnation
(a) Borrower 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
Borrower'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), Borrower
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
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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.
(i) In the case of a Condemnation, Lender may participate in
the settlement and adjustment of any claim; provided, however, that
Borrower 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 $100,000.00 such award shall be paid to Borrower for the cost of
restoring, repairing, replacing or rebuilding the Mortgaged Property or
the part thereof subject to the Condemnation, as provided below, and
Borrower 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 $100,000.00
where: (A) the Condemnation award or proceeds are sufficient to enable
Borrower to fully restore the Mortgaged Property (or Borrower 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, Borrower's business interruption insurance (or
other similar insurance) shall be sufficient to fully cover the period
that the Mortgaged Property is undergoing restoration; (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 .6:1.0; (E) the Franchise Agreement has not
been, and cannot be, terminated as a result of the Condemnation; (F) the
restoration can be completed within 18 months from the date that the
Condemnation 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 (I-I) the Debt Service
Coverage Ratio upon completion is reasonably anticipated to be at least
1.65:1, then, if no Event of Default shall have occurred and be
continuing, the Condemnation award or proceeds shall be paid to Borrower
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 Borrower 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 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 Borrower 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. Any such application to the Debt shall not be considered a
voluntary prepayment requiring payment of the
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prepayment consideration provided in the Note, except that if an Event of
Default, or an event which, with notice and/or the passage of time, or
both, would constitute an Event of Default, has occurred, then such
application shall be subject to the prepayment consideration computed in
accordance with the Note, if any. 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 Borrower for the restoring, repairing,
replacing or rebuilding of the Mortgaged Property, Borrower 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 Borrower 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.
(v) In the event Borrower 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 Borrower 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 Borrower, provided such restoration was
performed in accordance with the provisions of this Section, and Borrower
is not then in default of its obligations under the Loan Documents.
9. Leases and Rents
(a) In connection with the Loan, Borrower has absolutely and
unconditionally assigned to Lender all of Borrower'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. Borrower 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,
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Lender has granted to Borrower a revocable license to operate and manage the
Mortgaged Property and to collect the Rents. Borrower shall hold the Rents, 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 Borrower shall
automatically be revoked, and Lender shall immediately be entitled to possession
of all Rents, whether or not Lender enters upon or takes control of the
Mortgaged Property. Lender is hereby granted and assigned by Borrower 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. Any Rents 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) Borrower 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 shall provide that they are subordinate to the
Mortgage and that the lessee agrees to attorn to Lender. Borrower shall: (A)
observe and perform all the obligations imposed upon the lessor under the Leases
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 Borrower 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; (D) not
collect any Rents more than one month in advance; (E) not execute any 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 cancelled 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 cancelled 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, 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.
(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
Borrower and, if cash, shall be deposited by Borrower at such commercial or
savings bank or banks as may be reasonably satisfactory to Lender. Any bond or
other instrument which Borrower 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
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<PAGE>
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. Borrower shall, upon request, provide Lender
with evidence reasonably satisfactory to Lender of Borrower's compliance with
the foregoing. Following the occurrence and during the continuance of any Event
of Default, Borrower 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
Borrower 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 Borrower, 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.
(b) To the best of Borrower'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 Borrower's knowledge,
threatened for the total or partial condemnation of, or affecting, the Mortgaged
Property.
(c) 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 except as shown on the
surveys furnished to Lender in connection with the Loan and, except as shown on
such surveys, 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 Borrower 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 Borrower'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 Borrower'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 Borrower's business.
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(e) The survey of the Mortgaged Property delivered to Lender in
connection with this Agreement has been performed by a duly licensed surveyor or
registered professional engineer in the jurisdiction in which the Mortgaged
Property is situated, and to the best of Borrower'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 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 Borrower, and are prepared in
accordance with generally accepted accounting principles, consistently applied.
Borrower 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 Borrower and which, in Borrower'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
statements heretofore furnished to Lender or as otherwise disclosed to Lender
herein. Since the last date of such financial statements, there has been no
material adverse change in the financial condition, operations or business of
Borrower 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,
Borrower's performance thereunder, the recordation of the Mortgage, nor the
exercise of any remedies by Lender, will adversely affect (A) Borrower's rights
under either the Franchise Agreement or the Management Agreement or (B) the
licenses, registrations, permits, certificates, authorizations and approvals
necessary for the operation of the Mortgaged Property as a hotel.
(j) The current Leases are in full force and effect and there are no
defaults thereunder by either party and there are no conditions which with the
passage of time and/or notice would constitute defaults thereunder.
11. Single Purpose Entity: Authorization
Borrower represents and warrants, and covenants for so long as any
obligations secured by the Mortgage remain outstanding, as follows:
(a) Each entity comprising Borrower does not and will not own any
asset or property other than: (i) its respective portion of the property
comprising the Mortgaged Property; and (ii) incidental personal property
necessary for the ownership or operation of the Mortgaged Property.
(b) Each entity comprising Borrower does not and will not engage in
any business other than the ownership, management and operation of its
respective portion of the property comprising the
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Mortgaged Property, and each entity comprising Borrower will conduct and operate
its business in all material respects as presently conducted and operated.
(c) Except with respect to the Management Agreement which, in its
present form, is acceptable to Lender, Borrower will not enter into any contract
or agreement with any Guarantor or an affiliate, except upon terms and
conditions that are intrinsically fair and substantially similar to those that
would be available on an arms-length third-party basis.
(d) Borrower has not incurred and will not incur any indebtedness,
secured or unsecured, direct or indirect, absolute or contingent
(including-guaranteeing any obligation), other than: (i) the Debt; and (ii)
trade and operational debt incurred in the ordinary course of business with
trade creditors and in amounts as are customary and reasonable under the
circumstances. Except with Lender's prior written approval in each instance, no
indebtedness other than the Debt is or shall be secured by the Mortgaged
Property. Lender's approval shall be granted or withheld at Lender's sole
discretion. Notwithstanding the preceding sentence, Borrower may lease or
purchase on an installment basis, telephone systems, televisions, property
management systems, HVAC units, signage, copy machines, electronic lock systems,
laundry equipment and similar equipment in the ordinary course of its business
so long as: (A) the annual payments for all such equipment for any hotel
comprising the Mortgaged Property does not exceed $20,000; and (B) the Debt
Service Coverage Ratio for any such hotel is not less than 1.65:1.
(e) Borrower has not made and will not make any loans or advances to
any third party (including any constituent party, any Guarantor or any affiliate
of Borrower, of any constituent party or of any Guarantor), except in de minimus
amounts in the ordinary course of business and of the character of trade or
operational expenses.
(f) Borrower has done or caused to be done, and will do or cause to
be done, all things necessary to preserve its existence, and Borrower will not,
nor will Borrower permit any constituent party or Guarantor, to amend, modify or
otherwise change the partnership certificate, partnership agreement, articles of
incorporation and bylaws, trust or other organizational documents, as the case
may be, of Borrower or such constituent party or Guarantor in a manner which
would adversely affect the Borrower's existence as a single purpose entity.
(g) Borrower will maintain books and records and bank accounts
separate from those of its affiliates and any constituent party. Borrower shall
not change the principal place of its business without providing Lender with at
least 30 days prior written notice of such change to Lender.
(h) Borrower is and will be, and at all times will hold itself out
to the public as, a legal entity separate and distinct from any other entity
(including any affiliate of Borrower, any constituent party, any Guarantor or
any affiliate of any constituent party or Guarantor).
(i) Neither Borrower nor any constituent party will cause or seek
the dissolution or winding up, in whole or in part, of Borrower.
(j) Borrower will not commingle its funds and other assets with
those of any constituent party, any Guarantor, any affiliate of Borrower, of any
constituent party or of any Guarantor, or any other person.
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(k) Borrower will not file or consent to the filing of any petition
to take advantage of any applicable insolvency, bankruptcy, liquidation or
reorganization statute, or make an assignment for the benefit of creditors.
(l) Borrower does not and will not hold itself out to be responsible
for the debts or obligations of any other person.
(m) Borrower shall at all times maintain at least one duly appointed
independent member of the Board of Directors of each of the Boards of Directors
of the constituent Borrower entities, which member has not been at the time of
such individual's appointment and may not have been at any time during the
preceding two years: (i) a stockholder of, or an officer or an employee of, such
constituent Borrower entity; (ii) a customer of or supplier to any constituent
Borrower entity; (iii) a person or other entity controlling any such
stockholder, officer, employee, customer or supplier; or (iv) a member of the
immediate family of any such stockholder, officer, employee, customer or
supplier or any other director of any constituent Borrower entity. As used in
this subsection (m), the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such person or entity, whether through ownership of voting
securities by contract or otherwise. Notwithstanding anything to the contrary
provided herein, such independent director may serve as a member of each of the
Boards of Directors of the constituent Borrower entities and other entities
affiliated with the Servico Entities (as such term is defined in Section 13(d)).
12. Maintenance of Mortgaged Property
Borrower 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) without the consent of Lender. Borrower shall promptly comply
with all laws, orders and ordinances affecting the Mortgaged Property, or the
use thereof. Borrower 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, Borrower shall have no
independent obligation to fund the cost thereof. Except as expressly permitted
in writing by Lender, Borrower 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, Borrower will not cause or permit such nonconforming
use to be discontinued or abandoned without the prior written consent of Lender.
Borrower shall not: (a) change the use of the 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.
13. Transfer or Encumbrance of the Mortgaged Property
(a) Borrower acknowledges that Lender has examined and relied on the
creditworthiness and experience of Borrower and its general partners, principals
and (if Borrower 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 Borrower's ownership
of the Mortgaged Property as a means of maintaining the value of the Mortgaged
Property as security for
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repayment of the Debt. Borrower acknowledges that Lender has a valid interest in
maintaining the value of the Mortgaged Property so as to ensure that, should
Borrower 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, Borrower 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) Subject to the express provisions of subsections (d) and (e) of
this Section, 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 Borrower agrees to sell the Mortgaged
Property or any part thereof for a price to be paid in installments; (ii) an
agreement by Borrower 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,
Borrower's right, title and interest in and to any Leases or any- Rents; (iii)
if Borrower, any Guarantor, or any general partner of Borrower or any Guarantor
is a corporation, the voluntary or involuntary sale, conveyance or transfer to
any entity or "controlled group" (as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934) which is not affiliated with such corporation
in excess of forty-nine (49%) percent 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 by which an aggregate of stock representing more
than forty-nine (49%) percent of any such corporation's total outstanding stock
having the power to vote for the election of directors shall be vested in a
party or controlled group (as defined above) who are not now stockholders; and
(iv) if Borrower, any Guarantor or any general partner of Borrower or any
Guarantor is a limited or general partnership, the transfer of the partnership
interest of any general partner or managing partner, provided, however, that
notwithstanding anything to the contrary provided herein, any general partner or
managing partner may transfer its partnership interests so long as the
principals of Borrower as of the date hereof maintain controlling and voting
ownership of no less than 51% of the beneficial controlling and voting interests
of Borrower.
(c) Except as expressly provided herein to the contrary, Lender may
predicate its decision to grant or withhold consent hereunder on Lender's
satisfaction, in its sole and absolute discretion, with all relevant factors
which shall include, without limitation, the creditworthiness of the proposed
transferee and such proposed transferee's management experience, and upon the
execution of an assumption agreement in form and substance acceptable to Lender,
the payment of an assumption fee equal to one (1%) percent of the then unpaid
principal balance of the Note and the payment of all costs and expenses incurred
by Lender in connection with the assumption including Lender's attorneys' fees.
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 Borrower's sale, conveyance, alienation,
mortgage, encumbrance, pledge or transfer of the Mortgaged Property without
Lender's consent. This provision shall apply to every sale, conveyance,
alienation, mortgage, encumbrance, pledge or transfer of the Mortgaged Property
regardless of whether voluntary or not, or whether or not Lender has consented
to any previous sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer of the Mortgaged Property.
(d) Notwithstanding anything contained herein to the contrary, but
subject to the requirements of subsection (1) of this Section, upon any transfer
of capital stock in Servico, Inc., Servico Operations Corp. or Servico
Management Corp. (collectively, the "Servico Entities") resulting in a change of
control thereof, or upon the sale of all or substantially all of the assets of
any of the Servico Entities, in either case provided that Securities have not
been issued, which change of control or sale of assets, as the
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case may be, in Lender's good faith judgment, would have an adverse effect on
the Loan's ability to support at least a BBB- rating from all of Moody's
Investors Service, Inc., Standard & Poor's Rating Group, Fitch Investor Service
and Duff & Phelps, Inc. (or other nationally recognized rating agency) (the
"Implied Rating"), Borrower shall upon demand make a prepayment of the principal
amount of the Debt in an amount sufficient, in Lender's good faith judgment, to
restore the Loan's ability to support the Implied Rating, together with any
prepayment consideration payable under the Note. If the Loan's ability to
support the Implied Rating cannot, in Lender's good faith judgment, be restored
by such partial prepayment, the entire Debt, together with any prepayment
consideration payable under the Note, shall become due and payable upon ten days
notice from Lender. A transfer under this subsection (d) shall not constitute a
transfer prohibited under subsection (a) or (b) of this Section or with respect
to which subsections (c) and (h) of this Section shall apply.
(e) Notwithstanding anything contained herein to the contrary, but
subject to the requirements of subsection (f) of this Section, upon any transfer
of capital stock in any of the Servico Entities resulting in a change of control
thereof, or upon the sale of all or substantially all of the assets of any of
the Servico Entities, in either case when Securities have been issued, unless
such of Moody's Investors Service, Inc., Standard & Poor's Rating Group, Fitch
Investor Service and Duff & Phelps, Inc. (or other nationally recognized rating
agency) as have rated the Securities confirms in writing that as a result of
such change of control or sale of assets, as the case may be, its then current
rating of the Securities will not be downgraded, withdrawn or adversely
affected, then Borrower shall upon demand make a prepayment of the principal
amount of the Debt in an amount necessary to prevent such downgrade, withdrawal
or other adverse effect, together with any prepayment consideration payable
under the Note. If such downgrade, withdrawal or other adverse effect cannot be
prevented by such partial prepayment, the entire Debt, together with any
prepayment consideration payable under the Note, shall become due and payable
upon ten days notice from Lender. A transfer under this subsection (e) shall not
constitute a transfer prohibited under subsection (a) or (b) of this Section or
with respect to which subsections (c) and (h) of this Section shall apply.
(f) Any transferee of the capital stock of any of the Servico
Entities (which underlying transfer results in a change of control thereof), or
any transferee of all or substantially all of the assets of any of the Servico
Entities, in either case in accordance with subsections (d) and (e) of this
Section, shall satisfy each of the following requirements: (i) such transferee
shall execute an assumption agreement in form and substance reasonably
acceptable to Lender, (ii) such transferee shall have a minimum tangible net
worth of not less than $45 million; and (iii) such transferee shall have a
maximum debt-to-equity ratio of 3.5:1. Borrower shall reimburse Lender for all
of its actual out of pocket expenses and third-party costs (including attorneys
fees and expenses) in connection with such transfer and assumption, in no event
to exceed $50,000 with respect to each such transfer.
(g) Lender's consent to one 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.
(h) Borrower 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, 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.
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(i) 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, Borrower 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 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 Borrower 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, Borrower shall furnish Lender
with a certificate reaffirming all representations and warranties of Borrower
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) Borrower 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
Borrower shall not be required to deliver such certificates more frequently than
two times in any calendar year.
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 imposes a tax, either directly or indirectly,
on the Debt or Lender's interest in the Mortgaged Property, Borrower 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
Borrower 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.
16, No Credits on Account of the Debt
Borrower 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
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mortgage filing privilege tax) to be affixed to the Note or the Mortgage, or
shall impose any other tax or charge on the same, Borrower 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 Borrower
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 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
Borrower will maintain full and accurate books of accounts and other
records reflecting the independent operations of each of the individual hotels
comprising the Mortgaged Property. Borrower will furnish, or cause to be
furnished to Lender, within 30 days of the end of each calendar month, the
following items, each certified by a senior financial officer of Borrower as
true, correct and complete as of the end of and for such period (subject to
normal year-end adjustments), and as having been prepared in accordance with
generally accepted accounting principles, consistently applied: (a) if requested
by Lender, a written occupancy statement dated as of the last day of the most
recently ended calendar quarter identifying each of the Leases by the term,
space occupied, rental required to be paid, security deposit paid, any rental
concessions, and identifying any defaults or payment delinquencies thereunder;
(b) monthly and year to date operating statements detailing the total revenues
received and total expenses incurred in connection with the ownership and
operation of each of the individual hotels comprising the Mortgaged Property,
including a comparison of the budgeted income and expenses and the actual income
and expenses for such month and the year to date (which operating information
shall include the hotel located thereon); and (c) a written statement for each
hotel dated as of the last day of the most recently ended month showing the
percentage of rooms rented and occupied during such month and the average daily
room rate charged during such month. Upon request by Lender, Borrower will
provide a detailed explanation of any variances often (10%) percent or more
between budgeted and actual amounts for such periods. Borrower shall furnish,
within 90 days following the end of each calendar year, a statement of the
financial affairs and condition of each of the individual hotels comprising the
Mortgaged Property, including a statement of profit and loss and a balance sheet
for each of the individual hotels comprising the Mortgaged Property for the
immediately preceding
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fiscal year, prepared by an independent certified public accountant acceptable
to Lender. Borrower shall deliver to Lender on or before December 31 of each
calendar year an itemized operating budget and capital expenditure budget for
each of the individual hotels comprising the Mortgaged Property and a management
plan for each of the individual hotels comprising the Mortgaged Property for the
next succeeding calendar year in such detail as Lender may reasonably request.
Borrower shall promptly after receipt deliver to Lender copies of all quality
inspection reports or similar reports or inspection results that are delivered
to it by the franchisor. At any time and from time to time Borrower shall
deliver to Lender or its agents such other financial data as Lender or its
agents shall reasonably request with respect to Borrower and the ownership,
maintenance, use and operation of each of the individual hotels comprising the
Mortgaged Property. All information required to be furnished to Lender pursuant
to this Section shall be on the form provided by Lender (which form shall
accompany Lender's request).
20. Performance of Other Agreements
Borrower shall observe and perform each and every term to be
observed or performed by Borrower 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
Borrower under the Loan Documents.
21. Further Assurances: Right to Split the Loan
(a) Borrower will, at the cost of Borrower, 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 Borrower 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. Borrower, on demand, will execute and deliver and hereby
authorizes Lender, upon the occurrence of an Event of Default, to execute in
the name of Borrower or without the signature of Borrower 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. Borrower 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 Borrower is in compliance with the
terms and conditions of this Agreement, Lender will first seek Borrower's
assistance in exercising and perfecting such rights and remedies.
(b) Borrower acknowledges that Lender intends to sell the loan
evidenced by the Note and the Loan Documents to a party who may pool the Loan
with a number of other loans and to have the holder of such loans grant
participations therein or 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 Borrower act as issuer
or depositor, or execute any registration statement, offering circular or
memorandum in connection with the offering of Securities. The Securities may be
rated by one or more national rating agencies. In this regard, Borrower agrees
to make available to Lender, at Lender's sole cost and expense, all information
concerning its business and operations which Lender reasonably requests. Lender
may share such information with the investment banking firms, rating agencies,
accounting firms, law firms and other
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third-party advisory firms involved with the Loan or the Securities. It is
understood that the information provided by Borrower 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, Borrower shall have no liability by reason of the
offering or issuance of the Securities; provided, however, that nothing herein
shall operate in derogation of any obligation of Borrower under the Loan
Documents.
(c) Lender shall have the right, at any time in its sole and
absolute discretion, to split and sever the Loan into two or more separate
loans. Borrower 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 Borrower's liability or
obligations hereunder, and Lender shall pay all of Borrower's actual out of
pocket expenses and third-party costs (including attorneys fees and expenses) in
connection with such splitter and severance.
22. Recording of Mortgage
Borrower 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. Borrower will pay all filing, registration or
recording fees, 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. Borrower 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
Borrower agrees to give prompt notice to Lender of the insolvency or
bankruptcy filing of Borrower or any constituent thereof, or the death,
insolvency or bankruptcy filing of any Guarantor.
24. Events of Default
The term "Event of Default" as used herein shall mean the occurrence
or happening, at anytime 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 tenth (10th)
day after the date such payment is due or if the entire Debt is not paid on or
before the Maturity Date;
(b) subject to Borrower'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;
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(d) if Borrower transfers or encumbers any portion of the Mortgaged
Property in a manner inconsistent with the terms of this Agreement;
(e) if any representation or warranty of Borrower, or of any
Guarantor, made herein, in any Loan Document, any 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 Borrower 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 Borrower or of any
Guarantor shall be appointed, or if Borrower 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, Borrower or any Guarantor or if any proceeding for the dissolution or
liquidation of Borrower or of any Guarantor shall be instituted; provided,
however, that such appointment, adjudication, petition or proceeding, if
involuntary and not consented to by Borrower or such Guarantor, shall constitute
an Event of Default only if not being discharged, stayed or dismissed within 90
days;
(h) if Borrower shall be in default under any other mortgage or
security agreement 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 Borrower'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 Borrower 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 Property;
(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 Borrower's
failure to maintain insurance required in accordance with this Agreement, which
damage is not promptly repaired to Lender's satisfaction at Borrower's cost and
expense;
(m) if without Lender's prior written consent: (i) the manager under
the Management Agreement (or any succeeding 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 management agreement);
(n) if without Lender's prior written consent, there is any material
adverse change in the Franchise Agreement (or any succeeding franchise
agreement);
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(o) if for more than 30 days after receipt of notice from Lender,
Borrower shall continue to be in default under any term, covenant, or condition
of this Agreement, the Assignment, the Environmental Agreement or any of the
other Loan Documents other than as specified in any of subsections (a) through
(n) of this Section: provided, however, that if the cure of any such default
cannot reasonably be cured within such 30 day period and Borrower 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 Borrower diligently and
continuously proceeds to cure such default to Lender's satisfaction;
(p) 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;
(q) 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;
(r) if Borrower 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); or
(s) if Borrower 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.
25. Late Payment Charge
If any portion of the Debt is not paid prior to the tenth (10th) day
after the date such payment is due or if the entire Debt is not paid on or
before the Maturity Date, 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.
26. Right to Cure Defaults
Upon the occurrence of any Event of Default or, upon notice, if
Borrower 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 Borrower from any
obligation hereunder, take such action as Lender may deem necessary to 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 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.
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 Borrower and in and to the
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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
Borrower 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 either before, during or
after any proceedings for the enforcement of the Mortgage; provided,
however, that nothing herein shall expand Lender's recourse as limited
pursuant to Section 8 of the Note;
(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 Borrower, any Guarantor or of any person, firm
or other entity liable for the payment of the Debt;
(viii) revoke the license granted to Borrower 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 Borrower
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 Borrower with respect to the Mortgaged Property, whether in
the name of Borrower 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
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receipts from the Mortgaged Property to the payment of the Debt, after
deducting therefrom all expenses (including Lender's attorneys' fees)
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 Borrower 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 Borrower and require Borrower to vacate and surrender
possession of the Mortgaged Property o Lender or to such receiver and, in
default thereof, evict Borrower by summary proceedings or otherwise; and
(x) pursue such other rights and remedies as may be available
at law or in equity or under the Uniform Commercial Code, including the
right to establish a lock box for all Rents and other receivables of
Borrower relating to the Mortgaged Property.
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.
(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 Borrower, 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 Borrower in and to the properties and rights so
sold, and shall be a perpetual bar both at law and in equity against
Borrower and against any and all persons claiming or who may claim the
same, or any part thereof from, through or under Borrower.
(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
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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 Borrower 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 by 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 Borrower is liable
hereunder shall be deemed to waive or cure any Event of Default with respect to
Borrower, or Borrower'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 Borrower, shall operate to release or in any
manner affect the interest of Lender in the remaining Mortgaged Property or the
liability of Borrower 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.
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 Borrower in the Mortgaged Property. By executing and delivering this
Agreement, Borrower 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
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the Uniform Commercial Code (such portion of the Mortgaged Property so subject
to the Uniform Commercial Code being called in this Section the "Collateral").
Borrower 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 thereat
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,
Borrower 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 and Lender prevails in such action, Borrower shall
pay to Lender on demand any and all expenses, including Lender's attorneys'
fees, 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 Borrower in accordance with the provisions hereof at least 10
days prior to such action, shall constitute commercially reasonable notice to
Borrower. 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
any change in name. identity or structure of any Borrower, such Borrower shall
notice 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, Borrower 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 Borrower's
obligations under the Note, the Mortgage, this Agreement, the Assignment, the
Environmental Agreement and the other Loan Documents. Borrower 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 Borrower fails to appear or defend, and upon an Event of
Default, to bring any action or proceeding, in the name and on behalf of
Borrower, 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. Borrower hereby waives the right to assert a counterclaim (other
than compulsory counter-claims) in any action or proceeding brought against it
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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,
Borrower 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) Borrower shall have notified Lender of such
nonpayment and the reasons therefor within 10 days of obtaining knowledge
thereof; (b) Borrower 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) Borrower 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 deposited into an interest-bearing account); (d) Borrower
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, Borrower shall immediately upon request of Lender
pay (and if Borrower 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 opinion of Lender, the
Mortgaged Property or any part thereof or interest therein may be in danger of
being sold, forfeited, foreclosed, terminated, cancelled 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 Borrower existing
at the time such earlier action was commenced. Nothing herein shall expand
Lender's recourse as limited pursuant to Section 8 of the Note.
34. Marshalling and Other Matters
Borrower 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, Borrower hereby expressly waives any and all
rights of redemption from sale under any order or decree of foreclosure of the
Mortgage on behalf of Borrower, 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.
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35. Hazardous Substances
Borrower hereby represents and warrants to Lender that. to the best
of Borrower's knowledge. after due inquiry and investigation, and except as
disclosed in the environmental audits of the Mortgaged Property furnished to
Lender in connection with the Loan: (a) the Mortgaged Property is not in direct
or indirect violation of any local, state, federal or other governmental
authority, statute, ordinance, code, order, decree, law, rule or regulation
pertaining to or imposing liability or standards of conduct concerning
environmental regulation, contamination or clean-up including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act, as amended, the Resource Conservation and Recovery Act, as
amended, and any state super-lien and environmental clean-up statutes
(collectively, "Environmental Laws") (b) the Mortgaged Property is not subject
to any private or governmental lien or judicial or administrative notice or
action relating to hazardous and/or toxic, dangerous and/or regulated,
substances, solvents, wastes, materials, pollutants or contaminants, petroleum,
tremolite, anthlophylie or actinolite or polychlorinated biphenyls (including,
without limitation, any raw materials which include hazardous constituents) and
any other substances, materials or solvents which are included under or
regulated by Environmental Laws (collectively, "Hazardous Substances"); (c) no
Hazardous Substances are or have been, prior to Borrower's acquisition of the
Mortgaged Property, discharged, generated, treated, disposed of or stored on,
incorporated in or removed or transported from the Mortgaged Property other than
in compliance with all Environmental Laws; and (d) no underground storage tanks
exist on any of the Mortgaged Property. So long as Borrower owns or is in
possession of the Mortgaged Property, Borrower shall keep or cause the Mortgaged
Property to be kept free from Hazardous Substances (other than de minimis
quantities of Hazardous Substances that are necessary and lawfully used in the
operation of the Mortgaged Property as a hotel or motel, and which are stored
and disposed of in compliance with all Environmental Laws) and in compliance
with all Environmental Laws, shall promptly notify Lender if Borrower shall
become aware of any Hazardous Substances on the Mortgaged Property and/or if
Borrower shall become aware that the Mortgaged Property is in direct or indirect
violation of any Environmental Laws and Borrower shall remove such Hazardous
Substances and/or cure such violations, as applicable, as required by law,
promptly after Borrower becomes aware of such Hazardous Substances or such
violations, at Borrower's sole expense. Nothing herein shall prevent Borrower
from recovering such expenses from any other party that may be liable for such
removal or cure. Upon Lender's request, at any time and from time to time while
this Agreement is in effect (but in no event more frequently than once in any
three-year period or more frequently if specific facts and circumstances
reasonably dictate, or otherwise at Lender's election but at Lender's expense),
Borrower shall provide at Borrower's sole expense, an inspection or audit of the
Mortgaged Property prepared by a licensed hydrogeologist or licensed
environmental engineer approved by Lender indicating the presence or absence of
Hazardous Substances on the Mortgaged Property. If Borrower fails to provide
such inspection or audit within 30 days after such request, Lender may order
such inspection or audit, and Borrower hereby grants to Lender and its employees
and agents access to the Mortgaged Property and a license to undertake such
inspection or audit. The cost of such inspection or audit shall be paid by
Borrower and added to the principal balance of the sums due under the Note and
the Mortgage and shall bear interest thereafter until paid at the Default Rate.
The obligations and liabilities of Borrower under this Section which relate to
conditions created or arising during Borrower's ownership of the Mortgaged
Property and prior to Lender's taking possession of the Mortgaged Property shall
survive any termination, satisfaction, or assignment of the Mortgage and the
exercise by Lender of any of its rights or remedies thereunder including,
without limitation, the acquisition of the Mortgaged Property by foreclosure or
a conveyance in lieu of foreclosure.
36. Asbestos
(a) Borrower represents and warrants that, to the best of Borrower's
knowledge, after due inquiry and investigation, and except as disclosed in the
environmental audits of the Mortgaged
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Property furnished to Lender in connection with the Loan, no asbestos or any
substance containing asbestos (collectively, "Asbestos") is located on the
Mortgaged Property. Borrower shall not install in the Mortgaged Property, nor
permit to be installed in the Mortgaged Property, Asbestos and shall remove any
Asbestos promptly upon discovery to the satisfaction of Lender, at Borrower's
sole expense. Upon Lender's request, at any time and from time to time (but in
no event more frequently than once in any three-year period or more frequently
if specific facts and circumstances reasonably dictate, or otherwise at Lender's
election but at Lender's expense), Borrower shall provide, at Borrower's sole
expense, an inspection or audit of the Mortgaged Property prepared by an
engineering or consulting firm approved by Lender, indicating the presence or
absence of Asbestos on the Mortgaged Property. If Borrower fails to provide such
inspection or audit within 30 days after such request, Lender may order such
inspection or audit The cost of such inspection or audit shall be paid by
Borrower and added to the principal balance of the sums due under the Note and
the Mortgage, and shall bear interest thereafter until paid at the Default Rate.
The obligations and liabilities of Borrower under this Section which relate to
conditions created or arising during Borrower's ownership of the Mortgaged
Property and prior to Lender's taking possession of the Mortgaged Property shall
survive any termination, satisfaction, or assignment of the Mortgage and the
exercise by Lender of any of its rights or remedies thereunder, including but
not limited to, the acquisition of the Mortgaged Property by foreclosure or a
conveyance in lieu of foreclosure.
(b) Borrower has developed an operations and maintenance plan (the
"O&M Plan") for the Mortgaged Property with respect to the presence of Asbestos
in the Improvements. Borrower covenants and agrees that it shall comply in all
respects with the terms and conditions of the O&M Plan. Borrower shall not
modify or amend the O&M Plan without Lender's prior written consent unless
required by Environmental Laws. Borrower shall not remove, disturb or
encapsulate or otherwise remediate the Asbestos in the Improvements except in
compliance with all Environmental Laws. If Borrower makes any alterations or
modifications to the Improvements that would disturb or expose any Asbestos in
the Improvements or cause any of such Asbestos to become friable, Borrower shall
remove or encapsulate such Asbestos in compliance with all applicable
Environmental Laws before allowing occupancy of such space or opening such space
to the public.
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37. Environmental Monitoring
Borrower shall give prompt written notices to Lender of: (a) any
proceeding or inquiry by any party with respect to the presence of any Hazardous
Substance on, under, from or about the Mortgaged Property; (b) all claims made
or threatened by any third party against Borrower or the Mortgaged Property
relating to any loss or injury resulting from any Hazardous Substance; and (c)
Borrower's discovery of any occurrence or condition on any real property
adjoining or in the vicinity of the Mortgaged Property that could cause the
Mortgaged Property to be subject to any investigation or cleanup pursuant to any
Environmental Law. Borrower shall permit Lender to join and participate, as a
party if it so elects, in any legal proceedings or actions initiated with
respect to the Mortgaged Property in connection with any Environmental Law or
Hazardous Substance, and Borrower shall pay all attorneys' fees incurred by
Lender in connection therewith. In the event that any environmental site
assessment report prepared for the Mortgaged Property recommends that an
operations and maintenance plan be implemented for Asbestos or any Hazardous
Substance, Borrower shall cause such operations and maintenance plan to be
prepared and implemented at Borrower's expense upon request of Lender and in
accordance with the recommendation. In the event that any investigation, site
monitoring, containment, cleanup, removal, restoration, or other work of any
kind which is reasonably necessary or desirable under an applicable
Environmental Law ("Remedial Work"), Borrower shall, at its sole cost and
expense, commence and thereafter diligently prosecute to completion all such
Remedial Work within 30 days after written demand by Lender for performance
thereof (or such shorter period of time as may be required under applicable
law).
38. Management of the Hotel
Borrower further covenants and agrees with Lender as follows:
(a) Borrower shall cause the hotel located on the Mortgaged Property
to be operated pursuant to the Franchise Agreement and the Management Agreement.
(b) Borrower shall:
(i) pay all sums required to be paid by Borrower 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 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;
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(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 Borrower to be performed or observed to
be promptly performed or observed on behalf of Borrower, to the end that
the rights of Borrower in, to and under the Franchise Agreement shall be
kept unimpaired and free from default;
(vii) use its reasonable efforts to obtain, from time to time,
from the franchisor under the Franchise Agreement such certificates of
estoppel with respect to compliance by Borrower with the terms of the
Franchise Agreement as may be requested by Lender; and
(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 Borrower 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 Borrower, which power of attorney
shall be irrevocable and shall be deemed to be coupled with an interest.
Notwithstanding the foregoing. Borrower shall not be required to extend or
renew the Franchise Agreement if Lender consents to Borrower's request to
enter into franchise arrangements with a franchisor other than the
franchisor under the Franchise Agreement.
(c) Borrower 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
of the Mortgaged Property.
(d) Except as set forth in the Management Agreement, Borrower 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, the rendering or receipt of
services or the purchase or sale of inventory, except any such transaction in
the ordinary course of business of Borrower if the monetary or business
consideration arising therefrom would be substantially as advantageous to
Borrower as the monetary or business consideration which would obtain in a
comparable transaction with a person not an affiliate of Borrower.
(e) Borrower irrevocably authorizes and directs Franchisor, from and
after an Event of Default, to deliver to Lender: (i) all operating information
concerning the Property submitted by Borrower to Franchisor; (ii) the written
results of all quality assurance inspections of the 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 Borrower 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 Borrower.
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39. Handicapped Access
(a) Borrower 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").
(b) Notwithstanding any provisions set forth herein or in any other
document regarding Lender's approval of alterations of the Mortgaged Property,
Borrower shall not alter the Mortgaged Property in any manner which would
increase Borrower'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) Borrower agrees to give prompt notice to Lender of the receipt
by Borrower 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) Borrower 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) Borrower 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) Borrower 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(3) of ERISA; (ii) Borrower 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 Borrower 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 Borrower are held by "benefit plan investors" within the
meaning of 29 C.F.R. ss. 2510.3-101(f)(2); or
(C) Borrower 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,
Borrower shall protect, 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'
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fees and expenses), imposed upon or incurred by or asserted against Lender by
reason of: (1) 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 Borrower 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, 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; and
(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. 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 Borrower 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 Borrower 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.
(c) Borrower 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. Borrower 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
38
<PAGE>
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 Borrower 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 Borrower following Borrower's receipt of notice of such settlement and
Borrower'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 Borrower or Lender, as the case may be, shall in like manner designate
in writing.
43. Authority
Borrower 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 Borrower's part to be performed; and (b) Borrower 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. 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
Borrower shall not be entitled to any notices of any nature
whatsoever from Lender except with respect to matters for which this Agreement
specifically and expressly provides for the giving of notice by Lender to
Borrower and except with respect to matters for which Lender is required by
applicable law to give notice, and Borrower 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 Borrower.
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
Borrower's remedies shall be limited to specific performance, injunctive relief
or declaratory judgment.
39
<PAGE>
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.
Borrower shall not be relieved of Borrower's obligations hereunder by reason of:
(a) the failure of Lender to comply with any request of Borrower 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 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
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 Borrower 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 Borrower 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 the 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 Borrower 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.
40
<PAGE>
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 "Borrower" shall mean
"each Borrower, and each constituent party of Borrower, 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, 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
Borrower 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. SUBMISSION TO JURISDICTION
BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY OHIO,
IOWA or GEORGIA STATE OR FEDERAL COURT SITTING IN SUMMIT COUNTY, OHIO or
WOODBURY COUNTY, IOWA or RICHMOND COUNTY, GEORGIA OVER ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. LENDER MAY, AT ITS SOLE
DISCRETION, ELECT THE STATE OF OHIO, SUMMIT COUNTY, THE STATE OF IOWA, WOODBURY
COUNTY or THE STATE OF GEORGIA, RICHMOND COUNTY, OR THE UNITED STATES OF
AMERICA, FEDERAL
41
<PAGE>
DISTRICT COURT HAVING JURISDICTION OVER SUMMIT, WOODBURY or RICHMOND COUNTY, AS
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING. BORROWER HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE TO SUCH VENUE AS BEING AN INCONVENIENT FORUM.
57. Agent for Receipt of Process
Borrower 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, Atnn: Robert I. Weissler, Esq., as its
authorized agent to accept and acknowledge, on behalf of Borrower, service of
any and all process which may be served in any suit, action or proceeding of the
nature referred to in Section 56 hereof in any State or Federal court within
Summit, Woodbury or Richmond County. If such agent shall cease so to act,
Borrower 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 of the nature referred to in Section 56 hereof may be
served: (a) by registered or certified mail, postage prepaid, to Borrower at the
address set forth above or to such other address of which Borrower shall have
given Lender written notice; or (b) if Borrower shall not have made an
appearance within 21 days after service in accordance with clause (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 Borrower in the courts of any other jurisdiction.
59. WAIVER OF JURY TRIAL
BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE
TRIABLE OF RIGHT BY JURY, AND WAIVES 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 BORROWER, 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 BORROWER.
60. CHOICE OF LAW
THIS LOAN AGREEMENT SHALL BE DEEMED TO BE A CONTRACT ENTERED INTO
PURSUANT TO TILE LAWS OF TILE COMMONWEALTH OF VIRGINIA AND SHALL IN ALL RESPECTS
BE GOVERNED, CONSTRUED, APPLIED, AND ENFORCED IN ACCORDANCE WITH THE LAWS OF
SUCH JURISDICTION.
42
<PAGE>
61. Release of Portions of the Mortgaged Property
(a) Any one or more individual hotels that comprises a portion of
the Mortgaged Property may be released from the lien of the Mortgage provided
that, in each instance: (i) no Event of Default shall have occurred and be
continuing; (ii) the Release Conditions are satisfied; (iii) Borrower pays to.
Lender the applicable release price set forth on Schedule A with respect to such
hotel, together with all other sums then due and payable in respect of the Loan
(including, without limitation, the prepayment consideration payable under the
Note, and interest, late fees, costs and expenses payable in accordance
herewith); and (iv) Borrower shall deliver to Lender a current title search with
respect to the remaining Mortgaged Property showing no liens or other
encumbrances other than as permitted hereunder or to which Lender shall have
consented. In order to confirm or effect such release, Lender shall execute one
or more instruments, in recordable form, evidencing such release and the release
of the constituent Borrower party from liability in respect of the Loan.
(b) Nothing herein shall obligate Borrower to repay principal in
excess of the Loan.
62. Limitations on Recourse
Anything herein to the contrary notwithstanding, Lender's recourse
upon the occurrence of an Event of Default hereunder is limited pursuant to the
express provisions of the Note.
43
<PAGE>
IN WITNESS WHEREOF, Borrower and Lender have executed this
instrument as of the day and year first above written.
BORROWER:
BRECKSVILLE HOSPITALITY, L.P.
By: Brecksville Hospitality, Inc.
General Partner
By: /s/ Robert D. Ruffin
-----------------------------------
Robert D. Ruffin
Vice President
SIOUX CITY HOSPITALITY, L.P.
By: Fourth Street Hospitality, Inc.
General Partner
By: /s/ Robert D. Ruffin
----------------------------------
Robert D. Ruffin
Vice President
1075 HOSPITALITY, L.P.
By: Stevens Creek Hospitality, Inc.
General Partner
By: /s/ Robert D. Ruffin
----------------------------------
Robert D. Ruffin
Vice President
LENDER:
LOAN SERVICES, INC.
By: /s/ Frank Warfield
-------------------------------------
Frank Warfield
President
[Acknowledgment]
44
<PAGE>
STATE OF FLORIDA )
: ss.:
COUNTY OF DADE )
On January 17, 1996, before me, a notary public, duly commissioned,
qualified and acting. personally appeared Robert D. Ruffin, personally known to
me (or proved to me on the basis of satisfactory evidence) to be the person
whose name is subscribed to the within instrument and acknowledged to me that he
executed the same in his authorized capacity, and that by his signature on the
instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Maureen Cooper
-----------------------------
Notary Public
[SEAL]
My Commission Expires
- -----------------------
STATE OF FLORIDA )
: ss.:
COUNTY OF DADE )
On January 17, 1996, before me, a notary public, duly commissioned,
qualified and acting, personally appeared Frank Warfield, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person whose
name is subscribed to the within instrument and acknowledged to me that he
executed the same in his authorized capacity, and that by his signature on the
instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Maureen Cooper
-----------------------------
Notary Public
[SEAL]
My Commission Expires
- -----------------------
STATE OF FLORIDA )
: ss.:
COUNTY OF DADE )
<PAGE>
SCHEDULE A
List of Mortgaged Properties
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Name/Address Franchise Agreement Franchisor Management Manager Release Price
Agreement
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Holiday Inn Holiday Inn Change of Holiday Inns Hotel Operating Servico $3,812,500.00
4742 Brecksville Ownership Agreement dated Franchising, Inc. Agreement dated Management Corp.
Richfield, Ohio as of the date hereof. as of the date
hereof.
- --------------------------------------------------------------------------------------------------------------------------------
Hilton Hotel License Agreement dated Hilton Inns, Inc. Hotel Operating Servico $7,362,500.00
707 4th Street December 20, 1994, as Agreement dated Management Corp.
Sioux City, Iowa amended and assigned by as of the date
Assignment and Assumption hereof.
of, and Amendment to,
License Agreement dated
as of the date hereof.
- --------------------------------------------------------------------------------------------------------------------------------
Holiday Inn Holiday Inn Change of Holiday Inns Hotel Operating Servico $4,962,500.00
1075 Steven Creek Ownership Agreement dated Franchising, Inc. Agreement dated Management Corp.
Augusta, Georgia as of the date hereof. as of the date
hereof.
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit 10.9.2
MORTGAGE NOTE
$12,910,000.00 January 17, 1996
Richmond, Virginia
FOR VALUE RECEIVED BRECKSVILLE HOSPITALITY, L.P., an Ohio limited
partnership, SIOUX CITY HOSPITALITY, L.P., an Iowa limited partnership, and 1075
HOSPITALITY, L.P., a Georgia limited partnership (collectively, "Maker"),
promises to pay to the order of LOAN SERVICES, INC., a Virginia corporation
("Payee"), at its principal place of business at 8614 Westwood Center Drive,
Suite 620, Vienna, Virginia 22182, or at such place as the holder hereof may
from time to time designate in writing, the principal sum of Twelve Million Nine
Hundred Ten Thousand and 00/100 Dollars (the "Loan"), in lawful money of the
United States of America, with interest thereon to be computed on the unpaid
principal balance from time to time outstanding at the Applicable Interest Rate
(as such term is defined in Section 1(c) hereof), and to be paid in installments
as follows:
(a) A payment of interest only on the first day of the first full
calendar month after the date hereof; and
(b) Equal monthly payments of principal and interest in the amount
of $107,712.22, on the first day of the second full calendar month after the
date hereof and on the first day of each of the next succeeding 83 calendar
months thereafter (each a "Monthly Payment Date");
with the entire outstanding principal balance, together with accrued and unpaid
interest and any other amounts due under this Note being due and payable on the
seventh anniversary of the first day of the first full calendar month after the
date hereof (the "Maturity Date").
1. Calculation of Interest Application of Payments.
(a) Interest on the outstanding principal balance of this Note shall
be calculated on the basis of a 360-day year composed of 12 months of 30 days
each, except that interest payable in respect of any period less than a full
calendar month shall be calculated by multiplying the actual number of days
elapsed in such period by a daily rate based on a 360-day year.
(b) Payments under this Note shall be applied first, to the payment
of interest and other costs and charges due in connection with this Note or the
Debt (as such term is defined in Section 4 hereof), as Payee may determine in
its sole discretion, and then to reduction of the outstanding principal balance.
All amounts due under this Note shall be payable without setoff, counterclaim or
any other deduction whatsoever.
(c) As used in this Note the term "Applicable Interest Rate" shall
mean, from the date of this Note through and including the Maturity Date, the
fixed rate of Eight and five-eighths (8.625%) percent per annum.
<PAGE>
2. Security for the Loan.
(a) This Note is secured by: (i) that certain Mortgage, Deed of
Trust, Assignment of Leases and Rents and Security Agreement dated as of the
date hereof from Maker to Payee (the "Mortgage") affecting the real property and
improvements more particularly described on Schedule A hereto (collectively, the
"Mortgage Property"); (ii) those certain Assignments of Leases and Rents dated
as of the date hereof from each of the parties constituting Maker to Payee
(collectively, the "Assignment"); (iii) an Environmental Indemnity Agreement
dated as of the date hereof among Payee, Maker and Servico, Inc. (the
"Environmental Agreement"); and (iv) such other documents now or hereafter
executed by Maker and/or others and by or in favor of Payee, which wholly or
partially secure or guarantee payment of this Note including, without
limitation, any collateral assignments and reserve and/or escrow accounts (such
other documents, collectively, the "Other Security Documents").
(b) As used herein, the term "Loan Documents" means, collectively,
this Note, the Mortgage, the Loan Agreement dated as of the date hereof between
Maker and Payee (the "Loan Agreement"), the Assignment, to Environmental
Agreement, the Other Security Documents and any and all other documents executed
in connection with the Loan.
3. Late Charge. If any sum payable under this Note is not paid prior
to the tenth (10th) day after the date such payment is due or if the entire Debt
is not paid on or before the Maturity Date, Maker shall pay to Payee on demand
an additional amount equal to five (5%) percent of such unpaid sum to defray the
expenses incurred by Payee in handling and processing such delinquent payment
and to compensate Payee for the loss of the use of such delinquent payment, and
such additional amount shall be secured by the Mortgage, the Assignment, the
Environmental Agreement and the Other Security Documents.
4. Events of Default. The entire outstanding principal balance of
this Note, together with all accrued and unpaid interest thereon and all other
sums due under the Loan Documents (all such sums, collectively, the "Debt"), or
any portion thereof, shall without notice become immediately due and payable at
the option of Payee; (a) if any payment required in this Note is not paid prior
to the tenth (10th) day after the date when due or on the Maturity Date; (b)
upon the occurrence of any other default under this Note continuing beyond
applicable notice and cure periods; or (c) upon the happening of any other Event
of Default under and as defined in the Loan Agreement (each of the foregoing, an
"Event of Default"). In the event that Payee retains counsel to collect the
Debt, if Payee prevails in such action, Maker shall pay on demand all costs of
collection incurred by Payee, including reasonable attorneys' fees for the
services of counsel whether or not suit be brought.
5. Default Rate Interest. Maker does hereby agree that upon the
occurrence of an Event of Default, including Maker's failure to pay the Debt in
full on the Maturity Date, Payee shall be entitled to receive, and Maker shall
pay, interest on the entire outstanding principal balance and any other amounts
due at to rate equal to the lesser of (a) the maximum rate permitted by
applicable law; and (b) the greater of (i) the Applicable Interest Rate plus
three percent (3%) or (ii) the Prime Rate (as hereinafter defined) plus four
percent (4%) (the lesser of such rates in (a) or (b), the "Default Rate"). The
"Prime Rate" shall mean the annual rate of interest publicly announced by
Citibank, N.A. in New York, New York, as its base rate, as such rate shall
change from time to time. If Citibank N.A. ceases to announce a base rate, Prime
Rate shall mean the rate of interest published in The Wall Street Journal from
time to time
2
<PAGE>
as the Prime Rate. If more than one Prime Rate is published in The Wall Street
Journal for a day, the average of the Prime Rates shall be used, and such
average shall be rounded up to the nearest one-quarter of one percent (1/4%).
Interest shall accrue and be payable at the Default Rate from the occurrence of
the Event of Default until all such Events of Default have been fully cured.
Interest at the Default Rate shall be added to the Debt, and shall be deemed
secured by the Mortgage. This provision, however, shall not be construed as an
agreement or privilege to extend the date of the payment of the Debt, nor as a
waiver of any other right or remedy accruing to Payee by reason of the
occurrence of any Event of Default.
6. Prepayment. (a) Payee is making the Loan at the Applicable
Interest Rate in reliance upon the Maker's repayment of the Debt over the full
stated term thereof. Payee would not otherwise be willing to make the Loan but
for Maker's covenant to repay the Loan over the full stated term. Accordingly,
in order to insure that Payee receives the full benefit of interest on the
outstanding principal balance hereunder in accordance with the terms hereof,
Maker will not prepay the principal balance hereunder prior to the Maturity Date
except in accordance with the terms, and upon the payment of a certain
additional prepayment consideration, as more particularly described below.
(b) Provided no Event of Default exists, the principal balance of
this Note may be prepaid, in whole or, in connection with a release of
collateral under Section 61 of the Loan Agreement, in part, upon: (i) not less
than 30 days prior written notice to Payee specifying the scheduled payment date
on which prepayment is to be made (the "Prepayment Date"); (ii) payment of
accrued interest to and including the Prepayment Date together with a payment of
all interest which would have accrued on the principal balance of this Note to
and including the first day of the calendar month immediately following the
Prepayment Date, if such prepayment occurs on a date which is not the first day
of a month (the "Shortfall Interest Payment") (iii) payment of all other sums
then due under this Note, the Loan Agreement, the Mortgage, the Assignment and
the Other Security Documents; and (iv) payment of a prepayment consideration in
an amount equal to the greater of: (A) one (1%) percent of the principal amount
being prepaid; and (B) the present value of a series of payments each equal to
the Payment Differential (hereinafter defined) and payable on each Monthly
Payment Date over the remaining original term of this Note and on the Maturity
Date discounted at the Reinvestment Yield (hereinafter defined) for the number
of months remaining from the Prepayment Date to each such Monthly Payment Date
and the Maturity Date. The term "Reinvestment Yield" as used herein shall be
equal to the lesser of (1) the yield on the U.S. Treasury issue (primary issue)
with a maturity date closest to the Maturity Date; and (2) the yield on the U.S.
Treasury Issue (primary issue) with a maturity equal to the remaining term of
this Note, with each such yield being based on the bid price for such issue as
published in The Wall Street Journal on the date that is 14 days prior to the
Prepayment Date set forth in the Prepayment Notice (or, if such bid price is not
published on that date, the next preceding date on which such bid price is so
published) and converted to a monthly compounded nominal yield. The term
"Payment Differential" as used herein shall be equal to (x) the Applicable
Interest Rate minus the Reinvestment Yield, divided by (y) 12 and multiplied by
(z) the Principal Sum outstanding after application of the Monthly Payment due
on such Prepayment Date, provided that the Payment Differential shall in no
event be less than zero. In no event, however, shall Lender be required to
reinvest any prepayment proceeds in U.S. Treasury obligations or otherwise (such
prepayment consideration, the "Prepayment Consideration"). Payee shall notify
Maker of the amount, and the basis of determination, of the required Prepayment
Consideration. If any such notice of prepayment is given, such portion of the
principal balance of this Note and the other sums required under this Section in
accordance
3
<PAGE>
with such notice shall be due and payable on the Prepayment Date. Payee shall
not be obligated to accept any prepayment of the principal balance of this Note
unless it is accompanied by the Prepayment Consideration due in connection
therewith. The term "Loan Year" as used in this Section shall mean each complete
365-day period beginning with the first day of the first full calendar month
following the date hereof. Notwithstanding the foregoing, no Prepayment
Consideration shall be payable in connection with a prepayment during the six
months immediately preceding the Maturity Date.
7. Acceleration Deemed Prepayment. If following the occurrence of
any Event of Default, Maker tenders payment of an amount sufficient to satisfy
the entire Debt at any time prior to a judicial or non-judicial foreclosure sale
or sale pursuant to a power of sale of any of the Mortgaged Property including
any redemption period, as applicable, and prior to the time prepayment of the
principal balance of this Note is permitted hereunder without prepayment
consideration, Maker shall, in addition to the entire Debt, also pay to Payee an
amount equal to the sum of: (a) interest calculated as set forth in subsection
(b)(ii) of Section 6; and (b) the Prepayment Consideration payable to Payee
pursuant to Section 6(b). An involuntary prepayment shall include any prepayment
made in connection with reinstatement of the Mortgage under foreclosure
proceedings, or exercise of a power of sale, any right of redemption exercised
by Maker or any other party having a right to redeem or prevent foreclosure, or
which is made or occurs upon the consummation of any sale in foreclosure or
under exercise of a power of sale.
8.Limitations on Recourse (a) Subject to the qualifications set
forth in this Section, Payee shall not enforce the liability and obligation of
Maker to perform and observe the obligations contained in the Note, the Loan
Agreement, the Mortgage, the Assignment or the Other Security Documents by an
action or proceeding wherein a money judgment shall be sought against Maker (or
any partner thereof), except that Payee may bring a foreclosure action, an
action for specific performance or any other appropriate action or proceeding to
enable Payee to enforce and realize upon this Note, the Mortgage, the
Assignment, the Other Security Documents, and the interests in the Mortgaged
Property and any other collateral given to Payee pursuant to the Mortgage, the
Assignment and the Other Security Documents; provided, however, that, except as
specifically provided in this Section, any judgment in any such action or
proceeding shall be enforceable only to the extent of each Maker's respective
interest in the Mortgaged Property and in any other collateral given to Payee.
Payee, by accepting this Note, the Loan Agreement, the Assignment, the Mortgage
and the Other Security Documents, agrees that it shall not sue for, seek or
demand any deficiency judgment against Maker (or any partner thereof) in any
such action or proceeding, under, by reason of or in connection with the
Mortgage, the Loan Agreement, the Assignment, the Other Security Documents or
this Note. Except as may be expressly provided for herein, the provisions of
this Section shall not: (i) constitute a waiver, release or impairment of any
obligation evidenced or secured by the Mortgage, the Loan Agreement, the
Assignment, the Environmental Agreement or the Other Security Documents or this
Note; (ii) impair the right of Payee to name Maker as a party defendant in any
action or suit for foreclosure and sale under the Mortgage; (iii) affect the
validity or enforceability of any guaranty or indemnity made in connection with
the Mortgage, the Loan Agreement, this Note, the Assignment or the Other
Security Documents; (iv) impair the right of Payee to obtain the appointment of
a receiver; (v) impair the enforcement of the Assignment (vi) impair the right
of Payee to bring suit with respect to fraud or intentional misrepresentation by
Maker or any other person or entity in connection with the Mortgage, the Loan
Agreement, this Note, the Assignment, the Environmental Agreement or the Other
Security
4
<PAGE>
Documents; or (vii) affect the validity or enforceability of the Environmental
Agreement or limit the liability of Maker or any other party thereunder. Nothing
herein shall impair the right of Payee to obtain a deficiency judgment in any
action or proceeding in order to preserve its rights and remedies including,
without limitation, foreclosure, non-judicial foreclosure or the exercise of a
power of sale, under the Mortgage; provided, however, that Payee shall not
enforce any such deficiency judgment against Maker (or any partner thereof) or
any assets of Maker (or any partner thereof) other than the Mortgaged Property
or in the exercise of its rights and remedies under the Loan Documents.
(b) Nothing herein shall be deemed to be a waiver of any right which
Payee may have under Section 506(a), 506(b), 1111(b) or any other provisions of
the U.S. Bankruptcy Code to file a claim for the full amount of the Debt secured
by the Mortgage or to require that all collateral shall continue to secure all
of the debt owing to Payee in accordance with this Note, the Loan Agreement, the
Mortgage, the Assignment, the Environmental Agreement and the Other Security
Documents.
(c) Notwithstanding the foregoing provisions of this Section or any
other provision in the Loan Documents, Maker shall be fully liable for and shall
indemnify Payee for any or all loss, cost, liability, judgment, claim, damage or
expense sustained, suffered or incurred by Payee (including, without limitation,
Payee's attorneys' fees) arising out of or attributable or relating to:
(i) fraud or misrepresentation by Maker in connection with the Loan;
(ii) the gross negligence or willful misconduct of Maker, its agents
or employees, or physical waste of the Mortgaged Property;
(iii) the breach of provisions in the Loan Agreement concerning
Environmental Laws, Hazardous Substances and Asbestos, and any
indemnification of Payee therein with respect to such Environmental Laws,
Hazardous Substances and Asbestos;
(iv) except as permitted in the Loan Agreement, the removal or
disposal of any portion of the Mortgaged Property after default under this
Note, the Mortgage, the Loan Agreement, the Assignment, the Environmental
Agreement or any Other Security Document;
(v) the misapplication or misappropriation by Maker of: (A) any
insurance proceeds paid by reason of any loss, damage or destruction to
the Mortgaged Property; (B) any awards or other amounts received in
connection with the condemnation of all or a portion of the Mortgaged
Property; or (C) rents, issues, profits, proceeds, accounts, or other
amounts received by Maker (in the case of clause (C) following an Event of
Default under this Note, the Mortgage, the Loan Agreement, the Assignment,
the Environmental Agreement or the Other Security Documents);
(vi) Maker's failure to pay taxes, assessments, charges for labor or
materials or other charges that results in liens on any portion of the
Mortgaged Property; and
5
<PAGE>
(vii) any security deposits or advance deposits collected with
respect to the Mortgaged Property (except to the extent such deposits are
required to be returned or refunded to the depositor), which are not
delivered to Payee upon a foreclosure of the Mortgaged Property or action
in lieu thereof.
(d) Notwithstanding the foregoing, the agreement of Payee not to
pursue recourse liability as set forth in Subsection (a) above SHALL BECOME NULL
AND VOID and shall be of no further force or effect in the event of: (i) Maker's
failure (after prior notice and the expiration of applicable cure periods) to
permit on-site inspections of the Mortgaged Property or to provide financial
reports and information pertaining to the Mortgaged Property as required by the
Loan Agreement which failure continues, with respect to reports required to be
furnished monthly, for 15 days beyond otherwise applicable cure periods, with
respect to reports required to be furnished quarterly, for 30 days beyond
otherwise applicable cure periods, and with respect to reports required to be
furnished annually, for 45 days beyond otherwise applicable cure periods; (ii)
Maker's failure to obtain Payee's written consent to any subordinate financing
not otherwise permitted under the Loan Agreement; (iii) Maker's failure to
obtain Payee's prior written consent to any transfer of the Mortgaged Property
or of any ownership interest in Maker not otherwise permitted under the Loan
Agreement; (iv) the Mortgaged Property or any part thereof becoming an asset in
a voluntary bankruptcy or insolvency proceeding; or (v) the failure of Maker to
comply with the provisions of Section 11 (SINGLE PURPOSE ENTITY) of the Loan
Agreement.
9. No Usury. It is expressly stipulated and agreed to be the intent
of Maker and Payee at all times to comply with applicable state law or
applicable United States federal law (to the extent that it permits Payee 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 Note 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 this Note or under any of the other Loan Documents, or
contracted for, charged, taken, reserved, or received with respect to the Debt,
or if Payee's exercise of the option to accelerate the maturity of this Note, or
if any prepayment by Maker results in Maker having paid any interest in excess
of that permitted by applicable law, then it is Maker's and Payee's express
intent that all excess amounts theretofore collected by Payee shall be credited
on the principal balance of this Note and all other Debt (or, if this Note and
all other Debt have been or would thereby be paid in full, refunded to Maker),
and the provisions of this 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 and 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 Payee 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 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 Payee 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.
6
<PAGE>
10. Transfers Not Permitted. Without the prior written consent of
Payee, Maker shall not sell, convey, alienate, mortgage, encumber, pledge or
otherwise transfer, or permit the transfer of, directly or indirectly, the
Mortgaged Property or ownership interests of Maker, except as permitted in the
Loan Agreement.
11. Authority. Maker represents that Maker has full power, authority
and legal right to execute, deliver and perform its obligations pursuant to this
Note, the Mortgage and the other Loan Documents and that this Note, the Mortgage
and the other Loan Documents constitute valid and binding obligations of Maker.
12. Notices. All notices or other communications required or
permitted to be given pursuant hereto shall be given in the manner specified in
the Loan Agreement directed to the parties at their respective addresses as
provided therein.
35. WAIVER OF JURY TRIAL. MAKER HEREBY AGREES NOT TO ELECT A TRIAL
BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY
JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH
REGARD TO THIS NOTE, THE LOAN AGREEMENT, THE MORTGAGE, 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 MAKER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE
AND EACH ISSUE AS TO WHICH THE RIGHT TO TRIAL BY JURY WOULD OTHERWISE ACCRUE.
PAYEE IS HEREBY AUTHORIZED TO FILE A COPY OF THIS SECTION IN ANY PROCEEDING AS
CONCLUSIVE EVIDENCE OF THIS WAIVER BY MAKER.
14. Governing Law. The Note shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia and the applicable laws
of the United States of America.
15. Miscellaneous
(a) No release of any security for the Debt or any person liable for
payment of the Debt, no extension of time for payment of this Note or any
installment hereof, and no alteration, amendment or waiver of any provision of
the Loan Documents made by agreement between Payee and any other person or party
shall release, modify, amend, waive, extend, change, discharge, terminate or
affect the liability of Maker, and any other person or party who might be or
become liable for the payment of all or any part of the Debt, under the Loan
Documents.
(b) Except as may be expressly provided for in the Loan Documents,
Maker and all others who may become liable for the payment of all or any part of
the Debt do hereby severally waive presentment and demand for payment, notice of
dishonor, protest, notice of protest, notice of non-payment, notice of intent to
accelerate the maturity hereof and of acceleration.
(c) This Note may not be modified, amended, waived, extended,
changed, discharged or terminated orally or by any act or failure to act on the
part of Maker or Payee, but
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<PAGE>
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.
(d) Whenever used, the singular number shall include the plural, the
plural the singular, and the words "Payee" and "Maker" shall include their
respective successors, assigns, heirs, executors and administrators.
(c) If Maker consists of more than one person or party, the
obligations and liabilities of each such person or party shall be joint and
several.
8
<PAGE>
IN WITNESS WHEREOF, Maker has duly executed this Note on the day and
year first above written.
MAKER:
BRECKSVILLE HOSPITALITY, L.P.
By: Brecksville Hospitality, Inc.
General Partner
By: /s/ Warren M. Knight
-------------------------------------
Warren M. Knight
Vice President
SIOUX CITY HOSPITALITY, L.P.
By: Fourth Street Hospitality, Inc.
General Partner
By: /s/ Warren M. Knight
-------------------------------------
Warren M. Knight
Vice President
1075 HOSPITALITY. L.P.
By: Stevens Creek Hospitality. Inc.
General Partner
By: /s/ Warren M. Knight
-------------------------------------
Warren M. Knight
Vice President
[Acknowledgment]
<PAGE>
COMMONWEALTH OF VIRGINIA )
)ss.:
COUNTY OF RICHMOND )
The foregoing instrument was acknowledged before me this ____ day of
January, 1996, by Warren M. Knight as Vice President of Brecksville Hospitality,
Inc., an Ohio corporation, the general partner of Brecksville Hospitality, L.P.,
an Ohio limited partnership, Fourth Street Hospitality, Inc., an Iowa
corporation, the general partner of Sioux City Hospitality, L.P., an Iowa
limited partnership, and Stevens Creek Hospitality, Inc., a Georgia corporation,
the general partner of 1075 Hospitality, L.P., a Georgia limited partnership,
who is personally known to me or who produced license as identification and who
did take oath, on behalf of the corporations executing the foregoing instrument
on behalf of such limited partnerships.
/s/ Tama Garrett
My commission expires ----------------
6-30-99 Notary Public
Print: Tama Garrett
<PAGE>
SCHEDULE A
List of Mortgaged Property
------------------
Holiday Inn
4742 Brecksville
Richfield Ohio
------------------
Hilton Hotel
707 4th Street
Sioux City, Iowa
------------------
Holiday Inn
1075 Stevens Creek
Augusta, Georgia
------------------
<PAGE>
Exhibit 10.10.1
LOAN AGREEMENT
Dated as of January 31, 1995
By and Among
SERVICO FORT WAYNE, INC., a Florida corporation,
WASHINGTON MOTEL ENTERPRISES, INC., a Pennsylvania corporation,
SERVICO HOTELS I, INC., a Florida corporation,
SERVICO HOTELS II, INC., a Florida corporation,
SERVICO HOTELS III, INC., a Florida corporation,
SERVICO HOTELS IV, INC., a Florida corporation,
NEW ORLEANS AIRPORT MOTEL ASSOCIATES, LTD. a Florida limited
partnership,
WILPEN, INC., a Pennsylvania corporation,
HILTON HEAD MOTEL ENTERPRISES, INC., a South Carolina
corporation,
and
MOON AIRPORT MOTEL, INC., a Pennsylvania corporation,
as Borrower
AND
COLUMN FINANCIAL, INC., a Delaware corporation,
as Lender
<PAGE>
TABLE OF CONTENTS
Page
----
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION ......................... 1
Section 1.1 Definitions ................................... 1-18
Section 1.2 Principles of Construction .................... 18-19
II. GENERAL TERMS ................................................... 19
Section 2.1 Loan Commitment; Disbursement to Borrowers .... 19
2.1.1 The Loan ...................................... 19
2.1.2 Disbursement to Borrowers ..................... 19
2.1.3 The Note ...................................... 19
Section 2.2 Use of Proceeds ............................... 19
Section 2.3 Loan Repayment and Prepayments; Refinancing
Debt Service Coverage Ratio; Extensions ..... 20
2.3.1 Repayment; Refinancings ....................... 20
2.3.2 Prepayments ................................... 20
2.3.3 Pro Forma Debt Service Coverage Ratio ......... 20
2.3.4 Extensions .................................... 20
Section 2.4 Release of Individual Properties .............. 21
2.4.1 Release of Individual Properties .............. 21
2.4.2 Recalculation of Amortization Payments ........ 22
2.4.3 Release Documentation ......................... 22
Section 2.5 Interest ...................................... 23
2.5.1 Generally ..................................... 23
2.5.2 Default Rate; Post-Maturity Interest .......... 23
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Page
----
Section 2.6 Payments; Computations ........................ 23
2.6.1 Making of Payments ............................ 23
2.6.2 Computations .................................. 23
2.6.3 Late Payment Charge ........................... 23
2.6.4 Application of Payments ....................... 24
Section 2.7 Central Account; Deposits and Distributions ... 24
2.7.1 Deposits in Central Account ................... 24
2.7.2 Establishment of Central Account and
Sub-Accounts ................................ 25
2.7.3 Funding of Basic Sub-Accounts ................. 25
2.7.4 Deposits During Operative Period and DSCR
Restricted Period ........................... 27
2.7.5 Eligible Investments .......................... 27
2.7.6 Interest on Accounts .......................... 28
2.7.7 Payment of Debt Service; Disbursement of Funds
in Basic Sub-Accounts; Excess Property
Income ...................................... 28
2.7.8 Payment of Loss Proceeds; Borrowers' Right to
Release ..................................... 37
III. CONDITIONS PRECEDENT ............................................ 39
Section 3.1 Conditions Precedent to Closing ............... 39
IV. REPRESENTATIONS AND WARRANTIES .................................. 42
Section 4.1 Borrowers' Representations .................... 42
Section 4.2 Survival of Representations ................... 53
V. AFFIRMATIVE COVENANTS ........................................... 54
Section 5.1 Borrowers' Covenants .......................... 54
VI. NEGATIVE COVENANTS .............................................. 63
Section 6.1 Borrowers' Negative Covenants ................. 63
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<PAGE>
VII. SPECIAL PROVISIONS .............................................. 66
Section 7.1 Cooperation ................................... 66
7.1.1 Cooperation ................................... 66
7.1.2 Additional Financial Reporting Requirements ... 66
Section 7.2 Insurance; Casualty and Condemnation .......... 67
7.2.1 Insurance ..................................... 67
7.2.2 Casualty and Restoration ...................... 70
7.2.3 Condemnation .................................. 72
Section 7.3 Required Repairs .............................. 74
Section 7.4 FF&E Replacements ............................. 75
7.4.1 Performance of FF&E Replacements .............. 75
7.4.2 Additional Replacements ....................... deleted
7.4.3 Indemnification ............................... 77
Section 7.5 Inspections ................................... 77
VIII. DEFAULTS ........................................................ 77
Section 8.1 Event of Default .............................. 77
Section 8.2 Remedies ...................................... 80
Section 8.3 Remedies Cumulative ........................... 80
IX. MISCELLANEOUS ................................................... 81
Section 9.1 Survival ...................................... 81
Section 9.2 Lender's Discretion ........................... 81
Section 9.3 Governing Law ................................. 81
Section 9.4 Modification, Waiver in Writing ............... 82
Section 9.5 Delay Not a Waiver ............................ 83
Section 9.6 Notices ....................................... 83
Section 9.7 Trial by Jury ................................. 84
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<PAGE>
Section 9.8 Headings ...................................... 84
Section 9.9 Successors and Assigns; Assignment ............ 84
Section 9.10 Severability .................................. 84
Section 9.11 Preferences ................................... 84
Section 9.12 Waiver of Notice .............................. 85
Section 9.13 Borrower to Act as Registrar .................. deleted
Section 9.14 Expenses; Indemnity ........................... 85
Section 9.15 Exhibits Incorporated ......................... 86
Section 9.16 Offsets, Counterclaims and Defenses ........... 86
Section 9.17 No Joint Venture or Partnership ............... 86
Section 9.18 Publicity ..................................... 86
Section 9.19 Waiver of Marshalling of Assets ............... 86
Section 9.20 Waiver of Counterclaim ........................ 87
Section 9.21 Conflict; Construction of Documents ........... 87
Section 9.22 Brokers and Financial Advisors ................ 87
Section 9.23 Prior Agreements .............................. 87
Section 9.24 Joint and Several ............................. 88
Section 9.25 Appointment of Servicer ....................... 88
Section 9.26 Exculpation ................................... 88
Section 9.27 Arizona Interest .............................. 89
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<PAGE>
SCHEDULES
Schedule A - Borrowers
Schedule B - Allocable Principal Balances
Schedule C - Franchisors and Franchise Agreements
Schedule D - Properties
Schedule E - Required Repairs
Schedule F - FF&E Replacements
Schedule G - Permits
Schedule H - Equipment Leases
Schedule I - Leases
Schedule J - Form of Operating Statement
Schedule K - Operations and Maintenance Programs
Schedule L - Litigation
Schedule M - Fair Market Value
-v-
<PAGE>
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of January 31, 1995, by and among
COLUMN FINANCIAL, INC., having an address at 3414 Peachtree Road, Suite 1140,
Atlanta, Georgia 30326-1113, Attention: Robert A. Barnes, Esq., together with
its successors and assigns, including, without limitation, the Loan Purchaser,
as lender ("Lender"), and those twelve entities set forth on Schedule A annexed
hereto, having an address at Servico Centre South, 1601 Belvedere Road, West
Palm Beach, Florida 33406, Attention: Chief Executive Officer, as borrower.
All capitalized terms used herein shall have the respective meanings
set forth in Section 1 hereof.
W I T N E S S E T H :
WHEREAS, Borrowers desire to obtain the Loan from Lender;
WHEREAS, Lender is willing to make the Loan to Borrowers, subject to
and in accordance with the terms of this Agreement and the other Loan Documents;
WHEREAS, Lender's interest in the Loan may be purchased by the Loan
Purchaser on or after the Closing Date; and
WHEREAS, Borrowers consent to the transfer described in the
preceding Recital.
NOW, THEREFORE, in consideration of the covenants, agreements,
representations and warranties set forth in this Agreement, and other good and
valuable consideration, the parties hereto hereby covenant, agree, represent and
warrant as follows:
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1 Definitions.
For all purposes of this Agreement, except as otherwise expressly
required or unless the context clearly indicates a contrary intent:
"Accountant's Certificate" shall have the meaning set forth in
Section 2.7.7(d) (ii).
"Accountant's Certificate Default" shall have the meaning set forth
in Section 2.7.7(e) (ii).
"Additional Sums" shall have the meaning set forth in Section 9.27.
<PAGE>
"Adjusted Debt Service" shall mean, in connection with the proposed
release of one or more Individual Properties pursuant to Section 2.4, the Debt
Service, as determined by Lender, that would be due during the twelve (12) month
period commencing on the first Due Date after the proposed date of such release,
after giving effect to the application of the Release Amount required to be paid
under Section 2.4.1 with respect to the proposed release to the outstanding
principal balance of the Loan and the recalculation, pursuant to Section 2.4.2,
of payments necessary to amortize the remaining principal balance of the Loan by
February 1, 2015 and pay interest on the amount of such principal balance
outstanding from time to time at the Interest Rate.
"Adjusted Debt Service Coverage Ratio" shall mean, with respect to
any date, the ratio of Adjusted Cash Flow Available for Debt Service to Adjusted
Debt Service for the applicable Properties.
"Adjusted Cash Flow Available for Debt Service" shall mean, in
connection with the proposed Release of one or more Individual Properties
pursuant to Section 2.4, the aggregate Cash Flow Available for Debt Service for
the Properties for the twelve (12) calendar month period ending with the last
month for which monthly statements of Revenue and Operating Expenses shall have
been due pursuant to Section 5.1(k) (iv) prior to the date of Lender's receipt
of notice of such proposed release (excluding any Cash Flow Available for Debt
Service relating to the Individual Properties proposed to be released).
"Affiliate" shall mean, as to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by or is under common
control with such Person or is a director or officer of such Person or of an
Affiliate of such Person.
"Agreement" shall mean this Loan Agreement, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.
"Allocable Principal Balance" shall mean, with respect to any
Individual Property as of any date, the portion of the aggregate original
principal amount of the Loan allocable to such Individual Property as reduced by
such Individual Property's pro rata share of any principal amortization payments
or prepayments theretofore received. The initial Allocable Principal Balance for
each Individual Property is set forth on Schedule B annexed hereto.
"ALTA" shall mean American Land Title Association, or any successor
thereto.
"Annual Operating Budget" shall mean, with respect to each
Individual Property, an annual operating budget, showing all
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<PAGE>
projected items of Revenue and Operating Expenses, prepared on an accrual basis
in accordance with GAAP and certified by Borrowers.
"Assignment of Leases" shall mean, collectively, that certain first
priority Assignment of Leases, Rents and Revenues, dated as of the date hereof,
from the applicable Borrower, as assignor, to Lender, as assignee, with respect
to each Individual Property, assigning to Lender all of Borrowers' interest in
and to the Leases, the Rents and the Revenue of such Individual Property as
security for the Loan, as such Assignment of Leases may be amended, restated,
replaced, supplemented or otherwise modified from time to time.
"Assignment of Consulting Agreement" shall mean, collectively, (a)
that certain first priority Assignment of Management Agreement, dated as of
January 31, 1995 from Westin William Penn Borrower and Westin William Penn
Manager with respect to the William Penn Property, (b) that certain Assignment
and Subordination of Management Agreement dated as of the date hereof from the
applicable Borrower and Related Consultant with respect to the Individual
Property identified on Schedule D as the Radisson Inn New Orleans located in
Kennar, Louisiana and (b) those certain first priority Assignments and
Subordinations of Consulting Agreement, dated as of the date hereof, from the
applicable Borrower and Related Consultant to Lender, with respect to each other
Individual Property, assigning to Lender all of each such Borrower's interest in
and to the applicable Consulting Agreement with respect to such Individual
Property as security for the Loan and subordinating, pursuant to its terms, such
Consulting Agreement and any Lien or rights created thereunder to the Lien and
to the terms, covenants and provisions of the Loan Documents, as such Assignment
of Consulting Agreement may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
"Bank" shall mean First National Bank of Chicago and any other
financial institution subsequently selected by Lender.
"Bankruptcy Order" shall mean that certain Order Confirming Debtors'
Plan of Reorganization filed on May 7, 1992 in that certain bankruptcy
proceeding captioned In re Servico, Inc., et al. in the United States Bankruptcy
Court, Southern District of Florida, Miami Division, Case No.
90-36655-BKC-AJC-X.
"Basic Carrying Costs" shall mean (a) with respect to an Individual
Property, the sum of the following costs for the relevant Fiscal Year or payment
period: (i) Impositions with respect to such Individual Property and (ii)
insurance premiums for the Policies with respect to such Individual Property or
(b) the aggregate amount of Basic Carrying Costs for all the Properties.
"Basic Carrying Costs Monthly Installment" shall mean an amount
equal to (i) one-twelfth (1/12) of an amount estimated
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<PAGE>
by Lender to be necessary to pay the Impositions for all the Properties payable
during the next ensuing twelve (12) months, giving effect to any amount
deposited in the Basic Carrying Costs Sub-Account on the Closing Date and (ii)
during any Operative Period, DSCR Restricted Period and Franchise Restricted
Period, one-twelfth (1/12) of an amount estimated by Lender to be necessary to
pay the premiums on the Policies for all the Properties due during the next
ensuing twelve (12) months for the renewal of the coverage afforded by the
Policies upon the expiration thereof. In the event any of the Policies is a
blanket policy insuring risks other than those associated with the Properties,
the amount set forth in (ii) above shall be the premium that would be payable to
continue such policy in effect for just the Properties, as set forth in the
Insuror's Letter.
"Basic Carrying Costs Sub-Account" shall mean the sub-account of the
Central Account established and maintained pursuant to Section 2.7.2 to provide
for payment of Basic Carrying Costs for the Properties.
"Basic Sub-Accounts" shall have the meaning specified in Section
2.7.2.
"Borrower" shall mean, respectively, each of those ten (10) entities
set forth on Schedule A annexed hereto and "Borrowers" shall mean, collectively,
all such entities, but excluding, in either case, any such entity or entities
that own(s) an Individual Property released from the lien of the Mortgage
pursuant to Section 2.4.
"Borrower Material Adverse Effect" shall have the meaning specified
in Section 4.1(a).
"Borrowers' Accountant" shall mean Ernst & Young or any other
Independent firm of certified public accountants approved by Lender, which
approval shall not be unreasonably withheld or delayed.
"Building Evaluation Reports" shall mean those certain Building
Evaluation Reports prepared by the Engineer and delivered to Lender in
connection with the Loan.
"Business Day" shall mean any day other than a Saturday, Sunday or
any other day on which national banks in New York are not open for business.
"Capital Expenditures Budget" shall mean, with respect to each
Individual Property, an annual budget, prepared on an accrual basis in
accordance with GAAP and certified by Borrowers, showing all proposed capital
expenditures.
"Capital Expenditure Sub-Account" shall mean a sub-account of the
Central Account established pursuant to Section 2.7.2 hereof for the purpose of
holding certain Excess Property
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<PAGE>
Income during any DSCR Restricted Period or any Franchise Restricted Period.
"Cash Flow Available for Debt Service" shall mean, with respect to
each Individual Property with respect to any period, the excess of (a) the
Revenue for such period, determined on an accrual basis, less (b) the Operating
Expenses for the same period, including, for the purposes of calculating Cash
Flow Available for Debt Service, all FF&E Installments calculated with respect
to the Revenues for such period or, with respect to any period prior to the
Closing Date, FF&E Installments that would have been calculated with respect to
such period if this Agreement had been in effect.
"Cash Management Agreement" shall mean that certain Cash Management
Agreement dated as of January 31, 1995 among Borrowers (except New Orleans Motel
Associates) certain Affiliates of Borrowers, Related Consultant and Servico,
Inc.
"Casualty" shall have the meaning specified in Section 7.2.2(a).
"Central Account" shall mean such Eligible Account maintained by
Lender at the Bank, in the name of Lender or its successors or assigns (as
secured party), as shall be designated by Lender.
"Certificate" shall mean any certificate representing an interest in
the Loan issued pursuant to the Trust and Servicing Agreement.
"Certificateholder" shall mean the holder of a Certificate.
"Closing Date" shall mean the date of the closing of the Loan.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
as it may be further amended from time to time, any successor statutes thereto,
and applicable U.S. Department of Treasury regulations issued pursuant thereto
in temporary or final form.
"Collateral Security Documents" shall mean any right, document or
instrument given as security for the Note, including, without limitation, the
Mortgage, the Assignment of Leases and the Assignment of Consulting Agreements,
as the same may be amended, restated, replaced, supplemented or otherwise
modified from time to time.
"Commitment" shall have the meaning specified in Section 2.3.1
hereof.
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<PAGE>
"Condemnation" shall mean any temporary or permanent taking of all
or any part of any Individual Property, or interest therein or right or use
thereof, as a result of, any proceeding in condemnation or eminent domain.
"Condemnation Proceeds" shall have the meaning specified in Section
2.7.8(b) hereof.
"Consultant" shall mean the Related Consultant and/or the Westin
William Penn Manager, as applicable.
"Consultant Control Change" shall have the meaning specified in
Section 5.1(j).
"Consultant Control Notice" shall have the meaning specified in
Section 5.1(j).
"Consultant's Certifications" shall mean those certifications
required to be delivered by Consultant under Section 5.1(k) (iv).
"Consultant's Notice" shall have the meaning specified in Section
2.7.1.
"Consulting Agreement" shall mean the Related Consulting Agreement
and/or the Westin William Penn Management Agreement, as applicable.
"Contribution Agreement" shall mean that certain Contribution
Agreement dated of even date herewith, by and among the Borrowers, relating to
contribution arrangements and reimbursement procedures in the event any Borrower
suffers losses or incurs expenses in excess of the Allocable Principal Balance
of such Borrower's Individual Property, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.
"Curtailment Reserve Fund Sub-Account" shall mean the sub-account of
the Central Account established and maintained pursuant to Section 2.7.2 hereof
during the Operative Period for the purpose of holding certain Excess Property
Income.
"Debt Service" shall mean, with respect to any particular period of
time, scheduled principal and interest payments under the Note, as adjusted as a
result of any reamortization of the Loan pursuant to Section 2.4.2 hereof.
"Debt Service Payment Sub-Account" shall mean the sub-account of the
Central Account established and maintained pursuant to Section 2.7.2 hereof for
the purposes of making Debt Service payments.
"Default Rate" shall have the meaning specified in the Note.
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<PAGE>
"Depositor" shall mean the entity described as such in the Trust and
Servicing Agreement, and its successors and assigns.
"DSCR Determination Date" shall mean each January 1, April 1, July 1
and October 1 commencing on April 1, 1995.
"DSCR Restricted Period" shall have the meaning specified in Section
2.3.3 hereof.
"Due Date" shall mean the first Business Day of each calendar month.
"Eligible Account" shall mean a segregated account held by and at
the Bank or an account that is either: (a) maintained with 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 such holding company) have been rated by the Rating Agency in one
of its two highest rating categories or the short-term commercial paper of which
is rated by the Rating Agency in its highest rating category at the time of any
deposit therein; or (b) a trust account or accounts maintained with a federal or
state chartered depository institution or trust company with trust powers acting
in its fiduciary capacity, provided that any such state chartered institution or
trust company shall be subject to regulations or has established internal
guidelines regarding fiduciary funds on deposit substantially similar to federal
regulation 12 C.F.R. 910 (b). The title of each Eligible Account shall indicate
that funds held therein are held in trust for the uses and purposes set forth
herein. Any funds deposited in the Eligible Account shall only be invested in
Eligible Investments.
"Eligible Investments" shall mean any one or more of the following
acquired at a purchase price of not greater than par:
(a) direct obligations of, or obligations fully
guaranteed as to payment of principal and interest by, the United
States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United
States of America;
(b) fully FDIC-insured demand and time deposits; and
(c) interests in money market or common trust funds
which as of the date of acquisition of the interest in such fund has
been approved for investment by trust funds securing obligations
rated AAAm or AAAm-
-7-
<PAGE>
G by Standards & Poor's Ratings Group, Inc. and P-1 by Moody's
Corporation.
"Engineer" shall mean RKTL Associates, Inc., which is acknowledged
by Lender and Borrowers to be an Independent Person, or any other Independent
engineer or engineering firm reasonably approved by Lender.
"Engineering Escrow Sub-Account" shall mean a sub-account of the
Central Account established pursuant to Section 2.7.2 hereof, for the purpose of
holding funds to pay for the Required Repairs.
"Environmental Consultant" shall mean Environmental Management
Group, Inc. or any other Independent environmental consulting firm reasonably
approved by Lender.
"Environmental Indemnity" shall mean the certain Environmental
Indemnity Agreement of even date herewith, by Borrower in favor of Lender with
respect to environmental conditions on the Properties, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.
"Equipment" shall have the meaning specified in the Mortgage with
respect to each Individual Property.
"Equipment Lease" shall mean a lease or other financing arrangement
with respect to any furniture, fixtures and equipment (including, without
limitation, any motor vehicle) used in the operation of the Properties.
"Event of Default" shall have the meaning specified in Section 8.1.
"Excess Property Income" shall mean the amounts available in the
Central Account during any Operative Period, any DSCR Restricted Period or any
Franchise Restricted Period after the allocations under clauses (a) through (e),
inclusive, of Section 2.7.3 have been made.
"FF&E Monthly Installment" shall mean a payment on each Due Date in
an amount equal to the sum of the product for each of the Properties of (a) the
Revenue of such Individual Property for the calendar month prior to the calendar
month immediately preceding the Due Date in question and (b) (i) five and
one-half percent (5.5%) for the Westin William Penn Property or (ii) four
percent (4.0%) for the other Properties.
"FF&E Replacements" shall have the meaning specified in Section
2.7.7(e).
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<PAGE>
"FF&E Sub-Account" shall mean a sub-account of the Central Account
established pursuant to Section 2.7.2 hereof for the purpose of holding reserves
to fund FF&E Replacements.
"Fiscal Year" shall mean that period beginning on the first Friday
after the last Thursday in December of each year and ending on the last Thursday
in December, which Fiscal Year shall be composed of four (4) quarters composed
of thirteen (13) weeks each.
"Franchise Agreement" shall mean, with respect to each Individual
Property, that certain franchise agreement more specifically identified on
Schedule C annexed hereto, and any other Franchise Agreement entered into by a
Borrower with respect to an Individual Property with the consent of Lender in
accordance with the terms hereof.
"Franchise Agreement Letters" shall mean each of those certain
Letter Agreements by the applicable Borrower and the applicable Franchisor in
favor of Lender, with respect to each Individual Property, establishing Lender's
rights with respect to the applicable Franchise Agreement, as such Franchise
Agreement Letters may be amended, restated, replaced, supplemented or otherwise
modified from time to time or, collectively, all such Franchise Agreement
Letters.
"Franchise Restricted Period" shall have the meaning specified in
Section 6.1(a).
"Franchisor" shall mean, with respect to each Individual Property,
which is subject to a Franchise Agreement, the franchisor with respect thereto,
as same are identified on Schedule C annexed hereto or any replacement
franchisor approved by Lender pursuant to the Assignment of Franchise Agreement.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as of the date of the applicable financial report.
"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.
"Impositions" shall mean all real estate and personal property taxes
and all other taxes, levies, assessments and other similar charges, general and
special, ordinary and extraordinary, foreseen and unforeseen, of every kind and
nature whatsoever, which at any time prior to, at or after the execution hereof
may be assessed, levied or imposed by, in each case, a Governmental Authority
upon an Individual Property or the Revenue or the ownership, use, occupancy or
enjoyment thereof, and any interest, costs or penalties with respect to any of
the foregoing, provided
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<PAGE>
that water, sewer and utility charges not be deemed to be an Imposition.
"Improvements" shall have the meaning specified in the Mortgage with
respect to each Individual Property.
"Indebtedness" shall mean the indebtedness in the original principal
amount set forth in, and evidenced by, the Note, together with all other
obligations and liabilities of Borrowers due or to become due to Lender pursuant
to the Note, this Agreement or any other Loan Document, including, without
limitation, all interest thereon and all Yield Maintenance Premiums due in
connection therewith.
"Independent" means, when used with respect to any Person, a Person
who (i) is in fact independent, (ii) does not have any direct financial interest
or any material indirect financial interest in any Borrower, or in any Affiliate
of any Borrower or any constituent partner, shareholder, member or beneficiary
of any Borrower, and (iii) is not connected with any Borrower or any Affiliate
of any Borrower or any constituent partner, shareholder, member or beneficiary
of any Borrower as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions. In each instance where
the opinion or certificate of an Independent Person is required in order to
comply with any of the provisions hereof, the opinion or certificate so supplied
shall include a statement that the individual executing the same has read this
definition and that the Person supplying such opinion or certificate is
Independent within the meaning hereof.
"Independent Director" shall have the meaning specified in Section
4.1(dd) (xv).
"Individual Property" shall mean each parcel of real property and
the Improvements thereon owned by a Borrower and encumbered by the Mortgage,
together with all rights and property pertaining to such real property and
Improvements, as more particularly described in the Granting Clauses of the
Mortgage and referred to therein as the "Mortgaged Property".
"Insurance Proceeds" shall have the meaning specified in Section
2.7.8(a).
"Insurance Requirements" shall mean, with respect to each Individual
Property, all material terms of any insurance policy required pursuant to this
Agreement or the related Loan Documents, all material requirements of the issuer
of any such policy, and all material regulations and then current standards
applicable to or affecting such Individual Property or any part thereof or any
use or condition thereof, which may, at any time, be recommended by the state
insurance commissioner or other state regulatory body, if any, having
jurisdiction over such Individual Property, or such other body exercising
similar functions.
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<PAGE>
"Insuror's Letter" shall mean a letter provided by the issuer of the
Policies setting forth, with respect to any such Policy that is a blanket policy
covering risks other than those associated with the Properties, the annual
premium that would be required to keep such Policies in effect for just the
Properties and making the statement required pursuant to clause (B) of the final
sentence of Section 7.2.1(c), as such letter shall be updated from time to time
as the amounts of the premiums for the Policies shall change.
"Interest Rate" shall have the meaning specified in the Note.
"Late Payment Charge" shall have the meaning specified in the Note.
"Lease" shall mean any lease, or, to the extent of the interest
therein of any Borrower, any sublease or subsublease, letting, license,
concession or other agreement (whether written or oral and whether now or
hereafter in effect) pursuant to which any person is granted a possessory
interest in, or right to use or occupy all or any portion of any space in any
Individual Property, and every modification, amendment or other agreement
relating thereto and every guarantee of the performance and observance of the
covenants, conditions and agreements to be performed and observed thereunder,
excluding, however, any occupancy of hotel rooms by guests in the ordinary
course of business.
"Legal Requirements" shall mean, with respect to each Individual
Property, all federal, state, county, municipal and other governmental statutes,
laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions
of Governmental Authorities to which such Individual Property or any part
thereof or the construction, use, alteration or operation thereof, or any part
thereof, is subject, including, without limitations, all zoning, land use,
building, and environmental statutes, laws, codes, resolutions and ordinances,
whether now or hereafter enacted and in force, and all permits, licenses,
variances and authorizations and regulations relating thereto, and all
covenants, agreements, restrictions and encumbrances contained in any
instruments, either of record or known to Borrowers, at any time in force
affecting such Individual Property or any part thereof, including, without
limitation, any which may (i) require repairs, modifications or alterations in
or to such Individual Property or any part thereof or (ii) in any way limit the
use and enjoyment thereof.
"Lender" shall have the meaning specified in the first Paragraph
hereof.
"Lien" shall mean any mortgage, deed of trust, lien, pledge,
hypothecation, assignment, security interest, or any other encumbrance, charge
or transfer of, on or affecting any
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<PAGE>
Individual Property or any portion thereof or any Borrower, or any interest
therein, including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, any financing statement, and mechanic's,
materialmen's and other similar liens and encumbrances.
"Loan" shall mean the loan, evidenced by the Note, and secured by
the Mortgage and the other Collateral Security Documents, to be made by Lender
to Borrowers pursuant hereto.
"Loan Documents" shall mean, collectively, this Agreement, the Note,
the Mortgage, the Environmental Indemnity and the other Collateral Security
Documents and any other document executed or delivered by or on behalf of
Borrowers in connection with the Loan.
"Loan Purchaser" shall mean any purchaser of the Loan from the
Lender, such purchaser's designee, the respective successors and/or assigns of
such purchaser or designee and any subsequent holder of the Note.
"Loan Year" shall mean each one (1) year period commencing on the
Closing Date and on each anniversary of the Closing Date.
"Lock-Out Date" shall have the meaning specified in the Note.
"Long-Term Required Repairs" shall mean those Required Repairs
designated as "long-term" on Schedule E annexed hereto.
"Long-Term Required Repairs Installment" shall mean a payment in the
amount of $373,875 to be made by Borrowers to Lender on each of the Closing Date
and the first Due Date occurring after each of the first two anniversaries of
the Closing Date, to be deposited in the Engineering Escrow Account, provided
that if the Borrowers shall expend funds (other than funds disbursed by Lender
hereunder) in payment of the costs of any Long-Term Required Repair (other than
a Long-Term Required Repair designated as sprinklers on Schedule E annexed
hereto) and shall deliver to Lender reasonably satisfactory evidence of such
payment, together with the contractor's certification required to be delivered
as a condition of disbursement pursuant to Section 2.7.7(d) (ii) with respect to
such Long-Term Required Repair, Borrowers shall, upon reasonable approval of the
foregoing by Lender, receive a credit in the amount of such payment against the
amount of the Long-Term Required Repairs Installment next due, if any, provided
that the amount of such credit together with any disbursements made from the
Engineering Escrow Sub-Account, expressed as a percentage of the costs allocated
for such item on Schedule E, shall not exceed the percentage of the work on such
item then completed.
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<PAGE>
"Loss Proceeds" shall have the meaning specified in Section 2.7.8(c)
hereof.
"Major Required Repair" shall have the meaning specified in Section
2.7.7 (d).
"Maturity Date" shall mean March 1, 2010, subject to extension as
provided in Section 2.3.4.
"Minor Required Repair" shall have the meaning specified in Section
2.7.7(d) (i).
"Mortgage" shall mean, with respect to each Individual Property,
that certain first priority (a) Mortgage, Security Agreement and Assignment of
Leases and Rents, (b) Leasehold Mortgage, Security Agreement and Assignment of
Leases and Liens or (c) Deed of Trust, Security Agreement and Assignment of
Leases and Rents, as applicable, executed and delivered by the Borrower that
owns such Individual Property as security for the Loan and encumbering such
Individual Property, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time or, collectively, all such
Mortgages, Leasehold Mortgages and Deeds of Trust, as the context may require.
"Non-Consolidation Opinion" shall have the meaning specified in
Section 3.1(f).
"Note" shall mean that certain Promissory Note of even date
herewith, made by Borrowers in favor of Lender, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
"Officer's Certificate" shall mean a certificate delivered to Lender
by a Borrower which is signed by an officer of such Borrower who also serves as
Chief Executive Officer, Chief Financial Officer, Treasurer, Controller or Vice
President of Servico, Inc.
"Operating Expenses" shall mean, for each Individual Property, all
ordinary and customary expenses payable in the ordinary course of operating such
Individual Property as a hotel project (such expenses being determined on an
accrual basis for the relevant calculation period, unless otherwise expressly
provided herein) but excluding distributions to stockholders or partners in the
applicable Borrower, Debt Service payable by Borrowers, income taxes, non-cash
items such as depreciation and any fees payable to the Related Consultant in
excess of four percent (4%) of Revenue.
"Operations and Maintenance Expense Monthly Installment" shall mean
with respect to each month in a particular year, an amount, as determined by
Lender, equal to the aggregate of one-twelfth (1/12th) of the product for each
Individual Property
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<PAGE>
of (a) 1.05 and (b) the Operating Expenses for such Individual Property in the
immediately preceding Fiscal Year.
"Operations and Maintenance Expense Sub-Account" shall mean a
sub-account of the Central Account established and maintained during any
Operative Period, any DSCR Restricted Period and any Franchise Restricted Period
pursuant to Section 2.7.2 hereof relating to the payment of Operating Expenses.
"Operative Period" shall mean (a) any period during which a monetary
Event of Default shall have occurred and be continuing, (b) if Borrowers fail to
provide Lender with a Commitment or Commitments on or prior to the Refinance
Notification Date, the period commencing on the Refinance Notification Date and
ending on the date the Indebtedness has been paid in full, and (c) if Borrowers
provide Lender with a Commitment or Commitments on or prior to the Refinance
Notification Date and the Void Commitment Date occurs, the period commencing on
the Void Commitment Date and ending on the date the Indebtedness has been paid
in full.
"Other Charges" shall have the meaning specified in Section 5.1(b)
"Permits" shall have the meaning specified in Section 4.1(w).
"Permitted Encumbrances" shall mean, with respect to each Individual
Property, (a) the Liens created by the Loan Documents, (b) all Liens,
encumbrances and other matters disclosed in the Title Insurance Policies
relating to such Individual Property or any part thereof or in UCC-11 searches
delivered to Lender, (c) Liens for Impositions not yet due and payable or being
contested in good faith and by appropriate proceedings in accordance with the
applicable provisions of the Loan Documents, (d) Equipment Leases and any
conditional sale agreement with respect to the purchase of any Equipment,
provided the same have been or shall be entered into by the applicable Borrower
in the ordinary course of business, (e) Liens given by a Borrower to finance
capital improvements to an Individual Property as permitted under the Mortgage,
subject to the prior written approval of Lender, in its sole discretion, which
approval shall not be granted if such Lien would result in any withdrawal,
downgrade or other adverse effect on any rating of the Certificates issued by
the Rating Agency, (f) other Liens expressly permitted by the terms of the Loan
Documents and (g) such other title and survey exceptions as Lender has approved
or may approve in writing in Lender's sole discretion.
"Person" shall mean any individual, corporation partnership, joint
venture, estate, trust, unincorporated association, any federal, state, county
or municipal government or any bureau, department or agency thereof and any
fiduciary acting in such capacity on behalf of any of the foregoing.
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<PAGE>
"Policies" shall have the meaning specified in Section 7.2.1(c).
"Premises" shall, with respect to each Individual Property, have the
meaning specified in the Granting Clause of the Mortgage encumbering such
Individual Property.
"Pro Forma Debt Service Coverage Ratio" shall mean, with respect to
any DSCR Determination Date, the ratio of (a) the aggregate Cash Flow Available
for Debt Service for all the Properties determined on an accrual basis for the
twelve (12) month period ending with the calendar month prior to the calendar
month immediately preceding such DSCR Determination Date to (b) the aggregate
amount of Debt Service scheduled to be due during the twelve (12) month period
immediately following such DSCR Determination Date, assuming, for the purpose of
this calculation, that no payments of principal other than scheduled
amortization payments will be made during such period.
"Properties" shall mean, collectively, all of the Individual
Properties, which Individual Properties are identified on Schedule D annexed
hereto, but excluding any such Individual Properties released from the lien of
the Mortgage pursuant to Section 2.4.
"Qualified Institutional Lender" shall mean a financial institution
or other lender with a long term credit rating which is not less than investment
grade.
"Rating Agency" shall mean Fitch Investors Service, Inc.
"Recourse Distributions" shall have the meaning specified in Section
9.26.
"Refinance Notification Date" shall have the meaning specified in
Section 2.3.1 hereof.
"Related Consulting Agreement" shall mean, collectively, those
certain agreements entered into by and between Borrowers (other than the Westin
William Penn Borrower) and Related Consultant, pursuant to which Related
Consultant is to provide management consulting, or, in the case of the
Individual Property identified on Schedule D as the Radisson Inn New Orleans
located in Kennar, Louisiana, management and other services with respect to each
Individual Property other than the Westin William Penn Property.
"Related Consultant" shall mean Servico Management Corp., a Florida
corporation.
"Release Amount" shall have the meaning specified in Section
2.4.1(a).
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<PAGE>
"Rents" shall mean, with respect to each Individual Property, all
rents, income, issues, revenues and profits arising from the Leases and renewals
thereof.
"Required Repairs" shall mean those repairs, if any, with respect to
any Individual Property specified in Schedule E annexed hereto.
"Required Repairs Installment" shall mean the Long-Term Required
Repairs Installment and the Sprinkler Installment.
"Restoration" shall have the meaning specified in Section 7.2.2(a).
"Revenue" shall mean, with respect to each Individual Property, all
Rents and all other revenue of any kind derived from such Individual Property,
all determined on an accrual basis (unless otherwise indicated) in accordance
with GAAP consistently applied, after deducting all allowances for rebates and
adjustments, whether cash or credit, derived directly or indirectly from any
source including, without limitation: rental of rooms; food and beverage; sales
from gift or other shops managed directly by the applicable Borrower or any
agent of such Borrower; telephone; net vending income (gross vending revenue
reduced by the amount payable to equipment vendors for the use thereof);
commissions; net rentals of cars, bicycles and other items; meeting room
rentals; all net revenue received from any third party concessionaires operating
any concession under any agreement with such Borrower or its agents, and other
persons occupying space at such Individual Property and/or rendering services to
guests staying at such Individual Property; and any form of incentive payments
or awards received by Borrower from any source whatsoever which are attributable
to the operation of such Individual Property.
"Royce Property" shall mean the Individual Property identified on
Schedule D as the Royce Hotel-Pittsburgh Airport located in Pittsburgh,
Pennsylvania.
"Securitization Transaction" shall mean the transactions
contemplated by the Trust and Servicing Agreement, including, without
limitation, (a) the assignment and transfer of the Loan and the Loan Documents
to the Depositor, (b) the issuance, sale and rating of the Certificates, and (c)
the assignment and transfer of the Loan and the Loan Documents to the Trustee
for the benefit of the Certificateholders.
"Servicer" shall mean (a) the entity described as such in the Trust
and Servicing Agreement or its successor in interest, or if any successor
servicer is appointed pursuant to the Trust and Servicing Agreement, such
successor servicer or (b) any other entity appointed to service the Loan
pursuant to Section 9.25.
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<PAGE>
"Short-Term Required Repairs" shall mean any Required Repairs not
designated "long-term" on Schedule E annexed hereto.
"Short-Term Required Repair Deposit" shall mean an amount equal to
the aggregate of one hundred twenty-five percent (125%) of the estimated costs
of Short-Term Required Repairs for each Individual Property as set forth on
Schedule E annexed hereto.
"Sprinkler Installment" shall mean a payment in the amount of
$1,312,500 to be made by Borrower to Lender on the Closing Date and the first
Due Date occurring after each of the first four anniversaries of the Closing
Date, to be deposited in the Engineering Escrow Account, provided that if
Borrowers shall expend any funds (other than amounts disbursed by Lender
hereunder) in payment of any Long-Term Required Repair designated as sprinklers
on Schedule E annexed hereto and shall deliver to Lender reasonably satisfactory
evidence of such payment, together with the contractor's certification required
to be delivered as a condition of disbursement pursuant to Section 2.7.7(d) (ii)
with respect to such Long-Term Required Repair, Borrowers shall, upon reasonable
approval of the foregoing by Lender, receive a credit in the amount of such
payment against the amount of the Sprinkler Installment next due, if any,
provided that the amount of such credit together with any disbursements made
from the Engineering Escrow Sub-Account, expressed as a percentage of the costs
allocated for such item on Schedule E, shall not exceed the percentage of the
work on such item then completed.
"State" shall mean, with respect to an Individual Property, the
State or Commonwealth in which such Individual Property or any part thereof is
located.
"Survey" shall mean a survey of the Individual Property in question
prepared by a surveyor, licensed in the State, in accordance with ALTA standards
and satisfactory to Lender and the company or companies issuing the Title
Insurance Policies, and containing a certification of such surveyor satisfactory
to Lender.
"Survey Requirements" shall have the meaning specified in Section
3.1 (c) (iii).
"Term Sheet" shall have the meaning specified in Section 9.23.
"Title Insurance Policy" shall mean, with respect to each Individual
Property, the ALTA extended coverage mortgagee title insurance policy (1970 form
B or other loan policy acceptable to Lender) issued with respect to such
Individual Property and insuring the lien of the Mortgage encumbering such
Individual Property and containing such endorsements and affirmative assurances
as Lender shall reasonably require (to the extent authorized in each State).
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"Trust and Servicing Agreement" shall mean any trust and servicing
agreement or pooling and servicing agreement pursuant to which the Loan is
assigned to a Trustee in trust and one or more classes of Certificates are
issued representing beneficial ownership interests in the Loan and the other
assets of such trust.
"Trustee" shall mean the entity described as such in the Trust and
Servicing Agreement or its successor in interest, or if any successor trustee is
appointed pursuant to the Trust and Servicing Agreement, such successor trustee.
"UCC" or "Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect in the State in which an Individual Property is located.
"Void Commitment Date" shall have the meaning specified in Section
2.3.1 hereof.
"Westin William Penn Borrower" shall mean Wilpen, Inc., a
Pennsylvania corporation.
"Westin William Penn Management Agreement" shall mean that certain
Management Agreement dated March 5, 1984 between Westin William Penn Borrower
and Westin William Penn Manager, as amended by that certain Amendment to
Management Agreement dated as of August 13, 1984 between Westin William Penn
Borrower and Westin William Penn Manager and as amended and assumed under that
certain Agreement for Assumption of Contract dated as of July 7, 1991, by and
between Westin William Penn Borrower and Westin William Penn Manager and further
amended by that certain Second Amendment of Management Agreement dated January
28, 1995.
"Westin William Penn Manager" shall mean Westin Hotel Company, a
Delaware corporation, together with its permitted successors and assigns under
the Westin William Penn Management Agreement.
"Westin William Penn Property" shall mean the Individual Property
identified on Schedule D as the Westin William Penn Hotel located in Pittsburgh,
Pennsylvania.
"Yield Maintenance Premium" shall have the meaning specified in the Note.
Section 1.2 Principles of Construction.
All references to sections, schedules and exhibits are to sections,
schedules and exhibits in or to this Agreement unless otherwise specified.
Unless otherwise specified, the words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
Unless otherwise specified, all meanings attributed to defined
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terms herein shall be equally applicable to both the singular and plural forms
of the terms so defined. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP, as modified herein.
II. GENERAL TERMS
Section 2.1 Loan Commitment; Disbursement to Borrowers.
2.1.1 The Loan. Subject to and upon the terms and conditions set
forth herein, Lender hereby agrees to make the Loan to Borrowers on the Closing
Date, in the original principal amount set forth in the Note, which Loan shall
mature on the Maturity Date. Borrowers hereby agree to accept the Loan on the
Closing Date, subject to and upon the terms and conditions set forth herein.
2.1.2 Disbursement to Borrowers. Borrowers may request and receive
only one borrowing hereunder in respect of the Loan and any amount borrowed and
repaid hereunder in respect of the Loan may not be reborrowed. Borrowers shall,
on the Closing Date, receive the Loan, subject to the direction given by
Borrowers as to the application of Loan proceeds to pay certain closing costs
and to fund (i) the Basic Carrying Cost Sub-Account in an amount equal to (a)
the amount necessary to enable Lender to make each payment of Impositions coming
due during the twelve (12) months following the Closing Date on the date each
such payment is due, taking into account the Basic Carrying Costs Monthly
Installments that will be due and payable before each such payment of
Impositions is due plus (b) twice the amount indicated in the Insuror's Letter
as the premium necessary to keep the Policies in effect for one month and (ii)
the Engineering Escrow Sub-Account in an amount equal to (a) the Short-Term
Required Repair Deposit plus (b) the first Long-Term Required Repair Installment
plus (c) the first Sprinkler Installment, in accordance with the provisions of
this Agreement.
2.1.3 The Note. The Loan shall be evidenced by the Note, in the
original principal amount of the Loan. The Note shall bear interest as provided
in such Note, shall be subject to repayment and prepayment as provided in
Section 2.3. The Note shall be entitled to the benefits of this Agreement and
shall be secured by the Mortgage, the Assignment of Leases and the other
Collateral Security Documents.
Section 2.2 Use of Proceeds.
Borrowers shall use the proceeds of the Loan disbursed to it
pursuant to Section 2.1 to (i) repay and discharge any existing loans relating
to the Properties, except the Permitted Encumbrances, (ii) pay all past-due
Basic Carrying Costs, if any,
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in respect of the Properties, (iii) fund the Basic Carrying Costs Sub-Account,
as provided in Section 2.1.2, and the Engineering Escrow Sub-Account and (iv)
pay costs and expenses incurred in connection with the Closing of the Loan, as
mutually approved by Lender and Borrowers. Any remaining proceeds of the Loan
shall be used for commercial purposes only.
Section 2.3 Loan Repayment and Prepayments; Refinancing; Extensions.
2.3.1 Repayment; Refinancing. Borrowers shall repay the Loan in
accordance with the provisions of the Note. Borrowers shall deliver to Lender
written commitment(s) or engagement letter(s) (either, a "Commitment" or
"Commitments"), which Commitment or Commitments shall set forth specific terms
and conditions for the refinancing of the entire outstanding amount of the Loan
from a Qualified Institutional Lender or Lenders or a nationally recognized
investment banking firm or firms on or before that date which is six (6) months
prior to the Maturity Date (the "Refinance Notification Date"). If Borrowers
fail to deliver such Commitment or Commitments prior to the Refinancing
Notification Date or if such Commitment or Commitments are delivered on or
before the Refinance Notification Date, but lapse, terminate or are otherwise
withdrawn prior to the funding of such Commitment or Commitments and the use of
the proceeds thereof to pay the entire outstanding amount of the Loan (the date
upon which such Commitment or Commitments lapse, terminate or are otherwise
withdrawn is hereinafter referred to as the "Void Commitment Date"), unless the
Indebtedness shall have been paid in full prior to the Refinance Notification
Date or the Void Commitment Date, as the case may be, an Operative Period shall
be in effect and all Excess Property Income shall be applied by Lender pursuant
to Section 2.7.3(f).
2.3.2 Prepayments. The Loan may be prepaid only as provided in the
Note.
2.3.3 Pro Forma Debt Service Coverage Ratio. If on any DSCR
Determination Date, the Pro Forma Debt Service Coverage Ratio, is less than or
equal to 1.2/1.0, then for the period (the "DSCR Restricted Period") commencing
on such DSCR Determination Date and ending on the next DSCR Determination Date
on which the Pro Forma Debt Service Coverage Ratio exceeds 1.2/1.0 all Excess
Property Income for all the Properties shall be deposited in the Central Account
and allocated as provided in Section 2.7.3(g), provided that if a DSCR
Restricted Period and an Operative Period shall both be in effect with respect
to any period of time, such period will be deemed an Operative Period for the
purposes of this Agreement.
2.3.4 Extensions. At the request of Borrower, which request must be
made at least one hundred eighty (180) days prior to the Maturity Date, Lender
shall have the option, in its sole discretion, to extend the maturity of the
Loan to the next
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anniversary of the Maturity Date, provided, however, in no event shall Lender
extend the maturity of the Loan beyond March 1, 2015.
Section 2.4 Release of Individual Properties. Except as set forth in
this Section 2.4, no repayment or prepayment of all or any portion of the
principal of the Loan shall cause, give rise to a right to require, or otherwise
result in, the release of any Lien of any Mortgage on any Individual Property.
2.4.1 Release of Individual Properties. From and after the Lock-Out
Date or in connection with any application by Lender of Loss Proceeds to the
Loan pursuant to Section 2.7.8 and Section 7.2, Borrowers may obtain (i) the
release (in whole but not in part) of an Individual Property from the Lien of
the Mortgage thereon and (ii) the release of such Borrower's obligations under
the Loan Documents (other than those expressly stated to survive satisfaction of
the Indebtedness), upon satisfaction of each of the following conditions:
(a) Lender shall have received payment of an amount equal to the sum
of (i) the then current Allocable Principal Balance for the Individual Property
to be released, (ii) twenty-five percent (25%) of (A) if such release shall
occur on or before the seventh (7th) anniversary of the Closing Date, the
initial Allocable Principal Balance for such Individual Property or (B) if such
release shall occur after such seventh (7th) anniversary of the Closing Date,
the then current Allocable Principal Balance for such Individual Property and
(iii) the amount of any additional reduction in the outstanding principal
balance of the Loan necessary to cause the Adjusted Debt Service Coverage Ratio
to equal at least (A) if such release shall occur on or before the seventh (7th)
anniversary of the Closing Date, the greater of (I) 1.53/1.0 or (II) the ratio
of (x) the Cash Flow Available for Debt Service for all of the Properties for
the twelve (12) month period ending with the last month for which Lender shall
have received financial reports for all of the Properties pursuant to Section
5.1(k) (iv) to (y) twelve (12) times the amount of the payment of Debt Service
payable on the Due Date occurring immediately prior to the date of such release
or (B) if such release shall occur after such seventh (7th) anniversary, the
greater of (I) 1.53/1.0 or (II) the ratio of (x) the Cash Flow Available for
Debt Service for all of the Properties for the twelve (12) month period ending
with the last month for which Lender shall have received financial reports for
all of the Properties pursuant to Section 5.1(k) (iv) to (y) twelve (12) times
the amount of the payment of Debt Service payable on the Due Date occurring
immediately prior to the date of such release (collectively, the "Release
Amount"), together with the Yield Maintenance Premium, if any, payable in
connection with payment of the Release Amount;
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(b) Lender shall have received all other payments of principal,
interest, Yield Maintenance Premiums and other amounts then due and payable
under the Note, this Agreement and the other Loan Documents;
(c) The Borrower in question shall have delivered an Officer's
Certificate to Lender at least thirty (30) days prior to the date the applicable
Individual Property is to be released from the Lien of the applicable Mortgage,
and again on the date of such release, certifying in each case that the
conditions in this Section have been satisfied (or will be satisfied on the date
of such release), with detailed calculations indicating the derivation of the
Adjusted Debt Service Coverage Ratio and of the amounts of the Release Amount,
the Yield Maintenance Premiums and other amounts payable pursuant to
subparagraphs (a) and (b) above, which amounts shall be subject to confirmation
by Lender;
(d) After giving effect to the proposed release, no Default or Event
of Default shall have occurred and be continuing; and
(e) Borrowers shall have submitted to Lender, not less than fifteen
(15) days prior to the date of such release, all documentation Lender reasonably
requires to be delivered by Borrowers in connection with such release, together
with an Officer's Certificate of the Borrower in question certifying that such
documentation (i) is in compliance with all Legal Requirements, (ii) will effect
such release in accordance with the terms of this Agreement, and (iii) will not
impair or otherwise adversely affect the Liens and other rights of Lender under
the Loan Documents and with respect to Properties not being released.
2.4.2 Recalculation of Amortization Payments. Commencing on the
first Due Date after the receipt of any Release Amount, the amount of the Debt
Service payment due on each Due Date shall be adjusted to equal the amount, as
determined by Lender and Borrowers, of the fixed monthly payment necessary to
fully amortize the remaining principal balance of the Loan by February 1, 2015
while paying interest at the Interest Rate on the principal balance of the Loan
outstanding from time to time.
2.4.3 Release Documentation. Lender shall, upon the written request
and at the expense of Borrowers, upon payment in full of all principal,
interest, Yield Maintenance Premiums and all other amounts then due and payable
under the Loan Documents, execute and deliver documents, prepared by Borrower or
Borrower's counsel and in form and substance reasonably satisfactory to Lender,
to release the Lien of the Mortgage from the applicable Individual Property.
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Section 2.5 Interest.
2.5.1 Generally. Borrowers shall pay interest at the Interest Rate
on the outstanding principal balance of the Loan on each Due Date.
2.5.2 Default Rate; Post-Maturity Interest. If Borrowers shall fail
to make any payment of principal, interest, Yield Maintenance Premiums or any
other amount payable by Borrowers under the Note, this Agreement or any other
Loan Documents within the grace period provided with respect to such payment
under Section 8.1 or, if no grace period is provided, on the date on which such
payment is due, whether by acceleration or otherwise, Borrowers shall pay
interest at the Default Rate with respect to such amounts and/or with respect to
the entire unpaid principal balance of the Loan as provided in the Note. The
preceding sentence shall not be construed as an agreement or privilege to extend
the date for payment of any such amounts nor as a waiver of any other right or
remedy accruing to Lender by reason of the occurrence of an Event of Default.
Section 2.6 Payments; Computations.
2.6.1 Making of Payments. Each payment by Borrowers hereunder or
under the Note shall be made directly into the Central Account by wire transfer
of immediately available funds to:
The First National Bank of Chicago
Chicago, Illinois
ABA #071000013
Credit Clearing A/C No. BNF=7521-7623/DES
Ref: 19203932/LSU
or to such other designated bank or place, or in such other manner, as Payee may
from time to time specify in writing. Whenever any payment hereunder or under
the Note shall be stated to be due on a day which is not a Business Day, such
payment shall be made on the next succeeding Business Day.
2.6.2 Computations. Interest payable hereunder or under the Note by
Borrowers shall be computed on the basis of a 360-day year consisting of twelve
(12) months of thirty (30) days each except that interest due and payable for a
period less than a full month shall be calculated by multiplying the actual
number of days elapsed in such period by a daily rate based on said 360-day
year.
2.6.3 Late Payment Charge. If any principal, interest, Yield
Maintenance Premiums or any other sums due under the Loan Documents is not paid
in full within three (3) Business Days of the date on which it is due, Borrowers
shall pay to Lender a Late Payment Charge pursuant to the Note.
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2.6.4 Application of Payments. Unless otherwise expressly provided
herein, all payments received on account of the Indebtedness shall be applied,
first, to accrued and unpaid interest, second, to the outstanding principal
balance of the Loan, third, to any Yield Maintenance Premium then due and
payable and thereafter to other amounts payable under the Loan Documents.
Section 2.7 Central Account; Deposits and Distributions.
2.7.1 Deposits in Central Account. (a) On each Due Date, Borrower
shall pay, or cause to be paid, to Lender, by wire transfer directly to the
Central Account as provided in Section 2.6.1 or as otherwise directed by Lender,
(i) the payment of Debt Service then due and payable, together with all Yield
Maintenance Premiums and other amounts payable under the Note, this Agreement
and the other Loan Documents, (ii) the Basic Carrying Costs Monthly Installment,
(iii) the FF&E Monthly Installment, (iv) during any Operative Period, DSCR
Restricted Period or Franchise Restricted Period, (A) the Operations and
Maintenance Expense Monthly Installment and (B) all Excess Property Income and
(v) if such Due Date is the first Due Date occurring after each of the first
four anniversaries of the Closing Date, the Required Repairs Installment, all
for application as provided herein.
(b) On each Due Date, Lender shall allocate all funds deposited into
the Central Account to the Debt Service Payment Sub-Account, the Basic Carrying
Costs Sub-Account, the Engineering Escrow Sub-Account (if such Due Date is the
first Due Date occurring after each of the first four anniversaries of the
Closing Date) and the FF&E Sub-Account, in that order, provided that during any
Operative Period, any DSCR Restricted Period or any Franchise Restricted Period,
Lender shall allocate such funds pursuant to Section 2.7.3.
(c) Upon commencement of any Operative Period, any DSCR Restricted
Period or any Franchise Restricted Period, Lender may deliver a Consultant's
Notice to Consultant. Borrowers shall cause Consultant, upon receipt by
Consultant of a notice from Lender so directing Consultant (a "Consultant's
Notice") until directed otherwise by Lender, to collect all Revenue (determined
for the purposes of this provision on a cash basis) relating to each Individual
Property and pay over all such Revenue or, in the case of the Westin William
Penn Manager, all amounts that would otherwise be payable to Westin William Penn
Borrower under the Westin William Penn Management Agreement, to Lender by wire
transfer directly to the Central Account as provided in Section 2.6.1 or as may
be otherwise designated from time to time by Lender. From and after the day
immediately following the date on which a Consultant's Notice is received,
Consultant shall collect all of the Revenue of each of the Individual Properties
and shall deposit such funds directly into the Central Account within One
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(1) Business Day after receipt thereof or, in the case of the Westin William
Penn Manager, when required to be paid to the Westin William Penn Borrower
pursuant to the Westin William Penn Management Agreement. Upon termination of
the applicable Operative Period, DSCR Restricted Period or Franchise Restricted
Period, provided no other such Period shall then be in effect, Lender shall
deliver a notice to Consultant directing Consultant that from and after the date
of such notice Consultant shall not be required to collect and pay over Revenue
pursuant to the applicable Consultant's Notice.
(d) Borrowers pledge, assign and grant a security interest to Lender
in all amounts deposited into the Central Account, as security for payment of
all sums due under the Loan and the performance of all other terms and covenants
of the Loan Documents and this Agreement on Borrowers' part to be paid and
performed.
2.7.2 Establishment of Central Account and Sub-Accounts. Lender
shall establish and maintain the Central Account with the Bank, in the name of
Lender, as secured party. The Central Account shall be an Eligible Account and
shall include (a) the Debt Service Payment Sub-Account, (b) the Basic Carrying
Costs Sub-Account, (c) the FF&E Sub-Account, (d) the Engineering Escrow
Sub-Account, (e) the Operations and Maintenance Expense Sub-Account, (f) the
Curtailment Reserve Fund Sub-Account and (g) the Capital Expenditure Sub-Account
(collectively, the "Basic Sub-Accounts"), to which certain funds shall be
allocated and from which disbursements shall be made pursuant to the terms of
this Agreement. The Central Account and the Basic Sub-Accounts shall be under
the sole dominion and control of Lender. Borrowers hereby irrevocably direct and
authorize Lender to deposit funds into and withdraw funds from the Central
Account and the Basic Sub-Accounts in accordance with the terms and conditions
of this Agreement. Borrowers shall have no direct right of withdrawal in respect
of the Central Account or the Basic Sub-Accounts, but shall have the right to
receive disbursements as provided herein. Each transfer of funds to be made
hereunder shall be made only to the extent that funds are on deposit in the
Central Account or the affected Basic Sub-Account and Lender shall have no
responsibility to make additional funds available in the event that funds on
deposit are insufficient.
2.7.3 Funding of Basic Sub-Accounts During Operative Period, DSCR
Restricted Period and Franchise Restricted Period. During any Operative Period,
DSCR Restrictive Period and any Franchise Restricted Period, Lender shall
allocate all funds deposited into the Central Account each day among the Basic
Sub-Accounts in the following priority:
(a) first, to the Basic Carrying Costs Sub-Account, until an amount
equal to the sum of (i) an amount equal to the Basic Carrying Costs Monthly
Installment for any prior month(s), to the extent not previously paid, plus (ii)
an
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amount equal to the Basic Carrying Cost Monthly Installment due on the current
Due Date, has been allocated to the Basic Carrying Costs Sub-Account;
(b) second, to the Operations and Maintenance Expense Sub-Account,
until an amount equal to the sum of (i) an amount equal to the Operations and
Maintenance Expense Monthly Installment for any prior month(s), to the extent
not previously paid, plus (ii) an amount equal to the Operations and Maintenance
Expense Monthly Installment due on the current Due Date, has been allocated to
the Operations and Maintenance Expense Sub-Account;
(c) third, to the Debt Service Payment Sub-Account, until an amount
equal to the sum of (i) the amount, if any, deducted therefrom during any
preceding month to pay any amounts due to any other Basic Sub-Account in
accordance with the provisions of this Section 2.7 to the extent not previously
reimbursed by such other Basic Sub-Account to the Debt Service Payment
Sub-Account, plus (ii) an amount equal to the payment of Debt Service for any
prior month(s), to the extent not previously paid, plus (iii) an amount equal to
the payment of Debt Service for the current Due Date (and any other amounts
required to be paid under the Note on such Due Date), has been allocated to the
Debt Service Payment Sub-Account;
(d) fourth, but only if all of the Required Repair Installments have
not yet been paid, to the Engineering Escrow Sub-Account, until an amount equal
to the sum of (i) the amount, if any, deducted therefrom during any preceding
month to pay any amounts due to any other Basic Sub-Account in accordance with
the provisions of this Section 2.7 to the extent not previously reimbursed by
such other Basic Sub-Account to the Engineering Escrow Sub-Account, plus (ii) an
amount equal to the payment of any portion of any Required Repairs Installment
previously payable, to the extent not previously paid, plus (iii) an amount
equal to the aggregate of the Required Repairs Installment, if any, payable
hereunder on the first Due Date occurring after the next anniversary of the
Closing Date divided by the number of Due Dates to occur between the date such
funds are received and the first Due Date occurring after the next anniversary
of the Closing Date, inclusive;
(e) fifth, to the FF&E Sub-Account, until an amount equal to the sum
of (i) the amount, if any, deducted therefrom during any preceding month to pay
any amounts due to any other Basic Sub-Account in accordance with the provisions
of this Section 2.7 to the extent not previously reimbursed by such other Basic
Sub-Account to the FF&E Sub-Account, plus (ii) an amount equal to the FF&E
Monthly Installment for any prior month(s), to the extent not previously paid,
plus (iii) an amount equal to the FF&E Monthly Installment due on the current
Due Date, has been allocated to the FF&E Sub-Account;
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(f) sixth, but only during any Operative Period, to the Curtailment
Reserve Fund Sub-Account to be applied pursuant to Section 2.7.7(g), unless
Lender shall elect, in its sole discretion, to disburse all or any portion of
such funds in payment of any Operating Expenses or any other charges affecting
all or a portion of the Properties, upon such terms and conditions as Lender
shall elect; and
(g) seventh, but only during any DSCR Restricted Period or any
Franchise Restricted Period, to the Capital Expenditure Sub-Account, to be
disbursed as provided in Section 2.7.7(f).
2.7.4 Deposits During Operative Period, DSCR Restricted Period and
Franchise Restricted Period. If on any Due Date during any Operative Period,
DSCR Restricted Period or any Franchise Restricted Period, the funds then on
deposit in the Central Account shall be less than the amount of funds which are
required to be deposited therein pursuant to Section 2.7.3(a) through (d) for
such Due Date, Borrowers shall be obligated to deposit immediately available
funds (in addition to Revenue) by wire transfer directly into the Central
Account as provided in Section 2.6.1, on such Due Date (subject to the grace
period provided in Section 8.1 (a) (i)), in the amount of such deficiency, and
failure to make such deposit shall be an Event of Default hereunder. Lender may
(but shall not be obligated to) withdraw funds from the Debt Service Payment
Sub-Account the Engineering Escrow Sub-Account, the FF&E Sub-Account, the
Curtailment Reserve Sub-Account or the Capital Expenditure Sub-Account (in each
case to the extent funds are available in each such Basic Sub-Account) and pay
any deficiency in any other Basic Sub-Account, in such order of priority as
Lender determines in Lender's sole discretion. Lender shall not withdraw or
disburse funds from the Basic Carrying Costs Sub-Account or the Operation and
Maintenance Sub-Account except as expressly provided in Section 2.7.7(b) and
(c).
2.7.5 Eligible Investments. Lender shall direct the Bank to invest
and reinvest any balance in the Central Account from time to time in Eligible
Investments, provided that (a) the maturities of the Eligible Investments on
deposit in the Central Account, if fixed, shall, to the extent such dates are
ascertainable, be selected and coordinated to become due not later than the day
before any disbursements from the Central Account and the Basic Sub-Accounts
must be made, (b) all such Eligible Investments shall be held in the name of
Lender (as secured party) and be under the sole dominion and control of Lender,
and (c) no Eligible Investment shall be made unless Lender shall retain a
perfected first priority Lien in such Eligible Investment securing the
Indebtedness and all filings and other actions necessary to ensure the validity,
perfection, and priority of such Lien have been taken and Lender shall have been
provided with an opinion of counsel satisfactory to Lender confirming the
perfection of such Lien in such Eligible
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Investment. All funds in the Central Account that are invested in a Eligible
Investment shall be deemed to be held in the Central Account for all purposes of
this Agreement and the other Loan Documents. Neither Lender nor the Bank shall
have any liability for any loss in investments of funds in the Central Account
that are invested in Eligible Investments and no such loss shall affect
Borrowers' obligation to fund, or liability for funding, the Central Account, as
the case may be. Borrowers agree that Borrowers shall include all such earnings
on the Central Account as income of the Borrowers for federal and applicable
state tax purposes.
2.7.6 Interest on Accounts. All interest paid or other earnings on
the Eligible Investments made hereunder shall be deposited into the Central
Account and shall be allocated to the Basic Sub-Account which contained the
funds with respect to which such interest was paid or other earnings earned. All
such interest and earnings shall be treated as Revenue. Except during a DSCR
Restricted Period, a Franchise Restricted Period, an Operative Period or any
period when an Event of Default has occurred and is continuing, all such
interest paid or other earnings earned with respect to funds in the Basic
Carrying Costs Sub-Account and the Debt Service Payment Sub-Account shall, after
each anniversary of the Closing Date, at Lender's option, either be paid over to
Borrowers or, on notice to Borrowers, credited against the amounts payable by
Borrowers on the next Due Date. Except for amounts to be paid or credited to
Borrowers pursuant to the preceding sentence, all interest paid or earnings
earned with respect to funds on deposit in any Basic Sub-Account shall be
retained in such Basic Sub-Account and disbursed pursuant to Section 2.7.7.
2.7.7 Payment of Debt Service; Disbursement of Funds in Basic
Sub-Accounts; Excess Property Income. Transfers and payments from the Central
Account and the Basic Sub-Accounts shall be made in accordance with the
following provisions:
(a) Payment of Debt Service. On each Due Date during the term of the
Loan, Lender shall withdraw from the Debt Service Payment Sub-Account and apply
to the Indebtedness an amount equal to the sum of all payments of Debt Service
and any other amounts payable to Lender under the Note, this Agreement or the
other Loan Documents, provided that if any such payment of Debt Service or other
amounts is past due, Lender shall make such withdrawal immediately upon
allocation of funds to the Debt Service Payment Sub-Account.
(b) Payment of Basic Carrying Costs. Borrower shall use its best
efforts to cause all notices of the amount and due date of payments of Basic
Carrying Costs to be sent to Lender at least ten (10) Business Days prior to
such due date. Provided that (i) Lender has received notice of the amount and
due date of any payment of Basic Carrying
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Costs and (ii) there are sufficient funds available in the Basic Carrying Costs
Sub-Account, Lender shall make such payment of Basic Carrying Costs directly to
the Governmental Authority or insuror entitled thereto. If the amount in the
Basic Carrying Costs Sub-Account is not sufficient to pay the Basic Carrying
Costs, Borrowers shall pay to Lender, within five (5) Business Days of written
notice, an amount which Lender shall estimate as sufficient to make up the
deficiency. Notwithstanding anything contained herein to the contrary, Borrowers
may only request disbursements from the Basic Carrying Costs Sub-Account to pay
premiums on the Policies to the extent of amounts deposited in the Basic
Carrying Costs Sub-Account pursuant to clause (ii) of the definition of "Basic
Carrying Costs Monthly Installment". Nevertheless, Lender shall also have the
right, without Borrowers' request, but not the obligation, to disburse amounts
in the Basic Carrying Costs Sub-Account in payment of premiums for the Policies
if Borrowers shall fail to pay the same when due.
(c) Payment of Operating Expenses. (i) Borrowers hereby agree to
pay, or cause to be paid, when due all Operating Expenses with respect to the
Properties (whether or not any amounts on deposit in the Operations and
Maintenance Expense Sub-Account shall be sufficient for such purpose); provided
that any Borrower may contest any Operating Expenses which it in good faith
disputes, provided that (A) no Lien shall attach to the applicable Individual
Property (except for the Lien of any Impositions being contested by Borrowers as
permitted under the Loan Documents), (B) such Borrower shall have demonstrated
to Lender's reasonable satisfaction that it has established adequate reserves to
provide for payment of such Operating Expense, if ultimately required, and (C)
failure to pay such Operating Expense shall not have a material adverse effect
on the operation of such Individual Property. Borrowers may, not more frequently
than twice in any calendar month, give Lender written notice, at least five (5)
Business Days prior to the due date with respect to any Operating Expenses,
requesting that Lender pay such Operating Expenses on behalf of such Borrower on
or prior to the due date thereof, which notice shall be accompanied by (I) an
Officer's Certificate for each Borrower making such request, specifying the
Operating Expenses for which payment is requested and certifying that all
requested amounts are properly payable hereunder and (II) evidence reasonably
satisfactory to Lender that all Operating Expenses for which disbursements have
previously been requested have been paid. Provided that (A) Lender has received
the Consultant's Certifications for the most recent period for which the same
are due, and (B) there are sufficient funds available in the Operations and
Maintenance Expense Sub-Account, Lender shall, as Lender in its sole discretion
shall determine, either make such payments out of such Basic Sub-Account or
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disburse funds from such Basic Sub-Account to the applicable Borrower or to the
Consultant on behalf of such Borrower for the purpose of making payment of such
Operating Expenses within five (5) Business Days of receipt of the documentation
required hereby; provided that if an Event of Default with respect to any
amounts payable under the Loan Documents shall have occurred and be continuing
or the Indebtedness shall have been accelerated, Lender shall disburse payments
of Operating Expenses only to third parties entitled to payment thereof.
(ii) Notwithstanding anything to the contrary contained herein,
Lender shall not be obligated to make any disbursement from the Operations and
Maintenance Sub-Account to pay Basic Carrying Costs, Debt Service, the costs of
any FF&E Replacements, the costs of Required Repairs or legal fees in connection
with any dispute arising under any Loan Document or any management or consulting
fees in excess of four percent (4%) of Revenues with respect to the applicable
Individual Property, except as may be required under the Westin William Penn
Management Agreement.
(d) Payment of Costs of Required Repairs. (i) Borrowers shall pay
all costs in connection with the performance of the Required Repairs (without
regard to the amount of money then available in the Engineering Escrow
Sub-Account). With respect to any Required Repair for which the cost set forth
on Exhibit E annexed hereto is less than the greater of (A) $75,000 or (B) one
and one-half percent (1.5%) of the initial Allocable Principal Balance for the
Individual Property in question (a "Minor Required Repair"), the applicable
Borrower may submit one request for a disbursement from the Engineering Escrow
Sub-Account of the actual cost of such Required Repair, provided that all
requests by Borrowers for disbursement for Minor Required Repairs in any
calendar month shall be submitted simultaneously and each such request shall be
accompanied by an Officer's Certificate specifying the costs to be paid from
such disbursement and certifying that all requested amounts are properly payable
hereunder and that (I) all costs of Required Repairs for which disbursements
have previously been made hereunder have been paid to the extent due and payable
and (II) any amounts disbursed by Lender for the costs of Required Repairs that
are not yet due and payable have been reserved by the applicable Borrower for
payment of such costs. Borrowers shall cause Borrowers' Accountant to deliver to
Lender, on or before the first day of each February, May, August and November of
each Fiscal Year, commencing on May 1, 1995, a certificate of Borrowers'
Accountant (an "Accountant's Certificate") stating that (A) Borrowers'
Accountant has reviewed (I) all Officer's Certificates delivered by Borrowers
pursuant to the preceding sentence during the quarter of Borrowers' Fiscal Year
last ended, (II) the invoice from the appropriate
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contractor or supplier for each expenditure for which an advance from the
Engineering Escrow Sub-Account was requested pursuant to such Officer's
Certificates, (III) the cancelled check written by the applicable Borrower in
payment of each such invoice, (IV) all receipts and other evidence of payment
received by Borrower with respect to such payments and (V) such evidence as
Borrowers' Accountant, in its professional judgment, deems necessary to
establish that all amounts requested by Borrowers to be disbursed from the
Engineering Escrow Sub-Account during such quarter of the Fiscal Year have in
fact been expended for purposes permitted under this Agreement and (B) all
amounts disbursed by Lender during such quarter of Borrowers' Fiscal Year (I)
(x) were in fact expended in payment of amounts payable out of funds on deposit
in the Engineering Escrow Sub-Account under the terms of this Agreement or (y)
have been reserved by the applicable Borrower for payment of such amounts or
(II), if any such disbursements were not used to pay amounts properly payable
hereunder or reserved for future payment of such amounts, specifying the amounts
so misapplied, provided that upon completion of any Minor Required Repair and
payment in full of costs payable in connection therewith, Borrowers shall not be
required to account for any excess funds disbursed from the Engineering
Sub-Account in connection with such Minor Required Repair. If any such
Accountant's Certificate shall indicate that amounts disbursed from the
Engineering Escrow Sub-Account were misapplied, Borrowers shall immediately
deposit in the Central Account, for allocation to the Engineering Escrow
Sub-Account, funds equal to the amount so misapplied.
(ii) With respect to any Required Repair for which the cost set
forth on Exhibit E annexed hereto is not less than the greater of (A) $75,000 or
(B) one and one-half percent (1.5%) of the initial Allocable Principal Balance
for the Individual Property in question (a "Major Required Repair") the
applicable Borrower may from time to time, but not more frequently than once in
any calendar month, request a disbursement from the Engineering Escrow Account
of amounts to pay for the costs of such Major Required Repair, accompanied by an
Officer's Certificate specifying the costs to be paid from such disbursement and
certifying that all such costs are properly payable hereunder, provided that (I)
prior to commencement of such Major Required Repair, Borrower shall have
submitted to Lender a budget for such Major Required Repair and a plan detailing
the time frames for each stage of such work, the percentage of the total Major
Required Repair represented by each stage and the percentage of the budget
allocated to each such stage; (II) such request shall be accompanied by (x) a
certification of the Independent contractor setting forth the percentage of the
Major Required Repair then completed and (y) evidence reasonably satisfactory to
Lender that all costs of such
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Major Required Repair for which disbursements have previously been made
hereunder have been paid; and (III) Lender shall not be required to advance any
funds from the Engineering Escrow Sub-Account with respect to any Major Required
Repair to the extent that the aggregate funds advanced for such item, expressed
as a percentage of the costs allocated for such item on Schedule E, would exceed
the percentage of the work on such item then completed.
(iii) Provided that (A) no Event of Default has occurred and is
continuing, (B) Lender has received the Consultant's Certifications and the
Accountant's Certificates for the most recent period for which the same are due
and the conditions set forth in subparagraphs (i) and (ii) above have been met,
Lender shall disburse to the applicable Borrower the funds in the Engineering
Escrow Sub-Account with respect to such Individual Property to pay the costs of
the Required Repairs, up to the amount set forth on Schedule E annexed hereto
for each such Required Repair, subject to Borrowers' right to request
disbursement of excess funds pursuant to clause (v) below; provided that Lender
may condition the disbursement of the final twenty-five percent (25%) of the
funds in the Engineering Escrow Sub-Account with respect to any Major Required
Repair upon an inspection by Lender or its agent, at Borrowers' expense, to
confirm that such item has been completed.
(iv) After completion of all Short-Term Required Repairs at any
Individual Property and after completion of all Long-Term Required Repairs at
any Individual Property, Borrowers shall submit to Lender (A) (i) a certificate
from the Engineer with respect to any of the Short-Term Required Repairs or
Long-Term Required Repairs at such Individual Property that were Major Required
Repairs or (ii) an Officer's Certificate with respect to all of the Short-Term
Required Repairs or Long-Term Required Repairs at such Individual Property that
were not Major Required Repairs stating that all such Short-Term Required
Repairs or Long-Term Required Repairs, as applicable, at the applicable
Individual Property have been completed in good and workmanlike manner and in
accordance with all Legal Requirements, that all Permits necessary for the use
or occupancy of the applicable Individual Property upon completion of such
Required Repairs have been obtained (with copies of all such Permits attached),
(B) at Lender's option, a title search for such Individual Property indicating
that such Individual Property is free from all liens, claims and other
encumbrances not previously approved by Lender, and (C) such other evidence as
Lender shall reasonably request that the Short-Term Required Repairs or
Long-Term Required Repairs, as applicable, Required Repairs at such Individual
Property have been completed and paid for, including, without limitation, copies
of lien waivers.
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(v) If, after completion of all Short-Term Required Repairs with
respect to any Individual Property, a portion of the funds deposited in the
Engineering Escrow Sub-Account with respect to Short-Term Required Repairs at
such Individual Property remains on deposit the applicable Borrower may submit
an Officer's Certificate stating that all Short-Term Required Repairs with
respect to such Individual Property have been completed in compliance herewith,
that all amounts payable in connection with such Short-Term Required Repairs
have been paid and that the applicable Borrower is entitled to receive a
disbursement of the remaining funds on deposit in the Engineering Escrow
Sub-Account with respect to the Short-Term Required Repairs at such Individual
Property. Lender shall, at Lender's option, pay such funds remaining in the
Engineering Escrow Sub-Account applicable to Short-Term Required Repairs at such
Individual Property to such Borrower or, upon notice to Borrowers, apply such
amount to the amounts payable hereunder on the next Due Date.
(vi) If, after completion of all Required Repairs with respect to
any Individual Property, a portion of the funds deposited in the Engineering
Escrow Sub-Account with respect to such Individual Property remains on deposit
and/or any Required Repairs Installments are not yet due and payable with
respect to such Individual Property, the applicable Borrower may submit an
Officer's Certificate stating that all Required Repairs with respect to such
Individual Property have been completed in compliance herewith, that all amounts
payable in connection with such Required Repairs have been paid and that the
applicable Borrower is entitled to receive a disbursement of the remaining funds
on deposit in the Engineering Escrow Sub-Account with respect to such Individual
Property and/or that any Required Repairs Installments with respect to such
Individual Property not yet due and payable should be waived. Lender shall, at
Lender's option, pay such funds remaining in the Engineering Escrow Sub-Account
applicable to such Individual Property to such Borrower or, upon notice to
Borrowers, apply such amount to the amounts payable hereunder on the next Due
Date, and any Required Repairs Installments with respect to such Individual
Property not yet due and payable shall be waived.
(vii) Upon the occurrence of an Event of Default with respect to any
amounts payable under the Loan Documents or the acceleration of the
Indebtedness, Lender may apply the funds on deposit in the Engineering Escrow
Sub-Account, as Lender in its sole discretion may determine, either (A) in
payment of any costs of Required Repairs or any other charges affecting all or
any portion of the Properties or (B) in payment, in such order as Lender may
elect, of the Indebtedness then due and payable, whether by acceleration or
otherwise; provided, however, that no such application
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shall be made by operation of law or otherwise until actually made by Lender as
herein provided.
(e) Disbursement from FF&E Sub-Account. (i) Borrowers shall pay the
costs of those items listed on Schedule F annexed hereto (the "FF&E
Replacements") (without regard to any amounts on deposit in the FF&E
Sub-Account). Borrowers may, not more frequently than once in any calendar month
and not with respect to any requested disbursement of less than $1,000, give
Lender written notice requesting that Lender pay for the costs of any FF&E
Replacements performed or to be performed in accordance with Section 7.4 hereof,
which notice shall be accompanied by an Officer's Certificate from each Borrower
performing FF&E Replacements that are subject to such request stating (A) the
specific FF&E Replacements for which the disbursement is requested, (B) the
quantity and price of each item purchased, if the FF&E Replacement includes the
purchase or replacement of specific items, (C) the price of all materials
(grouped by type or category) used or to be used in any FF&E Replacement other
than the purchase or replacement of specific items, (D) the cost of all
contracted labor or other services applicable to each FF&E Replacement for which
such request for disbursement is made, (E) that all FF&E Replacements have been
or will be made in accordance with all Legal Requirements and (F) that all costs
incurred in connection with the FF&E Replacements subject to such disbursement
are costs payable from the FF&E Sub-Account pursuant to the terms of this
Agreement.
(ii) Borrowers shall cause Borrowers' Accountant to deliver to
Lender, on or before the first day of each February, May, August and November of
each Fiscal Year, commencing on May 1, 1995, an Accountant's Certificate stating
that (A) Borrowers' Accountant has reviewed (I) all Officer's Certificates
delivered by Borrowers pursuant to subparagraph (i) above during the quarter of
Borrowers' Fiscal Year last ended, (II) the invoice from the appropriate
contractor or supplier for each expenditure for which an advance from the FF&E
Sub-Account was requested pursuant to such Officer's Certificates, (III) the
cancelled check written by the applicable Borrower in payment of each such
invoice, (IV) all receipts and other evidence of payment received by Borrower
with respect to such payments and (V) such evidence as Borrowers' Accountant, in
its professional judgment, deems necessary to establish that all amounts
requested by Borrowers to be disbursed from the FF&E Sub-Account during such
quarter of the Fiscal Year have in fact been expended for purposes permitted
under this Agreement and (B) all amounts disbursed by Lender during such quarter
of Borrowers' Fiscal Year were in fact expended in payment of amounts payable
out of funds on deposit in the FF&E Sub-Account under the terms of this
Agreement. If Borrowers' Accountant is unable to deliver the Accountant's
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Certificate containing the certifications required under the preceding sentence
when due, or if any Accountant's Certificate contains any incorrect Statement
(either occurrence is herein referred to as an "Accountant's Certificate
Default"), thereafter the Officer's Certificate delivered in connection with any
request for a disbursement from the FF&E Sub-Account shall, in addition to all
the other matters described in clause (i) above, (Y) state that all costs for
which such disbursement is requested have been paid in full by Borrowers and (Z)
be accompanied by copies of invoices for all items or materials purchased and
all contracted labor or services provided and each request shall include copies
of lien waivers or other evidence satisfactory to Lender of payment of all such
amounts.
(iii) If (A) the cost of an FF&E Replacement exceeds $10,000 and (B)
the contractor performing such FF&E Replacement requires periodic payments
pursuant to terms of a written contract, a copy of which has been delivered to
Lender, a request for disbursement from the FF&E Sub-Account may be made from
time to time to make such periodic payments when payable under such contract,
provided (I) all other conditions in this Agreement for disbursement have been
satisfied, (II) funds remaining in the FF&E Sub-Account are, in Lender's
judgment, sufficient to complete such FF&E Replacement and other FF&E
Replacements when required, and (III) each contractor or subcontractor receiving
payments under such contract shall have provided a waiver of lien with respect
to amounts which have been paid to that contractor or subcontractor and, if
requested by Lender, the applicable Borrower shall have delivered copies of such
lien waivers to Lender.
(iv) Except for requests for disbursement described in clause (iii)
above, each request for disbursement from the FF&E Sub-Account shall be made
only after completion of the FF&E Replacement for which disbursement is
requested and Borrowers, collectively, shall make only one simultaneous
submission of such requests in any calendar month. Borrowers shall provide
Lender evidence of completion of the FF&E Replacements subject to such requests
satisfactory to Lender in its reasonable judgment and the Officer's Certificates
submitted in connection with such requests shall state that all costs of the
FF&E Replacements subject thereto have been paid in full.
(v) Provided that (A) no Event of Default has occurred and is
continuing, (B) Lender has received the Consultant's Certifications and the
Accountant's Certificate for the most recent period for which the same are due,
(C) the requirements set forth in this clause (e) and Section 7.4 of this
Agreement are satisfied and (D) there are sufficient funds available in the FF&E
Sub-Account, Lender shall disburse to the applicable Borrowers amounts from the
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FF&E Sub-Account necessary to pay the actual costs of the FF&E Replacements,
provided that after the occurrence of an Accountant's Certificate of Default,
such disbursements shall be made only to reimburse Borrowers for actual costs of
FF&E Replacements that Borrowers have demonstrated pursuant to subparagraph (ii)
above have already been paid and that are properly payable from the FF&E
Sub-Account under this Agreement. Lender shall not be obligated to make
disbursements from the FF&E Sub-Account to pay, or to reimburse Borrowers for,
the costs of routine maintenance to an Individual Property or for costs which
are to be disbursed from the Required Repair Fund.
(vi) Upon the occurrence of an Event of Default with respect to any
amounts payable under the Loan Documents or acceleration of the Indebtedness,
Lender may apply the funds on deposit in the FF&E Sub-Account, as Lender in its
sole discretion may determine, either (A) in payment of the costs of any FF&E
Replacements or other charges affecting all or any portion of the Properties or
(B) in payment, in such order as Lender may elect, of the Indebtedness then due
and payable, whether by acceleration or otherwise, any Yield Maintenance Premium
payable with respect to any portion applied in reduction of the principal
balance of the Loan; provided, however, that no such application shall be deemed
to have been made by operation of law or otherwise until actually made by Lender
as herein provided.
(f) Disbursement of Funds in Capital Expenditure Sub-Account. (i)
Notwithstanding anything to the contrary contained in the Note, this Agreement
or the other Loan Documents, Lender may elect to (a) retain the funds on deposit
in the Capital Expenditure Sub-Account as additional collateral to secure
repayment of the Indebtedness and performance of the other obligations of
Borrowers hereunder or (b) disburse such funds in payment of the costs and
expenses of any improvement, repair or replacement approved by Lender, in its
sole discretion, to any Individual Property, the cost of which Borrower would be
required to capitalize for federal income tax purposes, provided, however, that
notwithstanding the foregoing, if the Pro Forma Debt Service Coverage Ratio has
been (I) less than or equal to 1.2/1.0 on two (2) consecutive DSCR Determination
Dates, exclusive, with respect to any DSCR Restricted Period, of the initial
DSCR Determination Date on which the Pro Forma Debt Service Coverage Ratio fell
below 1.2/1.0, Lender may elect to apply any funds on deposit in the Capital
Expenditure Sub-Account as a prepayment of the principal balance of the Loan or
other amounts payable in connection therewith, on the next occurring Due Date,
with no Yield Maintenance Payable in connection with such application, or (II)
at least equal to 1.3/1.0 for four (4) consecutive DSCR Determination Dates,
Lender shall, at Lender's option, either pay over any funds on deposit in the
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Capital Expenditure Sub-Account to Borrowers or credit such funds, on notice to
Borrowers, against the amounts payable by Borrowers on the next Due Date,
provided that nothing contained in this clause (II) shall limit Lenders rights
elsewhere in this paragraph (f)(i). If any Franchise Restricted Period shall
terminate prior to the occurrence of an Event of Default hereunder and no DSCR
Restricted Period is then in effect, Lender shall, at Lender's option, either
pay over any funds on deposit in the Capital Expenditure Sub-Account to
Borrowers or credit such funds, on notice to Borrowers, against the amounts
payable by Borrowers on the next Due Date.
(ii) Each Borrower may, not more frequently than once in each
calendar month, give Lender written notice requesting that Lender pay the costs
of, or reimburse such Borrower for payment of the costs of any such capital
improvement, repair or replacement, together with an Officer's Certificate from
such Borrower stating the amounts of charges for which disbursement is requested
and that such charges are properly payable hereunder, and, if required,
satisfactory evidence of the progress and/or completion of such capital
improvement and the cost thereof, satisfactory evidence that any and all
completed capital improvement, repair or replacement work complies with Legal
Requirements and lien waivers, copies of bills, invoices and other evidence as
may be required by Lender to establish that the costs of any such capital
improvement, repair or replacement for which reimbursement is requested, or for
which disbursement has been previously made, have been paid by such Borrower.
(g) Disbursement of Funds in Curtailment Reserve Fund Sub-Account.
Lender shall apply the funds on deposit in the Curtailment Reserve Fund
Sub-Account as a prepayment of the principal balance of the Loan, together with
any Yield Maintenance Premium and other amounts payable in connection therewith
on the next occurring Due Date.
2.7.8 Payment of Loss Proceeds; Borrowers' Right to Release. (a) In
the event of a Casualty with respect to an Individual Property, Lender and
Borrowers shall cause all proceeds under any insurance policy required to be
maintained by Borrowers ("Insurance Proceeds") to be paid by the respective
insurers directly into the Central Account, except for Insurance Proceeds
relating to Equipment subject to Equipment Leases that require such Insurance
proceeds be paid to the lessor thereunder. Unless Lender shall elect or be
required to make such Insurance Proceeds available to Borrowers for Restoration
pursuant to Section 7.2.2 (a), Lender shall (after deducting out Lender's cost
of recovering such Insurance Proceeds, including, without limitation, reasonable
attorneys' fees) apply such Insurance Proceeds on the next occurring Due Date as
a prepayment of the principal balance of the Loan in accordance with the terms
of the
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Note. If such Insurance Proceeds are to be made available for Restoration of
such Individual Property, Lender shall hold such funds in a segregated bank
account at the Bank, which, to the extent feasible in the context of the
administration of construction disbursement draw requests, shall be interest
bearing, and shall disburse such funds in accordance with Section 7.2.2(b).
(b) In the event of a Condemnation to an Individual Property, Lender
and Borrowers shall cause all of the proceeds in respect of any Condemnation
("Condemnation Proceeds") to be paid directly into the Central Account. Unless
Lender shall elect or be required to make such Condemnation Proceeds available
to Borrowers pursuant to Section 7.2.3 (a), Lender shall (after deducting out
Lender's cost of recovering such Condemnation Proceeds, including, without
limitation, reasonable attorneys' fees) apply such Condemnation Proceeds on the
next occurring Due Date as a prepayment of the principal balance of the Loan in
accordance with the terms of the Note. If such Condemnation Proceeds are to be
made available to Borrowers, Lender shall hold any such funds not immediately
disbursed to Borrowers in a segregated bank account at the Bank, which, to the
extent feasible in the context of the purposes for which Lender shall disburse
such funds, shall be interest-bearing, and shall disburse such funds in
accordance with Section 7.2.3(a).
(c) If any Insurance Proceeds or Condemnation Proceeds
(collectively, "Loss Proceeds") are received by Borrowers, such Loss Proceeds
shall be received in trust for Lender, shall be segregated from other funds of
Borrowers, and shall be forthwith paid into the Central Account, to be applied
or disbursed in accordance with the foregoing.
(d) If Lender shall apply any Loss Proceeds as a prepayment of the
principal balance of the Loan as provided above, the applicable Borrower may
elect to have the Individual Property in question released from the Lien of the
Mortgage, notwithstanding anything to the contrary contained herein, without
payment of any Yield Maintenance Premium and whether or not the Lock-Out Date
shall have occurred, provided that (i) (A) the Loss Proceeds applied by Lender
toward payment of the Loan shall be at least equal to the then current Allocable
Principal Balance for such Individual Property or (B) Borrowers shall pay to
Lender any amount by which the then current Allocable Principal Balance of such
Individual Property exceeds the amount of Loss Proceeds so applied toward
payment of the Loan and (ii) the conditions set forth in Section 2.4.1(d) and
(e) shall have been satisfied.
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III. CONDITIONS PRECEDENT
Section 3.1 Conditions Precedent to Closing.
The obligation of Lender to make the Loan hereunder is subject to
the fulfillment by Borrowers, or waiver by Lender, of the following conditions
precedent no later than the Closing Date:
(a) Representations and Warranties; Compliance with Conditions. The
representations and warranties of Borrowers contained in this Agreement and the
other Loan Documents shall be true and correct in all material respects on and
as of the Closing Date, and no event shall have occurred and be continuing that
would constitute, by reason of the execution, delivery and performance of this
Agreement or the other Loan Documents, the grant of the Liens on the Properties
contemplated hereby, the making of the Loan, or the consummation of the other
transactions contemplated by this Agreement or the other Loan Documents, a
Default or an Event of Default; and Borrowers shall be in compliance in all
material respects with all terms and conditions set forth in this Agreement and
in each other Loan Document on its part to be observed or performed.
(b) Loan Agreement, Note, Environmental Agreement and Contribution
Agreement. Lender shall have received an original of this Agreement, the Note,
the Environmental Indemnity and the Contribution Agreement in each case duly
executed and delivered on behalf of each of the Borrowers.
(c) Delivery of Mortgages; Assignment of Leases; Franchise Agreement
Letters and Assignment of Consulting Agreement; Title Insurance; Reports;
Leases.
(i) Mortgage, Assignment of Leases, Franchise Agreement Letters and
Assignment of Consulting Agreement. Lender shall have received from each
Borrower fully executed and acknowledged counterparts of the Mortgage, the
Assignment of Leases, the Franchise Agreement Letters (except with respect to
the Westin William Penn Property and the Royce Property) and the Assignment of
Consulting Agreement relating to each of the Individual Properties and evidence
that counterparts of the Mortgage and Assignment of Leases for each Individual
Property have been delivered to the title company for recording so as to
effectively create upon such recording, in the reasonable judgment of Lender,
valid and enforceable Liens upon such Properties, of the requisite priority, in
favor of Lender (or such other trustee as may be required or desired under local
law), subject only to the Permitted Encumbrances and such other Liens as are
permitted pursuant to the Loan Documents.
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(ii) Title Insurance. Lender shall have received the Title Insurance
Policy for each Mortgage, or a marked, re-dated and recertified title commitment
establishing the form of the Title Insurance Policy and providing title
insurance effective as of the Closing Date, issued by First American Title
Insurance Company and dated as of the Closing Date, with endorsements,
reinsurance and direct access agreements acceptable to Lender. Such policies
shall (A) provide coverage in amounts satisfactory to Lender, (B) insure Lender
that the relevant Mortgage creates a valid first priority Lien on the Individual
Property, free and clear of all exceptions from coverage other than Permitted
Encumbrances and standard exceptions and exclusions from coverage (as modified
by the terms of any endorsements), (C) contain such endorsements and affirmative
coverages as Lender may request, and (D) name Lender. The Title Insurance
Policies shall be assignable without charge. Lender also shall have received
evidence that all premiums in respect of such title policies have been paid.
(iii) Survey. Lender shall have received a current survey of each
Individual Property in form and content satisfactory to Lender, prepared by a
professional and properly licensed land surveyor satisfactory to Lender in
accordance with the 1992 Minimum Standard Detail Requirements for ALTA/ACSM Land
Title Survey (the "Survey Recruirements") and certified to the issuer of the
Title Insurance Policy, Lender and its successors and assigns by a certification
in the form set forth in paragraph 8 of the Survey Requirements. Such survey
shall reflect the same legal description contained in the Title Insurance Policy
relating to such Individual Property referred to in clause (ii) above and shall
meet the requirements of an "Urban Survey as set forth in the Survey
Requirements and shall include items 1, 2, 3, 4, 6, 7, 8, 9, 10, 11 and 13 set
forth on Table A of the Survey Requirements.
(iv) Insurance. Lender shall have received certified copies of the
Policies required hereby, together with original certificates issued by the
insuror evidencing such Policies, naming Lender as an additional insured or loss
payee, together with evidence satisfactory to Lender that such policies are in
full force and effect, that all premiums then payable for the existing policy
period have been paid and that such policies may not lapse or be terminated
without at least thirty (30) days notice to Lender.
(v) Environmental Reports. Lender shall have received a Phase I
environmental report and, if indicated, a Phase II environmental report in
respect of each Individual Property, in each case satisfactory to Lender.
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(vi) Zoning. With respect to each Individual Property, Lender shall
have received, at Lender's option, (i) letters or other evidence with respect to
such Individual Property from the appropriate municipal authorities (or other
Persons acceptable to Lender) concerning applicable zoning laws, or (ii) a
zoning opinion letter from Borrowers' local counsel, in form and substance
satisfactory to Lender.
(vii) Encumbrances. Borrowers shall have taken or caused to be taken
such actions to provide Lender, as of the Closing Date, with a valid, perfected,
first priority Lien with respect to the Mortgage in each Individual Property,
subject only to applicable Permitted Encumbrances, and Lender shall have
received satisfactory evidence thereof.
(d) Related Documents. Each additional Loan Document not
specifically referenced herein, but relating to the transactions contemplated
herein, shall have been duly authorized, executed and delivered by all parties
thereto and Lender shall have received and approved certified copies thereof.
(e) Delivery of Organizational Documents. On or before the Closing
Date, Borrowers shall deliver or cause to be delivered to Lender copies
certified by each of the respective Borrowers of all organizational
documentation related to such Borrower and/or its formation, structure,
existence, good standing and/or qualification to do business, as Lender may
request in its sole discretion, including, without limitation, good standing
certificates, qualifications to do business in the appropriate jurisdictions,
resolutions authorizing the entering into of the Loan and incumbency
certificates.
(f) Opinions of Borrowers' Counsel. Lender shall have received (i)
the opinion of Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A.,
special counsel for Borrowers, with respect to non-consolidation issues (the
"Non-Consolidation Opinion"), (ii) opinions of counsel for Borrowers with
respect to due formation of Borrowers, due authorization, execution and delivery
of the Note, this Agreement and the other Loan Documents and enforceability of
the Note, this Agreement and the other Loan Documents and (iii) opinions of
counsel for Borrowers (who shall be satisfactory to Lender), in the States in
which the Individual Properties are located with respect to (A) enforceability
of the Mortgage, the Assignment of Leases and the other Loan Documents with
respect to the Individual Properties located in such State, (B) perfection of
Lender's security interest in the Revenue of such Individual Properties, (C)
perfection of Lender's security interest in all liquor licenses, restaurant
licenses and hotel operating licenses with respect to each such Individual
Property, if permitted under the laws of such State and (D) adequacy of Permits
listed on an affidavit of an officer of each Borrower with respect to each such
Individual Property, to the knowledge
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of such counsel, each in form and substance satisfactory to Lender, dated as of
the Closing Date and addressing such matters as Lender may reasonably request.
(g) Budgets. Borrower shall have delivered the Capital Expenditures
Budget and the Annual Operating Budget for each Individual Property for the
prior Fiscal Year and the current Fiscal Year (on a forecast basis).
(h) Basic Carrying Costs. Borrower shall have paid all Basic
Carrying Costs relating to each of its Properties which are due and payable
through the Closing Date, including, without limitation, all Impositions
relating to each of the Borrowers or the Individual Properties, which amounts
may be funded with proceeds of the Loan.
(i) Completion of Proceedings. All corporate and other proceedings
taken or to be taken in connection with the transactions contemplated by this
Agreement and other Loan Documents shall be reasonably satisfactory in form and
substance to Lender, and Lender shall have received all such counterpart
originals or certified copies of such documents as Lender may reasonably
request.
(j) Evidence of Insurance Premiums. Borrowers shall have delivered,
or caused to be delivered, the Insuror's Letter.
(k) Cash Management Agreement. Borrowers shall have delivered to
Lender a certified copy of the Cash Management Agreement.
IV. REPRESENTATIONS AND WARRANTIES
Section 4.1 Borrowers' Representations.
Borrowers represent and warrant that:
(a) Organization. Each Borrower has been duly organized and is
validly existing and in good standing under the laws of the jurisdiction of its
formation. Each Borrower and any general partner of any Borrower has requisite
corporate or partnership power and authority to (i) own its properties, (ii)
transact the businesses in which it is now engaged, (iii) execute and deliver
this Agreement, the Note, the Mortgage and the other Loan Documents and (iv)
consummate the transactions contemplated hereby and thereby. Each Borrower is
duly qualified to do business and is in good standing in the jurisdiction where
its respective Individual Property is located and in each other jurisdiction
where it is required to be so qualified in connection with the ownership,
maintenance, management and operation of its Individual Property, except where
the failure to be so qualified or in good standing would not have a material
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adverse effect on the financial condition or the business of such Borrower or
the ownership, condition or operation of its Individual Property (a "Borrower
Material Adverse Effect"). Each Borrower possesses all rights, licenses, permits
and authorizations, governmental or otherwise, necessary to entitle it to own
its properties and to transact the businesses in which it is now engaged. The
sole business of each Borrower is the ownership, management and operation of
Individual Property.
(b) Authorization; Enforceability. The execution, delivery and
performance of Borrowers' obligations under this Agreement, the Note, the
Mortgage and the other Loan Documents has been duly authorized by all requisite
corporate or partnership action of each Borrower, including, where required, the
consent of its partners or shareholders and directors. This Agreement, the Note,
the Mortgage and such other Loan Documents have been duly executed and delivered
by or on behalf of Borrowers and constitute legal, valid and binding obligations
of Borrowers enforceable against Borrowers in accordance with their respective
terms, subject to applicable bankruptcy, insolvency and similar laws affecting
rights of creditors generally and to general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
(c) No Conflicts. The execution, delivery and performance of this
Agreement, the Note, the Mortgage and the other Loan Documents by Borrowers will
not conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any Lien
(other than pursuant to the Loan Documents) upon any of the property or assets
of any Borrower pursuant to the terms of any indenture, mortgage, deed of trust,
loan agreement, partnership agreement or other agreement or instrument to which
any Borrower is a party or to which any of Borrowers' property or assets is
subject, which conflict, breach, default or imposition of Lien would have a
Borrower Material Adverse Effect, nor will such action result in any violation
of the provisions of any statute or any order, rule or regulation of any
Governmental Authority having jurisdiction over any Borrower or any of
Borrowers' Properties or assets, and any consent, approval, authorization,
order, registration or qualification of or with any Governmental Authority
required for the execution, delivery and performance by Borrowers of this
Agreement, the Note, the Mortgage or any other Loan Documents has been obtained
and is in full force and effect.
(d) Litigation. Except as set forth on Schedule L, there are no
actions, suits or proceedings at law or in equity by or before any Governmental
Authority for which service has been made on any Borrower or any Affiliate or,
to the knowledge of any Borrower, threatened against or affecting any Borrower
or any of the Properties, which actions, suits or proceedings are not covered by
insurance and, if determined against such Borrower or any of the Properties,
would materially adversely affect the
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condition (financial or otherwise) or business of such Borrower or the condition
or ownership of any of the Properties.
(e) Agreements. No Borrower is a party to any agreement or
instrument or subject to any restriction which would materially adversely affect
such Borrower or any of the Properties, or Borrower's business, properties or
assets, operations or condition, financial or otherwise. No Borrower is in
default in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement or instrument to which it is
a party or by which such Borrower or any of the Properties are bound, except for
any defaults that would not have a Borrower Material Adverse Effect.
(f) Title. Each Borrower has good, marketable and indefeasible title
in fee to the real property comprising part of its respective Individual
Properties and good title to the balance of such Properties, free and clear of
all Liens, restrictions, covenants, easements and other matters affecting title
whatsoever, except the Permitted Encumbrances. The Mortgage, when properly
recorded in the real property records of the county or parish where each
Individual Property is located, and the other Collateral Security Documents,
together with any Uniform Commercial Code financing statements required to be
filed in connection therewith, will create (i) a valid, perfected first priority
Lien on the applicable Individual Property, subject only to Permitted
Encumbrances and (ii) perfected security interests in and to, and perfected
collateral assignments of, all personalty (including the Leases) and other
collateral described therein, all in accordance with the terms thereof, in each
case subject only to any applicable Permitted Encumbrances. There are no
outstanding options or rights of first refusal affecting any of the Properties.
There are no claims for payment for work, labor or materials affecting any of
the Properties which are or may become a lien prior to, or of equal priority
with, the Liens created by the Loan Documents. All of the Permitted Encumbrances
reflected in the Title Insurance Policies are customary exceptions for
commercial mortgage lending transactions involving properties similar to the
Properties.
(g) No Bankruptcy Filing. No Borrower is contemplating either the
filing of a petition by it under any state or federal bankruptcy or insolvency
laws or the liquidation of all or a major portion of such Borrower's assets or
property, and no Borrower has knowledge of any Person contemplating the filing
of any such petition against it. Except for the Bankruptcy Order, no Borrower is
currently the subject of any bankruptcy or similar proceeding under any state or
federal law and none of the Properties is currently under the jurisdiction of
any bankruptcy court or other court having similar jurisdiction.
(h) Full and Accurate Disclosure. No statement of fact made by any
Borrower in this Agreement or in any of the other Loan Documents contains any
untrue statement of a material
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fact or omits to state any material fact necessary to make statements contained
herein or therein not misleading. There is no material fact presently known to
any Borrower which has not been disclosed to Lender which adversely affects, or
might reasonably be expected to adversely affect, any of the Properties or the
business, operations or condition (financial or otherwise) of any Borrower.
(i) No Plan Assets. No Borrower is an "employee benefit plan," as
defined in Section 3(3) of ERISA, subject to Title I of ERISA, and none of the
assets of any Borrower constitutes or will constitute "plan assets" of one or
more such plans within the meaning of 29 C.F.R. Section 2510.3-101.
(j) Compliance. Each Borrower and each of the Properties and the use
thereof comply in all material respects with all applicable Legal Requirements,
including, without limitation, parking requirements. No Borrower is in default
or violation of any order, writ, injunction, decree or demand of any
Governmental Authority, the violation of which would materially adversely affect
the condition (financial or otherwise) or business of such Borrower.
(k) Contracts. There are no material contracts, excluding Leases,
Equipment Leases, Franchise Agreements and cable television contracts affecting
any Individual Property that would be binding upon Lender or its designee after
foreclosure or transfer in lieu of foreclosure of such Individual Property that
are not terminable on one month's notice or less without cause and without
penalty or premium.
(l) Financial Information. All financial data of the Borrowers,
including, without limitation, the statements of cash flow and income and
operating expense, that have been delivered to Lender (i) are true, complete and
correct in all material respects, (ii) fairly represent the financial condition
of the Properties and Borrowers as of the date of such reports, and (iii) have
been prepared in accordance with GAAP, consistently applied throughout the
periods covered, except as disclosed therein. As of the date of this Agreement,
no Borrower has any material contingent liability, liability for taxes (other
than taxes not yet due and payable) or other unusual or forward commitment.
Since June 30, 1994, there has been no material adverse change in the results of
operations of any of the Properties or the assets, liabilities or financial
condition of any Borrower. Except as disclosed in such financial statements, no
Borrower has incurred any obligation or liability, contingent or otherwise,
which would materially adversely affect its business operations or any of the
Properties.
(m) Condemnation. No Borrower or Affiliate of any Borrower has
received notice of any proceeding with respect to Condemnation, nor, to
Borrower's best knowledge, is any
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Condemnation contemplated, with respect to all or any portion of any of the
Properties.
(n) Federal Reserve Regulations. No part of the proceeds of the Loan
will be used for the purpose of purchasing or acquiring any "margin stock"
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System or for any other purpose which would be inconsistent with such
Regulation U or any other Regulations of such Board of Governors, or for any
purposes prohibited by Legal Requirements or by the terms and conditions of this
Agreement or the other Loan Documents.
(o) Utilities and Public Access. Each Individual Property has rights
of access to public ways and is served by water, gas, electric, telephone,
sanitary sewer and storm drain facilities adequate to service such Properties
for their respective intended uses. To the knowledge of Borrowers, except as
disclosed in the surveys, all public utilities necessary or convenient to the
full use and enjoyment of each Individual Property are located in the public
right-of-way abutting such Individual Property, and all such utilities are
connected so as to serve such Individual Property without passing over other
property. All roads necessary for access to each Individual Property for its
current purposes have been completed and dedicated to public use and accepted by
all Governmental Authorities. No road providing access to any of the Properties
is currently (i) closed or severely restricted in use or (ii) to the best of any
Borrower's knowledge, contemplated to be relocated, closed or severely
restricted in use.
(p) Not a Foreign Person. No Borrower is a "foreign person" within
the meaning of 1445(f) (3) of the I.R.C.
(q) Separate Lots. Each Individual Property is comprised of one (1)
or more parcels, which constitutes a separate tax lot and does not constitute a
portion of any other tax lot not a part of such Individual Property. No
Individual Property is assessed jointly with any other real property
constituting a separate tax lot or with any personal property not constituting
part of such Individual Property such that the lien of any taxes which may be
levied against such personal property shall be assessed or levied or charged as
a lien on such Individual Property.
(r) Assessments. There are no pending or, to the best of Borrowers'
knowledge, proposed special or other assessments for public improvements or
otherwise affecting any of the Properties, except for Permitted Encumbrances,
nor, to the best of Borrowers' knowledge, are there any contemplated
improvements to any of the Properties that may result in such special or other
assessments.
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(s) No Defenses. As of the Closing Date, this Agreement, the Note
and the other Loan Documents are not subject to any right of rescission,
set-off, counterclaim or defense by Borrowers, including the defense of usury,
and no Borrower has asserted any right of rescission, set-off, counterclaim or
defense with respect thereto.
(t) No Prior Assignment. Lender is the assignee of all Borrowers'
interests under the Leases and there are no prior assignments of any of the
Leases or any portion of the Revenue which are presently outstanding.
(u) Insurance. Borrower has obtained and has delivered to Lender the
Policies, or certified copies thereof, together with original certificates
evidencing such Policies, reflecting the insurance coverages, amounts and other
requirements set forth herein, which Policies are in full force and effect and
may not lapse or be terminated without at least thirty (30) days notice to
Lender or ten (10) days for nonpayment of premium.
(v) Use of Properties. Each Individual Property is used exclusively
for hotel purposes and other appurtenant and related uses, except for those
portions of the Westin William Penn Property which are, as of the Closing Date,
leased or offered for lease for commercial uses not related to the use of such
Property as a hotel.
(w) Certificate of Occupancy; Permits and Licenses. Borrowers have
obtained all permits, licenses, approvals and franchises, including, without
limitation, certificates of occupancy, hotel licenses and liquor licenses (the
"Permits"), required by Legal Requirements in order to use and operate each of
the Properties for hotel use as currently operated, except for Permits the
failure of which to so obtain would not have a Borrower Material Adverse Effect.
All such Permits are (i) listed on Schedule G annexed hereto, (ii) have been
validly issued and are in full force and effect and (iii) are issued in or have
been transferred into the name of the related Borrower or the related Individual
Property, except as indicated on Schedule G. Where permitted by Legal
Requirements, each Borrower has granted Lender a valid, perfected first priority
security interest in all such Permits. All fees due and payable with respect to
each Permit have been paid. There are no proceedings pending or threatened which
may result in the revocation, suspension or, to the best of Borrowers'
knowledge, termination of any Permit. Each Individual Property is operated in
compliance, in all material respects, with the related Permits.
(x) Flood Zone. None of the Improvements on any Individual Property
are located in a flood hazard area as defined by the Federal Emergency
Management Agency, except for the Individual Properties identified on Schedule D
as the Radisson
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Inn New Orleans located in Kennar, Louisiana and the Holiday Inn Hilton Head on
Hilton Head Island, South Carolina.
(y) Physical Condition. To the best of Borrowers' knowledge, except
as disclosed in the Building Evaluation Reports, each Individual Property,
including, without limitation, all buildings, parking facilities, sidewalks,
storm drainage systems, roofs, plumbing systems, HVAC systems, fire protection
systems, electrical systems, equipment, elevators, exterior sidings and doors,
landscaping, irrigation systems and all other Improvements thereon are in
operating condition, order and repair in all material respects. To the best of
Borrowers' knowledge, except as disclosed in the Building Evaluation Reports,
there exists no structural or other material defect in any of the Properties,
whether latent or otherwise. Neither any Borrower nor any Affiliate of any
Borrower has received written notice from any insurance company or bonding
company of any defects or inadequacies in any of the Properties, or any part
thereof, which would adversely affect the insurability of the same or cause the
imposition of extraordinary premiums or charges thereon or of any termination or
threatened termination of any policy of insurance or bond.
(z) Solvency. The fair saleable value of each Borrower's assets
(taking into account the rights and obligations of each Borrower against each of
the other Borrowers pursuant to the Contribution Agreement) exceeds and will,
immediately following the making of the Loan, exceed such Borrower's total
liabilities, including, without limitation, subordinated, unliquidated, disputed
and contingent liabilities. The fair saleable value of each Borrower's assets
(taking into account the rights and obligations of each Borrower against each of
the other Borrowers pursuant to the Contribution Agreement) is and will,
immediately following the making of the Loan, be greater than such Borrower's
probable liabilities, including its contingent liabilities, on its debts as such
debts become absolute and matured. In the good faith judgment of each Borrower,
such Borrower's assets constitute, and immediately following the making of the
Loan will constitute, reasonably sufficient capital to carry out its business as
conducted or as proposed to be conducted. No Borrower intends to, or believes
that it will, incur debts and liabilities (including, without limitation,
contingent liabilities and other commitments) beyond its ability to pay such
debts as they mature.
(aa) Casualty. No Individual Property has sustained any material
loss or interference with its operations from fire, explosion, flood or other
calamity, or from any labor dispute or any action, order or decree by any
Governmental Authority.
(bb) Components of Value. The portions of the Properties
constituting real property interests have a fair market value as of the date
hereof at least equal to seventy percent (70%) of the original principal balance
of the Loan. The
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portion of each Individual Property constituting interests in real property have
a fair market value as of the date hereof at least equal to seventy percent
(70%) of the Allocable Principal Balance for such Individual Property.
(cc) Filing and Recording Taxes. All transfer taxes, deed stamps,
intangible taxes or other amounts in the nature of transfer taxes required to be
paid by any Person under applicable Legal Requirements in connection with the
transfer of the Properties to Borrower have been paid. All mortgage, mortgage
recording, stamp, intangible or other similar tax required to be paid by any
Person under applicable Legal Requirements in connection with the execution,
delivery, recordation, filing, registration, perfection or enforcement of any of
the Loan Documents, including, without limitation, the Mortgage encumbering each
Individual Property have been paid, and, under current Legal Requirements, the
Mortgage is enforceable in accordance with its terms by Lender (or any
subsequent holder thereof) against each Individual Property.
(dd) Single-Purpose. Borrowers hereby represent and warrant to, and
covenant with, Lender that, as of the date hereof and until such time as the
Indebtedness shall be paid in full, except as otherwise provided herein, in the
other Loan Documents or in the Related Consulting Agreement or the Cash
Management Agreement, each Borrower, and if any such Borrower is a limited
partnership, the general partner of such Borrower:
(i) does not own and shall not own any asset other than the related
Individual Property or, in the case of a general partner, its interest in such
Borrower;
(ii) is not engaged and shall not engage in any business other than
those necessary for the ownership, use, management or operation of the such
Individual Property and any transactions entered into in connection with such
business with any Affiliate of such Borrower or such general partner, other than
any such transactions embodied in the Loan Documents and the Related Consulting
Agreement, shall be entered into 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 an Affiliate of such Borrower
or such general partner;
(iii) has not incurred, created or assumed any currently outstanding
debt, and shall not incur, create or assume any debt, secured or unsecured,
direct or contingent (including guaranteeing any obligation), other than the
Indebtedness, trade indebtedness incurred in the ordinary course of such
Borrower's or such general partner's business (including the financing of
insurance premiums) and the Permitted Encumbrances, except as may be otherwise
expressly permitted hereunder;
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(iv) has not made any currently outstanding, and shall not make any,
loans or advances to any third party (including any Affiliate of such Borrower
or such general partner), provided that (A) the execution and delivery of the
Loan Documents, the payment by any Borrower of any amounts payable to Lender
thereunder and the disbursement by Lender of any amounts hereunder shall not be
deemed a violation of this provision, regardless of to which Individual Property
any such amounts relate, provided that Borrowers shall account for all amounts
advanced by each Borrower on behalf of any other Borrower pursuant to the Cash
Management Agreement and (B) participation by such Borrower under the Cash
Management Agreement shall not be deemed a violation of this provision;
(v) is and shall be solvent and paying its liabilities (including,
as applicable, reasonable allocations of personnel and overhead expenses) from
its assets as the same shall become due;
(vi) has done or caused to be done and shall do or cause to be done
all things necessary to preserve its existence, and shall not, nor shall any
general partner thereof, as applicable, amend, modify or otherwise change its
articles of incorporation or by-laws or partnership agreement, as applicable
without the prior written consent of Lender, in its sole discretion;
(vii) shall observe all corporate or partnership formalities, as
applicable, and conduct and operate its business as presently conducted and
operated and in accordance with the assumptions set forth in the
Non-Consolidation Opinion;
(viii) shall maintain books and records and bank accounts separate
from those of its Affiliates or any other Person;
(ix) shall maintain a separate business office at its Individual
Property;
(x) shall be, and at all times shall hold itself out to the public
as, a legal entity separate and distinct from any other entity, including any
Affiliate thereof, provided that each Borrower may identify its Individual
Property as associated with the applicable Franchisor;
(xi) shall file its own tax returns, if required by the Code;
(xii) shall maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations, which capital may include amounts
deposited by such Borrower under the Cash Management Agreement;
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(xiii) shall not seek or consent to the liquidation, dissolution or
winding up, in whole or in part, of such Borrower or such general partner, nor
enter into any consolidation, merger, joint venture, syndication or other
combination;
(xiv) shall not commingle its funds and other assets with those of
any Affiliate or any other Person, except as may be provided herein, in the
other Loan Documents or in the Cash Management Agreement;
(xv) has caused, and at all times shall cause, there to be at least
one duly appointed member of the board of directors (an "Independent Director")
of such Borrower or such general partner who has not been at the time of such
individual's appointment, and may not have been at any time during the preceding
two years (A) a stockholder of, or an officer, director (other than with respect
to such Independent Director's service as director of such Borrower, such
general partner or any other Borrower hereunder) or employee of, such Borrower
or any of its Affiliates, or such general partner or any of its Affiliates, (B)
a customer or supplier to such Borrower or any of its Affiliates, or to such
general partner or any of its Affiliates, (C) a person or other entity
controlling any such stockholder, supplier or customer, or (D) a member of the
immediate family of any such stockholder, officer, employee, supplier or
customer or any other director of such Borrower or such general partner. As used
in this subsection (dd), the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting securities, by
contract or otherwise;
(xvi) has not caused, and shall not cause, the board of directors of
such Borrower or such general partner to take any action which, under the terms
of any certificate of incorporation, by-laws or any voting trust agreement with
respect to such Borrower's common stock, requires the unanimous affirmative vote
of one hundred percent (100%) of the members of the board of directors, unless
at the time of such action there shall be at least one member who is an
Independent Director;
(xvii) shall comply with the provisions of its articles of
incorporation or by-laws or partnership agreement, as applicable; and
(xviii) shall use separate and distinct invoices and stationery and
checks that indicate, by printed or typed identification, that such Borrower is
the entity for which payment is made.
(ee) Enforceability of Franchise and Consulting Agreement. Each of
the Franchise Agreements, the Related Consulting Agreement and the Westin
William Penn Management Agreement has been duly authorized, executed and
delivered or
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duly assumed by the applicable Borrower or Borrowers and constitutes a valid and
legally binding instrument enforceable against such Borrower or Borrowers in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally and general equitable principles (whether considered
in a proceeding in equity or at law).
(ff) Compliance with Franchise Agreements. A true and complete copy
of each Franchise Agreement (including all amendments, agreements, side letters
and other documents relating thereto) has been delivered to Lender and there are
no other documents or agreements between any Borrower or any Franchisor with
respect to any of its Properties. All amounts due and payable under the
Franchise Agreements through the Closing Date have been paid, and to Borrowers'
knowledge, there is no default by either party under any Franchise Agreement and
no event has occurred and is continuing which, with the passage of time and/or
the giving of notice, would constitute a default or event of default by either
party under any Franchise Agreement, except in any case for defaults that would
not have a Borrower Material Adverse Effect. Any work on any Individual Property
required by the Franchisor under any Franchise Agreement to have been completed
prior to the date hereof has been completed and either (i) has been approved by
such Franchisor or (ii) Borrowers know of no reason why such work should not be
approved. All necessary consents, if any, of any Franchisor to the transactions
contemplated by this Agreement and the other Loan Documents have been obtained.
(gg) Compliance with Consulting Agreements. A true and complete copy
of the Related Consulting Agreement and the Westin William Penn Management
Agreement (including, in each case, all amendments, agreements, side letters and
other documents relating thereto) has been delivered to Lender and there are no
other agreements or documents providing for the management or the supervision of
any Individual Property. All amounts due and payable under the Related
Consulting Agreement and the Westin William Penn Management Agreement as of the
Closing Date have been paid and, to the best of Borrowers' knowledge, there is
no default in any material respect by any party under the Related Consulting
Agreement or the Westin William Penn Management Agreement, and no event has
occurred and is continuing which, with the passage of time and/or the giving of
notice, would constitute a default or event of default in any material respect
by any party under either the Related Consulting Agreement or the Westin William
Penn Management Agreement.
(hh) Equipment Leases. True and complete copies of all Equipment
Leases (including all amendments, agreements, side letters and documents
relating thereto) have been delivered to Lender. All Equipment Leases are listed
on Schedule H annexed hereto and, except as set forth on Schedule H, all of such
Equipment Leases are unmodified. All of the Equipment Leases are
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in full force and effect and there is no default in any material respect by any
Borrower thereunder, nor, to the best knowledge of Borrowers, by the lessor or
other party thereunder and, to the best knowledge of Borrowers, no event has
occurred and is continuing which, with the passage of time and/or the giving of
notice, would constitute a default or event of default in any material respect
under any such Equipment Leases. Except for items subject to the Equipment
Leases, all furniture, fixtures, equipment and personal property used in
connection with the ownership, operation, management and maintenance of the
Properties is owned by the Borrowers.
(ii) No Encroachments. To the best knowledge of the Borrowers,
except as disclosed in the Surveys or Title Insurance Policies, all improvements
comprising a portion of each Individual Property lie wholly within the boundary
and building restriction lines of such Individual Property and no improvements
on adjoining properties encroach upon any Individual Property in any respect.
(jj) Leases. Schedule I, annexed hereto, sets forth all Leases
affecting any part of the Properties. All such Leases are in full force and
effect and have not been amended or modified except as set forth on Schedule I.
To the best of Borrowers' knowledge, no material default has occurred and is
continuing thereunder.
(kk) Royce Hotel. There is no Franchise Agreement in effect with
respect to the Royce Property and Borrower has the right to use the name "Royce"
in connection with the operation thereof without a license by or agreement with
any other party. Upon taking title to the Royce Property, by foreclosure, deed
in lieu of foreclosure or otherwise, Lender will have full right to use the
"Royce" name.
(ll) Cash Management Agreement. The Cash Management Agreement is in
full force and effect and has not been modified, amended or terminated and there
are no other agreements, other than the Consulting Agreements, among Borrowers
and any Affiliates regarding the transfer of funds between Borrowers and any
Affiliates.
(mm) Bankruptcy Order. No Borrower nor any Affiliate of Borrowers is
in default in any material respect under its obligations under the Bankruptcy
Order.
Section 4.2 Survival of Representations.
Borrowers agree that all of the representations and warranties of
Borrowers set forth in Section 4.1 and elsewhere in this Agreement and in the
other Loan Documents shall survive for so long as any amount remains owing to
Lender under this Agreement or any of the other Loan Documents. All
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representations, warranties, covenants and agreements made in this Agreement or
in the other Loan Documents by Borrowers shall be deemed to have been relied
upon by Lender notwithstanding any investigation heretofore or hereafter made by
Lender or on its behalf.
V. AFFIRMATIVE COVENANTS
Section 5.1 Borrowers' Covenants.
From the date hereof and until payment and performance in full of
all obligations of Borrowers under the Loan Documents or the earlier release of
the Lien of the Mortgage (and all related obligations) from all the Properties
in accordance with the terms of this Agreement and the other Loan Documents,
Borrowers hereby covenant and agree with Lender that:
(a) Existence; Compliance with Legal Requirements and Insurance
Requirements. Each Borrower shall do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its existence, rights,
licenses, permits and corporate franchises and comply with all Legal
Requirements applicable to it and its Individual Property. Each Borrower shall
at all times use its best efforts to maintain, preserve and protect all its
corporate franchises and trade names and preserve all the remainder of its
property used or useful in the conduct of its business and shall keep all of its
Individual Property, including, without limitation, all Equipment, in
satisfactory working order and repair and in compliance with all Legal
Requirements and Insurance Requirements, and from time to time make, or cause to
be made, all reasonably necessary repairs, renewals, replacements, betterments
and improvements thereto in order to maintain such Individual Property in
compliance with the prevailing standards for a hotel property of similar age,
size, construction and the then applicable franchise affiliation in the
metropolitan area in which such Individual Property is located, all as more
fully provided in the Mortgage.
(b) Impositions and Other Charges. Each Borrower shall pay all
Impositions, now or hereafter levied or assessed or imposed against its
Individual Property or any part thereof, subject to Lender's obligation to
disburse funds from the Basic Carrying Costs Sub-Account pursuant to Section
2.7.7(b) and shall pay all water, sewer, maintenance and other charges now or
hereafter levied or assessed or imposed against such Individual Property or any
part thereof (the "Other Charges") as same become due and payable. No Borrower
shall suffer, and each Borrower shall promptly cause to be paid and discharged,
any Lien whatsoever which may be or become a lien or charge against Individual
Property other than Permitted Encumbrances, and shall promptly pay for all
utility services provided to its Individual Property. Each Borrower shall
furnish to Lender or its designee
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upon request, receipts for the payment, or other evidence reasonably
satisfactory to Lender of payment, of such Impositions, Other Charges and said
utility services prior to the date the same shall become delinquent, except with
respect to amounts that Lender is obligated to disburse pursuant to Section
2.7.7(b). After prior written notice to Lender, a Borrower, at its own expense,
may contest by appropriate legal proceeding, promptly initiated and conducted in
good faith and with due diligence, the amount or validity or application in
whole or in part of any Impositions or Other Charges, provided that (i) no Event
of Default has occurred and is continuing, (ii) such proceeding shall suspend
the collection of the Impositions or Other Charges from the applicable
Individual Property, (iii) such proceeding shall be permitted under and be
conducted in accordance with the provisions of any other instrument to which
such Borrower or the related Individual Property is subject and shall not
constitute a default thereunder, and (iv) such Borrower shall have furnished
such security as may be required in the proceeding, or as may be reasonably
requested by Lender, to insure the payment of any such Impositions or Other
Charges, together with all interest and penalties thereon.
(c) Litigation. Each Borrower shall give prompt written notice to
Lender of any litigation or governmental proceedings pending or threatened
against such Borrower which might materially adversely affect such Borrower's
condition (financial or otherwise) or its business or its Individual Property.
(d) Access to Premises. Borrowers shall permit agents,
representatives and employees of Lender to inspect any of the Properties or any
part thereof at reasonable hours upon reasonable advance notice.
(e) Notice of Default. Each Borrower shall promptly advise Lender of
any material adverse change in such Borrower's condition, financial or
otherwise, or of the occurrence of any default or Event of Default of which such
Borrower has knowledge.
(f) Cooperate in Legal Proceedings. Borrowers shall cooperate fully
with Lender with respect to any proceedings before any Governmental Authority
with respect to Borrowers or the Properties which may in any way affect the
rights of Lender hereunder or any rights obtained by Lender under any of the
other Loan Documents and, in connection therewith, permit Lender, at its
election and at Borrowers' expense, to participate in any such proceedings.
(g) Perform Loan Documents. Each Borrower shall observe, perform and
satisfy all the terms, provisions, covenants and conditions of, and shall pay
when due all costs, fees and expenses to the extent required under the Loan
Documents executed and delivered by, or applicable to, such Borrower.
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(h) Insurance Benefits. Each Borrower shall cooperate with Lender in
obtaining for Lender the benefits of any proceeds of any insurance lawfully or
equitably payable in connection with its Individual Property, and Lender shall
be reimbursed for any expenses incurred in connection therewith (including
reasonable attorneys' fees and disbursements, and the payment by such Borrower
of the expense of an appraisal on behalf of Lender if reasonably requested by
Lender in case of a fire or other casualty affecting its Individual Property or
any part thereof) out of such insurance proceeds.
(i) Further Assurances; Supplemental Mortgage Affidavits. (i)
Borrowers shall, at Borrowers' sole cost and expense:
(A) furnish to Lender all instruments, documents, boundary surveys,
footing or foundation surveys, certificates, plans and specifications,
appraisals, title and other insurance reports and agreements, and each and every
other document, certificate, agreement and instrument required to be furnished
by Borrowers pursuant to the terms of the Loan Documents or reasonably requested
by Lender in connection therewith;
(B) execute and deliver to Lender such documents, instruments,
certificates, assignments and other writings, and do such other acts necessary
or desirable to evidence, preserve and/or protect, and to maintain Lender's
perfected lien upon, and security interest in, the collateral (including,
without limitation, the Central Account and all funds on deposit therein) at any
time securing or intended to secure the obligations of Borrowers under the Loan
Documents, as Lender may reasonably require; and
(C) do and execute all and such further lawful and reasonable acts,
conveyances and assurances for the better and more effective carrying out of the
intents and purposes of this Agreement and the other Loan Documents, as Lender
shall reasonably require from time to time.
(ii) The Lien created by the Mortgage is intended to encumber each
Individual Property on a joint and several basis to the full extent of the
Indebtedness. As of the date hereof, Borrowers represent that they have paid all
state, county and municipal recording and all other taxes imposed upon the
execution and recordation of the Mortgage against each of the Properties based
upon the foregoing and such security is not limited by the Allocable Principal
Balance for any Individual Property. If at any time Lender determines, based on
applicable law, that Lender is not being afforded the maximum amount of security
available from any one or more of the Properties as a direct or indirect result
of applicable taxes not having been paid with respect to any such Properties,
Borrowers will execute, acknowledge and deliver to Lender, immediately upon
Lender's request, supplemental affidavits increasing the amount of the
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Indebtedness for which all applicable taxes have been paid to an amount
determined by Lender to be equal to the lesser of (a) the greater of the fair
market value of the applicable Individual Property (i) as of the Closing Date
and (ii) as of the date such supplemental affidavits are to be delivered to
Lender, and (b) the amount of the Indebtedness, and Borrower shall, on demand,
pay any additional taxes required in connection therewith.
(j) Management of Mortgaged Property. Each Borrower covenants and
agrees with Lender that (i) its Individual Property will be managed at all times
(A) by the Westin William Penn Manager pursuant to the Westin William Penn
Management Agreement with respect to the Westin William Penn Property or by the
Related Consultant with respect to the Individual Property identified on
Schedule D as the Radisson Inn New Orleans located in Kennar, Louisiana pursuant
to the applicable Related Consulting Agreement or (B) in consultation with the
Related Consultant pursuant to the Related Consulting Agreement with respect to
each other Individual Property, (ii) immediately upon the occurrence of a fifty
percent (50%) or more change in control of the Related Consultant (a "Consultant
Control Change"), Borrower will promptly give Lender notice thereof (a
"Consultant Control Notice") and (iii) any Related Consulting Agreement may be
terminated by Lender (A) For Cause (as defined below) at any time, (B) at any
time after the occurrence and during the continuance of an Event of Default with
respect to any amounts payable hereunder or under the Note, the Mortgage or the
other Loan Documents, (C) upon commencement of any foreclosure proceeding with
respect to the applicable Individual Property and (D) after any Consultant
Control Change with respect to the applicable Consultant if the Rating Agency
has failed to confirm, after written request, in writing that as a result of
such Consultant Control Change the then current rating of the Certificates will
not be downgraded, withdrawn or otherwise adversely affected. Upon such
termination, a substitute managing agent shall be appointed by the applicable
Borrower, subject to Lender's approval, in Lender's sole discretion, for such
Individual Property. As used in this subsection (j), the term "control", means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of Consultant, whether through
ownership of voting securities, by contract or otherwise, and the term "For
Cause" means on account of Consultant's gross negligence, willful misconduct or
fraud or Consultant's default beyond the expiration of any applicable notice or
grace period in the performance of its obligations under the applicable
Consulting Agreement. The Consulting Agreements shall be subject and subordinate
in all respects to the Lien and to the terms, covenants and provisions of the
Mortgage and the other Loan Documents in accordance with those certain
Assignments of Consulting Agreements, dated as of the date hereof. Provided no
Event of Default has occurred and is then continuing hereunder, Consultant shall
be entitled to collect fees under the Consulting Agreement, provided that any
such fees in excess of four percent (4%) of Revenues shall not be
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paid or collected unless all amounts then payable under the Loan Documents shall
have been paid in full and Operating Expenses are being paid consistent with
Borrowers' practices in effect as of the Closing Date and Borrowers shall not
reasonably expect future Revenue to be insufficient to pay Operating Expenses
accrued or thereafter accruing. Borrowers further covenant and agree that
Borrowers shall require the Consultant to maintain at all times during the term
of the Loan worker's compensation insurance as required by Governmental
Authorities. Each Borrower shall perform its obligations under the Consulting
Agreements.
(k) Financial Reporting.
(i) Borrowers will keep and maintain or will cause to be kept and
maintained on a Fiscal Year basis, in accordance with GAAP, proper and accurate
books, records and accounts reflecting all of the financial affairs of Borrowers
and all items of income and expense in connection with the operation on an
individual basis of each Individual Property and in connection with any services
or Equipment provided in connection with the operation thereof, whether such
income or expense be realized by any Borrower or by any other Person whatsoever,
excepting lessees unrelated to and unaffiliated with any Borrower who have
leased from a Borrower portions of any Individual Property for the purpose of
occupying the same. Lender shall have the right from time to time at all times
during normal business hours upon reasonable notice to examine such books,
records and accounts at the office of any Borrower or other Person maintaining
such books, records and accounts and to make such copies or extracts thereof as
Lender shall desire. After the occurrence of an Event of Default, Borrowers
shall pay any reasonable costs and expenses incurred by Lender in connection
with such examination.
(ii) Borrowers will furnish to Lender annually (with a copy to the
Rating Agency), within one hundred twenty (120) days following the end of each
Fiscal Year of Borrowers, a certified complete copy of the financial statement
of Borrowers, prepared on a combined basis, audited by Borrowers' Accountant in
accordance with GAAP covering on a combined basis the operation of the
Properties for such Fiscal Year and containing a statement of Revenues and
Operating Expenses, a statement of assets and liabilities and a statement of
Borrowers' equity. Together with Borrowers' annual combined financial statement,
each Borrower shall furnish to Lender an unaudited operating statement for such
Individual Property, accompanied by an Officer's Certificate representing as of
the date thereof (A) that the annual operating statement accurately represents
the operation of the related Individual Property, in accordance with GAAP
consistently applied and (B) whether there exists an event or circumstance which
constitutes a default or Event of Default under the Loan Documents executed and
delivered by, or applicable to, such Borrower, and if such default or Event of
Default exists, the nature thereof, the period of time it has existed and the
action then being taken to remedy the same.
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(iii) Borrowers shall timely file any and all required reports with
the Securities and Exchange Commission, required to be filed pursuant to the
Securities Exchange Act of 1934, as amended.
(iv) Borrowers will furnish, or cause to be furnished, to Lender
monthly (with a copy to the Rating Agency), within twenty (20) days following
the end of each month, both (A) a true, complete and correct cash flow statement
with respect to each Individual Property on an individual basis in form
reasonably acceptable to Lender showing (I) all cash receipts of any kind
whatsoever and all cash payments and disbursements for such month, and (II)
year-to-date summaries of such cash receipts, payments and disbursements, (III)
all Revenue and Operating Expenses for such month and (IV) all Revenue and
Operating Expenses for the preceding twelve (12) full calendar months and (B) an
operations statement with respect to each Individual Property prepared on an
accrual basis, in the form of Schedule J annexed hereto, showing the operations
of such Individual Property for the preceding twelve (12) full calendar months
and (C) a balance sheet for each Borrower, together with a certification of the
Related Consultant (a "Consultant's Certification") stating that, in all
material respects, (a) each such cash flow statement and operating statement is
true, complete and correct and (b) all Operating Expenses with respect to such
Individual Property which have accrued as of the last day of the month preceding
the delivery of such cash flow statement have been fully paid or otherwise
provided for by or on behalf of the related Borrower.
(v) Borrowers shall furnish to Lender (with a copy to the Rating
Agency), within fourteen (14) days after request, such further detailed
information with respect to the operation of any of the Properties and the
financial affairs of Borrowers as may be reasonably requested by Lender.
(vi) Lender shall have the right to audit, at Lender's expense, each
Borrower's books and records to determine Revenue and Operating Expenses for
each Individual Property; provided, however, that if such audit reveals a
misstatement of Revenue or Operating Expenses in any financial statement
submitted by or on behalf of any Borrower by more than five percent (5%) of such
amount for the period which is the subject of such audit, Borrowers shall
reimburse Lender on demand for the cost of such audit.
(l) Business and Operations. Each Borrower will continue to engage
in the businesses presently conducted by it as and to the extent the same are
necessary for the ownership, maintenance, management and operation of its
Individual Property. Each Borrower will qualify to do business and will remain
in good standing under the laws of each jurisdiction as and to the extent the
same are required for the ownership, maintenance, management and operation of
its Individual Property.
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(m) Title to the Properties. Borrowers will warrant and defend (i)
the title to each of the Properties and every part thereof, subject only to the
Permitted Encumbrances, and (ii) the validity and priority of the Liens of the
Mortgage and the Assignment of Leases on each Individual Property, subject only
to the Permitted Encumbrances, in each case against the claims of all Persons
whomsoever. Borrowers shall reimburse Lender for any losses, costs, damages or
expenses (including reasonable attorneys' fees and court costs) incurred by
Lender if an interest in any of the Properties, other than as permitted
hereunder, is claimed by another Person.
(n) Costs of Enforcement. In the event (i) that the Mortgage is
foreclosed in whole or in part or is put into the hands of an attorney for
collection, suit, action or foreclosure, (ii) of the foreclosure of any other
mortgage encumbering any of the Properties in which proceeding Lender is made a
party, or (iii) of the bankruptcy, insolvency, rehabilitation or other similar
proceeding in respect of any Borrower or an assignment by any Borrower for the
benefit of its creditors, Borrowers, their successors or assigns, shall be
chargeable with and agree to pay all costs of collection and defense, including
attorneys' fees in connection therewith and in connection with any appellate
proceeding or post-judgment action involved therein, which shall be due and
payable hereunder together with all required service or use taxes.
(o) Estoppel Statement. Borrowers, within ten (10) days after
request from Lender, shall from time to time furnish to Lender a statement, duly
acknowledged and certified by Borrowers, setting forth (i) the amount then owing
by Borrowers in respect of the Indebtedness, (ii) the date through which
interest on the Loan has been paid, and (iii) any offsets, counterclaims,
credits or defenses to the payment of Borrowers' obligations under the Loan
Documents and acknowledging that this Agreement and the other Loan Documents
executed and delivered by, or applicable to, Borrowers are legal, valid and
binding obligations of Borrowers and have not been modified or, if modified,
giving the particulars of such modification. Lender, within ten (10) days after
a request by Borrowers, shall from time to time, but not more frequently than
four (4) times in any calendar year, furnish to Borrowers a statement, duly
acknowledged and certified by Lender, setting forth (A) the amount then owing by
Borrowers with respect to the Indebtedness, (B) the date through which Interest
on the Loan has been paid and (C) that, to the best of Lender's knowledge, no
default has occurred hereunder, and acknowledging that this Agreement and the
other Loan Documents have not been modified, or if modified, giving the
particulars of such modification.
(p) Loan Proceeds. The proceeds of the Loan shall be o used only for
the purposes set forth in Section 2.2.
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(q) Permits. Each Borrower shall comply, and cause its Individual
Property to be operated in compliance, in all material respects, with all
Permits and shall extend or renew any Permit that may expire.
(r) Annual Operating Budget and Capital Expenditure Budget.
Borrowers shall prepare and deliver to Lender, not less than fifteen (15)
Business Days prior to the commencement of each Fiscal Year of Borrowers, (i) an
Annual Operating Budget with respect to each Individual Property for such
ensuing Fiscal Year, and (ii) a Capital Expenditures Budget with respect to each
Individual Property for such ensuing Fiscal Year.
(s) Confirmation of Representations. In addition to and not in
limitation of the covenants and agreements of Borrower contained in Section 7.1,
each Borrower shall deliver, in connection with any Securitization Transaction,
one or more Officer's Certificates certifying as to the accuracy of all
representations made by Borrowers in the Loan Documents as of the date of the
closing of such Securitization Transaction or specifying any changes in the
accuracy of such representations.
(t) No Joint Assessment. No Borrower shall suffer, permit or
initiate the joint assessment of any Individual Property (i) with any other real
property constituting a tax lot separate from such Individual Property, and (ii)
with any other personal property, whereby the lien of any taxes which may be
levied against such other personal property shall be assessed or levied or
charged to such Individual Property.
(u) Leasing Matters. Any Lease with respect to any Individual
Property that covers more than one thousand (1,000) rentable square feet shall
be written on a form of lease which has been approved by Lender, which approval
shall not be unreasonably withheld. Upon request, Borrowers shall furnish Lender
with executed copies of all Leases. All proposed Leases or renewals of existing
leases entered into after the Closing Date shall be on commercially reasonable
terms and shall not contain any terms which would materially affect Lender's
rights under the Loan Documents. All Leases executed after the date hereof shall
be subordinate to the Mortgage encumbering the applicable Individual Property.
Notwithstanding anything to the contrary contained herein, with respect to those
portions of the Westin William Penn Property which are, as of the Closing Date,
leased or offered for lease for commercial uses not related to the use of the
Property as a hotel, the Westin William Penn Borrower may enter, extend, modify
or terminate, or take any other actions with respect to, any Lease, in a
commercially reasonable manner provided that the uses permitted under such
Leases shall be commercially suitable to the operation of the Westin William
Penn Property as a first-class hotel. Borrowers (i) shall observe and perform
the obligations imposed upon the lessor under the Leases in a commercially
reasonable manner; (ii) shall enforce, and may amend or terminate, the terms,
covenants (pound)
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and conditions contained in the Leases upon the part of the lessee thereunder to
be observed or performed in a commercially reasonable manner; (iii) shall not
collect any of the rents more than one (1) month in advance (other than security
deposits); (iv) shall not execute any other assignment of lessor's interest in
the Leases or the Revenue (except as contemplated by the Loan Documents); (v)
shall not alter, modify or change the terms of the Leases in a manner
inconsistent within the provisions of the Loan Documents; and (vi) shall execute
and deliver at the request of Lender all such further assurances, confirmations
and assignments in connection with the Leases as Lender shall from time to time
require.
(v) Financing Statements. Borrowers shall, promptly upon Lender's
request, at Borrowers' sole cost and expense, timely file or refile, or cause to
be filed or refiled, all continuations and any assignments of any of the Uniform
Commercial Code Financing Statements filed in connection with the Loan, as
appropriate, in the appropriate recording or filing offices, such that Lender
will continue to have a valid and perfected first priority lien on the
collateral subject to such financing statements.
(w) Equipment Leases. Each Borrower shall observe and perform or
cause to be observed or performed all of its obligations under all Equipment
Leases and replace any expired Equipment Leases with similar agreements as
necessary to maintain the operating standards of its Individual Property.
(x) Franchise Inspection Reports. Each Borrower shall deliver to
Lender, or cause the Consultant to deliver to Lender, a copy of each inspection
report of any Franchisor with respect to any Individual Property within five (5)
Business Days after such Borrowers' or Consultant's receipt thereof.
(y) Compliance with Franchise Agreements. Each Borrower shall
operate its Individual Property as a hotel open for business under the Franchise
Agreement, and shall perform all of its obligations under the Franchise
Agreement.
(z) Operations and Maintenance Programs. The Borrowers that own the
Individual Properties referred to on Schedule K annexed hereto shall cause such
Individual Properties to be operated and maintained in all material respects in
accordance with those certain operations and maintenance programs, approved by
the Environmental Consultant, listed on Schedule K and shall deliver an
Officer's Certificate to Lender within thirty (30) days of the Closing Date
stating that such Borrowers have instructed the relevant employees at such
Individual Property in compliance with such operations and maintenance program.
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(aa) Insuror's Letter. Borrowers shall deliver an updated Insuror's
Letter within ten (10) Business Days of any change in the premiums payable with
respect to the Policies.
(bb) Cash Management Agreement. Each Borrower shall comply with its
obligations under the Cash Management Agreement, including, without limitation,
that during any Operative Period, DSCR Restricted Period or Franchise Restricted
Period or if a receiver, liquidator or trustee shall be appointed for Servico,
Inc., Consultant or a Non-Borrower Participant (as defined in the Cash
Management Agreement) 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., Consultant or any Non-Borrower
Participant, Borrowers will cease to participate in the Cash Management
Agreement and shall reconcile in cash any underpayments or overpayments existing
at that time and that from the date of any such appointment or filing, Lender
may, by delivery of a Consultant's Notice, cause the Consultant to collect the
Revenue of each Individual Property and pay such Revenue over to Lender pursuant
to Section 2.7.1(c), to be allocated by Lender pursuant to Section 2.7.3 as if &
DSCR Restricted Period were then in effect, until such time aa Lender shall be
reasonably satisfied that Borrowers are no longer participating in the Cash
Management Agreement.
VI. NEGATIVE COVENANTS
Section 6.1 Borrowers' Negative Covenants.
From the date hereof until payment and performance in full of all
obligations of Borrowers under the Loan Documents or the earlier release of the
Liens of the Mortgage (and all related obligations) from all the Properties in
accordance with the terms of this Agreement and the other Loan Documents,
Borrowers covenant and agree with Lender that none of them will do, directly or
indirectly, any of the following:
(a) Operation of Properties. No Borrower shall, without the prior
consent of Lender, which consent shall not be unreasonably withheld or delayed,
amend, modify, terminate or extend, or consent to an assignment of Franchisor's
or Consultant's rights under, any Franchise Agreement or Consulting Agreement
relating to any Individual Property or otherwise replace any Franchisor or
Consultant of any Individual Property or enter into any other management or
franchise agreements with respect to any of the Properties. Notwithstanding the
foregoing, if any Franchise Agreement or the Westin William Penn Management
Agreement shall expire or be terminated, other than any termination by a
Borrower or on account of a Borrower's default thereunder, the applicable
Borrower shall enter into a new Franchise Agreement, in form and substance
reasonably
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satisfactory to Lender. During any Franchise Restricted Period, all Excess
Property Income for all the properties shall be deposited in the Central Account
and allocated as provided in Section 2.7.3(g), provided that if a Franchise
Restricted Period and a DSCR Restricted Period shall both be in effect with
respect to any period of time, such period will be deemed a DSCR Restricted
Period for the purposes of this Agreement and if a Franchise Restricted Period
and an Operative Period shall both be in effect with respect to any period of
time, such period of time shall be deemed an Operative Period for the purposes
of this Agreement. A "Franchise Restricted Period" shall mean any period of time
(i) commencing on the ninetieth (90th) day after the expiration or termination,
other than a termination by a Borrower or on account of a Borrower's default
thereunder, of any Franchise Agreement or of the Westin William Penn Management
Agreement and continuing until such Franchise Agreement or the Westin William
Penn Management Agreement shall have been replaced by a new Franchise Agreement
pursuant to the second preceding sentence or (ii) any period of time during
which three (3) or more of the Franchise Agreements and the Westin William Penn
Management Agreement shall have been expired or been terminated, other than a
termination by a Borrower or on account of a Borrower's default thereunder, and
shall not have been replaced by a new Franchise Agreement pursuant to the third
preceding sentence. It shall be an Event of Default hereunder if any Franchise
Restricted Period shall continue for more than ninety (90) days.
(b) Liens. No Borrower shall, without the prior written consent of
Lender, create, incur, assume or suffer to exist any Lien on any portion of any
of the Properties or permit any such action to be taken, except:
(i) Permitted Encumbrances; or
(ii) Liens for Impositions or Other Charges not yet due or which are
being contested in compliance with Section 5.1(b)
(c) Dissolution. No Borrower shall dissolve, terminate, liquidate,
merge with or consolidate into another Person.
(d) Chance In Business. No Borrower shall enter into any line of
business other than the ownership and operation of its Individual Property, or
make any material change in the scope or nature of its business objectives,
purposes or operations, or undertake or participate in activities other than the
continuance of its present business.
(e) Debt Cancellation. No Borrower shall cancel or otherwise forgive
or release any claim or debt (other than termination of Leases in accordance
herewith) owed to Borrower by
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any Person, except for adequate consideration and in the ordinary course of
Borrower's business.
(f) Affiliate Transactions. No Borrower shall enter into, or be a
party to, any transaction with an Affiliate of any Borrower or of any partner of
any Borrower except (a) under the Cash Management Agreement, (b) the Related
Consulting Agreement, (c) in the ordinary course of business and on terms which
are fully disclosed to Lender in advance and are no less favorable to such
Borrower or such Affiliate than would be obtained in a comparable arm's-length
transaction with an unrelated third party or (d) as may be otherwise expressly
provided for hereunder.
(g) Zoning. No Borrower shall initiate or consent to any zoning
reclassification of all or any portion of its Individual Property or seek any
variance under any existing zoning ordinance or use or permit the use of any
portion of any such Individual Property in any manner that could result in such
use becoming a non-conforming use under any zoning ordinance or any other
applicable land use law, rule or regulation, without the prior consent of
Lender.
(h) Assets. No Borrower shall purchase or own any properties other
than its Individual Property.
(i) Debt. No Borrower shall create, incur or assume any debt other
than the Indebtedness and other than unsecured, short-term trade indebtedness
incurred in the ordinary course of operating its Individual Property (including
financing of insurance premiums) and permitted Encumbrances.
(j) Misapplication of Funds. No Borrower shall, or permit any
Consultant to, (i) distribute any Revenue to any Borrower or any partners or
shareholders thereof either (A) in violation of the provisions of Section 2.7
hereof or (B) unless true and correct Consultant's Certifications as referred to
in Section 5.1(k) (iv) shall have been delivered for the most recent period for
which the same are due, or (ii) misappropriate any security deposit made under
any Lease or portion thereof.
(k) Cash Management Agreement. No Borrower shall amend, modify,
rescind or terminate the Cash Management Agreement, nor waive any rights of such
Borrower thereunder, provided that the addition or release of Affiliates as
parties thereto shall not be deemed an amendment thereof provided that any
Affiliate so withdrawing shall have repaid all advances made to it under such
Cash Management Agreement.
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VII. SPECIAL PROVISIONS
Section 7.1 Cooperation.
7.1.1 Cooperation. (a) Lender intends to make the Loan pursuant to
and in accordance with the Loan Documents and the Loan Purchaser intends to
purchase the Loan, in each case, prior to effecting any Securitization
Transaction. Borrowers and their Affiliates shall, at Lender's cost and expense,
including, without limitation, reasonable legal fees, cooperate in good faith
with the Lender, the Loan Purchaser, any Servicer and the Securities and
Exchange Commission in effecting such Securitization Transaction, including
obtaining Franchise Agreement Letters for the benefit of the Loan Purchaser, and
shall cooperate in good faith to implement all requirements imposed by the
Rating Agency or any rating agencies including, without limitation, changes to
the Loan and the Loan Documents occasioned by the Securitization Transaction and
all additional conditions imposed by such rating agencies in connection with any
rating of the Certificates, including, without limitation, delivery of opinions
of counsel acceptable to such Rating Agencies and addressing such matters as
such Rating Agencies may reasonably require; provided, however, that Borrowers
shall not act as a Depositor or issuer in connection with a Securitization
Transaction or be required to acquiesce in respect of material modifications to
the Loan or the Loan Documents, including, without limitation, any modifications
(whether material or not) relating to (i) the interest rate payable in respect
of the Loan, (ii) the Maturity Date, (iii) the amortization of the Loan, (iv)
the calculation of Yield Maintenance Premiums or the instances in which such
Yield Maintenance Premiums are applicable, (v) the limitations on recourse set
forth in the Loan Documents, (vi) the conditions for release of an Individual
Property set forth in Section 2.4 or (vii) the Cash Management Agreement.
(b) The Loan Purchaser, at its election, may determine to resell the
Loan or retain title to the Loan instead of implementing the Securitization
Transaction. In such event, Borrower shall cooperate in good faith with the Loan
Purchaser in connection with effecting any such resale or retention of the Loan.
7.1.2 Additional Financial Reporting Requirements.
Borrowers hereby agree that Borrowers and their Affiliates shall, at
Borrowers' cost and expense, execute and deliver all documentation and
statistical information as may be reasonably requested by Lender and take all
action deemed reasonably necessary or desirable by Lender, in both cases for the
implementation of the Securitization Transaction including, without limitation,
delivery of (i) audited financial statements fulfilling Securities and Exchange
Commission
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requirements as to form, content and period covered, (ii) consents of experts
fulfilling Securities and Exchange Commission requirements, (iii) other matters
as may be customary for offerings of securities similar to the Certificates,
(iv) the satisfaction of all reasonable Rating Agency requirements with respect
to documentation and statistical information and (v) all ongoing periodic
reporting requirements under the Securities Exchange Act of 1934, as amended,
arising out of the registration of the Certificates.
Section 7.2 Insurance; Casualty and Condemnation.
7.2.1 Insurance. (a) Each Borrower, at its sole cost and expense,
shall keep its Individual Property insured during the entire term of the Loan
for the mutual benefit of such Borrower and Lender on an "All Risk" basis,
including without limitation, insurance against loss or damage by fire and
against loss or damage by other risks and hazards covered by a standard extended
coverage policy, including, but not limited to, riot and civil commotion,
vandalism, malicious mischief, burglary and theft. Such insurance shall be in an
amount (i) equal to the then full replacement cost of the Improvements
(exclusive of footings and foundations) and Equipment, without deduction for
physical depreciation, and (ii) such that the insurer would not deem such
Borrower a co-insurer under said policies, provided that if such coverage is
provided under a blanket policy, such coverage may be provided through a "loss
limit" policy in the amount of not less than $100,000,000 per occurrence and not
in the aggregate (which amount may be increased, in Lender's reasonable
discretion, if the number of properties covered by such blanket policy is
increased after the Closing Date). The policies of insurance carried in
accordance with this Section shall be paid monthly or quarterly in advance and,
unless such policies shall be blanket policies pursuant to the preceding
sentence, shall contain the "Replacement Cost Endorsement with a waiver of
depreciation.
(b) Each Borrower, at its sole cost and expense, for the mutual
benefit of such Borrower and Lender, shall also obtain and maintain, or cause to
be maintained, during the entire term of the Loan the following policies of
insurance with respect to its Individual Property:
(i) flood insurance if any part of such Individual Property is
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 (and any amendment or
successor act thereto) in an amount at least equal to the lesser of the
Allocable Principal Balance attributable to such Individual Property or the
maximum limit of coverage available with respect to the Improvements and
Equipment under said Act, whichever is less;
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(ii) comprehensive public liability insurance in the amount of
$5,000,000 or such additional amount reasonably requested by Lender, including
broad form property damage, blanket contractual and personal injuries (including
death resulting therefrom) coverages;
(iii) business interruption insurance in an amount not less than the
Revenues projected by Lender for such Individual Property for a period of
twenty-four (24) months at one hundred percent (100%) occupancy, provided that
notwithstanding the foregoing, if the hazard insurance under paragraph (a) above
is provided under a "loss limit" blanket policy as permitted thereunder, such
business interruption insurance may be included in such policy, provided that
such insurance shall provide coverage for each Individual Property for the
actual loss of Cash Flow Available for Debt Service for such Individual Property
sustained due to the suspension of operations during the period of the
restoration of operations and continuing normal Operating Expenses incurred
during such period. The term "period of restoration" as used in this
subparagraph means the period of time (a) from the date of the applicable
Casualty until the date on which the Restoration of the Individual Property, if
prosecuted with reasonable diligence, should be completed and (b) from the date
on which the Restoration of such Individual Property is technically completed
until the earlier of (I) the date on which the business operations and condition
of the Individual Property should be restored to their status prior to such
Casualty, if pursued with reasonable diligence, and (II) the date which is sixty
(60) consecutive days after the actual completion of the Restoration;
(iv) insurance against loss or damage from leakage of sprinklers or
explosion of steam boilers, air conditioning equipment, high pressure piping,
machinery and equipment, pressure vessels or similar apparatus now or hereafter
installed on such Individual Property;
(v) Worker's compensation insurance with respect to any employees of
such Borrower or of Consultant employed at such Individual Property, as required
by Governmental Authorities, or Legal Requirements; and
(vi) such other or additional insurance as may from time to time be
reasonably required by Lender.
(c) All policies of insurance (the "Policies") required pursuant to
this Section 7.2.1: (i) shall be issued by an insurer rated "A" (or the
equivalent) by the Rating Agency and satisfactory to Lender, (ii) shall contain
the standard New York mortgagee non-contribution clause (or equivalent) naming
Lender as the person to whom all payments made by such insurance company,
relating to property losses, shall be paid (except with respect to (A) Equipment
subject to an Equipment Lease that requires insurance proceeds to be paid to the
lessor thereunder
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and (B) provided no Event of Default shall have occurred and be continuing,
refunds of premiums made as a result of policy audits), (iii) shall be
maintained throughout the term of this Agreement without cost to Lender, (iv)
shall contain a waiver of subrogation, (v) shall be delivered to Lender (or
Lender shall receive original certificates of insurance and certified copies of
all Policies), (vi) shall contain such provisions as Lender deems reasonably
necessary or desirable to protect its interest including, without limitation,
endorsements providing that neither Borrower, Lender nor any other party shall
be a co-insurer under said Policies and that Lender shall receive at least
thirty (30) days' prior written notice of any modification or cancellation,
except that Lender shall receive ten (10) days' prior written notice of any
cancellation for non-payment of any premium, and (vii) shall be reasonably
satisfactory to Lender and shall be approved by Lender as to amounts, form, risk
coverage, deductibles, loss payees, and insureds, which approval shall not be
unreasonably withheld or delayed. Borrowers shall pay the premiums for such
Policies as the same become due and payable. Not later than ten (10) days prior
to the expiration date of each of the Policies, Borrowers will deliver to Lender
satisfactory evidence of the renewal of each of the Policies. The Policies may
be part of a blanket policy only if (A) such blanket policy covers only
Individual Properties subject to the Mortgage (excluding, without limitation,
any Individual Property released from the Lien of the Mortgage pursuant to
Section 2.4) or (B) the provider of such blanket policy provides Borrowers and
Lender with a letter confirming that coverage for any Individual Property will
not be cancelled or reduced because of any matter relating to any property other
than the Properties.
(d) All insurers shall be authorized to issue insurance in the State
in which the applicable Individual Property is located.
(e) In the event Borrowers fail to provide, maintain, keep in force,
or deliver and furnish to Lender the Policies required hereunder, Lender may
procure such insurance as Lender shall deem appropriate, and Borrowers will
reimburse Lender for all premiums paid by Lender promptly upon demand by Lender,
together with interest thereon at the Default Rate from the date of demand. The
amounts advanced by Lender to pay for such insurance, together with such
interest thereon, shall be a part of the Indebtedness and secured by the
Mortgage.
(f) Borrowers shall pay, or cause to be paid, all premiums therefor
not later than the date due and shall submit to Lender, within three (3)
Business Days of the date such premium payment is due, other than with respect
to payments disbursed from the Basic Carrying Costs Sub-Account, a copy of each
check written in payment of such premiums or other evidence reasonably
satisfactory to Lender that such premium has been paid or, if such payment shall
be made by wire transfer, evidence of such transfer reasonably satisfactory to
Lender.
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7.2.2 Casualty and Restoration. (a) Borrowers shall give prompt
written notice to Lender of any damage to or destruction of all or any portion
of any Individual Property (any such event being herein referred to as a
"Casualty"). Provided that Lender shall make Insurance proceeds available
pursuant to Section 7.2.2(b), Borrowers shall promptly and diligently restore,
replace, rebuild and repair such Individual Property as nearly as possible to
the value and condition of such Individual Property immediately prior to such
Casualty (such restoration, replacement, rebuilding and repair is herein
referred to as the "Restoration"), regardless of whether Insurance Proceeds
shall be payable with respect to such Casualty or shall be sufficient to pay for
the Restoration. The plans and specifications and Permits for the Restoration
shall be submitted to Lender in advance and shall be reasonably satisfactory to
Lender in all respects. The Restoration shall be done in compliance with all
Legal Requirements, and the applicable Borrower shall carry builder's risk
insurance satisfactory to Lender in connection with the Restoration. Lender, its
agents and representatives shall have the right to inspect the Individual
Property to monitor the Restoration. All reasonable costs and expenses incurred
by Lender, its agents or representatives in connection with the Restoration,
including, without limitation, counsel fees and engineers fees incurred by
Lender in connection with the review of plans, specifications and Permits and
the monitoring of the Restoration, shall be paid by Borrowers. Upon completion
of the Restoration, the applicable Borrower shall deliver to Lender an Officer's
Certificate (or if the cost of such Restoration shall exceed $250,000, a
certificate of an Engineer) stating that (A) all materials installed and work
and labor performed in connection with the Restoration have been paid for in
full, (B) no mechanics' or other Liens on the applicable Individual Property
arising out of the Restoration exist which have not been bonded or otherwise
discharged of record, (C) the Restoration has been completed in compliance with
the plans and specifications submitted to Lender and all Legal Requirements and
(D) all Permits required for use of the Individual Property after the
Restoration have been obtained, together with such other evidence of the
foregoing as Lender may request.
(b) Lender may elect to make all or any portion of any Insurance
Proceeds received by Lender pursuant to Section 2.7.8(a) (after deducting out
Lender's cost of obtaining such Insurance Proceeds, including, without
limitation, reasonable attorneys' fees) available to pay the costs of the
Restoration, provided that Lender shall make such Insurance Proceeds (after
deducting Lender's cost as aforesaid) available to pay the costs of the
Restoration if (i) such Insurance Proceeds are paid to Lender prior to February
1, 2007, and (ii) (A) the Insurance Proceeds received with respect to any
Casualty (after deducting out such costs) shall not exceed fifty percent (50%)
of the fair market value for the Individual Property in question as set forth on
Schedule H annexed hereto or (B) such Insurance Proceeds (after deducting out
such costs) shall equal or exceed fifty
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percent (50%) of such fair market value for such Individual Property and the
ratio of (x) the Cash Flow Available for Debt Service for such Individual
Property for the twelve (12) month period ending with the last day of the last
full month prior to such Casualty for which Lender shall have received financial
reports for such Individual Property pursuant to Section 5.1(k) (iv) to (y) the
aggregate amount of payments of principal and interest that would be payable
over the twelve (12) months following the date of such Casualty in order to
amortize the current Allocable Principal Balance for such Individual Property,
with interest at the Interest Rate, over the period from the date of such
Casualty to the Maturity Date shall be at least equal to 1.53/1.0, unless, in
such case, Borrowers shall elect not to perform the Restoration (provided that
with respect to the Individual Property identified as the Hilton Head Holiday
Inn located on Hilton Head Island, South Carolina, Lender may elect to apply
such Insurance Proceeds as a prepayment of the principal balance of the Loan in
accordance with Section 2.7.8 unless Borrowers shall demonstrate to Lender's
reasonable satisfaction that Borrowers have obtained any zoning variations or
permits required to reconstruct such Individual Property to substantially its
configuration prior to such Casualty), and (iii) no Default or Event of Default
shall have occurred and be continuing and (iv) Borrowers shall have deposited
with Lender an amount equal to the difference between the cost of the
Restoration, as reasonably estimated by Lender, and the amount of Insurance
Proceeds to be made available by Lender to pay such costs. If such Insurance
Proceeds are less than $100,000, Lender shall pay such Insurance Proceeds over
to the Borrower in question upon receipt of an Officer's Certificate stating the
costs of such Restoration to which such Insurance Proceeds shall be applied. If
the Insurance Proceeds equal or exceed $100,000 and are to be made available to
pay the costs of the Restoration, such Insurance Proceeds shall be paid by
Lender to, or as directed by, the applicable Borrower, less retainage customary
in the area where such Individual Property is located, from time to time during
the course of the Restoration (but not more frequently than once per calendar
month), upon (x) receipt of a written request for such disbursement by the
applicable Borrower accompanied by an Officer's Certificate (or if the cost of
such Restoration shall exceed $250,000, a certificate of an Engineer) stating
that (l) all materials installed and work and labor performed to date (except to
the extent they are to be paid for out of the requested payment) in connection
with the Restoration have been paid for in full, and (2) no mechanics' or other
Liens on the applicable Individual Property arising out of the Restoration exist
which have not been bonded or otherwise discharged or released, together with
such other evidence of the foregoing as Lender may request and (y) compliance
with such other reasonable conditions as Lender may from time to time impose.
(c) Any amount of Insurance Proceeds which Lender does not elect, or
is not required, to make available to pay the costs
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of the Restoration, or which remains after payment of the costs of any
restoration or reconstruction, shall be applied as provided in Section 2.7.8(a)
7.2.3 Condemnation. (a) Borrowers shall promptly give Lender notice
of the actual or threatened commencement of any Condemnation proceeding relating
to any Individual Property and shall deliver to Lender copies of any and all
papers served in connection with such proceedings. Following any Condemnation of
less than all of an Individual Property, provided that Lender shall make
Condemnation Proceeds available pursuant to Section 7.2.3(b), Borrowers shall
promptly and diligently perform such restoration and reconstruction of the
affected Individual Property as is necessary to retain, as nearly as possible,
the economic value of such Individual Property, regardless of whether
Condemnation Proceeds payable with respect thereto shall be sufficient to pay
for such restoration and reconstruction. The plans and specifications and
Permits for such restoration and reconstruction shall be submitted to Lender in
advance and shall be reasonably satisfactory to Lender in all respects. Such
restoration and reconstruction shall be done in compliance with all Legal
Requirements, and the applicable Borrower shall carry builder's risk insurance
satisfactory to Lender in connection therewith. Lender, its agents and
representatives shall have the right to inspect the Individual Property to
monitor such restoration and reconstruction. All reasonable costs and expenses
incurred by Lender, its agents or representatives in connection with such
restoration and reconstruction, including, without limitation, counsel fees and
engineers fees incurred by Lender in connection with the review of plans,
specifications and Permits and the monitoring of such restoration and
reconstruction, shall be paid by Borrowers. Upon completion of such restoration
and reconstruction, the applicable Borrower shall deliver to Lender an Officer's
Certificate (or if the cost of such restoration and reconstruction shall exceed
$250,000, a certificate of an Engineer) stating that (A) all materials installed
and work and labor performed in connection with such restoration and
reconstruction have been paid for in full. (B) no mechanics' or other Liens on
the applicable Individual Property arising out of such restoration and
reconstruction exist which have not been bonded or otherwise discharged of
record, (C) such restoration and reconstruction have been completed in
compliance with the plans and specifications submitted to Lender and all Legal
Requirements and (D) all Permits required for use of the Individual Property
after such restoration and reconstruction have been obtained, together with such
other evidence of the foregoing as Lender may request.
(b) Any Condemnation Proceeds received by Lender (after deducting
out Lender's costs of obtaining such Condemnation Proceeds, including, without
limitation, reasonable attorneys' fees) may, in Lender's discretion, be either
retained and applied by Lender toward payment of the Loan or, at the discretion
of Lender be disbursed, either in whole or in part, to
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the applicable Borrower for such purposes and upon such conditions as Lender
shall designate, provided that Lender shall make such Condemnation Proceeds
(after deducting Lender's cost as aforesaid) available to pay the costs of such
restoration and reconstruction if (i) such Condemnation Proceeds (after
deducting out such costs) are paid to Lender prior to February 1, 2007, and (ii)
(A) the Condemnation Proceeds received with respect to any Condemnation shall
not exceed fifty percent (50%) of the fair market value for the Individual
Property in question as set forth on Schedule M, or (B) such Condemnation
Proceeds shall equal or exceed fifty percent (50%) of such fair market value for
such Individual Property and the ratio of (x) the Cash Flow Available for Debt
Service for such Individual Property for the twelve (12) month period ending
with the last day of the last full month prior to such Condemnation for which
Lender shall have received financial reports for such Individual Property
pursuant to Section 5.1(k) (iv) to (y) the aggregate amount of payments for
principal and interest that would be payable over the twelve (12) months
following the date of such Condemnation in order to amortize the current
Allocable Principal Balance for such Individual Property, with interest at the
Interest Rate, over the period from the date of such Condemnation to the
Maturity Date shall be at least equal to 1.53/1.0, unless in such case Borrowers
shall elect not to perform such restoration and construction, and (iii) the
remainder of the Individual Property is, in Lender's reasonable judgment,
susceptible to being restored or reconstructed to a satisfactory economic value,
and (iv) no Default or Event of Default shall have occurred and be continuing
and (v) Borrowers shall have deposited with Lender an amount equal to the
difference between the cost of such restoration and reconstruction, as
reasonably estimated by Lender, and the amount of Insurance Proceeds to be made
available by Lender to pay such costs. If such Condemnation Proceeds are less
than $100,000, Lender shall pay such Condemnation Proceeds over to the Borrower
in question upon receipt of an Officer's Certificate stating the costs of such
Restoration to which such Condemnation Proceeds shall be applied. If the
Condemnation Proceeds equal or exceed $100,000 and are to be made available to
pay the costs of such restoration and reconstruction, such Condemnation Proceeds
shall be paid by Lender to, or as directed by, the applicable Borrower, less
retainage customary in the area where such Individual Property is located, from
time to time during the course of such restoration and reconstruction (but not
more frequently than once per calendar month), upon (x) receipt of a written
request for such disbursement by the applicable Borrower accompanied by an
Officer's Certificate (or if the cost of such restoration and reconstruction
shall exceed $250,000, a certificate of an Engineer) stating that (1) all
materials installed and work and labor performed to date (except to the extent
they are to be paid for out of the requested payment) in connection with such
restoration and reconstruction have been paid for in full, and (2) no mechanics'
or other Liens on the applicable Individual Property arising out of such
restoration and reconstruction exist which have not been bonded or otherwise
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[ILLEGIBLE] charged or released, together with such other evidence of the
foregoing as Lender may request and (y) compliance with such other reasonable
conditions as Lender may from time to time impose.
(c) Any amount of Condemnation Proceeds that Lender does not elect,
or is not required, to make available to Borrowers, or that remains after
payment of the costs of any restoration or reconstruction, shall be applied as
provided in Section 2.7.8(b).
(d) Notwithstanding any Condemnation (including but not limited to
any transfer made in lieu of or in anticipation of the exercise of such taking),
Borrower shall continue to pay the Loan at the time and in the manner provided
for its payment in the Note and the Loan shall not be reduced until any
Condemnation Proceeds shall have been actually received and applied by Lender,
after the deduction of expenses of collection as provided above, to the
reduction of the Indebtedness, if permitted hereunder. 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. If the Individual Property subject to the Condemnation proceeding
is sold, through foreclosure or otherwise, prior to the receipt by Lender of
such Condemnation proceeds, Lender shall have the right, notwithstanding the
limitations on recourse under the Loan [ILLEGIBLE] and whether or not a
deficiency judgment on the Note shall have been sought, recovered, denied or
available hereunder, to receive said Condemnation proceeds, or a portion thereof
sufficient to pay the Indebtedness.
Section 7.3 Required Repairs.
Borrowers shall promptly commence and diligently continue the
Required Repairs at each Individual Property, provided that Long-Term Required
Repairs shall be commenced as may be reasonably required to permit the
completion thereof by the dates required pursuant to the following sentence. It
shall be an Event of default under this Agreement if Borrower does not complete
the Short-Term Required Repairs at each Individual Property by the first (1st)
anniversary of the Closing Date (except as set forth on Schedule E with respect
to certain Short-Term Required Repairs at the Individual Property identified on
Schedule D as the Holiday Inn Meadowlands located in Washington, Pennsylvania)
or, with respect to any Long-Term Required Repair by the first to occur of (a)
the fifth (5th) anniversary of the Closing Date or (b) the date by which such
Long-Term Required Repair may be required to be completed pursuant to any
applicable Franchise Agreement.
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Section 7.4 FF&E Replacements.
7.4.1 Performance of FF&E Replacements. (a) Borrowers shall make
FF&E Replacements when required by sound hotel management practices in order to
keep each Individual Property in condition and repair consistent with
requirements under the applicable Franchise Agreements and Borrowers' standards
and practices as of the Closing Date, but in any event not below prevailing
standards for hotel properties of similar age, size, construction and the
then-current franchise affiliation in the metropolitan area in which the
respective Individual Property is located, and to keep each Individual Property
from deteriorating. Borrowers 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.
(b) Upon Lender's request, Borrowers shall deliver copies of, and
assign to Lender any contract or subcontract relating to such FF&E Replacements.
(c) Borrowers shall permit Lender and Lender's agents and
representatives (including, without limitation, Lender's engineer, architect, or
inspector) to enter onto each Individual Property, upon reasonable prior notice,
during normal business hours (subject to the rights of tenants under their
leases) to inspect the progress of any FF&E Replacements and all material 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
Property. Borrowers shall cause all contractors and subcontractors to cooperate
with Lender and such agents and representatives in connection with such
inspections.
(d) In the event Lender determines, in its reasonable discretion,
that any FF&E Replacement is not being performed in a workmanlike or timely
manner or that any FF&E Replacement has not been completed in a workmanlike
manner and timely manner, Lender may elect to withhold disbursement under
Section 2.7.7(e) for such unsatisfactory FF&E Replacement and, if Borrowers have
failed to remedy any deficiencies in the performance of such FF&E Replacement
within fifteen (15) days after notice thereof by Lender, to proceed under
existing contracts or to contract with third parties to complete such FF&E
Replacement and to apply any funds in the FF&E Sub-Account toward the costs to
complete such FF&E Replacement, upon five (5) Business Days' prior written
notice.
(e) In order to facilitate Lender's making the FF&E Replacements
pursuant to subsection (d) above, Borrowers grant Lender the right to enter onto
any Individual Property and perform any and all work and acquire all materials
necessary to complete or make the FF&E Replacements and/or employ watchmen to
protect such Individual Property from damage. All sums so expended Lender shall
be deemed to have been advanced under
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the Loan to Borrowers and secured by the Mortgage encumbering such Individual
Property. For this purpose each Borrower 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 such Borrower pursuant to
subsection (d) above. Such power of attorney shall be deemed to be a power
coupled with an interest and cannot be revoked. Each Borrower empowers said
attorney-in-fact as follows: (i) to use any funds in the FF&E Sub-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 Property, or as
may be necessary or desirable for the completion of the FF&E Replacements; (v)
to execute all applications and certificates in the name of such Borrower which
may be required by any contract documents relating to such FF&E Replacements;
(vi) to prosecute and defend all actions or proceedings relating to the FF&E
Replacements in connection with any Individual Property; and (vii) to do any and
every act which such Borrower might do in its own behalf to fulfill the terms of
this Agreement relating to the FF&E Replacements.
(f) In addition to any other insurance required under the Loan
Documents, Borrowers 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 by Legal Requirements in connection with a
particular FF&E Replacement. All such policies shall be in form and amount
reasonably satisfactory to Lender.
(g) All FF&E Replacements shall be constructed, installed or
completed, as applicable, free and clear of all mechanic's; materialman's or
other Liens and in compliance with all Legal Requirements and all Insurance
Requirements.
(h) Nothing in this Section 7.4.1 nor the exercise by Lender of its
rights hereunder shall (i) require Lender to expend funds in addition to such
funds as may be on deposit from time to time in the FF&E Sub-Account to make or
complete any FF&E Replacements; (ii) obligate Lender to make or complete any
FF&E Replacements; (iii) obligate Lender to demand from Borrowers additional
sums to make or complete any FF&E Replacements; or (iv) be construed as
constituting Lender a "mortgagee in possession" of any Individual Property.
(i) It shall be an Event of Default under this Agreement if
Borrowers fail to comply with any provision of this Section 7.4.1. and such
failure is not cured within ten (10) days after notice from Lender or, if such
failure is not reasonably susceptible to cure within such ten (10) day period,
if Borrowers
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shall fail to commence to cure such failure within such ten (10) day period or
to complete such cure within such longer period, not to exceed sixty (60) days
or, if such cure shall require construction, one hundred eighty (180) days,
except as such 180-day period may be extended to the extent Borrowers' cure of
such failure is prevented by fire or other casualty, acts of God, strike or
other labor trouble of general application (but not a labor dispute directed
particularly at any Borrower or Borrowers) or similar event (excluding financial
difficulties of Borrower) beyond the control of Borrowers, as may be required to
complete the same with reasonable diligence.
7.4.2 Indemnification. Borrowers shall indemnify Lender and hold
Lender harmless from and against any and all actions, suits, claims, demands,
liabilities, losses, damages, obligations, 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, except for any
such actions, suits, claims, demands, liabilities, losses, damages, obligations,
costs and expenses arising solely out of the willful misconduct or gross
negligence of Lender. Borrowers shall assign to Lender all rights and claims
Borrowers 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.
Section 7.5 Inspections.
Without limiting any other rights provided to Lender under the Loan
Documents, Lender shall have the right to inspect each Individual Property, at
Borrowers' expense (a) once during any DSCR Restricted Period and (b) after
receipt of any report indicating that such Individual Property has failed an
inspection by the applicable Franchisor.
VIII. DEFAULTS
Section 8.1 Event of Default.
(a) Each of the following events occurring with respect to
Borrowers, any Borrower, the Properties or any Individual Property shall
constitute an "Event of Default" hereunder:
(i) if Borrowers fail to make any payment required to fund the Debt
Service Payment Sub-Account, the Basic Carrying Costs Sub-Account, the FF&E
Sub-Account and, during any Operative Period and any DSCR Restricted Period, the
Operations and Maintenance Expense Sub-Account, in full on any Due Date and such
failure continues for two (2) days, provided that if such grace
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period shall end on a day other than a Business Day, such grace period shall be
extended to the next Business Day;
(ii) if Borrowers fail to pay all or any portion of the principal
amount of the Loan on the Maturity Date;
(iii) if Borrowers fail to pay any amount (other than amounts that
may be referred to in clauses (i) and (ii) above) payable by Borrowers pursuant
to this Agreement or any other Loan Document when due and such failure continues
for five (5) days after Lender delivers written notice thereof to Borrowers,
provided that if such grace period shall end on a day other than a Business Day,
such grace period shall be extended to the next Business Day;
(iv) the continuation of any Franchise Restricted Period for ninety
(90) days;
(v) if any representation or warranty made by any Borrower herein or
in any other Loan Document, or in any report, certificate, financial statement
or other instrument, agreement or document furnished by Borrowers in connection
with this Agreement or any other Loan Document, shall be misleading in any
material respect as of the date representation or warranty was made and such
misleading respect shall not have been remedied within fifteen (15) days of the
earlier of discovery by Borrowers or written notice by Lender;
(vi) if any Borrower or any general partner of any Borrower shall
make an assignment for the benefit of creditors;
(vii) if a receiver, liquidator or trustee shall be appointed for
any Borrower or any general partner of any Borrower or if any Borrower or any
general partner of any Borrower 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, any Borrower or any general
partner of any Borrower, or if any proceeding for the dissolution or liquidation
of any Borrower or any general partner of any Borrower shall be instituted;
provided, however, if such appointment, adjudication, petition or proceeding was
involuntary and not consented to by such Borrower or such general partner, upon
the same not being discharged, stayed or dismissed within thirty (30) days, or
if any Borrower or any general partner of any Borrower shall generally not be
paying its debts as they become due;
(viii) if any Borrower attempts to (A) assign its respective rights
under this Agreement or any of the other Loan Documents or any interest herein
or therein or (B) transfer its Individual Property or any interest therein in
contravention of the Loan Documents;
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(ix) if any Borrower breaches any of its covenants contained in
Section 6.1 or any covenant contained in Section 4.l(dd) hereof and such breach
is not remedied within five (5) days of written notice by Lender;
(x) if an Event of Default as defined or described in the Note, the
Mortgage or any of the other Loan Documents occurs, whether as to any Borrower
or its Individual Property or as to Borrowers or all or any portion of the
Properties;
(xi) if Borrowers, or any Borrower shall continue to be in Default
under any of the other terms, covenants or conditions of this Agreement or any
other Loan Document, for ten (10) days after written notice from Lender, in the
case of any default which can be cured by the payment of a sum of money, or for
thirty (30) days after notice from Lender in the case of any other default;
provided, however, that if such non-monetary default is susceptible of cure but
cannot reasonably be cured within such 30-day period and provided further that
Borrowers shall have commenced to cure such default within such 30-day period
and thereafter diligently and expeditiously proceeds to cure the same, such
30-day period shall be extended for such time as is reasonably necessary for
Borrowers in the exercise of due diligence to cure such default, such additional
period not to exceed sixty (60) days or, if such cure shall require
construction, one hundred eighty (180) days, except as such 180-day period may
be extended to the extent Borrowers' cure of such default is prevented by fire
or other casualty, acts of God, strike or other labor trouble of general
application (but not a labor dispute directed particularly at any Borrower or
Borrowers) or similar event (excluding financial difficulties of Borrower)
beyond the control of Borrowers, as may be required to complete the same with
reasonable diligence;
(xii) if the Policies required to be procured and maintained by
Borrowers are not so procured and maintained in accordance with the terms
hereof; or
(xiii) if Borrowers shall fail to complete the Required Repairs as
required under Section 7.3
(b) Upon the occurrence of an Event of Default (other than an Event
of Default described in clauses (vi), (vii) or (viii) above) and at any time
thereafter the Lender may, in addition to any other rights or remedies available
to it pursuant to this Agreement and. the other Loan Documents or at law or in
equity, take such action, without notice or demand, that Lender deems advisable
to protect and enforce its rights against any one or more of the Borrowers and
in and to all or any of the Properties, including, without limitation, giving
notice to Borrowers that the Indebtedness is immediately due and payable, and
Lender may enforce or avail itself of any or all rights or remedies provided in
the Loan Documents against any one or more of the Borrowers and any or all of
the Properties, including,
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without limitation, all rights or remedies available at law or in equity. Upon
any Event of Default described in clauses (vi), (vii) or (viii) above, the
Indebtedness shall immediately and automatically become due and payable, without
notice or demand, and Borrowers hereby expressly waive any such notice or
demand, anything contained herein or in any other Loan Document to the contrary
notwithstanding.
Section 8.2 Remedies.
(a) Upon the occurrence of an Event of Default, all or any one or
more of the rights, powers, privileges and other remedies available to Lender
against Borrowers under this Agreement or any of the other Loan Documents or at
law or in equity may be exercised by Lender at any time and from time to time,
whether or not all or any of the Indebtedness shall be declared due and payable,
and whether or not Lender shall have commenced any foreclosure proceeding or
other action for the enforcement of its rights and remedies under any of the
Loan Documents with respect to all or any of the Individual Properties. Any such
actions taken by Lender shall be cumulative and concurrent and may be pursued
independently, singly, successively, together or otherwise, at such time and in
such order as Lender may determine in its sole discretion, to the fullest extent
permitted by law, without impairing or otherwise affecting the other rights and
remedies of Lender permitted by law, equity or contract or as set forth herein
or in the other Loan Documents.
(b) With respect to Borrowers and the Properties, nothing contained
herein or in any other Loan Document shall be construed as requiring Lender to
resort to any Individual Properties for the satisfaction of any of the
Indebtedness in preference or priority to any other such Individual Properties,
and Lender may seek satisfaction out of all such Individual Properties or any
part thereof, in its absolute discretion, in respect of the Indebtedness.
Section 8.3 Remedies Cumulative.
The rights, powers and remedies of Lender under this Agreement shall
be cumulative and not exclusive of any other right, power or remedy which Lender
may have against Borrower pursuant to this Agreement or the other Loan
Documents, or existing at law or in equity or otherwise. Lender's rights, powers
and remedies may be pursued singly, concurrently or otherwise, at such time and
in such order as Lender may determine in Lender's sole discretion. No delay or
omission to exercise any remedy, right or power accruing upon an Event of
Default shall impair any such remedy, right or power or shall be construed as a
waiver thereof, but any such remedy, right or power may be exercised from time
to time and as often as may be
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deemed expedient. A waiver of one default or Event of Default with respect to
any one or more of Borrowers shall not be construed to be a waiver of any such
default or Event of Default with respect to any other Borrowers or with respect
to any subsequent default or Event of Default by such Borrower or Borrowers or
any other Borrowers, or to impair any remedy, right or power consequent thereon.
IX. MISCELLANEOUS
Section 9.1 Survival.
This Agreement and all covenants, agreements, representations and
warranties made herein and in the certificates delivered pursuant hereto shall
survive the making by Lender of the Loan and the execution and delivery to
Lender of the Note, and shall continue in full force and effect so long as all
or any of the Indebtedness of Borrowers is outstanding and unpaid. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party. All covenants,
promises and agreements contained in this Agreement shall be binding upon, and
shall inure to the benefit of, Lender, together with its successors and assigns,
and Borrowers, together with their permitted successors and assigns.
Section 9.2 Lender's Discretion.
Whenever 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 whether arrangements or terms are satisfactory or not satisfactory shall
(except as is otherwise specifically herein provided) be in the sole discretion
of Lender and shall be final and conclusive.
Section 9.3 Governing Law.
(a) This Agreement was negotiated in the State of New York, and made
by Lender and accepted by Borrowers in the State of New York, and the proceeds
of the Note delivered pursuant hereto shall be disbursed from the State of New
York, which State the parties agree has a substantial relationship to the
parties and to the underlying transaction embodied hereby, and in all respects,
including, without limiting the generality of the foregoing, matters of
construction, validity and performance, this Agreement and the obligations
arising hereunder shall be governed by, and construed in accordance with, the
laws of the State of New York applicable to contracts made and performed in such
State and any applicable law of the United States of
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America, except that at all times the provisions for the creation, perfection,
and enforcement of the liens and security interests created pursuant hereto and
pursuant to the other Loan Documents shall be governed by and construed
according to the law of the State in which the applicable Individual Property is
located, it being understood that, to the fullest extent permitted by the law of
such State, the law of the State of New York shall govern the validity and the
enforceability of all Loan Documents and all of the Indebtedness or obligations
arising hereunder or thereunder. To the fullest extent permitted by law,
Borrowers hereby unconditionally and irrevocably waive any claim to assert that
the law of any other jurisdiction governs this Agreement and the Note, and this
Agreement and the Note shall be governed by and construed in accordance with the
laws of the State of New York pursuant to Section 5-1401 of the New York General
Obligations Law.
(b) Any suit, action or proceeding against Lender or any Borrower or
Borrowers arising out of or relating to this Agreement shall be instituted in
any federal or state court in New York, New York, pursuant to Section 5-1402 of
the New York General Obligations Law, or, at Lender's discretion, in any State
where any Individual Property is located, and each Borrower waives any objection
which it may now or hereafter have to the laying of venue of any such suit,
action or proceeding, and each Borrower hereby irrevocably submits to the
jurisdiction of any such court in any suit, action or proceeding. Borrowers do
hereby designate and appoint C.T. Corporation System, 1633 Broadway, New York,
New York 10019, as its authorized agent to accept and acknowledge on its behalf
service of any and all process which may be served in any such suit, action or
proceeding in any federal or state court in New York, New York, and agrees that
service of process upon said agent at said address and written notice of said
service of Borrowers mailed or delivered to Borrowers in the manner provided
herein shall be deemed in every respect effective service of process upon
Borrowers, in any such suit, action or proceeding in the State of New York.
Borrowers (i) shall give prompt notice to Lender of any changed address of its
authorized agent hereunder, (ii) may at any time and from time to time designate
a substitute authorized agent with an office in New York, New York (which office
shall be designated as the address for service of process), provided that all
Borrowers shall have the same authorized agent with the same address, and (iii)
shall promptly designate such a substitute if its authorized agent ceases to
have an office in New York, New York or is dissolved without leaving a
successor.
Section 9.4 Modification, Waiver in Writing.
No modification, amendment, extension, discharge, termination or
waiver of any provision of this Agreement, or of the Note, or of any other Loan
Document, nor consent to any
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departure by Borrowers therefrom, shall in any event be effective unless the
same shall be in a writing signed by the party against whom enforcement is
sought, and then any such waiver or consent shall be effective only in the
specific instance, and for the purpose, for which given. Except as otherwise
expressly provided herein, no notice to, or demand on Borrowers, shall entitle
Borrowers to any other or future notice or demand in the same, similar or other
circumstances.
Section 9.5 Delay Not a Waiver.
Neither any failure nor any delay on the part of Lender in insisting
upon strict performance of any term, condition, covenant or agreement, or
exercising any right, power, remedy or privilege hereunder, under the Note or
under any other Loan Document, or any other instrument given as security
therefor, shall operate as or constitute a waiver thereof, nor shall a single or
partial exercise thereof preclude any other future exercise, or the exercise of
any other right, power, remedy or privilege. In particular, and not by way of
limitation, by accepting payment after the date on which the same is due of any
amount payable under this Agreement, the Note or any other Loan Document, Lender
shall not be deemed to have waived any right either to require prompt payment
when due of all other amounts due under this Agreement, the Note or the other
Loan Documents, or to declare a default for failure to effect prompt payment of
any such other amount.
Section 9.6 Notices.
All notices, consents, approvals and requests required or permitted
hereunder or under any other Loan Document shall be given in writing and shall
be effective for all purposes if hand delivered or sent by (a) certified or
registered United States mail, postage prepaid, return receipt requested, or (b)
nationally recognized overnight delivery service, either commercial or United
States Postal Service, with proof of attempted delivery, addressed if to Lender
at its address set forth on the first page hereof, and if to Borrowers to
Borrowers' address set forth on the first page hereof, or at such other address
and person as shall be designated from time to time by any party hereto, as the
case may be, in a written notice to the other parties hereto in the manner
provided for in this Section. A copy of all notices, consents, approvals and
requests directed to Borrower shall be delivered to Stearns Weaver Miller
Weissler Alhadeff & Sitterson, P.A., 150 West Flagler Street, Suite 2200, Miami,
Florida 33130, Attention: Alison W. Miller, Esq. A notice shall be deemed to
have been given: in the case of hand delivery, at the time of delivery; in the
case of registered or certified mail, when delivered or upon the first attempted
delivery on a Business Day; or in the case of overnight delivery
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service, when delivered or upon the first attempted delivery on a Business Day.
Section 9.7 Trial by Jury.
EACH BORROWER, TO THE FULLEST EXTENT THAT IT MAY LAWFULLY DO SO,
WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING, INCLUDING, WITHOUT LIMITATION,
ANY TORT ACTION, BROUGHT BY ANY PARTY HERETO WITH RESPECT TO THIS AGREEMENT, THE
NOTE, OR THE OTHER LOAN DOCUMENTS.
Section 9.8 Headings.
The Article and/or Section headings and the Table of Contents in
this Agreement are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose.
Section 9.9 Successors and Assigns; Assignment.
This Agreement shall be binding upon and shall inure to the benefit
of each party hereto and their respective permitted successors and assigns.
Lender shall have the right, upon notice to Borrowers, to transfer, sell or
assign this Agreement and any of the other Loan Documents and the obligations
hereunder to any Person who purchases or otherwise acquires an interest in the
Loan.
Section 9.10 Severability.
Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
Section 9.11 Preferences.
Lender shall have the continuing and exclusive right to apply or
reverse and reapply any and all payments by Borrowers to any portion of the
obligations of Borrowers hereunder. To the extent Borrowers make a payment or
payments to Lender, which payment or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or
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proceeds received, the obligations hereunder or part thereof intended to be
satisfied shall be revived and continue in full force and effect, as if such
payment or proceeds had not been received by Lender.
Section 9.12 Waiver of Notice.
Borrowers shall not be entitled to any notices of any nature
whatsoever from Lender except with respect to matters for which (a) this
Agreement or the other Loan Documents specifically and expressly provide for the
giving of notice by Lender to Borrowers and (b) Borrowers are not, pursuant to
applicable law, permitted to waive the giving of notice. To the extent permitted
by Applicable Law, Borrowers hereby expressly waive the right to receive any
notice from Lender with respect to any matter for which this Agreement or the
other Loan Documents do not specifically and expressly provide for the giving of
notice by Lender to Borrowers.
Section 9.13 Intentionally Deleted.
Section 9.14 Expenses; Indemnity.
Borrowers covenant and agree to reimburse Lender upon receipt of
written notice from Lender for all reasonable costs and expenses (including
reasonable attorneys' fees and disbursements) incurred by Lender in connection
with (i) the negotiation, preparation, execution, delivery and administration of
any consents, amendments, waivers or other modifications to this Agreement and
the other Loan Documents and any other documents or matters requested by
Borrower; (ii) the filing and recording fees and expenses, title insurance and
other similar expenses incurred in creating and perfecting the Liens in favor of
Lender pursuant to this Agreement and the other Loan Documents; (iii) enforcing
or preserving any rights, in response to third party claims or the prosecuting
or defending of any action or proceeding or other litigation, in each case
against, under or affecting Borrowers, this Agreement, the other Loan Documents,
the Properties, or any other security given for the Loan; and (iv) enforcing any
obligations of or collecting any payments due from Borrowers under this
Agreement, the other Loan Documents or with respect to the Properties or in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a "work-out" or of any insolvency
or bankruptcy proceedings; provided, however, that Borrowers shall not be liable
for the payment of any such costs and expenses to the extent the same arise by
reason of the gross negligence, illegal acts, fraud or willful misconduct of
Lender.
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Section 9.15 Exhibits Incorporated.
The Exhibits and Schedules annexed hereto are hereby incorporated
herein as a part of this Agreement with the same effect as if set forth in the
body hereof.
Section 9.16 Offsets, Counterclaims and Defenses.
Any assignee of Lender's interest in and to this Agreement, the Note
and the other Loan Documents shall take the same free and clear of all offsets,
counterclaims or defenses which Borrowers may have against any assignor of such
documents that are unrelated to the Loan, and no such unrelated counterclaim or
defense shall be interposed or asserted by Borrowers in any action or proceeding
brought by any such assignee upon such documents and any such right to interpose
or assert any such unrelated offset, counterclaim or defense in any such action
or proceeding is hereby expressly waived by each Borrower.
Section 9.17 No Joint Venture or Partnership.
Borrowers and Lender intend that the relationships created hereunder
and under the other Loan Documents be solely that of borrower and lender.
Nothing herein or therein is intended to create a joint venture, partnership,
tenancy-in-common, or joint tenancy relationship between Borrowers and Lender
nor to grant Lender any interest in the Properties other than that of mortgagee
or lender.
Section 9.18 Publicity.
All news releases, publicity or advertising by Borrowers or their
Affiliates through any media intended to reach the general public which refers
to the Loan Documents or the Loan, to the Lender, the Loan Purchaser, the
Depositor, the Servicer or the Trustee shall be subject to the prior written
approval of Lender, provided that Lender shall have no right to prevent
Borrowers from making any news releases, filings or statements required by Legal
Requirements.
Section 9.19 Waiver of Marshalling of Assets.
To the fullest extent Borrowers may legally do so, each Borrower
waives all rights to a marshalling of the assets of such Borrower, such
Borrower's partners, if any, and others with interests in Borrower, and of such
Borrower's Individual Property, and to a marshalling of the assets of any other
Borrower, its partners or others with interests therein and of the other
Properties, or to a sale in inverse order of alienation in the event of
foreclosure of the interests hereby created, and
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agrees not to assert any right under any laws pertaining to the marshalling of
assets, the sale in inverse order of alienation, homestead exemption, the
administration of estates of decedents, or any other matters whatsoever to
defeat, reduce or affect the right of Lender under the Loan Documents to a sale
of the applicable Individual Properties for the collection of the Indebtedness
without any prior or different resort for collection, or the right of Lender or
any deed of trust trustee to the payment of the Indebtedness out of the net
proceeds of the Individual Property in preference to every other claimant
whatsoever.
Section 9.20 Waiver of Counterclaim.
Each Borrower hereby waives the right to assert a counterclaim,
other than a compulsory counterclaim, in any action or proceeding brought
against it by Lender or its agents, including, without limitation, any Servicer.
Section 9.21 Conflict; Construction of Documents.
In the event of any conflict between the provisions of this
Agreement and any of the other Loan Documents, the provisions of this Agreement
shall control. The parties hereto acknowledge that they were represented by
counsel in connection with the negotiation and drafting of the Loan Documents
and that such Loan Documents shall not be subject to the principle of construing
their meaning against the party which drafted same.
Section 9.22 Brokers and Financial Advisors.
Each Borrower hereby represents that it has dealt with no financial
advisors, brokers, underwriters, placement agents, agents or finders in
connection with the transactions contemplated by this Agreement other than the
Blackstone Group L.P. and Donaldson, Lufkin & Jenrette Securities Corporation,
which Borrower will pay pursuant to separate agreements. Each of Borrowers and
Lender hereby agree to indemnify and hold the other harmless from and against
any and all claims, liabilities, costs and expenses of any kind in any way
relating to or arising from a claim by any other Person that such Person acted
on behalf of the indemnifying party in connection with the transactions
contemplated herein. The provisions of this Section 9.22 shall survive the
expiration and termination of this Agreement and the repayment of the
Indebtedness.
Section 9.23 Prior Agreements.
This Agreement and the other Loan Documents contain the entire
agreement of the parties hereto and thereto in respect of the transactions
contemplated hereby and thereby, and all prior agreements among or between such
parties, whether oral or
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written, including, without limitation, the Commitment Letter dated July 19,
1994 between DLJ Mortgage Capital, Inc. and Servico, Inc., and those certain
supplemental letters dated August 19, 1994 and August 29, 1994 by DLJ Mortgage
Capital, Inc. to Servico Hotels & Resorts (together with any subsequent term
sheets, supplemental letters or amendments, the "Term Sheet") are superseded by
the terms of this Agreement and the other Loan Documents, except for the
provisions of Schedule I of the Term Sheet, as the same may be amended, which
shall survive the execution and delivery of this Agreement and the other Loan
Documents.
Section 9.24 Joint and Several.
The obligations and liabilities of Borrowers, and of each Borrower
hereunder, shall be joint and several.
Section 9.25 Appointment of Servicer.
Lender may appoint a Servicer to administer the Loan, which Servicer
shall have the power and authority to exercise all of the rights and remedies of
Lender and to act as agent of Lender hereunder and under the Note, the Mortgage
and the other Loan Documents. Upon receipt of notice of the appointment of
Servicer, Borrowers shall recognize Servicer as the agent of Lender and shall
make all payments and deliver all notices as directed by Servicer and accept all
notices from Servicer hereunder.
Section 9.26 Exculpation.
Notwithstanding any provision herein or in any of the Loan Documents
(other than the Environmental Indemnity) to the contrary, in any action brought
to enforce the obligations of Borrowers under the Note, this Agreement, the
Mortgage or the other Loan Documents (other than the Environmental Indemnity),
the judgment or decree shall be enforceable against Borrowers only to the extent
of their respective interests in the Properties and any other collateral given
to Lender to secure Borrowers' obligations hereunder, and any such judgment
shall not be subject to execution on, nor be a lien on, other assets of
Borrowers other than their respective interests in the Properties and any other
Collateral given to Lender to secure the Borrowers' obligations hereunder,
except as otherwise expressly provided hereinafter. The provisions of this
paragraph shall not, however, limit the liability of Borrowers for loss, costs
or damage arising out of the following matters: (i) any failure to apply the
Revenue of the Properties to pay the operating expenses of the Properties or to
fulfill the then current obligations of Borrowers under this Agreement, the
Note, the Mortgage or any other Loan Document; (ii) any misapplication of Loss
Proceeds, security deposits or trust funds in violation of applicable law or the
provisions of this Agreement, the Mortgage or any other Loan Document; (iii) any
collection of Rent for more than one
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month in advance of the time when the same becomes due; (iv) failure to pay all
Impositions prior to the date on which such payments become delinquent (subject
to Lender's obligation to make disbursements from the Basic Carrying Costs
Sub-Account); (v) any willful misrepresentation by any Borrower (or any
constituent partner or shareholder of any Borrower) in connection with
Borrowers' application, negotiation or documentation of the Loan; or (vi) a
fraudulent conveyance or a fraudulent transfer of the Properties or any part
thereof or any other properties or assets of any Borrower; (vii) any material
misrepresentation or breach of warranty or covenant made by any Borrower under
the Environmental Indemnity. Nothing herein shall be deemed (w) to be a waiver
of any right which Lender may have under any bankruptcy law of the United States
or of any State in which any part of the Properties are located to file a claim
for the full amount of the Loan or to require that all of the Properties and any
other collateral securing the Loan shall continue to secure all of the
Indebtedness; (x) to impair the validity of the Indebtedness; (y) to impair the
right of Lender as mortgagee or secured party to foreclose any Lien or (z)
impair the right of Lender to obtain the Recourse Distributions received by
Borrowers, including, without limitation, the right to proceed against any
constituent partner or shareholder of any Borrower to the extent any such
Recourse Distribution has actually theretofore been distributed to such
constituent partner or shareholder. The provisions of this Section 9.26 shall be
inapplicable to any Borrower if any petition for bankruptcy, reorganization or
arrangement pursuant to federal or state law shall be filed by, consented to or
acquiesced in by or with respect to such Borrower or if such Borrower shall
institute any proceeding for the dissolution or liquidation of such Borrower or
if such Borrower shall make an assignment for the benefit of creditors, in which
event Lender shall have recourse against all of the assets of such Borrower and
the Recourse Distributions received by the constituent partners and shareholders
of such Borrower. For purposes of this Section 9.26, the term "Recourse
Distributions" shall mean the Revenue arising from the Properties to the extent
received by any Borrower (or actually received by any partner or shareholder of
any Borrower if not actually received by any Borrower) after the occurrence and
written notice (including any Consultant's Notice) of an Event of Default.
Section 9.27 Arizona Interest.
Borrowers agree that, for the purposes of Arizona law, the effective
rate of interest shall be the Interest Rate stated in the Note plus any
additional rate of interest resulting from any other charges in the nature of
interest paid or to be paid in connection with this Loan Agreement, the Note and
the other Loan Documents. All fees, charges, goods and things in action or any
other sums or things of value, other than the interest resulting from the
Interest Rate and the Default Rate, as applicable, paid or payable by Maker
(collectively, the "Additional Sums"),
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whether pursuant to this Loan Agreement, the Note, the Loan Documents or any
other document or instrument in any way pertaining to this lending transaction,
or otherwise with respect to this lending transaction, shall, for the purpose of
any laws of the State of Arizona that may limit the maximum amount of interest
to be charged with respect to the Loan transaction, be payable by the Borrowers
as, and shall be deemed to be, additional interest, and for such purposes only,
the agreed upon and "contracted for rate of interest" of the Loan shall be
deemed to be increased by the rate of interest resulting from the Additional
Sums. Borrowers understand and believe that the Loan complies with the usury
laws of the State of Arizona; however, for the purposes of Arizona law, if any
interest or other charges in connection with this lending transaction are ever
determined to exceed the maximum amount permitted by law, then Borrowers agree
that (a) the amount of interest or charges payable pursuant to this lending
transaction shall be reduced to the maximum amount permitted by law and (b) any
excess amount previously collected from Borrower in connection with this lending
transaction that exceeded the maximum amount permitted by law, will be credited
against the principal balance then outstanding hereunder as provided in the
Note. If the outstanding principal balance hereunder has been paid in full, the
excess amount paid will be refunded to Borrower.
-90-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their duly authorized representatives, all as of the day and
year first above written.
LENDER:
COLUMN FINANCIAL, INC.
By: /s/ Kieran P. Quinn
-----------------------------------
Name: KIERAN P. QUINN
Title: Vice President & COO
BORROWERS:
SERVICO FORT WAYNE, INC.,
a Florida corporation
By: /s/ David Buddemeyer
-----------------------------------
David Buddemeyer, President
WASHINGTON MOTEL ENTERPRISES, INC.,
a Pennsylvania corporation
By: /s/ David Buddemeyer
-----------------------------------
David Buddemeyer, President
SERVICO HOTELS III, INC., a Florida
corporation
By: /s/ David Buddemeyer
-----------------------------------
David Buddemeyer, President
SERVICO HOTELS IV, INC., a Florida
corporation
By: /s/ David Buddemeyer
-----------------------------------
David Buddemeyer, President
-91-
<PAGE>
NEW ORLEANS AIRPORT MOTEL
ASSOCIATES, LTD. a Florida limited
partnership
By New Orleans Airport Motel
Enterprises, Inc., a Louisiana
corporation
By: /s/ David Buddemeyer
-------------------------------
David Buddemeyer
President
WILPEN, INC., a Pennsylvania
corporation
By: /s/ David Buddemeyer
-----------------------------------
Name: David Buddemeyer, President
HILTON HEAD MOTEL ENTERPRISES,
INC., a South Carolina corporation
By: /s/ David Buddemeyer
-----------------------------------
Name: David Buddemeyer, President
SERVICO HOTELS I, INC., a Florida
corporation
By: /s/ David Buddemeyer
-----------------------------------
Name: David Buddemeyer, President
SERVICO HOTELS II, INC., a Florida
corporation
By: /s/ David Buddemeyer
-----------------------------------
Name: David Buddemeyer, President
MOON AIRPORT MOTEL, INC.,
a Pennsylvania corporation
By: /s/ David Buddemeyer
-----------------------------------
Name: David Buddemeyer, President
-92-
<PAGE>
Exhibit 10.10.2
PROMISSORY NOTE
U.S. $60,500,000 Executed and Delivered
in the City of
New York, New York
As of January 31, 1995
1. FOR VALUE RECEIVED, the undersigned parties, having an address at
Servico Centre South , 1601 Belvedere Road, West Palm Beach, Florida 33406
(each, a "Maker" and collectively, "Makers"), promise to pay to the order of
COLUMN FINANCIAL, INC., a Delaware corporation, having an office at 3414
Peachtree Road, N.E., Suite 1140, Atlanta, Georgia 30326-1113, or its successors
or assigns (collectively, the "Payee"), the principal sum of SIXTY MILLION FIVE
HUNDRED THOUSAND Dollars ($60,500,000), in lawful money of the United States of
America with interest thereon from the date of this Note at the Interest Rate
(hereinafter defined).
2. The interest rate (the "Interest Rate") shall be Ten and
59/100ths (10.59%) percent per annum. Interest on the principal sum of this Note
shall be calculated on the basis of a 360 day year consisting of twelve (12)
months of thirty (30) days each. However, interest due and payable for a period
of less than a full calendar month shall be calculated by multiplying the actual
number of days elapsed in such period by a daily rate based on a 360-day year.
3. Makers shall make (a) a payment of interest only in the amount of
Four Hundred Sixty Two Thousand Seven Hundred Twenty Four and 17/100ths Dollars
($462,724.17) on March 1, 1995 and (b) thereafter monthly payments of principal
and interest on the unpaid principal balance, payable in arrears, in the amount
of Six Hundred Seven Thousand Six Hundred Eighty One and 78/100ths Dollars
($607,681.78) on the first Business Day (as hereinafter defined) of each
calendar month (the "Due Date"). The unpaid principal sum and all interest
thereon and all other sums and fees then payable under this Note shall be due
and payable on the first Business Day of March, 2010 (the "Maturity Date"). All
payments under this Note shall be paid directly into the Central Account (as
defined in the Loan Agreement (as hereinafter defined)) by wire transfer of
immediately available funds to:
<PAGE>
The First National Bank of Chicago
Chicago, Illinois
ABA #071000013
Credit Clearing A/C No. BNF=7521-7623/DES
Ref: 192023932/LSU
or to such other designated bank or place, or in such other manner, as Payee may
reasonably specify in writing from time to time. The term "Business Day" shall
mean any day other than a Saturday, Sunday or any other day on which national
banks in New York, New York are not open for business.
4. The whole of the principal sum of this Note, together with all
interest accrued and unpaid thereon, and all other sums and fees payable
hereunder and under the Loan Agreement, the Mortgage (as hereinafter defined)
and the other Loan Documents (as defined in the Loan Agreement) (such amounts
hereinafter collectively referred to as the "Indebtedness") shall become
immediately due and payable at the option of Payee on the happening of any Event
of Default (as defined in the Loan Agreement), subject to Section 8.1(b) of the
Loan Agreement.
5. (a) The outstanding principal balance of this Note may not be
prepaid, in whole or in part, on or prior to the fourth anniversary of the date
hereof (the "Lock-Out Date"), except in connection with the application by
Lender of (i) any Loss Proceeds (as defined in the Loan Agreement) to the
principal amount of the Indebtedness pursuant to Section 2.7.8 of the Loan
Agreement, including any payments made with respect to a release of any
Individual Property (as defined in the Loan Agreement) from the lien of the
Mortgage pursuant to Section 2.7.8(d) of the Loan Agreement in connection with
such application of Loss Proceeds, (ii) any amounts on deposit in the Capital
Expenditure Sub-Account to the Indebtedness during any DSCR Restricted Period or
Franchise Restricted Period (as such terms are defined in the Loan Agreement)
pursuant to Section 2.7.7(f) of the Loan Agreement, (iii) any amounts on deposit
in the Curtailment Reserve Fund Sub-Account to the Indebtedness during any
Operative Period (as such terms are defined in the Loan Agreement) pursuant to
Section 2.7.7(g) of the Loan Agreement and (iv) any prepayments of the
outstanding principal amount of the Indebtedness made pursuant to the Mortgage
:r. connection with a change in control of Servico, Inc. After the Lock-Out
Date, and provided that no Event of Default shall have occurred and be
continuing under the Loan Documents, Makers may, on any Due Date, upon not less
than thirty (30) days prior written notice to Payee, prepay the principal amount
of the Indebtedness, in whole or in part, by wire transfer to the Central
Account as provided in Paragraph 3 above of (A) the portion of the principal
amount of the Indebtedness to be prepaid, (B) interest accrued and unpaid on the
outstanding principal balance of the Indebtedness to and including the date of
such prepayment, (C) the Yield Maintenance Premium, if any, payable with respect
to such
-2-
<PAGE>
prepayment, and (D) any other amounts which have accrued and are owing under the
Loan Documents through the date of such prepayment. Each notice of a voluntary
prepayment of all or any portion of the principal amount of the Indebtedness
shall specify (I) the prepayment date, (II) the amount of such prepayment and
the amount of interest thereon and other amounts to be delivered in connection
therewith, (III) the amount of the Yield Maintenance Premium believed by Makers
to be payable in connection with such prepayment, and (IV) whether Makers intend
to obtain a release of the Mortgage encumbering any Individual Property in
connection with such prepayment. The amount of the Yield Maintenance Premium,
interest and other amounts payable in connection with any prepayment shall be
subject to confirmation by Payee.
(b) The term "Yield Maintenance Premium" shall mean an amount to be
paid to Payee upon the prepayment of the Indebtedness in whole or in part at any
time before the first Due Date (the "l0th Anniversary Due Date") following the
tenth (l0th) anniversary of the date hereof for any reason, whether said
prepayment is made voluntarily or involuntarily or before, upon or after the
acceleration of the Indebtedness by Payee following the occurrence of an Event
of Default (provided, however, that no Yield Maintenance Premium shall be
payable in connection with any prepayment made as a result of Lender's
application to the Indebtedness of Loss Proceeds pursuant to Section 2.7.8 of
the Loan Agreement or of amounts on deposit in the Capital Expenditure
Sub-Account pursuant to Section 2.7.7(f) (ii) of the Loan Agreement), which
amount shall be equal to the greater of: (i) (A) with respect to a prepayment
made prior to the first Due Date (the "5th Anniversary Due Date") following the
fifth (5th) anniversary of the date hereof, two percent (2%) or (B) with respect
to a prepayment made on or after the 5th Anniversary Due Date but before the
10th Anniversary Due Date, one percent (1%) of the portion of the principal
balance of the Loan being prepaid, or (ii) the product of (A) the excess, if
any, of (I) the present value (as determined by discounting at a rate equal to
(y) the Treasury Constant Maturity Yield Index published during the second full
week preceding the date on which such Yield Maintenance Premium is payable for
instruments having maturity coterminous with the remaining term of this Note
plus (z) fifty (50) basis points) of the stream of payments of principal and
interest that would be made on the Indebtedness if such prepayment of principal
were not made, including any payment due on the Maturity Date, over (II) the
principal balance of the Indebtedness immediately prior to such prepayment,
multiplied by (B) a fraction of which the numerator is the amount of principal
so prepaid and the denominator is the principal balance immediately prior to
such prepayment. The determination of the Yield Maintenance Premium shall be
made by Payee and shall, absent manifest error, be final, conclusive and binding
upon all parties. The term "Treasury Constant Maturity Yield Index" shall mean
the average yield for "This Week" as reported by the Federal
-3-
<PAGE>
Reserve Board in Federal Reserve Statistical Release H.15(519). If there is no
Treasury Constant Maturity Yield Index for instruments having a maturity
coterminous with the remaining term of this Note, then the index referred to in
clause (ii) (A) (I) above shall be equal to the weighted average yield to
maturity of the Treasury Constant Maturity Yield Indices with maturities next
longer and shorter than the remaining term of the Note, calculated by averaging
(and rounding upward to the nearest whole multiple of 1/100 of 1% per annum, if
the average is not such a multiple) the yields of the relevant Treasury Constant
Maturity Yield Indices (rounded, if necessary, to the nearest 1/100 of 1%, with
any figure of 1/200 of 1% or above rounded upward).
6. Makers agree that (a) if any amount payable under this Note, the
Loan Agreement or any other Loan Document is not paid within the grace period
provided with respect to such payment under Section 8.1 of the Loan Agreement
or, if no grace period is provided thereunder with respect to such payment, on
the date on which such payment is due, whether by acceleration or otherwise,
Makers shall pay interest at the Default Rate (as hereinafter defined) with
respect to such amount, upon demand from time to time, to the extent permitted
by applicable law, from the date such amount was due until such amount has been
paid by Makers and (b) upon the occurrence of any Event of Default, Payee shall
have the option, upon three (3) Business Days' notice given to Makers, of
increasing the rate of interest on the entire unpaid principal balance of this
Note (provided, however, that such rate of interest shall be increased
automatically and without notice for all such amounts as hereinafter provided,
upon the occurrence of any of the events set forth in Section 8.1(a) (vi), (vii)
and (viii) of the Loan Agreement), effective from the date of Makers' initial
default with respect to such Event of Default without allowance for any
applicable notice and/or grace period, to the Default Rate. The term "Default
Rate" shall mean a rate of interest equal to the greater of (a) fifteen percent
(15%) per annum or (b) 500 basis points above the "Prime Rate" published in The
Wall Street Journal as of the date notice is sent to Makers, which interest
Makers agree to pay and which interest shall be secured by the Mortgage. For
purposes of the foregoing, if more than one Prime Rate is published in The Wall
Street Journal for the applicable day, the average of the Prime Rates shall be
used. The Prime Rate (or the average of Prime Rates) will be rounded up to the
nearest one-fourth of one percent. In the event that The Wall Street Journal
should cease or temporarily interrupt publication, then the Prime Rate shall
mean the daily average prime rate published in another business newspaper, or
business section of a newspaper, of national standing chosen by Payee. In the
event that a prime rate is no longer generally published or is limited,
regulated or administered by a governmental or quasi-governmental body, then
Payee shall select a comparable interest rate index which is readily available
and verifiable to Makers but is beyond Payee's control. This substitute index
will also be rounded up to the
-4-
<PAGE>
nearest one-fourth of one percent. Notwithstanding the foregoing, if the unpaid
principal sum or any other amount required to be paid on the Maturity Date or
upon acceleration of the Indebtedness is not paid when due, then interest shall
thereafter be computed and paid at the Default Rate without notice to Maker. The
preceding sentence shall not be construed as an agreement or privilege to extend
the date of the payment of the Indebtedness, nor as a waiver of any other right
or remedy accruing to Payee by reason of the occurrence of an Event of Default.
7. This Note is given to evidence a loan (the "Loan") by Payee to
Makers pursuant to that certain Loan Agreement dated the date hereof (the "Loan
Agreement") between Payee and Makers and is secured by, among other things,
those certain Mortgages, Security Agreements and Assignments of Leases and
Rents, Leasehold Mortgage, Security Agreement and Assignment of Leases and Rents
and Deeds of Trust, Security Agreements and Assignments of Leases and Rents,
(collectively, the "Mortgage") dated the date hereof given by Makers to Payee
covering ten (10) certain premises more particularly described in the Mortgage.
8. Notwithstanding any provision herein, the total liability for
payments in the nature of interest hereunder shall not exceed the applicable
limits imposed by any applicable State or Federal interest rate laws. If any
payments in the nature of interest, additional interest, and other charges made
hereunder are held to be in excess of the applicable limits imposed by any
applicable State or Federal laws, the amount held to be in excess of such limits
shall be considered payment of principal and the Indebtedness shall be reduced
by such amount of principal in the inverse order of maturity so that the total
liability for payments in the nature of interest, additional interest and other
charges shall not exceed the applicable limits imposed by any applicable State
or Federal interest rate laws. For the purposes of calculating the actual amount
of interest, additional interest and other amounts paid and/or payable
hereunder, in respect of laws pertaining to usury or such other laws, all sums
paid or agreed to be paid to the holder hereof for the use, forbearance or
detention of the Indebtedness outstanding from time to time shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread from
the date of disbursement of the proceeds of this Note until payment in full of
all of the Indebtedness, so that the actual rate of interest on account of the
Indebtedness is uniform through the term hereof. The terms and provisions of
this Paragraph 8 shall control and supersede every other provision of all
agreements between Makers or any endorser and Payee.
9. If any monthly principal and interest payment or any other
amounts payable under this Note, the Mortgage, the Loan Agreement or the other
Loan Documents is not paid in full within the grace period provided with respect
to such payment under
-5-
<PAGE>
Section 8.1 of the Loan Agreement or, if no grace period is provided thereunder
with respect to such payment, on the date on which such payment is due, then a
late charge equal to the lesser of five percent (5%) of such unpaid amount, or
the maximum amount permitted by applicable law (the "Late Payment Charge") shall
be deemed to be immediately assessed and shall be immediately due and payable.
Such Late Payment Charge shall automatically become due to Payee without notice
and shall be paid to defray the expenses incurred by Payee in handling and
processing such delinquent payment, and to compensate Payee for the loss of the
use of such delinquent payment, and such amount shall be secured by the
Mortgage. Such charges shall be in addition to interest at the Default Rate and
all other rights and remedies available to Payee upon the occurrence of an Event
of Default or a default under this Note, the Mortgage, the Loan Agreement or the
other Loan Documents.
10. Notwithstanding any provision herein or in any of the Loan
Documents (other than the Environmental indemnity (as defined in the Loan
Agreement)) to the contrary, Payee shall not enforce the obligations contained
in this Note, the Loan Agreement, the Mortgage or the other Loan Documents by
any action or proceeding wherein a money judgment shall be sought against any
Maker except that Payee may bring a foreclosure action, an action for specific
performance or any other appropriate action or proceeding to enable Payee to
realize upon the Mortgaged Property (as defined in the Mortgage) and any other
collateral given to Payee to secure the Indebtedness, including, without
limitation, any action to obtain a deficiency judgment against any Maker or
Makers, provided that such deficiency judgment shall be enforced only against
the Mortgaged Property and such other collateral, except as otherwise expressly
provided hereinafter. The provisions of this Paragraph 10 shall not, however,
limit the liability of Makers for loss, costs or damage arising out of the
following matters: (i) any failure to apply the Revenue (as defined in the Loan
Agreement) of the Mortgaged Property to pay the operating expenses of the
Mortgaged Property or to fulfill the then current obligations of Makers under
this Note, the Loan Agreement, the Mortgage or any other Loan Document; (ii) any
misapplication of Loss Proceeds (as defined in the Loan Agreement), security
deposits or trust funds in violation of applicable law or the provisions of the
Loan Agreement or any other Loan Document; (iii) any collection of rent for more
than one month in advance of the time when the same becomes due; (iv) failure to
pay all real estate taxes and assessments prior to the date on which such
payments become delinquent (subject to Lender's obligation to make disbursements
from the Basic Carrying Costs Sub-Account (as defined in the Loan Agreement));
(v) any willful misrepresentation by any Maker (or any constituent partner or
shareholder of any Maker) in connection with Makers' application, negotiation or
documentation of the Loan; (vi) a fraudulent conveyance or a fraudulent transfer
of the Mortgaged Property or any part thereof or any other properties or assets
of
-6-
<PAGE>
any Maker; or (vii) any material misrepresentation or breach of warranty or
covenant made by any Maker under the Environmental Indemnity. Nothing herein
shall be deemed (w) to be a waiver of any right which Payee may have under any
bankruptcy law of the United States or of any State in which any part of the
Mortgaged Property is located to file a claim for the full amount of the Loan or
to require that all of the Mortgaged Property and any other collateral given to
secure the Loan shall continue to secure all of the Indebtedness; (x) to impair
the validity of the Indebtedness; (y) to impair the right of Payee as mortgagee
or secured party to foreclose any lien or security interest or (z) impair the
right of Payee to obtain the Recourse Distributions received by Makers,
including, without limitation, the right to proceed against any constituent
partner or shareholder of any Maker to the extent any such Recourse Distribution
has actually theretofore been distributed to such constituent partner or
shareholder. The provisions of this Paragraph 10 shall be inapplicable to any
Maker if any petition for bankruptcy, reorganization or arrangement pursuant to
federal or state law shall be filed by, consented to or acquiesced in by or with
respect to such Maker or if such Maker shall institute any proceeding for the
dissolution or liquidation of such Maker or if such Maker shall make an
assignment for the benefit of creditors, in which event Payee shall have
recourse against all of the assets of such Maker and the Recourse Distributions
received by the constituent partners and shareholders of such Maker. For
purposes of this Paragraph 10, the term "Recourse Distributions" shall mean the
Revenues arising from the Mortgaged Property to the extent received by any Maker
(or actually received by any partner or shareholder of any Maker if not actually
received by any Maker) after the occurrence and written notice (including any
Consultant's Notice (as defined in the Loan Agreement)) of an Event of Default.
11. This Note may not be modified, amended, waived, extended,
changed, discharged or terminated orally or by any act or failure to act on the
part of Makers or Payee, 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. Any such written waiver or consent
shall be effective only in the specific instance, and for the purpose, for which
given. Except as otherwise expressly provided herein, no notice to, or demand
on, Makers shall entitle Makers to any other or future notice or demand in the
same, similar or other circumstances.
12. The obligations and liabilities of Makers and each Maker
hereunder shall be joint and several.
13. Each Maker and all other persons or parties who may become
liable for the payment of all or any part of the Indebtedness does hereby
expressly and unconditionally waive (a) presentment and demand for payment,
notice of dishonor, protest,
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<PAGE>
notice of protest and non-payment and notice of any kind, including, without
limitation, any notice of intention to accelerate and notice of acceleration,
except as expressly provided herein, and (b) in connection with any suit, action
or proceeding brought by Payee on this Note, any and every right it may have to
(i) interpose any counterclaim therein (other than a counterclaim which can only
be asserted in the suit, action or proceeding brought by Payee on this Note and
cannot be maintained in a separate action) and (ii) have the same consolidated
with any other or separate suit, action or proceeding. Except as provided in the
Loan Agreement, no release of any security for the Indebtedness or extension of
time for payment of this Note or any installment hereof, and no alteration,
amendment or waiver of any provision of this Note, the Mortgage, the Loan
Agreement or any other Loan Document made by agreement between Payee and any
such other person or party shall release, discharge, modify, change or affect
the liability of Makers, and any other person who may become liable for the
payment of all or any part of the Indebtedness, under any other provision of
this Note or the Mortgage. EACH MAKER WAIVES THE RIGHT TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING OF ANY KIND ARISING OUT OF OR RELATING TO THIS NOTE OR THE
INTERPRETATION, BREACH OR ENFORCEMENT HEREOF.
14. In the event that it should become necessary to employ counsel
to collect the Indebtedness or to protect or foreclose the security hereof, or
pursue its rights under the Loan Documents, Maker agrees to pay reasonable
attorneys' fees for the services and disbursements of such counsel whether or
not suit be brought.
15. All of the terms, covenants and conditions contained in the Loan
Agreement, the Mortgage and all other Loan Documents are hereby made part of
this Note to the same extent and with the same force as if they were fully set
forth herein.
16. (a) This Note was negotiated in New York, and executed and
delivered by Makers and accepted by Payee in the State of New York, and the
proceeds of the Note delivered pursuant hereto were disbursed from New York,
which State the parties agree has a substantial relationship to the parties and
to the underlying transaction embodied hereby, and in all respects, including,
without limiting the generality of the foregoing, matters of construction,
validity and performance, this Note and the obligations arising hereunder shall
be governed by, and construed in accordance with, the laws of the State of New
York applicable to contracts made and performed in such State and any applicable
law of the United States of America, except that at all times the provisions for
the creation, perfection, and enforcement of the liens and security interests
created pursuant to the Loan Agreement, the Mortgage and the other Loan
Documents shall be governed by and construed according to the law of the State
in which the applicable Individual Property (as defined in the Loan Agreement)
is located, it being understood
-8-
<PAGE>
that, to the fullest extent permitted by law of such State, the law of the State
of New York shall govern the validity and the enforceability of all Loan
Documents, and the Indebtedness or obligations arising hereunder or thereunder.
To the fullest extent permitted by law, each Maker hereby unconditionally and
irrevocably waives any claim to assert that the law of any other jurisdiction
governs this Note and the Loan Agreement and this Note and the Loan Agreement
shall be governed by and construed in accordance with the laws of the State of
New York pursuant to 5-1401 of the New York General Obligations Law.
(b) Any suit, action or proceeding against Makers or Payee arising
out of or relating to this Note shall be instituted in any federal or state
court in New York, New York, pursuant to 5-1402 of the New York General
Obligations Law, or, at Payee's discretion, in any state where the Mortgaged
Property is located and each Maker waives any objection which it may now or
hereafter have to the laying of venue of any such suit, action or proceeding,
and each Maker hereby irrevocably submits to the jurisdiction of any such court
in any suit, action or proceeding. Makers do hereby designate and appoint C.T.
Corporation System, 1633 Broadway, New York, New York 10019, as their authorized
agent to accept and acknowledge on their behalf service of any and all process
which may be served in any such suit, action or proceeding in any federal or
state court in New York, New York, and agree that service of process upon said
agent at said address and written notice of said service of Makers mailed or
delivered to Makers in the manner provided in the Mortgage, shall be deemed in
every respect effective service of process upon Makers, in any such suit, action
or proceeding in the State of New York. Makers (i) shall give prompt notice to
the Payee of any changed address of their authorized agent hereunder, (ii) may
at any time and from time to time designate a substitute authorized agent with
an office in New York, New York (which office shall be designated as the address
for service of process), provided that all Makers shall have the same authorized
agent with the same address and (iii) shall promptly designate such a substitute
if its authorized agent ceases to have an office in New York, New York or is
dissolved without leaving a successor.
17. Wherever possible, each provision of this Note shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Note shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Note.
-9-
<PAGE>
IN WITNESS WHEREOF, Maker has duly executed this Note the day and
year first above written.
BORROWERS:
HILTON HEAD MOTEL ENTERPRISES,
INC., a South Carolina corporation
By: David Buddemeyer
-----------------------------------------
David Buddemeyer, President
SERVICO HOTELS I, INC., a Florida
corporation
By: David Buddemeyer
-----------------------------------------
David Buddemeyer, President
SERVICO HOTELS II, INC., a Florida
corporation
By: David Buddemeyer
-----------------------------------------
David Buddemeyer, President
MOON AIRPORT MOTEL, INC.,
a Pennsylvania corporation
By: David Buddemeyer
-----------------------------------------
David Buddemeyer, President
SERVICO FORT WAYNE, INC., a Florida
corporation
By: David Buddemeyer
-----------------------------------------
David Buddemeyer, President
-10-
<PAGE>
WASHINGTON MOTEL ENTERPRISES, INC.,
a Pennsylvania corporation
By: /s/ David Buddemeyer
-----------------------------------------
David Buddemeyer, President
SERVICO HOTELS III, INC., a Florida
corporation
By: /s/ David Buddemeyer
-----------------------------------------
David Buddemeyer, President
SERVICO HOTELS IV, INC., a Florida
corporation
By: /s/ David Buddemeyer
-----------------------------------------
David Buddemeyer, President
NEW ORLEANS AIRPORT MOTEL ASSOCIATES, LTD.,
a Florida limited partnership
By New Orleans Airport Motel Enterprises,
Inc., a Louisiana corporation
By: /s/ David Buddemeyer
-----------------------------------------
David Buddemeyer, President
WILPEN, INC.,
a Pennsylvania corporation
By: /s/ David Buddemeyer
-----------------------------------------
David Buddemeyer, President
-11-
<PAGE>
Exhibit 10.11.1
LOAN AGREEMENT
Dated as of June 29, 1995
By and Between
EAST WASHINGTON HOSPITALITY LIMITED PARTNERSHIP,
a Florida limited partnership,
as Borrower
AND
COLUMN FINANCIAL, INC., a Delaware corporation,
as Lender
<PAGE>
TABLE OF CONTENTS
Page
----
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1 Definitions ....................................
Section 1.2 Principles of Construction .....................
II. GENERAL TERMS ....................................................
Section 2.1 Loan Commitment; Disbursement to Borrower ......
2.1.1 The Loan .......................................
2.1.2 Disbursement to Borrower .......................
2.1.3 The Note .......................................
Section 2.2 Use of Proceeds ................................
Section 2.3 Loan Repayment and Prepayments; ................
Refinancing Debt Service .....................
Coverage Ratio; Extensions ...................
2.3.1 Repayment; Refinancings ........................
2.3.2 Prepayments ....................................
2.3.3 Pro Forma Debt Service .........................
Coverage Ratio ...............................
2.3.4 Extensions .....................................
Section 2.4 Interest .......................................
2.4.1 Generally ......................................
2.4.2 Default Rate; Post-Maturity
Interest .....................................
Section 2.5 Payments; Computations .........................
2.5.1 Making of Payments .............................
2.5.2 Computations ...................................
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Page
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2.5.3 Late Payment Charge ............................
2.5.4 Application of Payments ........................
Section 2.6 Central Account; Deposits
and Distributions ............................
2.6.1 Deposits in Central Account ....................
2.6.2 Establishment of Central
Account and Sub-Accounts .....................
2.6.3 Funding of Basic Sub-Accounts ..................
2.6.4 Deposits During Operative Period
and DSCR Restricted Period ...................
2.6.5 Eligible Investments ...........................
2.6.6 Interest on Accounts ...........................
2.6.7 Payment of Debt Service; Disbursement
of Funds in Basic Sub-Accounts;
Excess Property Income .......................
2.6.8 Payment of Loss Proceeds;
Borrower's Right to Release ..................
III. CONDITIONS PRECEDENT .............................................
Section 3.1 Conditions Precedent to
Closing ......................................
IV. REPRESENTATIONS AND WARRANTIES
Section 4.1 Borrower's Representations .....................
Section 4.2 Survival of Representations ....................
V. AFFIRMATIVE COVENANTS ............................................
Section 5.1 Borrower's Covenants ...........................
VI. NEGATIVE COVENANTS ...............................................
Section 6.1 Borrower's Negative
Covenants ....................................
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Page
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VII. SPECIAL PROVISIONS
Section 7.1 Cooperation ...................................
7.1.1 Cooperation ...................................
7.1.2 Additional Financial Reporting ................
Requirements ................................
Section 7.2 Insurance; Casualty and
Condemnation ................................
7.2.1 Insurance .....................................
7.2.2 Casualty and Restoration ......................
7.2.3 Condemnation ..................................
Section 7.3 Required Repairs ..............................
Section 7.4 FF&E Replacements .............................
7.4.1 Performance of FF&E Replacements ..............
7.4.2 Additional Replacements .......................
7.4.3 Indemnification ...............................
Section 7.5 Inspections ...................................
VIII. DEFAULTS ........................................................
Section 8.1 Event of Default ..............................
Section 8.2 Remedies ......................................
Section 8.3 Remedies Cumulative ...........................
IX. MISCELLANEOUS ...................................................
Section 9.1 Survival ......................................
Section 9.2 Lender's Discretion ...........................
Section 9.3 Governing Law .................................
Section 9.4 Modification, Waiver in
Writing .....................................
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Page
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Section 9.5 Delay Not a Waiver .............................
Section 9.6 Notices ........................................
Section 9.7 Trial by Jury ..................................
Section 9.8 Headings .......................................
Section 9.9 Successors and Assigns;
Assignment ...................................
Section 9.10 Severability ...................................
Section 9.11 Preferences ....................................
Section 9.12 Waiver of Notice ...............................
Section 9.13 Expenses; Indemnity ............................
Section 9.14 Exhibits Incorporated ..........................
Section 9.15 Offsets, Counterclaims and
Defenses .....................................
Section 9.16 No Joint Venture or
Partnership ..................................
Section 9.17 Publicity ......................................
Section 9.18 Waiver of Marshalling of
Assets .......................................
Section 9.19 Waiver of Counterclaim .........................
Section 9.20 Conflict; Construction of
Documents ....................................
Section 9.21 Brokers and Financial
Advisors .....................................
Section 9.22 Prior Agreements ...............................
Section 9.23 Appointment of Servicer ........................
Section 9.24 Exculpation ....................................
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<PAGE>
SCHEDULES
Schedule A - Legal Description
Schedule B - Franchisor and Franchise Agreement
Schedule C - Required Repairs
Schedule D - FF&E Replacements
Schedule E - Permits
Schedule F - Equipment Leases
Schedule G - Leases
Schedule H - Form of Operating Statement
Schedule I - Operations and Maintenance Programs
Schedule J - Litigation
Schedule K - Fair Market Value
-v-
<PAGE>
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of June 29, 1995, by and between
COLUMN FINANCIAL, INC., having an address at 3414 Peachtree Road, Suite 1140,
Atlanta, Georgia 30326-1113, Attention: Robert A. Barnes, Esq., together with
its successors and assigns, including, without limitation, the Loan Purchaser,
as lender ("Lender"), and EAST WASHINGTON HOSPITALITY LIMITED PARTNERSHIP, a
Florida limited partnership, having an address at Servico Centre South, 1601
Belvedere Road, West Palm Beach, Florida 33406, Attention: Chief Executive
Officer, as borrower ("Borrower").
All capitalized terms used herein shall have the respective meanings
set forth in Section 1 hereof.
W I T N E S S E T H :
WHEREAS, Borrower desire to obtain the Loan from Lender;
WHEREAS, Lender is willing to make the Loan to Borrower, subject to
and in accordance with the terms of this Agreement and the other Loan Documents;
WHEREAS, Lender's interest in the Loan may be purchased by the Loan
Purchaser on or after the Closing Date; and
WHEREAS, Borrower consents to the transfer described in the
preceding Recital.
NOW, THEREFORE, in consideration of the covenants, agreements,
representations and warranties set forth in this Agreement, and other good and
valuable consideration, the parties hereto hereby covenant, agree, represent and
warrant as follows:
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1 Definitions.
For all purposes of this Agreement, except as otherwise expressly
required or unless the context clearly indicates a contrary intent:
<PAGE>
"Accountant's Certificate" shall have the meaning set forth in
Section 2.6.7(d) (i).
"Accountant's Certificate Default" shall have the meaning set forth
in Section 2.7.7(e) (ii).
"Affiliate" shall mean, as to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by or is under common
control with such Person or is a director or officer of such Person or of an
Affiliate of such Person.
"Agreement" shall mean this Loan Agreement, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.
"ALTA" shall mean American Land Title Association, or any successor
thereto.
"Annual Operating Budget" shall mean, with respect to the Property,
an annual operating budget, showing all projected items of Revenue and Operating
Expenses, prepared on an accrual basis in accordance with GAAP and certified by
Borrower.
"Assignment of Leases" shall mean that certain first priority
Assignment of Leases, Rents and Revenues, dated as of the date hereof, from
Borrower, as assignor, to Lender, as assignee, with respect to the Property,
assigning to Lender all of Borrower's interest in and to the Leases, the Rents
and the Revenue of the Property as security for the Loan, as such Assignment of
Leases may be amended, restated, replaced, supplemented or otherwise modified
from time to time.
"Assignment of Consulting Agreement" shall mean, that certain first
priority Assignment and Subordination of Management Agreement, dated the date
hereof from Borrower and Consultant with respect to the Property, assigning to
Lender all of Borrower's interest in and to the Consulting Agreement with
respect to the Property as security for the Loan and subordinating, pursuant to
its terms, such Consulting Agreement and any Lien or rights created thereunder
to the Lien and to the terms, covenants and provisions of the Loan Documents, as
such Assignment of Consulting Agreement may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
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<PAGE>
"Bank" shall mean First National Bank of Chicago and any other
financial institution subsequently selected by Lender.
"Basic Carrying Costs" shall mean (a) with respect to the Property,
the sum of the following costs for the relevant Fiscal Year or payment period:
(i) Impositions with respect to the Property and (ii) insurance premiums for the
Policies with respect to the Property.
"Basic Carrying Costs Monthly Installment" shall mean an amount
equal to (i) one-twelfth (1/12) of an amount estimated by Lender to be necessary
to pay the Impositions for the Property payable during the next ensuing twelve
(12) months, giving effect to any amount deposited in the Basic Carrying Costs
Sub-Account on the Closing Date and (ii) during any Operative Period, DSCR
Restricted Period and Franchise Restricted Period, one-twelfth (1/12) of an
amount estimated by Lender to be necessary to pay the premiums on the Policies
for the Property due during the next ensuing twelve (12) months for the renewal
of the coverage afforded by the Policies upon the expiration thereof. In the
event any of the Policies is a blanket policy insuring risks other than those
associated with the Property, the amount set forth in (ii) above shall be the
premium that would be payable to continue such policy in effect for just the
Property, as set forth in the Insuror's Letter.
"Basic Carrying Costs Sub-Account" shall mean the sub-account of the
Central Account established and maintained pursuant to Section 2.6.2 to provide
for payment of Basic Carrying Costs for the Property.
"Basic Sub-Accounts" shall have the meaning specified in Section
2.6.2.
"Borrower" shall have the meaning specified in the first Paragraph
hereof. Any reference to "Borrower", "any Borrower" or "the applicable
Borrower", or any similar reference shall be deemed to refer to Borrower.
"Borrower Material Adverse Effect" shall have the meaning specified
in Section 4.1(a).
"Borrower's Accountant" shall mean Ernst & Young, L.L.P. or any
other Independent firm of certified public accountants approved by Lender, which
approval shall not be unreasonably withheld or delayed.
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<PAGE>
"Building Evaluation Reports" shall mean those certain Building
Evaluation Reports prepared by the Engineer and delivered to Lender in
connection with the Loan.
"Business Day" shall mean any day other than a Saturday, Sunday or
any other day on which national banks in New York are not open for business.
"Capital Expenditures Budget" shall mean, with respect to the
Property, an annual budget, prepared on an accrual basis in accordance with GAAP
and certified by Borrower, showing all proposed capital expenditures.
"Capital Expenditure Sub-Account" shall mean a sub-account of the
Central Account established pursuant to Section 2.6.2 hereof for the purpose of
holding certain Excess Property Income during any DSCR Restricted Period or any
Franchise Restricted Period.
"Cash Flow Available for Debt Service" shall mean, with respect to
the Property with respect to any period, the excess of (a) the Revenue for such
period, determined on an accrual basis, less (b) the Operating Expenses for the
same period, including, for the purposes of calculating Cash Flow Available for
Debt Service, all FF&E Installments calculated with respect to the Revenues for
such period or, with respect to any period prior to the Closing Date, FF&E
Installments that would have been calculated with respect to such period if this
Agreement had been in effect.
"Casualty" shall have the meaning specified in Section 7.2.2(a).
"Central Account" shall mean such Eligible Account maintained by
Lender at the Bank, in the name of Lender or its successors or assigns (as
secured party), as shall be designated by Lender.
"Certificate" shall mean any certificate evidencing interests in the
Loan issued pursuant to the Trust and Servicing Agreement.
"Certificateholder" shall mean the holder of a Certificate.
"Closing Date" shall mean the date of the closing of the Loan.
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<PAGE>
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
as it may be further amended from time to time, any successor statutes thereto,
and applicable U.S. Department or Treasury regulations issued pursuant thereto
in temporary or final form.
"Collateral Security Documents" shall mean any right, document or
instrument given as security for the Note, including, without limitation, the
Mortgage, the Assignment of Leases and the Assignment of Consulting Agreement,
as the same may be amended, restated, replaced, supplemented or otherwise
modified from time to time.
"Commitment" shall have the meaning specified in Section 2.3.1
hereof.
"Condemnation" shall mean any temporary or permanent taking of all
or any part of any Property, or interest therein or right or use thereof, as a
result of, any proceeding in condemnation or eminent domain.
"Condemnation Proceeds" shall have the meaning specified in Section
2.6.8(b) hereof.
"Consultant" shall mean Servico Management Corp., a Florida
corporation, and its permitted successors and assigns.
"Consultant Control Change" shall have the meaning specified in
Section 5.1(j).
"Consultant Control Notice" shall have the meaning specified in
Section 5.1(j).
"Consultant's Certifications" shall mean those certifications
required to be delivered by Consultant under Section 5.1(k) (iv).
"Consultant's Notice" shall have the meaning specified in Section
2.6.1.
"Consulting Agreement" shall mean that certain Hotel Operating
Agreement dated June 29, 1995 between Servico Management Corp. and Borrower, as
assigned to Consultant.
"Curtailment Reserve Fund Sub-Account" shall mean the sub-account of
the Central Account established and maintained
-5-
<PAGE>
pursuant to Section 2.6.2 hereof during the Operative Period for the purpose of
holding certain Excess Property Income.
"Debt Service" shall mean, with respect to any particular period of
time, scheduled principal and interest payments under the Note.
"Debt Service Payment Sub-Account" shall mean the sub-account of the
Central Account established and maintained pursuant to Section 2.6.2 hereof for
the purposes of making Debt Service payments.
"Deed of Trust" shall mean, with respect to the Property, that
certain first priority Deed of Trust, Security Agreement and Assignment of
Leases and Rents executed and delivered by Borrower as security for the Loan and
encumbering the Property, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
"Default Rate" shall have the meaning specified in the Note.
"Depositor" shall mean the entity described as such in the Trust and
Servicing Agreement, and its successors and assigns.
"DSCR Determination Date" shall mean each January 1, April 1, July 1
and October 1, commencing on October 1, 1995.
"DSCR Restricted Period" shall have the meaning specified in Section
2.3.3 hereof.
"Due Date" shall mean the first Business Day of each calendar month.
"Eligible Account" shall mean a segregated account held by and at
the Bank or an account that is either: (a) maintained with 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 such holding company) have been rated by the Rating Agency in one
of its two highest rating categories or the short-term commercial paper of which
is rated by the Rating Agency in its highest rating category at the time of any
deposit therein; or (b) a trust account or accounts maintained with a federal or
state chartered depository institution or trust
-6-
<PAGE>
company with trust powers acting in its fiduciary capacity, provided that any
such state chartered institution or trust company shall be subject to
regulations or has established internal guidelines regarding fiduciary funds on
deposit substantially similar to federal regulation 12 C.F.R. ss. 910 (b). The
title of each Eligible Account shall indicate that funds held therein are held
in trust for the uses and purposes set forth herein.
"Eligible Investments" shall mean any one or more of the following
acquired at a purchase price of not greater than par:
(a) direct obligations of, or obligations fully
guaranteed as to payment of principal and interest by, the United
States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United
States of America;
(b) fully FDIC-insured demand and time deposits; and
(c) interests in money market or common trust funds
which as of the date of acquisition of the interest in such fund has
been approved for investment by trust funds securing obligations
rated AAAm or AAAm-G by Standards & Poor's Ratings Group, Inc. and
P-1 by Moody's Corporation.
"Engineer" shall mean RTKL Associates, Inc., which is acknowledged
by Lender and Borrower to be an Independent Person, or any other Independent
engineer or engineering firm reasonably approved by Lender.
"Engineering Escrow Sub-Account" shall mean a sub-account of the
Central Account established pursuant to Section 2.6.2 hereof, for the purpose of
holding funds to pay for the Required Repairs.
"Environmental Consultant" shall mean Eckland Consultants, Inc. or
any other Independent environmental consulting firm reasonably approved by
Lender.
"Environmental Indemnity" shall mean the certain Environmental
Indemnity Agreement of even date herewith, by
-7-
<PAGE>
Borrower in favor of Lender with respect to environmental conditions on the
Property, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
"Equipment" shall have the meaning specified in the Mortgage with
respect to the Property.
"Equipment Lease" shall mean a lease or other financing arrangement
with respect to any furniture, fixtures and equipment (including, without
limitation, any motor vehicle) used in the operation of the Property.
"Event of Default" shall have the meaning specified in Section 8.1.
"Excess Property Income" shall mean the amounts available in the
Central Account during any Operative Period, any DSCR Restricted Period or any
Franchise Restricted Period after the allocations under clauses (a) through (e),
inclusive, of Section 2.6.3 have been made.
"FF&E Monthly Installment" shall mean a payment on each Due Date in
an amount equal to the sum of the product for each of the Property of (a) the
Revenue of the Property for the calendar month prior to the calendar month
immediately preceding the Due Date in question and (b) four percent (4.0%).
"FF&E Replacements" shall have the meaning specified in Section
2.6.7(e).
"FF&E Sub-Account" shall mean a sub-account of the Central Account
established pursuant to Section 2.6.2 hereof for the purpose of holding reserves
to fund FF&E Replacements.
"Fiscal Year" shall mean that period beginning on the first Friday
after the last Thursday in December of each year and ending on the last Thursday
in December, which Fiscal Year shall be composed of four (4) quarters composed
of thirteen (13) weeks each.
"Franchise Agreement" shall mean that certain franchise agreement
more specifically identified on Schedule B annexed hereto, and any other
Franchise Agreement entered into by a Borrower with respect to the Property with
the consent of Lender in accordance with the terms hereof.
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<PAGE>
"Franchise Agreement Letter" shall mean that certain Letter
Agreement by Borrower and Franchisor in favor of Lender, with respect to the
Property, establishing Lender's rights with respect to the Franchise Agreement,
as such Franchise Agreement Letter may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
"Franchise Restricted Period" shall have the meaning specified in
Section 6.1(a).
"Franchisor" shall mean, with respect to the Property, which is
subject to a Franchise Agreement, the franchisor with respect thereto, as same
are identified on Schedule B annexed hereto or any replacement franchisor
approved by Lender pursuant to the Assignment of Franchise Agreement.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as of the date of the applicable financial report.
"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.
"Ground Lease" shall mean that certain ground lease more
specifically identified on Schedule A annexed hereto.
"Impositions" shall mean all real estate and personal property taxes
and all other taxes, levies, assessments and other similar charges, general and
special, ordinary and extraordinary, foreseen and unforeseen, of every kind and
nature whatsoever, which at any time prior to, at or after the execution hereof
may be assessed, levied or imposed by, in each case, a Governmental Authority
upon the Property or the Revenue or the ownership, use, occupancy or enjoyment
thereof, and any interest, costs or penalties with respect to any of the
foregoing, provided that water, sewer and utility charges not be deemed to be an
Imposition.
"Improvements" shall have the meaning specified in the Mortgage with
respect to the Property.
"Indebtedness" shall mean the indebtedness in the original principal
amount set forth in, and evidenced by, the
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<PAGE>
Note, together with all other obligations and liabilities of Borrower due or to
become due to Lender pursuant to the Note, this Agreement or any other Loan
Document, including, without limitation, all interest thereon and all Yield
Maintenance Premiums due in connection therewith.
"Independent" means, when used with respect to any Person, a Person
who (i) is in fact independent, (ii) does not have any direct financial interest
or any material indirect financial interest in Borrower, or in any Affiliate of
Borrower or any constituent partner, shareholder, member or beneficiary of
Borrower, and (iii) is not connected with Borrower or any Affiliate of Borrower
or any constituent partner, shareholder, member or beneficiary of Borrower as an
officer, employee, promoter, underwriter, trustee, partner, director or person
performing similar functions. In each instance where the opinion or certificate
of an Independent Person is required in order to comply with any of the
provisions hereof, the opinion or certificate so supplied shall include a
statement that the individual executing the same has read this definition and
that the Person supplying such opinion or certificate is Independent within the
meaning hereof.
"Independent Director" shall have the meaning specified in Section
4.1(dd)(xv).
"Insurance Proceeds" shall have the meaning specified in Section
2.6.8(a).
"Insurance Requirements" shall mean, with respect to the each
Property, all material terms of any insurance policy required pursuant to this
Agreement or the related Loan Documents, all material requirements of the issuer
of any such policy, and all material regulations and then current standards
applicable to or affecting the Property or any part thereof or any use or
condition thereof, which may, at any time, be recommended by the state insurance
commissioner or other state regulatory body, if any, having jurisdiction over
the Property, or such other body exercising similar functions.
"Insuror's Letter" shall mean a letter provided by the issuer of the
Policies setting forth, with respect to any such Policy that is a blanket policy
covering risks other than those associated with the Property, the annual premium
that would be required to keep such Policies in effect for just the Property and
making the statement required pursuant to clause (B) of the
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<PAGE>
final sentence of Section 7.2.1(c), as such letter shall be updated from time to
time as the amounts of the premiums for the Policies shall change.
"Interest Rate" shall have the meaning specified in the Note.
"Late Payment Charge" shall have the meaning specified in the Note.
"Lease" shall mean any lease, or, to the extent of the interest
therein of Borrower, any sublease or subsublease, letting, license, concession
or other agreement (whether written or oral and whether now or hereafter in
effect) pursuant to which any person is granted a possessory interest in, or
right to use or occupy all or any portion of any space in the Property, and
every modification, amendment or other agreement relating thereto and every
guarantee of the performance and observance of the covenants, conditions and
agreements to be performed and observed thereunder, excluding, however, the
Ground Lease and any occupancy of hotel rooms by guests in the ordinary course
of business.
"Legal Requirements" shall mean all federal, state, county,
municipal and other governmental statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions of Governmental Authorities to
which the Property or any part thereof or the construction, use, alteration or
operation thereof, or any part thereof, is subject, including, without
limitations, all zoning, land use, building, and environmental statutes, laws,
codes, resolutions and ordinances, whether now or hereafter enacted and in
force, and all permits, licenses, variances and authorizations and regulations
relating thereto, and all covenants, agreements, restrictions and encumbrances
contained in any instruments, either of record or known to Borrower, at any time
in force affecting the Property or any part thereof, including, without
limitation, any which may (i) require repairs, modifications or alterations in
or to the Property or any part thereof or (ii) in any way limit the use and
enjoyment thereof.
"Lender" shall have the meaning specified in the first Paragraph
hereof.
"Lien" shall mean any mortgage, deed of trust, lien, pledge,
hypothecation, assignment, security interest, or any
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<PAGE>
other encumbrance, charge or transfer of, on or affecting the Property or any
portion thereof or Borrower, or any interest therein, including, without
limitation, any conditional sale other title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing, any
financing statement, and mechanic's, materialmen's and other similar liens and
encumbrances.
"Loan" shall mean the loan, evidenced by the Note, and secured by
the Mortgage and the other Collateral Security Documents, to be made by Lender
to Borrower pursuant hereto.
"Loan Documents" shall mean, collectively, this Agreement, the Note,
the Mortgage, the Environmental Indemnity and the other Collateral Security
Documents and any other document executed or delivered by or on behalf of
Borrower in connection with the Loan.
"Loan Purchaser" shall mean any purchaser of the Loan from the
Lender, such purchaser's designee, the respective successors and/or assigns of
such purchaser or designee and any subsequent holder of the Note.
"Loan Year" shall mean each one (1) year period commencing on the
Closing Date and on each anniversary of the Closing Date.
"Lock-Out Date" shall have the meaning specified in the Note.
"Long-Term Required Repairs" shall mean those Required Repairs
designated as "long-term" on Schedule C annexed hereto.
"Long-Term Required Repairs Deposit" shall mean an amount equal to
the aggregate of one hundred percent (100%) of the estimated costs of Long-Term
Required Repairs for the Property as set forth on Schedule C annexed hereto.
"Loss Proceeds" shall have the meaning specified in Section 2.6.8(c)
hereof.
"Major Required Repair" shall have the meaning specified in Section
2.6.7(d).
"Maturity Date" shall mean July 1, 2010, subject to extension as
provided in Section 2.3.4.
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<PAGE>
"Minor Required Repair" shall have the meaning specified in Section
2.6.7(d)(i).
"Non-Consolidation Opinion" shall have the meaning specified in
Section 3.1(f).
"Note" shall mean that certain Promissory Note of even date
herewith, made by Borrower in favor of Lender, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
"Officer's Certificate" shall mean a certificate delivered to Lender
by Borrower which is signed by an officer of Borrower who also serves as Chief
Executive Officer, Chief Financial Officer, Treasurer, Controller or Vice
President of Servico, Inc.
"Operating Expenses" shall mean all ordinary and customary expenses
payable in the ordinary course of operating the Property as a hotel project
(such expenses being determined on an accrual basis for the relevant calculation
period, unless otherwise expressly provided herein) including, without
limitation, any amounts payable by Borrower as tenant under the Ground Lease but
excluding distributions to stockholders or partners of Borrower, Debt Service
payable by Borrower, income taxes, non-cash items such as depreciation and any
fees payable to the Consultant in excess of four percent (4%) of Revenue.
"Operations and Maintenance Expense Monthly Installment" shall mean
with respect to each month in a particular year, an amount, as determined by
Lender, equal to the aggregate of one-twelfth (1/12th) of the product for the
Property of (a) 1.05 and (b) the Operating Expenses for the Property in the
immediately preceding Fiscal Year.
"Operations and Maintenance Expense Sub-Account" shall mean a
sub-account of the Central Account established and maintained during any
Operative Period, any DSCR Restricted Period and any Franchise Restricted Period
pursuant to Section 2.6.2 hereof relating to the payment of Operating Expenses.
"Operative Period" shall mean (a) any period during which a monetary
Event of Default shall have occurred and be continuing, (b) if Borrower fails to
provide Lender with a Commitment on or prior to the Refinance Notification Date,
the period commencing on the Refinance Notification Date and ending
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<PAGE>
on the date the Indebtedness has been paid in full, and (c) if Borrower provides
Lender with a Commitment on or prior to the Refinance Notification Date and the
Void Commitment Date occurs, the period commencing on the Void Commitment Date
and ending on the date the Indebtedness has been paid in full.
"Other Charges" shall have the meaning specified in Section 5.1(b).
"Permits" shall have the meaning specified in Section 4.1(w).
"Permitted Encumbrances" shall mean, with respect to the Property,
(a) the Liens created by the Loan Documents, (b) all Liens, encumbrances and
other matters disclosed in the Title Insurance Policy relating to the Property
or any part thereof or in UCC-1 searches delivered to Lender, (c) Liens for
Impositions not yet due and payable or being contested in good faith and by
appropriate proceedings in accordance with the applicable provisions of the Loan
Documents, (d) Equipment Leases and any conditional sale agreement with respect
to the purchase of any Equipment, provided the same have been or shall be
entered into by Borrower in the ordinary course of business, (e) Liens given by
Borrower to finance capital improvements to the Property as permitted under the
Mortgage, subject to the prior written approval of Lender, in its sole
discretion, which approval shall not be granted if such Lien would result in any
withdrawal, downgrade or other adverse effect on any rating of the Certificates
issued by the Rating Agency, (f) other Liens expressly permitted by the terms of
the Loan Documents and (g) such other title and survey exceptions as Lender has
approved or may approve in writing in Lender's sole discretion.
"Person" shall mean any individual, corporation, partnership, joint
venture, estate, trust, unincorporated association, any federal, state, county
or municipal government or any bureau, department or agency thereof and any
fiduciary acting in such capacity on behalf of any of the foregoing.
"Policies" shall have the meaning specified in Section 7.2.1(c).
"Premises" shall, with respect to the Property, have the meaning
specified in the granting clause of the Mortgage encumbering the Property.
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"Principal Balance" shall mean the outstanding principal balance of
the Loan.
"Pro Forma Debt Service Coverage Ratio" shall mean, with respect to
any DSCR Determination Date, the ratio of (a) the aggregate Cash Flow Available
for Debt Service for the Property determined on an accrual basis for the twelve
(12) month period ending with the calendar month prior to the calendar month
immediately preceding such DSCR Determination Date to (b) the aggregate amount
of Debt Service scheduled to be due during the twelve (12) month period
immediately following such DSCR Determination Date, assuming, for the purpose of
this calculation, that no payments of principal other than scheduled
amortization payments will be made during such period.
"Property" shall mean the parcel of real property, as more fully
described in Schedule A attached hereto, and the Improvements thereon owned by
Borrower and encumbered by the Mortgage, together with all rights and property
pertaining to such real property and Improvements, as more particularly
described in the granting clauses of the Mortgage and referred to therein as the
"Mortgaged Property".
"Qualified Institutional Lender" shall mean a financial institution
or other lender with a long term credit rating which is not less than investment
grade.
"Rating Agency" shall mean Fitch Investors Service, Inc.
"Recourse Distributions" shall have the meaning specified in
Section 9.26.
"Refinance Notification Date" shall have the meaning specified in
Section 2.3.1 hereof.
"Rents" shall mean, with respect to the Property, all rents, income,
issues, revenues and profits arising from the Leases and renewals thereof.
"Required Repairs" shall mean those repairs, if any, with respect to
the Property specified in Schedule C annexed hereto.
"Restoration" shall have the meaning specified in Section 7.2.2(a).
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"Revenue" shall mean all Rents and all other revenue of any kind
derived from the Property, all determined on an accrual basis (unless otherwise
indicated) in accordance with GAAP consistently applied, after deducting all
allowances for rebates and adjustments, whether cash or credit, derived directly
or indirectly from any source including, without limitation: fees, charges,
accounts or other payments for the use or occupancy of rooms or other public
facilities; food and beverage; sales from gift or other shops managed directly
by Borrower or any agent of Borrower; telephone; net vending income (gross
vending revenue reduced by the amount payable to equipment vendors for the use
thereof); commissions; net rentals of cars, bicycles and other items; meeting
room rentals, all net revenue received from any third party concessionaires
operating any concession under any agreement with Borrower or its agents, and
other persons occupying space at the Property and/or rendering services to
guests staying at the Property; and any form of incentive payments or awards
received by Borrower from any source whatsoever which are attributable to the
operation of the Property.
"Securitization Transaction" shall mean the transactions
contemplated by the Trust and Servicing Agreement, including, without
limitation, (a) the assignment and transfer the Loan and the Loan Documents to
the Depositor, (b) the issuance, sale and rating of the Certificates, and (c)
the assignment and transfer of the Loan and the Loan Documents to the Trustee
for the benefit of the Certificateholders.
"Servicer" shall mean (a) the entity described as such in the Trust
and Servicing Agreement or its successor in interest, or if any successor
servicer is appointed pursuant to the Trust and Servicing Agreement, such
successor servicer or (b) any other entity appointed to service the Loan
pursuant to Section 9.25.
"Short-Term Required Repairs" shall mean any Required Repairs not
designated "long-term" on Schedule C annexed hereto.
"Short-Term Required Repair Deposit" shall mean an amount equal to
the aggregate of one hundred percent (100%) of the estimated costs of Short-Term
Required Repairs for the Property as set forth on Schedule C annexed hereto.
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"State" shall mean, with respect to the Property, the State or
Commonwealth in which the Property or any part thereof is located.
"Survey" shall mean a survey of the Property prepared by a surveyor,
licensed in the State, in accordance with ALTA standards and satisfactory to
Lender and the company or companies issuing the Title Insurance Policy, and
containing a certification of such surveyor satisfactory to Lender.
"Survey Requirements" shall have the meaning specified in
Section 3.1 (c) (iii).
"Title Insurance Policy" shall mean, with respect to the Property,
the ALTA extended coverage mortgagee title insurance policy (1970 form B or
other loan policy acceptable to Lender) issued with respect to the Property and
insuring the lien of the Mortgage encumbering the Property and containing such
endorsements and affirmative assurances as Lender shall reasonably require (to
the extent authorized in the State).
"Trust and Servicing Agreement" shall mean any trust and servicing
agreement or pooling and servicing agreement pursuant to which the Loan is
assigned to a Trustee in trust and one or more classes of Certificates are
issued representing beneficial ownership interests in the Loan and the other
assets of such trust.
"Trustee" shall mean the entity described as such in the Trust and
Servicing Agreement or its successor in interest, or if any successor trustee is
appointed pursuant to the Trust and Servicing Agreement, such successor trustee.
"UCC" or "Uniform Commercial Code" shall mean the Uniform
Commercial Code as in effect in the State in which the Property is located.
"Void Commitment Date" shall have the meaning specified in Section
2.3.1 hereof.
"Yield Maintenance Premium" shall have the meaning specified in
the Note.
Section 1.2 Principles of Construction.
All references to sections, schedules and exhibits are to
sections, schedules and exhibits in or to this Agreement
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unless otherwise specified. Unless otherwise specified, the words "hereof,"
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement. Unless otherwise specified, all meanings attributed to defined
terms herein shall be equally applicable to both the singular and plural forms
of the terms so defined. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP, as modified herein.
II. GENERAL TERMS
Section 2.1 Loan Commitment; Disbursement to Borrower.
2.1.1 The Loan. Subject to and upon the terms and conditions set
forth herein, Lender hereby agrees to make the Loan to Borrower on the Closing
Date, in the original principal amount set forth in the Note, which Loan shall
mature on the Maturity Date. Borrower hereby agrees to accept the Loan on the
Closing Date, subject to and upon the terms and conditions set forth herein.
2.1.2 Disbursement to Borrower. Borrower may request and receive
only one borrowing hereunder in respect of the Loan and any amount borrowed and
repaid hereunder in respect of the Loan may not be reborrowed. Borrower shall,
on the Closing Date, receive the Loan, subject to the direction given by
Borrower as to the application of Loan proceeds to pay certain closing costs and
to fund (i) the Basic Carrying Cost Sub-Account in an amount equal to (a) the
amount necessary to enable Lender to make each payment of Impositions coming due
during the twelve (12) months following the Closing Date on the date each such
payment is due, taking into account the Basic Carrying Costs Monthly
Installments that will be due and payable before each such payment of
Impositions is due plus (b) twice the amount indicated in the Insuror's Letter
as the premium necessary to keep the Policies in effect for one month and (ii)
the Engineering Escrow Sub-Account in an amount equal to (a) the Short-Term
Required Repair Deposit plus (b) the Long-Term Required Repair Deposit in
accordance with the provisions of this Agreement.
2.1.3 The Note. The Loan shall be evidenced by the Note, in the
original principal amount of the Loan. The Note
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shall bear interest as provided in such Note, and shall be subject to repayment
and prepayment as provided in Section 2.3. The Note shall be entitled to the
benefits of this Agreement and shall be secured by the Mortgage, the Assignment
of Leases and the other Collateral Security Documents.
Section 2.2 Use of Proceeds.
Borrower shall use the proceeds of the Loan disbursed to it pursuant
to Section 2.1 to (i) repay and discharge any existing loans relating to the
Property, except the Permitted Encumbrances, (ii) pay all past-due Basic
Carrying Costs, if any, in respect of the Property, (iii) fund the Basic
Carrying Costs Sub-Account, as provided in Section 2.1.2, and the Engineering
Escrow Sub-Account and (iv) pay costs and expenses incurred in connection with
the Closing of the Loan, as mutually approved by Lender and Borrower. Any
remaining proceeds of the Loan shall be used for commercial purposes only.
Section 2.3 Loan Repayment and Prepayments; Refinancing; Extensions.
2.3.1 Repayment; Refinancings. Borrower shall repay the Loan in
accordance with the provisions of the Note. Borrower shall deliver to Lender a
written commitment or engagement letter (a "Commitment"), which Commitment shall
set forth specific terms and conditions for the refinancing of the entire
outstanding amount of the Loan from a Qualified Institutional Lender or Lenders
or a nationally recognized investment banking firm or firms on or before that
date which is six (6) months prior to the Maturity Date (the "Refinance
Notification Date"). If Borrower fails to deliver such Commitment prior to the
Refinancing Notification Date or if such Commitment is delivered on or before
the Refinance Notification Date, but lapses, terminates or is otherwise
withdrawn prior to the funding of such Commitment and the use of the proceeds
thereof to pay the entire outstanding amount of the Loan (the date upon which
such Commitment lapses, terminates or is otherwise withdrawn is hereinafter
referred to as the "Void Commitment Date"), unless the Indebtedness shall have
been paid in full prior to the Refinance Notification Date or the Void
Commitment Date, as the case may be, an Operative Period shall be in effect and
all Excess Property Income shall be applied by Lender pursuant to Section
2.6.3(f).
2.3.2 Prepayments. The Loan may be prepaid only as provided in the
Note.
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2.3.3 Pro Forma Debt Service Coverage Ratio. If on any DSCR
Determination Date, the Pro Forma Debt Service Coverage Ratio, is less than or
equal to 1.2/1.0, then for the period (the "DSCR Restricted Period") commencing
on such DSCR Determination Date and ending on the next DSCR Determination Date
on which the Pro Forma Debt Service Coverage Ratio exceeds 1.2/1.0 all Excess
Property Income for all the Property shall be deposited in the Central Account
and allocated as provided in Section 2.6.3(g), provided that if a DSCR
Restricted Period and an Operative Period shall both be in effect with respect
to any period of time, such period will be deemed an Operative Period for the
purposes of this Agreement.
2.3.4 Extensions. At the request of Borrower, which request must be
made at least one hundred eighty (180) days prior to the Maturity Date, Lender
shall have the option, in its sole discretion, to extend the maturity of the
Loan to the next anniversary of the Maturity Date, provided, however, in no
event shall Lender extend the maturity of the Loan beyond July 1, 2015.
Section 2.4 Interest
2.4.1 Generally. Borrower shall pay interest at the Interest Rate on
the outstanding Principal Balance on each Due Date.
2.4.2 Default, Rate; Post-Maturity Interest. If Borrower shall fail
to make any payment of principal, interest, Yield Maintenance Premiums or any
other amount payable by Borrower under the Note, this Agreement or any other
Loan Documents within the grace period provided with respect to such payment
under Section 8.1 or, if no grace period is provided, on the date on which such
payment is due, whether by acceleration or otherwise, Borrower shall pay
interest at the Default Rate with respect to such amounts and/or with respect to
the entire unpaid Principal Balance as provided in the Note. The preceding
sentence shall not be construed as an agreement or privilege to extend the date
for payment of any such amounts nor as a waiver of any other right or remedy
accruing to Lender by reason of the occurrence of an Event of Default.
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Section 2.5 Payments; Computations.
2.5.1 Making of Payments. Each payment by Borrower hereunder or
under the Note shall be made directly into the Central Account by wire transfer
of immediately available funds to:
The First National Bank of Chicago
Chicago, Illinois
ABA #071000013
Credit Clearing A/C No. 75217682
Ref: DLJ/Servico/Phoenix Lease
or to such other designated bank or place, or in such other manner, as Payee may
from time to time specify in writing. Whenever any payment hereunder or under
the Note shall be stated to be due on a day which is not a Business Day, such
payment shall be made on the next succeeding Business Day.
2.5.2 Computations. Interest payable hereunder or under the Note by
Borrower shall be computed on the basis of a 360-day year consisting of twelve
(12) months of thirty (30) days each except that interest due and payable for a
period less than a full month shall be calculated by multiplying the actual
number of days elapsed in such period by a daily rate based on said 360-day
year.
2.5.3 Late Payment Charge. If any principal, interest, Yield
Maintenance Premiums or any other sums due under the Loan Documents is not paid
in full within three (3) Business Days of the date on which it is due, Borrower
shall pay to Lender a Late Payment Charge pursuant to the Note.
2.5.4 Application of Payments. Unless otherwise expressly provided
herein, all payments received on account of the Indebtedness shall be applied,
first, to accrued and unpaid interest, second, to the outstanding Principal
Balance, third, to any Yield Maintenance Premium then due and payable and
thereafter to other amounts payable under the Loan Documents.
Section 2.6 Central Account; Deposits and Distributions.
2.6.1 Deposits in Central Account. (a) On each Due Date, Borrower
shall pay, or cause to be paid, to Lender, by wire transfer directly to the
Central Account as provided in Section
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2.5.1 or as otherwise directed by Lender, (i) the payment of Debt Service then
due and payable, together with all Yield Maintenance Premiums and other amounts
payable under the Note, this Agreement and the other Loan Documents, (ii) the
Basic Carrying Costs Monthly Installment, (iii) the FF&E Monthly Installment and
(iv) during any Operative Period, DSCR Restricted Period or Franchise Restricted
Period, (A) the Operations and Maintenance Expense Monthly Installment and (B)
all Excess Property Income.
(b) On each Due Date, Lender shall allocate all funds deposited into
the Central Account to the Debt Service Payment Sub-Account, the Basic Carrying
Costs Sub-Account and the FF&E Sub-Account, in that order, provided that during
any Operative Period, any DSCR Restricted Period or any Franchise Restricted
Period, Lender shall allocate such funds pursuant to Section 2.6.3.
(c) Upon commencement of any Operative Period, any DSCR Restricted
Period or any Franchise Restricted Period, Lender may deliver a Consultant's
Notice to Consultant. Borrower shall cause Consultant, upon receipt by
Consultant of a notice from Lender so directing Consultant (a "Consultant's
Notice") until directed otherwise by Lender, to collect all Revenue (determined
for the purposes of this provision on a cash basis) relating to the Property and
pay over all such Revenue to Lender by wire transfer directly to the Central
Account as provided in Section 2.5.1 or as may be otherwise designated from time
to time by Lender. From and after the day immediately following the date on
which a Consultant's Notice is received, Consultant shall collect all of the
Revenue of the Property and shall deposit such funds, within one (1) Business
Day after receipt thereof, directly into the Central Account. Upon termination
of the applicable Operative Period, DSCR Restricted Period or Franchise
Restricted Period, provided no other such period shall then be in effect, Lender
shall deliver a notice to Consultant directing Consultant that from and after
the date of such notice Consultant shall not be required to collect and pay over
Revenue pursuant to the applicable Consultant's Notice.
(d) Borrower pledges, assigns and grants a security interest to
Lender in all amounts deposited into the Central Account, as security for
payment of all sums due under the Loan and the performance of all other terms
and covenants of the Loan Documents and this Agreement on Borrower's part to be
paid and performed.
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2.6.2 Establishment of Central Account and Sub-Accounts. Lender
shall establish and maintain the Central Account with the Bank, in the name of
Lender, as secured party. The Central Account shall be an Eligible Account and
shall include (a) the Debt Service Payment Sub-Account, (b) the Basic Carrying
Costs Sub-Account, (c) the FF&E Sub-Account, (d) the Engineering Escrow
Sub-Account, (e) the Operations and Maintenance Expense Sub-Account, (f) the
Curtailment Reserve Fund Sub-Account and (g) the Capital Expenditure Sub-Account
(collectively, the "Basic Sub-Accounts"), to which certain funds shall be
allocated and from which disbursements shall be made pursuant to the terms of
this Agreement. The Central Account and the Basic Sub-Accounts shall be under
the sole dominion and control of Lender. Borrower hereby irrevocably directs and
authorizes Lender to deposit funds into and withdraw funds from the Central
Account and the Basic Sub-Accounts in accordance with the terms and conditions
of this Agreement. Borrower shall have no direct right of withdrawal in respect
of the Central Account or the Basic Sub-Accounts, but shall have the right to
receive disbursements as provided herein. Each transfer of funds to be made
hereunder shall be made only to the extent that funds are on deposit in the
Central Account or the affected Basic Sub-Account and Lender shall have no
responsibility to make additional funds available in the event that funds on
deposit are insufficient.
2.6.3 Funding of Basic Sub-Accounts During Operative Period, DSCR
Restricted Period and Franchise Restricted Period. During any Operative Period,
DSCR Restrictive Period and any Franchise Restricted Period, Lender shall
allocate all funds deposited into the Central Account each day among the Basic
Sub-Accounts in the following priority:
(a) first, to the Basic Carrying Costs Sub-Account, until an amount
equal to the sum of (i) an amount equal to the Basic Carrying Costs Monthly
Installment for any prior month(s), to the extent not previously paid, plus (ii)
an amount equal to the Basic Carrying Cost Monthly Installment due on the
current Due Date, has been allocated to the Basic Carrying Costs Sub-Account;
(b) second, to the Operations and Maintenance Expense Sub-Account,
until an amount equal to the sum of (i) an amount equal to the Operations and
Maintenance Expense Monthly Installment for any prior month(s), to the extent
not previously paid, plus (ii) an amount equal to the Operations and Maintenance
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Expense Monthly Installment due on the current Due Date, has been allocated to
the Operations and Maintenance Expense Sub-Account;
(c) third, to the Debt Service Payment Sub-Account, until an amount
equal to the sum of (i) the amount, if any, deducted therefrom during any
preceding month to pay any amounts due to any other Basic Sub-Account in
accordance with the provisions of this Section 2.6 to the extent not previously
reimbursed by such other Basic Sub-Account to the Debt Service Payment
Sub-Account, plus (ii) an amount equal to the payment of Debt Service for any
prior month(s), to the extent not previously paid, plus (iii) an amount equal to
the payment of Debt Service for the current Due Date (and any other amounts
required to be paid under the Note on such Due Date), has been allocated to the
Debt Service Payment Sub-Account;
(d) fourth, to the Engineer Escrow Sub-Account, until an amount
equal to the amount, if any, deducted therefrom during any preceding month to
pay any amounts due to any other Basic Sub-Account in accordance with the
provisions of this Section 2.6 to the extent not previously reimbursed by such
other Basic Sub-Account to the Engineering Escrow Sub-Account;
(e) fifth, to the FF&E Sub-Account, until an amount equal to the sum
of (i) the amount, if any, deducted therefrom during any preceding month to pay
any amounts due to any other Basic Sub-Account in accordance with the provisions
of this Section 2.6 to the extent not previously reimbursed by such other Basic
Sub-Account to the FF&E Sub-Account, plus (ii) an amount equal to the FF&E
Monthly Installment for any prior month(s), to the extent not previously paid,
plus (iii) an amount equal to the FF&E Monthly Installment due on the current
Due Date, has been allocated to the FF&E Sub-Account;
(f) sixth, but only during any Operative Period, to the Curtailment
Reserve Fund Sub-Account to be applied pursuant to Section 2.6.7(g), unless
Lender shall elect, in its sole discretion, to disburse all or any portion of
such funds in payment of any Operating Expenses or any other charges affecting
all or a portion of the Property, upon such terms and conditions as Lender shall
elect; and
(g) seventh, but only during any DSCR Restricted Period or any
Franchise Restricted Period, to the Capital Expenditure Sub-Account, to be
disbursed as provided in Section 2.6.7(f).
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2.6.4 Deposits During Operative Period, DSCR Restricted Period and
Franchise Restricted Period. If on any Due Date during any Operative Period,
DSCR Restricted Period or any Franchise Restricted Period, the funds then on
deposit in the Central Account shall be less than the amount of funds which are
required to be deposited therein pursuant to Section 2.6.3(a) through (d) for
such Due Date, Borrower shall be obligated to deposit immediately available
funds (in addition to Revenue) by wire transfer directly into the Central
Account as provided in Section 2.5.1, on such Due Date (subject to the grace
period provided in Section 8.1(a)(i)), in the amount of such deficiency, and
failure to make such deposit shall be an Event of Default hereunder. Lender may
(but shall not be obligated to) withdraw funds from the Debt Service Payment
Sub-Account the Engineering Escrow Sub-Account, the FF&E Sub-Account, the
Curtailment Reserve Sub-Account or the Capital Expenditure Sub-Account (in each
case to the extent funds are available in each such Basic Sub-Account) and pay
any deficiency in any other Basic Sub-Account, in such order of priority as
Lender determines in Lender's sole discretion. Lender shall not withdraw or
disburse funds from the Basic Carrying Costs Sub-Account or the Operation and
Maintenance Sub-Account except as expressly provided in Section 2.6.7(b) and
(c).
2.6.5 Eligible Investments. Lender shall direct the Bank to invest
and reinvest any balance in the Central Account from time to time in Eligible
Investments, provided that (a) the maturities of the Eligible Investments on
deposit in the Central Account, if fixed, shall, to the extent such dates are
ascertainable, be selected and coordinated to become due not later than the day
before any disbursements from the Central Account and the Basic Sub-Accounts
must be made, (b) all such Eligible Investments shall be held in the name of
Lender (as secured party) and be under the sole dominion and control of Lender,
and (c) no Permitted Investment shall be made unless Lender shall retain a
perfected first priority Lien in such Permitted Investment securing the
Indebtedness and all filings and other actions necessary to ensure the validity,
perfection, and priority of such Lien have been taken and Lender shall have been
provided with an opinion of counsel satisfactory to Lender confirming the
perfection of such Lien in such Eligible Investment. All funds in the Central
Account that are invested in an Eligible Investment shall be deemed to be held
in the Central Account for all purposes of this Agreement and the other Loan
Documents. Neither Lender nor the Bank shall have any
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liability for any loss in investments of funds in the Central Account that are
invested in Eligible Investments and no such loss shall affect Borrower's
obligation to fund, or liability for funding, the Central Account, as the case
may be. Borrower agrees that Borrower shall include all such earnings on the
Central Account as income of the Borrower for federal and applicable state tax
purposes.
2.6.6 Interest on Accounts. All interest paid or other earnings on
the Eligible Investments made hereunder shall be deposited into the Central
Account and shall be allocated to the Basic Sub-Account which contained the
funds with respect to which such interest was paid or other earnings earned. All
such interest and earnings shall be treated as Revenue. Except during a DSCR
Restricted Period, a Franchise Restricted Period, an Operative Period or any
period when an Event of Default has occurred and is continuing, all such
interest paid or other earnings earned with respect to funds in the Basic
Carrying Costs Sub-Account and the Debt Service Payment Sub-Account shall, after
each anniversary of the Closing Date, at Lender's option, either be paid over to
Borrower or, on notice to Borrower, credited against the amounts payable by
Borrower on the next Due Date. Except for amounts to be paid or credited to
Borrower pursuant to the preceding sentence, all interest paid or earnings
earned with respect to funds on deposit in any Basic Sub-Account shall be
retained in such Basic Sub-Account and disbursed pursuant to Section 2.6.7.
2.6.7 Payment of Debt Service; Disbursement of Funds in Basic
Sub-Accounts; Excess Property Income. Transfers and payments from the Central
Account and the Basic Sub-Accounts shall be made in accordance with the
following provisions:
(a) Payment of Debt Service. On each Due Date during the term
of the Loan, Lender shall withdraw from the Debt Service Payment
Sub-Account and apply to the Indebtedness an amount equal to the sum of
all payments of Debt Service and any other amounts payable to Lender under
the Note, this Agreement or the other Loan Documents, provided that if any
such payment of Debt Service or other amounts is past due, Lender shall
make such withdrawal immediately upon allocation of funds to the Debt
Service Payment Sub-Account.
(b) Payment of Basic Carrying Costs. Borrower shall use its
best efforts to cause all notices of the
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amount and due date of payments of Basic Carrying Costs to be sent to
Lender at least ten (10) Business Days prior to such due date. Provided
that (i) Lender has received notice of the amount and due date of any
payment of Basic Carrying Costs and (ii) there are sufficient funds
available in the Basic Carrying Costs Sub-Account, Lender shall make such
payment of Basic Carrying Costs directly to the Governmental Authority or
insuror entitled thereto. If the amount in the Basic Carrying Costs
Sub-Account is not sufficient to pay the Basic Carrying Costs, Borrower
shall pay to Lender, within five (5) Business Days of written notice, an
amount which Lender shall estimate as sufficient to make up the
deficiency. Notwithstanding anything contained herein to the contrary,
Borrower may only request disbursements from the Basic Carrying Costs
Sub-Account to pay premiums on the Policies to the extent of amounts
deposited in the Basic Carrying Costs Sub-Account pursuant to clause (ii)
of the definition of "Basic Carrying Costs Monthly Installment".
Nevertheless, Lender shall also have the right, without Borrower's
request, but not the obligation, to disburse amounts in the Basic Carrying
Costs Sub-Account in payment of premiums for the Policies if Borrower
shall fail to pay the same when due.
(c) Payment of Operating Expenses. (i) Borrower hereby agrees
to pay, or cause to be paid, when due all Operating Expenses with respect
to the Property (whether or not any amounts on deposit in the Operations
and Maintenance Expense Sub-Account shall be sufficient for such purpose);
provided that Borrower may contest any Operating Expenses which it in good
faith disputes, provided that (A) no Lien shall attach to the Property
(except for the Lien of any Impositions being contested by Borrower as
permitted under the Loan Documents), (B) Borrower shall have demonstrated
to Lender's reasonable satisfaction that it has established adequate
reserves to provide for payment of such Operating Expense, if ultimately
required, and (C) failure to pay such Operating Expense shall not have a
material adverse effect on the operation of the Property. Borrower may,
not more frequently than twice in any calendar month, give Lender written
notice, at least five (5) Business Days prior to the due date with respect
to any Operating Expenses, requesting that Lender pay such Operating
Expenses on behalf of Borrower on or prior to the due date thereof, which
notice shall be accompanied by (I) an Officer's Certificate
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specifying the Operating Expenses for which payment is requested and
certifying that all requested amounts are properly payable hereunder and
(ii) evidence reasonably satisfactory to Lender that all Operating
Expenses for which disbursements have previously been requested have been
paid. Provided that (A) Lender has received the Consultant's
Certifications for the most recent period for which the same are due, and
(B) there are sufficient funds available in the Operations and Maintenance
Expense Sub-Account, Lender shall, as Lender in its sole discretion shall
determine, either make such payments out of such Basic Sub-Account or
disburse funds from such Basic Sub-Account to Borrower or to the
Consultant on behalf of Borrower for the purpose of making payment of such
Operating Expenses within five (5) Business Days of receipt of the
documentation required hereby; provided that if an Event of Default with
respect to any amounts payable under the Loan Documents shall have
occurred and be continuing or the Indebtedness shall have been
accelerated, Lender shall disburse payments of Operating Expenses only to
third parties entitled to payment thereof.
(ii) Notwithstanding anything to the contrary contained
herein, Lender shall not be obligated to make any disbursement from the
Operations and Maintenance Sub-Account to pay Basic Carrying Costs, Debt
Service, the costs of any FF&E Replacements, the costs of Required Repairs
or legal fees in connection with any dispute arising under any Loan
Document or any management or consulting fees in excess of four percent
(4%) of Revenues with respect to the Property.
(d) Payment of Costs of Required Repairs. (i) Borrower shall
pay all costs in connection with the performance of the Required Repairs
(without regard to the amount of money then available in the Engineering
Escrow Sub-Account). With respect to any Required Repair for which the
cost set forth on Schedule C annexed hereto is less than the greater of
(A) $75,000.00 or (B) one and one-half percent (1.5%) of the Principal
Balance (a "Minor Required Repair"), Borrower may submit one request for a
disbursement from the Engineering Escrow Sub-Account of the actual cost of
such Required Repair, provided that all requests by Borrower for
disbursements for Minor Required Repairs in any calendar month shall be
submitted simultaneously and each such request shall be accompanied by an
Officer's
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Certificate specifying the costs to be paid from such disbursement and
certifying that all requested amounts are properly payable hereunder and
that (I) all costs of Required Repairs for which disbursements have
previously been made hereunder have been paid to the extent due and
payable and (II) any amounts disbursed by Lender for the costs of Required
Repairs that are not yet due and payable have been reserved by Borrower
for payment of such costs. Borrower shall cause Borrower's Accountant to
deliver to Lender, on or before the first day of each February, May,
August and November of each Fiscal Year, commencing on November 1, 1995, a
certificate of Borrower's Accountant (an "Accountant's Certificate")
stating that (A) Borrower's Accountant has reviewed (I) all Officer's
Certificates delivered by Borrower pursuant to the preceding sentence
during the quarter of Borrower's Fiscal Year last ended, (II) the invoice
from the appropriate contractor or supplier for each expenditure for which
an advance from the Engineering Escrow Sub-Account was requested pursuant
to such Officer's Certificates, (III) the cancelled check written by
Borrower in payment of each such invoice, (IV) all receipts and other
evidence of payment received by Borrower with respect to such payments and
(V) such evidence as Borrower's Accountant, in its professional judgment,
deems necessary to establish that all amounts requested by Borrower to be
disbursed from the Engineering Escrow Sub-Account during such quarter of
the Fiscal Year have in fact been expended for purposes permitted under
this Agreement and (B) all amounts disbursed by Lender during such quarter
of Borrower's Fiscal Year (I) (x) were in fact expended in payment of
amounts payable out of funds on deposit in the Engineering Escrow
Sub-Account under the terms of this Agreement or (y) have been reserved by
Borrower for payment of such amounts or (II), if any such disbursements
were not used to pay amounts properly payable hereunder or reserved for
future payment of such amounts, specifying the amounts so misapplied,
provided that upon completion of any Minor Required Repair and payment in
full of costs payable in connection therewith, Borrower shall not be
required to account for any excess funds disbursed from the Engineering
Sub-Account in connection with such Minor Required Repair. If any such
Accountant's Certificate shall indicate that amounts disbursed from the
Engineering Escrow Sub-Account were misapplied, Borrower shall immediately
deposit in the
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Central Account, for allocation to the Engineering Escrow Sub-Account,
funds equal to the amount so misapplied.
(ii) With respect to any Required Repair for which the cost
set forth on Schedule C annexed hereto is not less than the greater of (A)
$75,000.00 or (B) one and one-half percent (1.5%) of the initial Principal
Balance for the Property (a "Major Required Repair"), Borrower may from
time to time, but not more frequently than once in any calendar month,
request a disbursement from the Engineering Escrow Account of amounts to
pay for the costs of such Major Required Repair, accompanied by an
Officer's Certificate specifying the costs to be paid from such
disbursement and certifying that all such costs are properly payable
hereunder, provided that (I) prior to commencement of such Major Required
Repair, Borrower shall have submitted to Lender a budget for such Major
Required Repair and a plan detailing the time frames for each stage of
such work, the percentage of the total Major Required Repair represented
by each stage and the percentage of the budget allocated to each such
stage, (II) such request shall be accompanied by (x) a certification of
the Independent contractor setting forth the percentage of the Major
Required Repair then completed and (y) evidence reasonably satisfactory to
Lender that all costs of such Major Required Repair for which
disbursements have previously been made hereunder have been paid; and
(III) Lender shall not be required to advance any funds from the
Engineering Escrow Sub-Account with respect to any Major Required Repair
to the extent that the aggregate funds advanced for such item, expressed
as a percentage of the costs allocated for such item on Schedule C, would
exceed the percentage of the work on such item then completed.
(iii) Provided that (A) no Event of Default has occurred and
is continuing, (B) Lender has received the Consultant's Certifications and
the Accountant's Certificates for the most recent period for which the
same are due and the conditions set forth in subparagraphs (i) and (ii)
above have been met, Lender shall disburse to Borrower the funds in the
Engineering Escrow Sub-Account with respect to the Property to pay the
costs of the Required Repairs, up to the amount set forth on Schedule C
annexed hereto for each such Required Repair, subject to Borrower's right
to request disbursement of excess funds
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pursuant to clause (v) below; provided that Lender may condition the
disbursement of the final twenty-five percent (25%) of the funds in the
Engineering Escrow Sub-Account with respect to any Major Required Repair
upon an inspection by Lender or its agent, at Borrower's expense, to
confirm that such item has been completed.
(iv) After completion of the Short-Term Required Repairs and
after completion of the Long-Term Required Repairs to the Property,
Borrower shall submit to Lender (A) (I) with respect to Required Repairs
that were not Major Required Repairs, an Officers Certificate or (II) with
respect to any Major Required Repairs, a certificate from the Engineer,
stating, in either case, that all Short-Term Required Repairs or Long-Term
Required Repairs, as applicable, have been completed in good and
workmanlike manner and in accordance with all Legal Requirements, that all
Permits necessary for the use or occupancy of the Property upon completion
of such Required Repairs have been obtained (with copies of all such
Permits attached), (B) at Lender's option, a title search for the Property
indicating that the Property is free from all liens, claims and other
encumbrances not previously approved by Lender, and (C) such other
evidence as Lender shall reasonably request that the Required Repairs to
the Property have been completed and paid for, including, without
limitation, copies of lien waivers.
(v) If, after completion of all Short-Term Required Repairs, a
portion of the funds deposited in the Engineering Escrow Sub-Account with
respect to the Short-Term Required Repairs remains on deposit, Borrower
may submit an Officer's Certificate stating that all Short-Term Required
Repairs with respect to the Property have been completed in compliance
herewith, that all amounts payable in connection with such Short-Term
Required Repairs have been paid and that Borrower is entitled to receive a
disbursement of the remaining funds on deposit in the Engineering Escrow
Sub-Account with respect to the Short-Term Required Repairs. Lender shall,
at Lender's option, pay such funds remaining in the Engineering Escrow
Sub-Account applicable to the Short-Term Required Repairs to Borrower or,
upon notice to Borrower, apply such amount to the amounts payable
hereunder on the next Due Date.
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(vi) If, after completion of all Required Repairs with respect
to the Property, a portion of the funds deposited in the Engineering
Escrow Sub-Account with respect to the Property remains on deposit,
Borrower may submit an Officer's Certificate stating that all Required
Repairs with respect to the Property have been completed in compliance
herewith, that all amounts payable in connection with such Required
Repairs have been paid and that Borrower is entitled to receive a
disbursement of the remaining funds on deposit in the Engineering Escrow
Sub-Account with respect to the Property. Lender shall, at Lender's
option, pay such funds remaining in the Engineering Escrow Sub-Account
applicable to the Property to Borrower or, upon notice to Borrower, apply
such amount to the amounts payable hereunder on the next Due Date.
(vii) Upon the occurrence of an Event of Default with respect
to any amounts payable under the Loan Documents or the acceleration of the
Indebtedness, Lender may apply the funds on deposit in the Engineering
Escrow Sub-Account, as Lender in its sole discretion may determine, either
(A) in payment of any costs of Required Repairs or any other charges
affecting all or any portion of the Property or (B) in payment, in such
order as Lender may elect, of the Indebtedness then due and payable,
whether by acceleration or otherwise; provided, however, that no such
application shall be made by operation of law or otherwise until actually
made by Lender as herein provided.
(e) Disbursement from FF&E Sub-Account. (i) Borrower shall pay
the costs of those items listed on Schedule D annexed hereto (the "FF&E
Replacements") (without regard to any amounts on deposit in the FF&E
Sub-Account). Borrower may, not more frequently than once in any calendar
month and not with respect to any requested disbursement of less than
$1,000, give Lender written notice requesting that Lender pay for the
costs of any FF&E Replacements performed or to be performed in accordance
with Section 7.4 hereof, which notice shall be accompanied by an Officer's
Certificate from Borrower stating (A) the specific FF&E Replacements for
which the disbursement is requested, (B) the quantity and price of each
item purchased, if the FF&E Replacement includes the purchase or
replacement of specific items, (C) the price of all materials (grouped by
type or category) used or to be used in any FF&E Replacement other
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than the purchase or replacement of specific items, (D) the cost of all
contracted labor or other services applicable to each FF&E Replacement for
which such request for disbursement is made, (E) that all FF&E
Replacements have been or will be made in accordance with all Legal
Requirements and (F) that all costs incurred in connection with the FF&E
Replacements subject to such disbursement are costs payable from the FF&E
Sub-Account pursuant to the terms of this Agreement.
(ii) Borrower shall cause Borrower's Accountant to deliver to
Lender, on or before the first day of each February, May, August and
November of each Fiscal Year, commencing on November 1, 1995, an
Accountant's Certificate stating that (A) Borrower's Accountant has
reviewed (I) all Officer's Certificates delivered by Borrower pursuant to
subparagraph (i) above during the quarter of Borrower's Fiscal Year last
ended, (II) the invoice from the appropriate contractor or supplier for
each expenditure for which an advance from the FF&E Sub-Account was
requested pursuant to such Officer's Certificates, (III) the cancelled
check written by Borrower in payment of each such invoice, (IV) all
receipts and other evidence of payment received by Borrower with respect
to such payments and (V) such evidence as Borrower's Accountant, in its
professional judgment, deems necessary to establish that all amounts
requested by Borrower to be disbursed from the FF&E Sub-Account during
such quarter of the Fiscal Year have in fact been expended for purposes
permitted under this Agreement and (B) all amounts disbursed by Lender
during such quarter of Borrower's Fiscal Year were in fact expended in
payment of amounts payable out of funds on deposit in the FF&E Sub-Account
under the terms of this Agreement. If Borrower's Accountant is unable to
deliver the Accountant's Certificate containing the certifications
required under the preceding sentence when due, or if any Accountant's
Certificate contains any incorrect statement (either occurrence is herein
referred to as an "Accountant's Certificate Default"), thereafter the
Officer's Certificate delivered in connection with any request for a
disbursement from the FF&E Sub-Account shall, in addition to all the other
matters described in clause (i) above, (Y) state that all costs for which
such disbursement is requested have been paid in full by Borrower and (Z)
be accompanied by copies of invoices for all items or materials purchased
and all contracted labor or
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services provided and each request shall include copies of lien waivers or
other evidence satisfactory to Lender of payment of all such amounts.
(iii) If (A) the cost of an FF&E Replacement exceeds $10,000
and (B) the contractor performing such FF&E Replacement requires periodic
payments pursuant to terms of a written contract, a copy of which has been
delivered to Lender, a request for disbursement from the FF&E Sub-Account
may be made from time to time to make such periodic payments when payable
under such contract, provided (I) all other conditions in this Agreement
for disbursement have been satisfied, (II) funds remaining in the FF&E
Sub-Account are, in Lender's judgment, sufficient to complete such FF&E
Replacement and other FF&E Replacements when required, and (III) each
contractor or subcontractor receiving payments under such contract shall
have provided a waiver of lien with respect to amounts which have been
paid to that contractor or subcontractor and, if requested by Lender,
Borrower shall have delivered copies of such lien waivers to Lender.
(iv) Except for requests for disbursement described in clause
(iii) above, each request for disbursement from the FF&E Sub-Account shall
be made only after completion of the FF&E Replacement for which
disbursement is requested and Borrower, shall make only one simultaneous
submission of such requests in any calendar month. Borrower shall provide
Lender evidence of completion of the FF&E Replacements subject to such
requests satisfactory to Lender in its reasonable judgment and the
Officer's Certificates submitted in connection with such requests shall
state that all costs of the FF&E Replacements subject thereto have been
paid in full.
(v) Provided that (A) no Event of Default has occurred and is
continuing, (B) Lender has received the Consultant's Certifications and
the Accountant's Certificate for the most recent period for which the same
are due, (C) the requirements set forth in this clause (e) and Section 7.4
of this Agreement are satisfied and (D) there are sufficient funds
available in the FF&E Sub-Account, Lender shall disburse to Borrower
amounts from the FF&E Sub-Account necessary to pay the actual costs of the
FF&E Replacements, provided that after the occurrence of an Accountant s
Certificate of Default, such disbursements shall be made
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only to reimburse Borrower for actual costs of FF&E Replacements that
Borrower has demonstrated pursuant to subparagraph (ii) above have already
been paid and that are properly payable from the FF&E Sub-Account under
this Agreement. Lender shall not be obligated to make disbursements from
the FF&E Sub-Account to pay, or to reimburse Borrower for, the costs of
routine maintenance to the Property or for costs which are to be disbursed
from the Required Repair Fund.
(vi) Upon the occurrence of an Event of Default with respect
to any amounts payable under the Loan Documents or acceleration of the
Indebtedness, Lender may apply the funds on deposit in the FF&E
Sub-Account, as Lender in its sole discretion may determine, either (A) in
payment of the costs of any FF&E Replacements or other charges affecting
all or any portion of the Property or (B) in payment, in such order as
Lender may elect, of the Indebtedness then due and payable, whether by
acceleration or otherwise, any Yield Maintenance Premium payable with
respect to any portion applied in reduction of the Principal Balance;
provided, however, that no such application shall be deemed to have been
made by operation of law or otherwise until actually made by Lender as
herein provided.
(f) Disbursement of Funds in Capital Expenditure Sub-Account.
(i) Notwithstanding anything to the contrary contained in the Note, this
Agreement or the other Loan Documents, Lender may elect to (a) retain the
funds on deposit in the Capital Expenditure Sub-Account as additional
collateral to secure repayment of the Indebtedness and performance of the
other obligations of Borrower hereunder or (b) disburse such funds in
payment of the costs and expenses of any improvement, repair or
replacement approved by Lender, in its sole discretion, to the Property,
the cost of which Borrower would be required to capitalize for federal
income tax purposes, provided, however, that notwithstanding the
foregoing, if the Pro Forma Debt Service Coverage Ratio has been (I) less
than or equal to 1.2/1.0 on two (2) consecutive DSCR Determination Dates,
exclusive, with respect to any DSCR Restricted Period, of the initial DSCR
Determination Date on which the Pro Forma Debt Service Coverage Ratio fell
below 1.2/1.0, Lender may elect to apply any funds on deposit in the
Capital Expenditure Sub-Account as a prepayment of the Principal Balance
or other amounts
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payable in connection therewith, on the next occurring Due Date, with no
Yield Maintenance Payable in connection with such application, or (II) at
least equal to 1.3/1.0 for four (4) consecutive DSCR Determination Dates,
Lender shall, at Lender's option, either pay over any funds on deposit in
the Capital Expenditure Sub-Account to Borrower or credit such funds, on
notice to Borrower, against the amounts payable by Borrower on the next
Due Date, provided that nothing contained in this clause (II) shall limit
Lenders rights elsewhere in this paragraph (f) (i). If any Franchise
Restricted Period shall terminate prior to the occurrence of an Event of
Default hereunder and no DSCR Restricted Period is then in effect, Lender
shall, at Lender's option, either pay over any funds on deposit in the
Capital Expenditure Sub-Account to Borrower or credit such funds, on
notice to Borrower, against the amounts payable by Borrower on the next
Due Date.
(ii) Borrower may, not more frequently than once in each
calendar month, give Lender written notice requesting that Lender pay the
costs of, or reimburse Borrower for payment of the costs of any such
capital improvement, repair or replacement, together with an Officer's
Certificate from Borrower stating the amounts of charges for which
disbursement is requested and that such charges are properly payable
hereunder, and, if required, satisfactory evidence of the progress and/or
completion of such capital improvement and the cost thereof, satisfactory
evidence that any and all completed capital improvement, repair or
replacement work complies with Legal Requirements and lien waivers, copies
of bills, invoices and other evidence as may be required by Lender to
establish that the costs of any such capital improvement, repair or
replacement for which reimbursement is requested, or for which
disbursement has been previously made, have been paid by Borrower.
(g) Disbursement of Funds in Curtailment Reserve Fund
Sub-Account. Lender shall apply the funds on deposit in the Curtailment
Reserve Fund Sub-Account as a prepayment of the Principal Balance,
together with any Yield Maintenance Premium and other amounts payable in
connection therewith on the next occurring Due Date.
2.6.8 Payment of Loss Proceeds; Borrower's Right to Release. (a) In
the event of a Casualty with respect to the
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Property, Lender and Borrower shall cause all proceeds under any insurance
policy required to be maintained by Borrower ("Insurance Proceeds") to be paid
by the respective insurers directly into the Central Account, except for
Insurance Proceeds relating to Equipment subject to Equipment Leases that
require such insurance proceeds be paid to the lessor thereunder. Should such
Insurance Proceeds remain available after the payment of all costs of any
restoration or reconstruction pursuant to Section 7.2.2(c) or Section 7.2.3(c),
Lender shall (after deducting out Lender's cost of recovering such Insurance
Proceeds, including, without limitation, reasonable attorneys' fees) apply such
Insurance Proceeds on the next occurring Due Date as a prepayment of the
Principal Balance in accordance with the terms of the Note. All Insurance
Proceeds that are to be made available for Restoration of the Property shall be
held by Lender in a segregated bank account at the Bank, which, to the extent
feasible in the context of the administration of construction disbursement draw
requests, shall be interest bearing, and shall disburse such funds in accordance
with Section 7.2.2(b).
(b) In the event of a Condemnation of the Property, Lender and
Borrower shall cause all of the proceeds in respect of any Condemnation
("Condemnation Proceeds") to be paid directly into the Central Account. Unless
Lender shall elect or be required to make such Condemnation Proceeds available
to Borrower pursuant to Section 7.2.3(a), Lender shall (after deducting out
Lender's cost of recovering such Condemnation Proceeds, including, without
limitation, reasonable attorneys' fees) apply such Condemnation Proceeds on the
next occurring Due Date as a prepayment of the Principal Balance in accordance
with the terms of the Note. If such Condemnation Proceeds are to be made
available to Borrower, Lender shall hold any such funds not immediately
disbursed to Borrower in a segregated bank account at the Bank, which, to the
extent feasible in the context of the purposes for which Lender shall disburse
such funds, shall be interest-bearing, and shall disburse such funds in
accordance with Section 7.2.3(a).
(c) If any Insurance Proceeds or Condemnation Proceeds
(collectively, "Loss Proceeds") are received by Borrower, such Loss Proceeds
shall be received in trust for Lender, shall be segregated from other funds of
Borrower, and shall be forthwith paid into the Central Account, to be applied or
disbursed in accordance with the foregoing.
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(d) If Lender shall apply any Loss Proceeds as a prepayment of the
Principal Balance as provided above, Borrower may elect to have the Property
released from the Lien of the Mortgage, notwithstanding anything to the contrary
contained herein, without payment of any Yield Maintenance Premium and whether
or not the Lock-Out Date shall have occurred, provided that (i) (A) the Loss
Proceeds applied by Lender toward payment of the Loan shall be at least equal to
the then current Principal Balance or (B) Borrower shall pay to Lender any
amount by which the then current Principal Balance exceeds the amount of Loss
Proceeds so applied toward payment of the Loan.
III. CONDITIONS PRECEDENT
Section 3.1 Conditions Precedent to Closing.
The obligation of Lender to make the Loan hereunder is subject to
the fulfillment by Borrower, or waiver by Lender, of the following conditions
precedent no later than the Closing Date:
(a) Representations and Warranties; Compliance with Conditions. The
representations and warranties of Borrower contained in this Agreement and the
other Loan Documents shall be true and correct in all material respects on and
as of the Closing Date, and no event shall have occurred and be continuing that
would constitute, by reason of the execution, delivery and performance of this
Agreement or the other Loan Documents, the grant of the Liens on the Property
contemplated hereby, the making of the Loan, or the consummation of the other
transactions contemplated by this Agreement or the other Loan Documents, a
Default or an Event of Default; and Borrower shall be in compliance in all
material respects with all terms and conditions set forth in this Agreement and
in each other Loan Document on its part to be observed or performed.
(b) Loan Agreement, Note and Environmental Agreement. Lender shall
have received an original of this Agreement, the Note and the Environmental
Indemnity in each case duly executed and delivered on behalf of Borrower.
(c) Delivery of Mortgage; Assignment of Leases; Franchise Agreement
Letter and Assignment of Consulting Agreement; Title Insurance; Reports; Leases.
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(i) Mortgage, Assignment of Leases, Franchise Agreement Letter
and Assignment of Consulting Agreement. Lender shall have received from
Borrower fully executed and acknowledged counterparts of the Mortgage, the
Assignment of Leases, the Franchise Agreement Letter and the Assignment of
Consulting Agreement relating to the Property and evidence that
counterparts of the Mortgage and Assignment of Leases for the Property
have been delivered to the title company for recording so as to
effectively create upon such recording, in the reasonable judgment of
Lender, valid and enforceable Liens upon the Property, of the requisite
priority, in favor of Lender (or such other trustee as may be required or
desired under local law), subject only to the Permitted Encumbrances and
such other Liens as are permitted pursuant to the Loan Documents.
(ii) Title Insurance. Lender shall have received the Title
Insurance Policy for the Mortgage, or a marked, re-dated and recertified
title commitment establishing the form of the Title Insurance Policy and
providing title insurance effective as of the Closing Date, issued by
Chicago Title Insurance Company and dated as of the Closing Date, with
endorsements, reinsurance and direct access agreements acceptable to
Lender. Such policy shall (A) provide coverage in amounts satisfactory to
Lender, (B) insure Lender that the Mortgage creates a valid first priority
Lien on the Property, free and clear of all exceptions from coverage other
than Permitted Encumbrances and standard exceptions and exclusions from
coverage (as modified by the terms of any endorsements), (C) contain such
endorsements and affirmative coverages as Lender may request, and (D) name
Lender. The Title Insurance Policy shall be assignable without charge.
Lender also shall have received evidence that all premiums in respect of
such title policy have been paid.
(iii) Survey. Lender shall have received a current survey of
the Property in form and content satisfactory to Lender, prepared by a
professional and properly licensed land surveyor satisfactory to Lender in
accordance with the 1992 Minimum Standard Detail Requirements for
ALTA/ACSM Land Title Survey (the "Survey Requirements") and certified to
the issuer of the Title Insurance Policy, Lender and its successors and
assigns by a certification in the form set forth in paragraph 8 of the
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Survey Requirements. Such survey shall reflect the same legal description
contained in the Title Insurance Policy relating to the Property referred
to in clause (ii) above and shall meet the requirements of an "Urban
Survey as set forth in the Survey Requirements and shall include items 1,
2, 3, 4, 6, 7, 8, 9, 10, 11 and 13 set forth on Table A of the Survey
Requirements.
(iv) Insurance. Lender shall have received certified copies of
the Policies required hereby, together with original certificates issued
by the insuror evidencing such Policies, naming Lender as an additional
insured or loss payee, together with evidence satisfactory to Lender that
such policies are in full force and effect, that all premiums then payable
for the existing policy period have been paid and that such policies may
not lapse or be terminated without at least thirty (30) days notice to
Lender.
(v) Environmental Reports. Lender shall have received a Phase
I environmental report and, if indicated, a Phase II environmental report
in respect of the Property, in each case satisfactory to Lender.
(vi) Zoning. With respect to the Property, Lender shall have
received, at Lender's option, (i) letters or other evidence with respect
to the Property from the appropriate municipal authorities (or other
Persons acceptable to Lender) concerning applicable zoning laws, or (ii) a
zoning opinion letter from Borrower's local counsel, in form and substance
satisfactory to Lender.
(vii) Encumbrances. Borrower shall have taken or caused to be
taken such actions to provide Lender, as of the Closing Date, with a
valid, perfected, first priority Lien with respect to the Mortgage in the
Property, subject only to applicable Permitted Encumbrances, and Lender
shall have received satisfactory evidence thereof.
(viii) Ground Lease. Borrower shall have delivered to Lender a
certified copy of the Ground Lease and original counterpart of the consent
by lessor executed in contemplation of the Loan.
(d) Related Documents. Each additional Loan Document not
specifically referenced herein, but relating to the
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transactions contemplated herein, shall have been duly authorized, executed and
delivered by all parties thereto and Lender shall have received and approved
certified copies thereof.
(e) Delivery of Organizational Documents. On or before the Closing
Date, Borrower shall deliver or cause to be delivered to Lender copies certified
by Borrower of all organizational documentation related to Borrower and/or its
formation, structure, existence, good standing and/or qualification to do
business, as Lender may request in its sole discretion, including, without
limitation, good standing certificates, qualifications to do business in the
appropriate jurisdictions, resolutions authorizing the entering into of the Loan
and incumbency certificates.
(f) Opinions of Borrower's Counsel. Lender shall have received (i)
the opinion of Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A. with
respect to non-consolidation issues (the "Non-Consolidation Opinion"), (ii)
opinions of counsel for Borrower with respect to due formation of Borrower, due
authorization, execution and delivery of the Note, this Agreement and the other
Loan Documents and enforceability of the Note, this Agreement and the other Loan
Documents and (iii) opinions of counsel for Borrower (who shall be satisfactory
to Lender), in the State in which the Property is located with respect to (A)
enforceability of the Mortgage, the Assignment of Leases and the other Loan
Documents with respect to the Property located in such State, (B) perfection of
Lender's security interest in the Revenue of the Property and (C) perfection of
Lender's security interest in all liquor licenses, if permitted under the laws
of such State, each in form and substance satisfactory to Lender, dated as of
the Closing Date as addressing such matters and Lender may reasonably request.
(g) Budgets. Borrower shall have delivered the Capital Expenditures
Budget and the Annual Operating Budget for the Property for the prior Fiscal
Year and the current Fiscal Year (on a forecast basis).
(h) Basic Carrying Costs. Borrower shall have paid all Basic
Carrying Costs relating to the Property which is due and payable through the
Closing Date, including, without limitation, all Impositions relating to
Borrower or the Property, which amounts may be funded with proceeds of the Loan.
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(i) Completion of Proceedings. All corporate and other proceedings
taken or to be taken in connection with the transactions contemplated by this
Agreement and other Loan Documents shall be reasonably satisfactory in form and
substance to Lender, and Lender shall have received all such counterpart
originals or certified copies of such documents as Lender may reasonably
request.
(j) Evidence of Insurance Premiums. Borrower shall have delivered,
or caused to be delivered, the Insuror's Letter.
IV. REPRESENTATIONS AND WARRANTIES
Section 4.1 Borrower's Representations.
Borrower represents and warrants that:
(a) Organization. Borrower has been duly organized and is validly
existing and in good standing under the laws of the jurisdiction of its
formation. Borrower and any general partner of any Borrower has requisite
corporate or partnership power and authority to (i) own its properties, (ii)
transact the businesses in which it is now engaged, (iii) execute and deliver
this Agreement, the Note, the Mortgage and the other Loan Documents and (iv)
consummate the transactions contemplated hereby and thereby. Borrower is duly
qualified to do business and is in good standing in the jurisdiction where its
Property is located and in each other jurisdiction where it is required to be so
qualified in connection with the ownership, maintenance, management and
operation of its Property, except where the failure to be so qualified or in
good standing would not have a material adverse effect on the financial
condition or the business of Borrower or the ownership, condition or operation
of its Property (a "Borrower Material Adverse Effect"). Borrower possesses all
rights, licenses, permits and authorizations, governmental or otherwise,
necessary to entitle it to own its properties and to transact the businesses in
which it is now engaged. The sole business of Borrower is the ownership,
management and operation of Individual Property.
(b) Authorization; Enforceability. The execution, delivery and
performance of Borrower' s obligations under this Agreement, the Note, the
Mortgage and the other Loan Documents has been duly authorized by all requisite
corporate or
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partnership action of Borrower, including, where required, the consent of its
partners or shareholders and directors. This Agreement, the Note, the Mortgage
and such other Loan Documents have been duly executed and delivered by or on
behalf of Borrower and constitute legal, valid and binding obligations of
Borrower enforceable against Borrower in accordance with their respective terms,
subject to applicable bankruptcy, insolvency and similar laws affecting rights
of creditors generally and to general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
(c) No Conflicts. The execution, delivery and performance of this
Agreement, the Note, the Mortgage and the other Loan Documents by Borrower will
not conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any Lien
(other than pursuant to the Loan Documents) upon any of the property or assets
of Borrower pursuant to the terms of any indenture, mortgage, deed of trust,
loan agreement, partnership agreement or other agreement or instrument to which
Borrower is a party or to which any of Borrower's property or assets is subject,
which conflict, breach, default or imposition of Lien would have a Borrower
Material Adverse Effect, nor will such action result in any violation of the
provisions of any statute or any order, rule or regulation of any Governmental
Authority having jurisdiction over Borrower or Borrower's Property or assets,
and any consent, approval, authorization, order, registration or qualification
of or with any Governmental Authority required for the execution, delivery and
performance by Borrower of this Agreement, the Note, the Mortgage or any other
Loan Documents has been obtained and is in full force and effect.
(d) Litigation. Except as set forth on Schedule J, there are no
actions, suits or proceedings at law or in equity by or before any Governmental
Authority for which service has been made on Borrower or any Affiliate or, to
the knowledge of Borrower, threatened against or affecting Borrower or the
Property, which actions, suits or proceedings are not covered by insurance and,
if determined against Borrower or the Property, would materially adversely
affect the condition (financial or otherwise) or business of such Borrower or
the condition or ownership of the Property.
(e) Agreements. Borrower is not a party to any agreement or
instrument or subject to any restriction which would materially adversely affect
Borrower or the Property, or
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Borrower's business, properties or assets, operations or condition, financial or
otherwise. Borrower is not in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
agreement or instrument to which it is a party or by which Borrower or the
Property is bound, except for any defaults that would not have a Borrower
Material Adverse Effect.
(f) Title. Borrower has a good, marketable and indefeasible
leasehold estate, pursuant to the Ground Lease in the real property comprising
the Property and good title to the balance of the Property, free and clear of
all Liens, restrictions, covenants, easements and other matters affecting title
whatsoever, except the Permitted Encumbrances. The Mortgage, when properly
recorded in the real property records of the county or parish where the Property
is located, and the other Collateral Security Documents, together with any
Uniform Commercial Code financing statements required to be filed in connection
therewith, will create (i) a valid, perfected first priority Lien on the
Property, subject only to Permitted Encumbrances and (ii) perfected security
interests in and to, and perfected collateral assignments of, all personalty
(including the Leases) and other collateral described therein, all in accordance
with the terms thereof, in each case subject only to any applicable Permitted
Encumbrances. There are no outstanding options or rights of first refusal
affecting any of the Property, except for options, if any, held by Borrower as
tenant under the Ground Lease. There are no claims for payment for work, labor
or materials affecting the Property which is or may become a lien prior to, or
of equal priority with, the Liens created by the Loan Documents. All of the
Permitted Encumbrances reflected in the Title Insurance Policy are customary
exceptions for commercial mortgage lending transactions involving properties
similar to the Property.
(g) No Bankruptcy Filing. To the best of Borrower's knowledge,
Borrower is not contemplating the filing of a petition by it under any state or
federal bankruptcy or insolvency laws or the liquidation of all or a major
portion of Borrower's assets or property, and Borrower has no knowledge of any
Person contemplating the filing of any such petition against it. Borrower is not
currently the subject of any bankruptcy or similar proceeding under any state or
federal law and the Property is not currently under the jurisdiction of any
bankruptcy court or other court having similar jurisdiction.
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(h) Full and Accurate Disclosure. No statement of fact made by
Borrower in this Agreement or in any of the other Loan Documents contains any
untrue statement of a material fact or omits to state any material fact
necessary to make statements contained herein or therein not misleading. There
is no material fact presently known to Borrower which has not been disclosed to
Lender which adversely affects, or might reasonably be expected to adversely
affect, the Property or the business, operations or condition (financial or
otherwise) of Borrower.
(i) No Plan Assets. Borrower is not an "employee benefit plan," as
defined in Section 3(3) of ERISA, subject to Title I of ERISA, and none of the
assets of Borrower constitutes or will constitute "plan assets" of one or more
such plans within the meaning of 29 C.F.R. Section 2510.3-101.
(j) Compliance. Borrower and the Property and the use thereof comply
in all material respects with all applicable Legal Requirements, including,
without limitation, parking requirements. Borrower is not in default or
violation of any order, writ, injunction, decree or demand of any Governmental
Authority, the violation of which would materially adversely affect the
condition (financial or otherwise) or business of Borrower.
(k) Contracts. There are no material contracts, excluding Leases,
Equipment Leases, Franchise Agreement and cable television contracts affecting
the Property that would be binding upon Lender or its designee after foreclosure
or transfer in lieu of foreclosure of the Property that are not terminable on
one month's notice or less without cause and without penalty or premium.
(1) Financial Information. All financial data of the Borrower,
including, without limitation, the statements of cash flow and income and
operating expense, that have been delivered to Lender (i) are true, complete and
correct in all material respects, (ii) fairly represent the financial condition
of the Property and Borrower as of the date of such reports, and (iii) have been
prepared in accordance with GAAP, consistently applied throughout the periods
covered, except as disclosed therein. As of the date of this Agreement, Borrower
has no material contingent liability, liability for taxes (other than taxes not
yet due and payable) or other unusual or forward commitment. Since April 30,
1995, there has been no material adverse change in the results of operations of
the Property or the assets,
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liabilities or financial condition of Borrower. Except as disclosed in such
financial statements, Borrower has not incurred any obligation or liability,
contingent or otherwise, which would materially adversely affect its business
operations or the Property.
(m) Condemnation. Neither Borrower nor any Affiliate of Borrower has
received notice of any proceeding with respect to Condemnation, nor, to
Borrower's best knowledge, is any Condemnation contemplated, with respect to all
or any portion of the Property.
(n) Federal Reserve Regulations. No part of the proceeds of the Loan
will be used for the purpose of purchasing or acquiring any "margin stock"
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System or for any other purpose which would be inconsistent with such
Regulation U or any other Regulations of such Board of Governors, or for any
purposes prohibited by Legal Requirements or by the terms and conditions of this
Agreement or the other Loan Documents.
(o) Utilities and Public Access. The Property has rights of access
to public ways and is served by water, gas, electric, telephone, sanitary sewer
and storm drain facilities adequate to service the Property for its respective
intended use. To the knowledge of Borrower, except as disclosed in the surveys,
all public utilities necessary or convenient to the full use and enjoyment of
the Property is located in the public right-of-way abutting the Property, and
all such utilities are connected so as to serve the Property without passing
over other property. All roads necessary for access to the Property for its
current purpose have been completed and dedicated to public use and accepted by
all Governmental Authorities. No road providing access to the Property is
currently (i) closed or severely restricted in use or (ii) to the best of
Borrower's knowledge, contemplated to be relocated, closed or severely
restricted in use.
(p) Not a Foreign Person. Borrower is not a "foreign person" within
the meaning of ss. 1445(f) (3) of the I.R.C.
(q) Separate Lots. The Property is comprised of one (1) or more
parcels, which constitutes a separate tax lot and does not constitute a portion
of any other tax lot not a part of the Property. The Property is not assessed
jointly with any
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other real property constituting a separate tax lot or with any personal
property not constituting part of the Property such that the lien of any taxes
which may be levied against such personal property shall be assessed or levied
or charged as a lien on the Property.
(r) Assessments. There are no pending or, to the best of Borrower's
knowledge, proposed special or other assessments for public improvements or
otherwise affecting the Property, except for Permitted Encumbrances, nor, to the
best of Borrower's knowledge, are there any contemplated improvements to any of
the Property that may result in such special or other assessments.
(s) No Defenses. As of the Closing Date, this Agreement, the Note
and the other Loan Documents are not subject to any right of rescission,
set-off, counterclaim or defense by Borrower, including the defense of usury,
and Borrower has not asserted any right of rescission, set-off, counterclaim or
defense with respect thereto.
(t) No Prior Assignment. Lender is the assignee of all Borrower's
interests under the Leases and there are no prior assignments of any of the
Leases or any portion of the Revenue which are presently outstanding.
(u) Insurance. Borrower has obtained and has delivered to Lender the
Policies, or certified copies thereof, together with original certificates
evidencing such Policies, reflecting the insurance coverages, amounts and other
requirements set forth herein, which Policies are in full force and effect and
may not lapse or be terminated without at least thirty (30) days notice to
Lender or ten (10) days for nonpayment of premiums.
(v) Use of Properties. The Property is used exclusively for hotel
purposes and other appurtenant and related uses.
(w) Certificate of Occupancy; Permits and Licenses. Borrower has
obtained, or the appropriate authority has issued, all permits, licenses,
approvals and franchises, including, without limitation, certificates of
occupancy, hotel licenses and liquor licenses (the "Permits"), required by Legal
Requirements in order to use and operate the Property for hotel use as currently
operated, except for Permits the failure of which to so obtain would not have a
Borrower Material Adverse Effect. All
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such Permits are (i) listed on Schedule E annexed hereto, (ii) to the best of
Borrower's knowledge, have been validly issued and are in full force and effect
and (iii) are issued in or have been transferred into the name of the Borrower
that owns the Property, except as indicated on Schedule E. Where permitted by
Legal Requirements, Borrower has granted Lender a valid, perfected first
priority security interest in all such Permits. All fees due and payable with
respect to each Permit have been paid. There are no proceedings pending or, to
the best of Borrower's knowledge, threatened which may result in the revocation,
suspension or termination of any Permit. The Property is operated in compliance,
in all material respects, with the related Permits.
(x) Flood Zone. Except as indicated on the Survey, none of the
Improvements on the Property are located in a flood hazard area as defined by
the Federal Emergency Management Agency.
(y) Physical Condition. To the best of Borrower' knowledge, except
as disclosed in the Building Evaluation Reports, the Property, including,
without limitation, all buildings, parking facilities, sidewalks, storm drainage
systems, roofs, plumbing systems, HVAC systems, fire protection systems,
electrical systems, equipment, elevators, exterior sidings and doors,
landscaping, irrigation systems and all other Improvements thereon are in
operating condition, order and repair in all material respects. To the best of
Borrower' knowledge, except as disclosed in the Building Evaluation Reports,
there exists no structural or other material defect in the Property, whether
latent or otherwise. Neither Borrower nor any Affiliate of Borrower has received
written notice from any insurance company or bonding company of any defects or
inadequacies in any of the Properties, or any part thereof, which would
adversely affect the insurability of the same or cause the imposition of
extraordinary premiums or charges thereon or of any termination or threatened
termination of any policy of insurance or bond.
(z) Solvency. The fair saleable value of Borrower's assets exceeds
and will, immediately following the making of the Loan, exceed such Borrower's
total liabilities, including, without limitation, subordinated, unliquidated,
disputed and contingent liabilities. The fair saleable value of Borrower's
assets is and will, immediately following the making of the Loan, be greater
than Borrower's probable liabilities, including its contingent liabilities, on
its debts as such debts become
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absolute and matured. In the good faith judgment of Borrower, Borrower's assets
constitute, and immediately following the making of the Loan will constitute,
reasonably sufficient capital to carry out its business as conducted or as
proposed to be conducted. Borrower does not intend to, or believe that it will,
incur debts and liabilities (including, without limitation, contingent
liabilities and other commitments) beyond its ability to pay such debts as they
mature.
(aa) Casualty. The Property has not sustained any material loss or
interference with its operations from fire, explosion, flood or other calamity,
or from any labor dispute or any action, order or decree by any Governmental
Authority.
(bb) Components of Value. The portion of the Property constituting
interests in real property has a fair market value as of the date hereof at
least equal to eighty percent (80%) of the Principal Balance.
(cc) Filing and Recording Taxes. All transfer taxes, deed stamps,
intangible taxes or other amounts in the nature of transfer taxes required to be
paid by any Person under applicable Legal Requirements in connection with the
transfer of the Property to Borrower have been paid. All mortgage, mortgage
recording, stamp, intangible or other similar tax required to be paid by any
Person under applicable Legal Requirements in connection with the execution,
delivery, recordation, filing, registration, perfection or enforcement of any of
the Loan Documents, including, without limitation, the Mortgage encumbering the
Property have been paid, and, under current Legal Requirements, the Mortgage is
enforceable in accordance with its terms by Lender (or any subsequent holder
thereof) against the Property.
(dd) Single-Purpose. Borrower hereby represents and warrants to, and
covenants with, Lender that, as of the date hereof and until such time as the
Indebtedness shall be paid in full, except as otherwise provided herein, in the
other Loan Documents or in the Consulting Agreement, the Borrower, and if
Borrower is a limited partnership, the general partner of Borrower:
(i) does not own and shall not own any asset other than the
Property or, in the case of a general partner, its interest in Borrower;
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(ii) is not engaged and shall not engage in any business other
than those necessary for the ownership, use, management or operation of the
Property and any transactions entered into in connection with such business with
any Affiliate of Borrower or the general partner, other than any such
transactions embodied in the Loan Documents and the Consulting Agreement, shall
be entered into 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 an Affiliate of Borrower or such general partner;
(iii) has not incurred, created or assumed any currently
outstanding debt, and shall not incur, create or assume any debt, secured or
unsecured, direct or contingent (including guaranteeing any obligation), other
than the Indebtedness, trade indebtedness incurred in ordinary course of the
Borrower's or the general partner's business (including the financing of
insurance premiums) and the Permitted Encumbrances, except as may be otherwise
expressly permitted hereunder;
(iv) has not made any currently outstanding, and shall not
make any, loans or advances to any third party (including any Affiliate of
Borrower or such general partner);
(v) is and shall be solvent and paying its liabilities
(including, as applicable, reasonable allocations of personnel and overhead
expenses) from its assets as the same shall become due;
(vi) has done or caused to be done and shall do or cause to be
done all things necessary to preserve its existence, and shall not, nor shall
any general partner thereof, as applicable, amend, modify or otherwise change
its articles of incorporation or by-laws or partnership agreement, as applicable
without the prior written consent of Lender, in its sole discretion;
(vii) shall observe all corporate or partnership formalities,
as applicable, and conduct and operate its business as presently conducted and
operated and in accordance with the assumptions set forth in the
Non-Consolidation Opinion;
(viii) shall maintain books and records and bank accounts
separate from those of its Affiliates or any other Person;
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(ix) shall maintain a separate business office at the
Property;
(x) shall be, and at all times shall hold itself out to the
public as, a legal entity separate and distinct from any other entity, including
any Affiliate thereof, provided that Borrower may identify its Property as
associated with the applicable Franchisor;
(xi) shall file its own tax returns, if required by the Code;
(xii) shall maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and character and
in light of its contemplated business operations;
(xiii) shall not seek or consent to the liquidation,
dissolution or winding up, in whole or in part, of Borrower or the general
partner, nor enter into any consolidation, merger, joint venture, syndication or
other combination;
(xiv) shall not commingle its funds and other assets with
those of any Affiliate or any other Person;
(xv) has caused, and at all times shall cause, there to be at
least one duly appointed member of the board of directors (an "Independent
Director") of Borrower or the general partner who has not been at the time of
such individual's appointment, and may not have been at any time during the
preceding two years (A) a stockholder of, or an officer, director (other than
with respect to such Independent Director's service as director of Borrower or
the general partner) or employee of, Borrower or any of its Affiliates, or the
general partner or any of its Affiliates, (B) a customer or supplier to Borrower
or any of its Affiliates, or to the general partner or any of its Affiliates,
(C) a person or other entity controlling any such stockholder, supplier or
customer, or (D) a member of the immediate family of any such stockholder,
officer, employee, supplier or customer or any other director of Borrower or the
general partner. As used in this subsection (dd), the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise;
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(xvi) has not caused, and shall not cause, the board of
directors of Borrower or the general partner to take any action which, under the
terms of any certificate of incorporation, by-laws or any voting trust agreement
with respect to Borrower's common stock, requires the unanimous affirmative vote
of one hundred percent (100%) of the members of the board of directors, unless
at the time of such action there shall be at least one member who is an
Independent Director;
(xvii) shall comply with the provisions of its articles of
incorporation or by-laws or partnership agreement, as applicable; and
(xviii) shall use separate and distinct invoices and
stationery and checks that indicate, by printed or typed identification, that
Borrower is the entity for which payment is made.
(ee) Enforceability of Franchise and Consulting Agreement. Each of
the Franchise Agreement and the Consulting Agreement have been duly authorized,
executed and delivered or duly assumed by Borrower and constitutes a valid and
legally binding instrument enforceable against Borrower in accordance with its
terms, subject to the effects of bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally and general equitable principles (whether considered in a proceeding
in equity or at law).
(ff) Compliance with Franchise Agreement. A true and complete copy
of the Franchise Agreement (including all amendments, agreements, side letters
and other documents relating thereto) has been delivered to Lender and there are
no other documents or agreements between Borrower or any Franchisor with respect
to the Property. All amounts due and payable under the Franchise Agreement
through the Closing Date have been paid, and to Borrower's knowledge, there is
no default by either party under any Franchise Agreement and no event has
occurred and is continuing which, with the passage of time and/or the giving of
notice, would constitute a default or event of default by either party under any
Franchise Agreement, except in any case for defaults that would not have a
Borrower Material Adverse Effect. Any work on the Property required by the
Franchisor under any Franchise Agreement to have been completed prior to the
date hereof has been completed and either (i) has been approved by such
Franchisor or (ii) Borrower knows of no reason why such work
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should not be approved. All necessary consents, if any, of any Franchisor to the
transactions contemplated by this Agreement and the other Loan Documents have
been obtained.
(gg) Compliance with Consulting Agreement. A true and complete copy
of the Consulting Agreement has been delivered to Lender and there are no other
agreements or documents providing for the management or the supervision of the
Property. All amounts due and payable under the Consulting Agreement as of the
Closing Date have been paid and, to the best of Borrower's knowledge, there is
no default in any material respect by any party under the Consulting Agreement,
and no event has occurred and is continuing which, with the passage of time
and/or the giving of notice, would constitute a default or event of default in
any material respect by any party under the Consulting Agreement.
(hh) Equipment Leases. True and complete copies of all Equipment
Leases (including all amendments, agreements, side letters and documents
relating thereto) have been delivered to Lender. All Equipment Leases are listed
on Schedule F annexed hereto and, except as set forth on Schedule F, all of such
Equipment Leases are unmodified. All of the Equipment Leases are in full force
and effect and there is no default in any material respect by Borrower
thereunder, nor, to the best knowledge of Borrower, by the lessor or other party
thereunder and, to the best knowledge of Borrower, no event has occurred and is
continuing which, with the passage of time and/or the giving of notice, would
constitute a default or event of default in any material respect under any such
Equipment Leases. Except for items subject to the Equipment Leases, all
furniture, fixtures, equipment and personal property used in connection with the
ownership, operation, management and maintenance of the Property is owned by
Borrower.
(ii) No Encroachments. To the best knowledge of Borrower, except as
disclosed in the Surveys or Title Insurance Policy, all improvements comprising
a portion of the Property lie wholly within the boundary and building
restriction lines of the Property and no improvements on adjoining properties
encroach upon the Property in any respect.
(jj) Leases. Schedule G, annexed hereto, sets forth all Leases
affecting any part of the Properties. All such Leases are in full force and
effect and have not been amended or modified except as set forth on Schedule G.
To the best of
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Borrower's knowledge, no material default has occurred and is continuing
thereunder.
Section 4.2 Survival of Representations.
Borrower agrees that all of the representations and warranties of
Borrower set forth in Section 4.1 and elsewhere in this Agreement and in the
other Loan Documents shall survive for so long as any amount remains owing to
Lender under this Agreement or any of the other Loan Documents. All
representations, warranties, covenants and agreements made in this Agreement or
in the other Loan Documents by Borrower shall be deemed to have been relied upon
by Lender notwithstanding any investigation heretofore or hereafter made by
Lender or on its behalf.
V. AFFIRMATIVE COVENANTS
Section 5.1 Borrower's Covenants.
From the date hereof and until payment and performance in full of
all obligations of Borrower under the Loan Documents or the earlier release of
the Lien of the Mortgage (and all related obligations) from the Property in
accordance with the terms of this Agreement and the other Loan Documents,
Borrower hereby covenants and agrees with Lender that:
(a) Existence; Compliance with Legal Requirements and Insurance
Requirements. Borrower shall do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its existence, rights,
licenses, permits and corporate franchises and comply with all Legal
Requirements applicable to it and its Property. Borrower shall at all times use
its best efforts to maintain, preserve and protect all its corporate franchises
and trade names and preserve all the remainder of its property used or useful in
the conduct of its business and shall keep its Property, including, without
limitation, all Equipment, in satisfactory working order and repair and in
compliance with all Legal Requirements and Insurance Requirements, and from time
to time make, or cause to be made, all reasonably necessary repairs, renewals,
replacements, betterments and improvements thereto in order to maintain such
Property in compliance with the prevailing standards for a hotel property of
similar age, size, construction and the then applicable franchise affiliation in
the
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metropolitan area in which such Property is located, all as more fully provided
in the Mortgage.
(b) Impositions and Other Charges. Borrower shall pay all
Impositions, now or hereafter levied or assessed or imposed against its Property
or any part thereof, subject to Lender's obligation to disburse funds from the
Basic Carrying Costs Sub-Account pursuant to Section 2.6.7(b) and shall pay all
water, sewer, maintenance and other charges now or hereafter levied or assessed
or imposed against the Property or any part thereof (the "Other Charges") as
same become due and payable. Borrower shall not suffer, and Borrower shall
promptly cause to be paid and discharged, any Lien whatsoever which may be or
become a lien or charge against the Property other than Permitted Encumbrances,
and shall promptly pay for all utility services provided to its Property.
Borrower shall furnish to Lender or its designee upon request, receipts for the
payment, or other evidence reasonably satisfactory to Lender of payment, of such
Impositions, Other Charges and said utility services prior to the date the same
shall become delinquent, except with respect to amounts that Lender is obligated
to disburse pursuant to Section 2.6.7(b). After prior written notice to Lender,
Borrower, at its own expense, may contest by appropriate legal proceeding,
promptly initiated and conducted in good faith and with due diligence, the
amount or validity or application in whole or in part of any Impositions or
Other Charges, provided that (i) no Event of Default has occurred and is
continuing, (ii) such proceeding shall suspend the collection of the Impositions
or Other Charges from the Property, (iii) such proceeding shall be permitted
under and be conducted in accordance with the provisions of any other instrument
to which Borrower or the Property is subject and shall not constitute a default
thereunder, and (iv) Borrower shall have furnished such security as may be
required in the proceeding, or as may be reasonably requested by Lender, to
insure the payment of any such Impositions or Other Charges, together with all
interest and penalties thereon.
(c) Litigation. Borrower shall give prompt written notice to Lender
of any litigation or governmental proceedings pending or threatened against
Borrower which might materially adversely affect Borrower's condition (financial
or otherwise) or its business or its Property.
(d) Access to Premises. Borrower shall permit agents,
representatives and employees of Lender to inspect the Property
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or any part thereof at reasonable hours upon reasonable advance notice.
(e) Notice of Default. Borrower shall promptly advise Lender of any
material adverse change in Borrower's condition, financial or otherwise, or of
the occurrence of any default or Event of Default of which Borrower has
knowledge.
(f) Cooperate in Legal Proceedings. Borrower shall cooperate fully
with Lender with respect to any proceedings before any Governmental Authority
with respect to Borrower or the Property which may in any way affect the rights
of Lender hereunder or any rights obtained by Lender under any of the other Loan
Documents and, in connection therewith, permit Lender, at its election and at
Borrower' expense, to participate in any such proceedings.
(g) Perform Loan Documents. Borrower shall observe, perform and
satisfy all the terms, provisions, covenants and conditions of, and shall pay
when due all costs, fees and expenses to the extent required under the Loan
Documents executed and delivered by, or applicable to, Borrower.
(h) Insurance Benefits. Borrower shall cooperate with Lender in
obtaining for Lender the benefits of any proceeds of any insurance lawfully or
equitably payable in connection with its Property, and Lender shall be
reimbursed for any expenses incurred in connection therewith (including
reasonable attorneys' fees and disbursements, and the payment by Borrower of the
expense of an appraisal on behalf of Lender if reasonably requested by Lender in
case of a fire or other casualty affecting its Property or any part thereof) out
of such insurance proceeds.
(i) Further Assurances; Supplemental Mortgage Affidavits. (i)
Borrower shall, at Borrower's sole cost and expense:
(A) furnish to Lender all instruments, documents, boundary surveys,
footing or foundation surveys, certificates, plans and specifications,
appraisals, title and other insurance reports and agreements, and each and every
other document, certificate, agreement and instrument required to be furnished
by Borrower pursuant to the terms of the Loan Documents or reasonably requested
by Lender in connection therewith;
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(B) execute and deliver to Lender such documents, instruments,
certificates, assignments and other writings, and do such other acts necessary
or desirable to evidence, preserve and/or protect, and to maintain Lender's
perfected lien upon, and security interest in, the collateral (including,
without limitation, the Central Account and all funds on deposit therein) at any
time securing or intended to secure the obligations of Borrower under the Loan
Documents, as Lender may reasonably require; and
(C) do and execute all and such further lawful and reasonable acts,
conveyances and assurances for the better and more effective carrying out of the
intents and purposes of this Agreement and the other Loan Documents, as Lender
shall reasonably require from time to time.
(ii) As of the date hereof, Borrower represents that it has paid all
state, county and municipal recording and all other taxes imposed upon the
execution and recordation of the Mortgage against the Property.
(j) Management of Mortgaged Property. Borrower covenants and agrees
with Lender that (i) its Property will be managed at all times by the Consultant
pursuant to the Consulting Agreement, (ii) immediately upon the occurrence of a
fifty percent (50%) or more change in control of the Consultant (a "Consultant
Control Change"), Borrower will promptly give Lender notice thereof (a
"Consultant Control Notice") and (iii) any Consulting Agreement may be
terminated by Lender (A) For Cause (as defined below) at any time, (B) at any
time after the occurrence and during the continuance of an Event of Default with
respect to any amounts payable hereunder or under the Note, the Mortgage or the
other Loan Documents, (C) upon commencement of any foreclosure proceeding with
respect to the Property and (D) after any Consultant Control Change with respect
to the applicable Consultant if the Rating Agency has failed to confirm, after
written request, in writing that as a result of such Consultant Control Change
the then current rating of the Certificates will not be downgraded, withdrawn or
otherwise adversely affected. Upon such termination, a substitute managing agent
shall be appointed by Borrower, subject to Lender's approval, in Lender's sole
discretion, for the Property. As used in this subsection (j), the term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of Consultant, whether through
ownership of voting securities, by contract or otherwise,
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and the term "For Cause" means on account of Consultant's gross negligence,
willful misconduct or fraud or Consultant's default beyond the expiration of any
applicable notice or grace period in the performance of its obligations under
the applicable Consulting Agreement. The Consulting Agreement shall be subject
and subordinate in all respects to the Lien and to the terms, covenants and
provisions of the Mortgage and the other Loan Documents in accordance with that
certain Assignment of Consulting Agreement, dated as of the date hereof.
Provided no Event of Default has occurred and is then continuing hereunder,
Consultant shall be entitled to collect fees under the Consulting Agreement,
provided that any such fees in excess of four percent (4%) of Revenues shall not
be paid or collected unless all amounts then payable under the Loan Documents
shall have been paid in full and Operating Expenses are being paid consistent
with Borrower's practices in effect as of the Closing Date and Borrower shall
not reasonably expect future Revenue to be insufficient to pay Operating
Expenses accrued or thereafter accruing. Borrower further covenants and agrees
that Borrower shall require the Consultant to maintain at all times during the
term of the Loan worker's compensation insurance as required by Governmental
Authorities. Borrower shall perform its obligations under the Consulting
Agreement.
(k) Financial Reporting.
(i) Borrower will keep and maintain or will cause to be kept and
maintained on a Fiscal Year basis, in accordance with GAAP, proper and accurate
books, records and accounts reflecting all of the financial affairs of Borrower
and all items of income and expense in connection with the operation on an
individual basis of the Property and in connection with any services or
Equipment provided in connection with the operation thereof, whether such income
or expense be realized by Borrower or by any other Person whatsoever, excepting
lessees unrelated to and unaffiliated with Borrower who have leased from
Borrower portions of the Property for the purpose of occupying the same. Lender
shall have the right from time to time at all times during normal business hours
upon reasonable notice to examine such books, records and accounts at the office
of Borrower or other Person maintaining such books, records and accounts and to
make such copies or extracts thereof as Lender shall desire. After the
occurrence of an Event of Default, Borrower shall pay any reasonable costs and
expenses incurred by Lender in connection with such examination.
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(ii) Borrower will furnish to Lender annually (with a copy to the
Rating Agency), within one hundred twenty (120) days following the end of each
Fiscal Year of Borrower, a certified complete copy of the financial statement of
Borrower, prepared on a combined basis, audited by Borrower's Accountant in
accordance with GAAP covering on a combined basis the operation of the Property
for such Fiscal Year and containing a statement of Revenues and Operating
Expenses, a statement of assets and liabilities and a statement of Borrower's
equity. Together with Borrower's annual combined financial statement, Borrower
shall furnish to Lender an unaudited operating statement for the Property,
accompanied by an Officer's Certificate representing as of the date thereof (A)
that the annual operating statement accurately represents the operation of the
related Property, in accordance with GAAP consistently applied and (B) whether
there exists an event or circumstance which constitutes a default or Event of
Default under the Loan Documents executed and delivered by, or applicable to
Borrower, and if such default or Event of Default exists, the nature thereof,
the period of time it has existed and the action then being taken to remedy the
same.
(iii) Borrower shall timely file any and all required reports with
the Securities and Exchange Commission, required to be filed pursuant to the
Securities Exchange Act of 1934, as amended.
(iv) Borrower will furnish, or cause to be furnished, to Lender
monthly (with a copy to the Rating Agency), within twenty (20) days following
the end of each month, both (A) a true, complete and correct cash flow statement
with respect to the Property on an individual basis in form reasonably
acceptable to Lender showing (I) all cash receipts of any kind whatsoever and
all cash payments and disbursements for such month, and (II) year-to-date
summaries of such cash receipts, payments and disbursements, (III) all Revenue
and Operating Expenses for such month and (IV) all Revenue and Operating
Expenses for the preceding twelve (12) full calendar months and (B) an
operations statement with respect to the Property prepared on an accrual basis,
in the form of Schedule H annexed hereto, showing the operations of the Property
for the preceding twelve (12) full calendar months and (C) a balance sheet for
Borrower, together with a certification of the Consultant (a "Consultant's
Certification") stating that, in all material respects, (a) each such cash flow
statement and operating statement is true, complete and correct and (b) all
Operating Expenses with respect
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to the Property which have accrued as of the last day of the month preceding the
delivery of such cash flow statement have been fully paid or otherwise provided
for by or on behalf of Borrower.
(v) Borrower shall furnish to Lender (with a copy to the Rating
Agency), within fourteen (14) days after request, such further detailed
information with respect to the operation of the Property and the financial
affairs of Borrower as may be reasonably requested by Lender.
(vi) Lender shall have the right to audit, at Lender's expense,
Borrower's books and records to determine Revenue and Operating Expenses for the
Property; provided, however, that if such audit reveals a misstatement of
Revenue or Operating Expenses in any financial statement submitted by or on
behalf of Borrower by more than five percent (5%) of such amount for the period
which is the subject of such audit, Borrower shall reimburse Lender on demand
for the cost of such audit.
(l) Business and Operations. Borrower will continue to engage in the
businesses presently conducted by it as and to the extent the same are necessary
for the ownership, maintenance, management and operation of its Property.
Borrower will qualify to do business and will remain in good standing under the
laws of each jurisdiction as and to the extent the same are required for the
ownership, maintenance, management and operation of its Property.
(m) Title to the Property. Borrower will warrant and defend (i) the
title to the Property and every part thereof, subject only to the Permitted
Encumbrances, and (ii) the validity and priority of the Liens of the Mortgage
and the Assignment of Leases on the Property, subject only to the Permitted
Encumbrances, in each case against the claims of all Persons whomsoever.
Borrower shall reimburse Lender for any losses, costs, damages or expenses
(including reasonable attorneys' fees and court costs) incurred by Lender if an
interest in the Property, other than as permitted hereunder, is claimed by
another Person.
(n) Costs of Enforcement. In the event (i) that the Mortgage is
foreclosed in whole or in part or is put into the hands of an attorney for
collection, suit, action or foreclosure, (ii) of the foreclosure of any other
mortgage encumbering any of the Property in which proceeding Lender is made a
party, or (iii)
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of the bankruptcy, insolvency, rehabilitation or other similar proceeding in
respect of Borrower or an assignment by Borrower for the benefit of its
creditors, Borrower, its successors or assigns, shall be chargeable with and
agree to pay all costs of collection and defense, including attorneys' fees in
connection therewith and in connection with any appellate proceeding or
post-judgment action involved therein, which shall be due and payable hereunder
together with all required service or use taxes.
(o) Estoppel Statement. Borrower, within ten (10) days after request
from Lender, shall from time to time furnish to Lender a statement, duly
acknowledged and certified by Borrower, setting forth (i) the amount then owing
by Borrower in respect of the Indebtedness, (ii) the date through which interest
on the Loan has been paid, and (iii) any offsets, counterclaims, credits or
defenses to the payment of Borrower's obligations under the Loan Documents and
acknowledging that this Agreement and the other Loan Documents executed and
delivered by, or applicable to, Borrower are legal, valid and binding
obligations of Borrower and have not been modified or, if modified, giving the
particulars of such modification. Lender, within ten (10) days after a request
by Borrower, shall from time to time, but not more frequently than four (4)
times in any calendar year, furnish to Borrower a statement, duly acknowledged
and certified by Lender, setting forth (A) the amount then owing by Borrower
with respect to the Indebtedness, (B) the date through which Interest on the
Loan has been paid and (C) that, to the best of Lender's knowledge, no default
has occurred hereunder, and acknowledging that this Agreement and the other Loan
Documents have not been modified, or if modified, giving the particulars of such
modification.
(p) Loan Proceeds. The proceeds of the Loan shall be used only for
the purposes set forth in Section 2.2.
(q) Permits. Borrower shall comply, and cause its Property to be
operated in compliance, in all material respects, with all Permits and shall
extend or renew any Permit that may expire.
(r) Annual Operating Budget and Capital Expenditures Budget.
Borrower shall prepare and deliver to Lender, not less than fifteen (15)
Business Days prior to the commencement of each Fiscal Year of Borrower, (i) an
Annual Operating Budget with respect to the Property for such ensuing Fiscal
Year, and (ii) a
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Capital Expenditures Budget with respect to the Property for such ensuing Fiscal
Year.
(s) Confirmation of Representations. In addition to and not in
limitation of the covenants and agreements of Borrower contained in Section 7.1,
Borrower shall deliver, in connection with any Securitization Transaction, one
or more Officer's Certificates certifying as to the accuracy of all
representations made by Borrower in the Loan Documents as of the date of the
closing of such Securitization Transaction or specifying any changes in the
accuracy of such representations.
(t) No Joint Assessment. Borrower shall not suffer, permit or
initiate the joint assessment of the Property (i) with any other real property
constituting a tax lot separate from the Property, and (ii) with any other
personal property, whereby the lien of any taxes which may be levied against
such other personal property shall be assessed or levied or charged to the
Property.
(u) Leasing Matters. Any Lease with respect to the Property that
covers more than one thousand (1,000) rentable square feet shall be written on a
form of lease which has been approved by Lender, which approval shall not be
unreasonably withheld. Upon request, Borrower shall furnish Lender with executed
copies of all Leases. All proposed Leases or renewals of existing leases entered
into after the Closing Date shall be on commercially reasonable terms and shall
not contain any terms which would materially affect Lender's rights under the
Loan Documents. All Leases executed after the date hereof shall be subordinate
to the Mortgage encumbering the Property. Borrower (i) shall observe and perform
the obligations imposed upon the lessor under the Leases in a commercially
reasonable manner; (ii) shall enforce, and may amend or terminate, the terms,
covenants and conditions contained in the Leases upon the part of the lessee
thereunder to be observed or performed in a commercially reasonable manner;
(iii) shall not collect any of the rents more than one (1) month in advance
(other than security deposits); (iv) shall not execute any other assignment of
lessor's interest in the Leases or the Revenue (except as contemplated by the
Loan Documents); (v) shall not alter, modify or change the terms of the Leases
in a manner inconsistent within the provisions of the Loan Documents; and (vi)
shall execute and deliver at the request of Lender all such further assurances,
confirmations and assignments in connection with the Leases as Lender shall from
time to time require.
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(v) Financing Statements. Borrower shall, promptly upon Lender's
request, at Borrower's sole cost and expense, timely file or refile, or cause to
be filed or refiled, all continuations and any assignments of any of the Uniform
Commercial Code Financing Statements filed in connection with the Loan, as
appropriate, in the appropriate recording or filing offices, such that Lender
will continue to have a valid and perfected first priority lien on the
collateral subject to such financing statements.
(w) Equipment Leases. Borrower shall observe and perform or cause to
be observed or performed all of its obligations under all Equipment Leases and
replace any expired Equipment Leases with similar agreements as necessary to
maintain the operating standards of its Property.
(x) Franchise Inspection Reports. Borrower shall deliver to Lender,
or cause the Consultant to deliver to Lender, a copy of each inspection report
of any Franchisor with respect to the Property within five (5) Business Days
after Borrower's or Consultant's receipt thereof.
(y) Compliance with Franchise Agreement. Borrower shall operate its
Property as a hotel open for business under the Franchise Agreement, and shall
perform all of its obligations under the Franchise Agreement.
(z) Operations and Maintenance Programs. The Borrower that owns the
Property referred to on Schedule I annexed hereto shall cause such Property to
be operated and maintained in all material respects in accordance with those
certain operations and maintenance programs, approved by the Environmental
Consultant, listed on Schedule I and shall deliver an Officer's Certificate to
Lender within thirty (30) days of the Closing Date stating that such Borrower
has instructed the relevant employees at the Property in compliance with such
operations and maintenance program.
(aa) Insuror's Letter. Borrower shall deliver an updated Insuror's
Letter within ten (10) Business Days of any change in the premiums payable with
respect to the Policies.
VI. NEGATIVE COVENANTS
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Section 6.1 Borrower's Negative Covenants.
From the date hereof until payment and performance in full of all
obligations of Borrower under the Loan Documents or the earlier release of the
Liens of the Mortgage (and all related obligations) from the Property in
accordance with the terms of this Agreement and the other Loan Documents,
Borrower covenants and agrees with Lender that Borrower will not do, directly or
indirectly, any of the following:
(a) Operation of Property. Borrower shall not, without the prior
consent of Lender, which consent shall not be unreasonably withheld or delayed,
amend, modify, terminate or extend, or consent to an assignment of Franchisor's
or Consultant's rights under, any Franchise Agreement or Consulting Agreement
relating to the Property or otherwise replace Franchisor or Consultant of the
Property or enter into any other management or franchise agreements with respect
to the Property. Notwithstanding the foregoing, if the Franchise Agreement shall
expire or be terminated, other than any termination by Borrower or on account of
Borrower's default thereunder, Borrower shall enter into a new Franchise
Agreement, in form and substance reasonably satisfactory to Lender. During any
Franchise Restricted Period, all Excess Property Income for the Property shall
be deposited in the Central Account and allocated as provided in Section
2.6.3(g), provided that if a Franchise Restricted Period and a DSCR Restricted
Period shall both be in effect with respect to any period of time, such period
will be deemed a DSCR Restricted Period for the purposes of this Agreement and
if a Franchise Restricted Period and an Operative Period shall both be in effect
with respect to any period of time, such period of time shall be deemed an
Operative Period for the purposes of this Agreement. A "Franchise Restricted
Period" shall mean any period of time during which the Franchise Agreement shall
have been expired or been terminated, other than a termination by Borrower or on
account of Borrower's default thereunder, and shall not have been replaced by a
new Franchise Agreement pursuant to this subsection. It shall be an Event of
Default hereunder if any Franchise Restricted Period shall continue for more
than ninety (90) days.
(b) Liens. Borrower shall not, without the prior written consent of
Lender, create, incur, assume or suffer to exist any Lien on any portion of the
Property or permit any such action to be taken, except:
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(i) Permitted Encumbrances; or
(ii) Liens for Impositions or Other Charges not yet due or which are
being contested in compliance with Section 5.1(b).
(c) Dissolution. Borrower shall not dissolve, terminate, liquidate,
merge with or consolidate into another Person.
(d) Change In Business. Borrower shall not enter into any line of
business other than the ownership and operation of its Property, or make any
material change in the scope or nature of its business objectives, purposes or
operations, or undertake or participate in activities other than the continuance
of its present business.
(e) Debt Cancellation. Borrower shall not cancel or otherwise
forgive or release any claim or debt (other than termination of Leases in
accordance herewith) owed to Borrower by any Person, except for adequate
consideration and in the ordinary course of Borrower's business.
(f) Affiliate Transactions. Borrower shall not enter into, or be a
party to, any transaction with an Affiliate of Borrower or of any partner of
Borrower except (a) under the Consulting Agreement, (b) in the ordinary course
of business and on terms which are fully disclosed to Lender in advance and are
no less favorable to Borrower or such Affiliate than would be obtained in a
comparable arm's-length transaction with an unrelated third party or (c) as may
be otherwise expressly provided for hereunder.
(g) Zoning. Borrower shall not initiate or consent to any zoning
reclassification of all or any portion of its Property or seek any variance
under any existing zoning ordinance or use or permit the use of any portion of
the Property in any manner that could result in such use becoming a
non-conforming use under any zoning ordinance or any other applicable land use
law, rule or regulation, without the prior consent of Lender.
(h) Assets. Borrower shall not purchase or own any properties other
than the Property.
(i) Debt. Borrower shall not create, incur or assume any debt other
than the Indebtedness and other than unsecured,
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short-term trade indebtedness incurred in the ordinary course of operating the
Property (including financing of insurance premiums) and Permitted Encumbrances.
(j) Misapplication of Funds. Borrower shall not, or permit any
Consultant to, (i) distribute any Revenue to Borrower or any partners or
shareholders thereof either (A) in violation of the provisions of Section 2.6
hereof or (B) unless true and correct Consultant's Certifications as referred to
in Section 5.1(k) (iv) shall have been delivered for the most recent period for
which the same are due, or (ii) misappropriate any security deposit made under
any Lease or portion thereof.
VII. SPECIAL PROVISIONS
Section 7.1 Cooperation.
7.1.1 Cooperation;. (a) Lender intends to make the Loan pursuant to
and in accordance with the Loan Documents and the Loan Purchaser intends to
purchase the Loan, in each case, prior to effecting any Securitization
Transaction. Borrower shall, at Lender's cost and expense, including, without
limitation, reasonable legal fees, cooperate in good faith with the Lender, the
Loan Purchaser, any Servicer and the Securities and Exchange Commission in
effecting such Securitization Transaction, including obtaining Franchise
Agreement Letters for the benefit of the Loan Purchaser, and shall cooperate in
good faith to implement all requirements imposed by the Rating Agency or any
rating agencies including, without limitation, changes to the Loan and the Loan
Documents occasioned by the Securitization Transaction and all additional
conditions imposed by such rating agencies in connection with any rating of the
Certificates, including, without limitation, delivery of opinions of counsel
acceptable to such Rating Agencies and addressing such matters as such Rating
Agencies may reasonably require; provided, however, that Borrower shall not act
as a Depositor or issuer in connection with a Securitization Transaction or be
required to acquiesce in respect of material modifications to the Loan or the
Loan Documents, including, without limitation, any modifications (whether
material or not) relating to (i) the interest rate payable in respect of the
Loan, (ii) the Maturity Date, (iii) the amortization of the Loan, (iv) the
calculation of Yield Maintenance Premiums or the instances in which Yield
Maintenance Premiums are applicable, (v) the limitations on recourse as set
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forth in the Loan Documents, (vi) the conditions under which insurance proceeds
and condemnation awards shall be made available to Borrower for repairs and
restoration or (vii) the procedures for disbursement of funds held by Lender
under the Loan.
(b) The Loan Purchaser, at its election, may determine to resell the
Loan or retain title to the Loan instead of implementing the Securitization
Transaction. In such event, Borrower shall cooperate in good faith with the Loan
Purchaser in connection with effecting any such resale or retention of the Loan.
7.1.2 Additional Financial Reporting Requirements;.
Borrower hereby agrees that Borrower shall, at Borrowers' cost and
expense, execute and deliver all documentation and statistical information as
may be reasonably requested by Lender and take all action deemed reasonably
necessary or desirable by Lender, in both cases for the implementation of the
Securitization Transaction(s) including, without limitation, delivery of (i)
audited financial statements fulfilling Securities and Exchange Commission
requirements as to form, content and period covered, (ii) consents of experts
fulfilling Securities and Exchange Commission requirements, (iii) other matters
as may be customary for offerings of securities similar to the Certificates,
(iv) the satisfaction of all reasonable Rating Agency requirements with respect
to documentation and statistical information and (v) all ongoing periodic
reporting requirements under the Securities Exchange Act of 1934, as amended,
arising out of the registration of the Certificates.
Section 7.2 Insurance; Casualty and Condemnation.
7.2.1 Insurance. (a) Borrower, at its sole cost and expense, shall
keep the Property insured during the entire term of the Loan for the mutual
benefit of such Borrower and Lender on an "All Risk" basis, including without
limitation, insurance against loss or damage by fire and against loss or damage
by other risks and hazards covered by a standard extended coverage policy,
including, but not limited to, riot and civil commotion, vandalism, malicious
mischief, burglary and theft. Such insurance shall be in an amount (i) equal to
the then full
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replacement cost of the Improvements (exclusive of footings and foundations) and
Equipment, without deduction for physical depreciation, and (ii) such that the
insurer would not deem Borrower a co-insurer under said policies, provided that
if such coverage is provided under a blanket policy, such coverage may be
provided through a "loss limit" policy in the amount of not less than
$100,000,000 per occurrence and not in the aggregate (which amount may be
increased, in Lender's reasonable discretion, if the number of properties
covered by such blanket policy is increased after the Closing Date). The
policies of insurance carried in accordance with this Section shall be paid
monthly or quarterly in advance and, unless such policies shall be blanket
policies pursuant to the preceding sentence, shall contain the "Replacement Cost
Endorsement" with a waiver of depreciation.
(b) Borrower, at its sole cost and expense, for the mutual benefit
of Borrower and Lender, shall also obtain and maintain, or cause to be
maintained, during the entire term of the Loan the following policies of
insurance with respect to the Property:
(i) flood insurance if any part of the Property is 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 (and any amendment or successor act
thereto) in an amount at least equal to the lesser of the Principal Balance or
the maximum limit of coverage available with respect to the Improvements and
Equipment under said Act, whichever is less;
(ii) comprehensive public liability insurance in the amount of
$5,000,000 or such additional amount reasonably requested by Lender, including
broad form property damage, blanket contractual and personal injuries (including
death resulting therefrom) coverages;
(iii) business interruption insurance in an amount not less than the
Revenues projected by Lender for the Property for a period of twenty-four (24)
months at one hundred percent (100%) occupancy, provided that notwithstanding
the foregoing, if the hazard insurance under paragraph (a) above is provided
under a "loss limit" blanket policy as permitted thereunder, such business
interruption insurance may be included in such policy, provided that such
insurance shall provide coverage for the Property for the actual loss of Cash
Flow Available for Debt
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Service for the Property sustained due to the suspension of operations during
the period of the restoration of operations and continuing normal Operating
Expenses incurred during such period. The term "period of restoration" as used
in this subparagraph means the period of time (a) from the date of the
applicable Casualty until the date on which the Restoration of the Property, if
prosecuted with reasonable diligence, should be completed and (b) from the date
on which the Restoration of the Property is technically completed until the
earlier of (I) the date on which the business operations and condition of the
Property should be restored to their status prior to such Casualty, if pursued
with reasonable diligence, and (II) the date which is sixty (60) consecutive
days after the actual completion of the Restoration;
(iv) insurance against loss or damage from leakage of sprinklers or
explosion of steam boilers, air conditioning equipment, high pressure piping,
machinery and equipment, pressure vessels or similar apparatus now or hereafter
installed on the Property;
(v) Worker's compensation insurance with respect to any employees of
Borrower or of Consultant employed at the Property, as required by Governmental
Authorities, or Legal Requirements; and
(vi) such other or additional insurance as may from time to time be
reasonably required by Lender.
(c) All policies of insurance (the "Policies") required pursuant to
this Section 7.2.1: (i) shall be issued by an insurer rated "A" (or the
equivalent) by the Rating Agency and satisfactory to Lender, (ii) shall contain
the standard New York mortgagee non-contribution clause (or equivalent) naming
Lender as the person to whom all payments made by such insurance company, with
respect to property losses, shall be paid (except with respect to (A) Equipment
subject to an Equipment Lease that requires insurance proceeds to be paid to the
lessor thereunder and (B) provided no Event of Default shall have occurred and
be continuing, refunds of premiums made as a result of policy audits), (iii)
shall be maintained throughout the term of this Agreement without cost to
Lender, (iv) shall contain a waiver of subrogation, (v) shall be delivered to
Lender (or Lender shall receive original certificates of insurance and certified
copies of all Policies), (vi) shall contain such provisions as Lender deems
reasonably necessary or desirable to protect its interest including, without
limitation, endorsements providing that
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neither Borrower, Lender nor any other party shall be a coinsurer under said
Policies and that Lender shall receive at least thirty (30) days' prior written
notice of any modification or cancellation, except that Lender shall receive ten
(10) days' prior written notice of any cancellation for non-payment of any
premium, and (vii) shall be reasonably satisfactory to Lender and shall be
approved by Lender as to amounts, form, risk coverage, deductibles, loss payees,
and insureds, which approval shall not be unreasonably withheld or delayed.
Borrower shall pay the premiums for such Policies as the same become due and
payable. Not later than ten (10) days prior to the expiration date of each of
the Policies, Borrower will deliver to Lender satisfactory evidence of the
renewal of each of the Policies. The Policies may be part of a blanket policy
only if the provider of such blanket policy provides Borrower and Lender with a
letter confirming that coverage for the Property will not be cancelled or
reduced because of any matter relating to any property covered thereby.
(d) All insurers shall be authorized to issue insurance in the State
in which the Property is located.
(e) In the event Borrower fails to provide, maintain, keep in force,
or deliver and furnish to Lender the Policies required hereunder, Lender may
procure such insurance as Lender shall deem appropriate, and Borrower will
reimburse Lender for all premiums paid by Lender promptly upon demand by Lender,
together with interest thereon at the Default Rate from the date of demand. The
amounts advanced by Lender to pay for such insurance, together with such
interest thereon, shall be a part of the Indebtedness and secured by the
Mortgage.
(f) Borrower shall pay, or cause to be paid, all premiums therefor
not later than the date due and shall submit to Lender, within three (3)
Business Days of the date such premium payment is due, other than with respect
to payments disbursed from the Basic Carrying Costs Sub-Account, a copy of each
check written in payment of such premiums or other evidence reasonably
satisfactory to Lender that such premium has been paid, or, if such payment
shall be made by wire transfer, evidence of such transfer reasonably
satisfactory to Lender.
7.2.2 Casualty and Restoration. (a) Borrower shall give prompt
written notice to Lender of any damage to or destruction of all or any portion
of the Property (any such event being herein referred to as a "Casualty").
Provided that Lender
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shall make Insurance Proceeds available pursuant to Section 7.2.2(b), Borrower
shall promptly and diligently restore, replace, rebuild and repair the Property
as nearly as possible to the value and condition of the Property immediately
prior to such Casualty (such restoration, replacement, rebuilding and repair is
herein referred to as the "Restoration"), regardless of whether Insurance
Proceeds shall be payable with respect to such Casualty or shall be sufficient
to pay for the Restoration. The plans and specifications and Permits for the
Restoration shall be submitted to Lender in advance and shall be reasonably
satisfactory to Lender in all respects. The Restoration shall be done in
compliance with all Legal Requirements, and Borrower shall carry builder's risk
insurance satisfactory to Lender in connection with the Restoration. Lender, its
agents and representatives shall have the right to inspect the Property to
monitor the Restoration. All reasonable costs and expenses incurred by Lender,
its agents or representatives in connection with the Restoration, including,
without limitation, counsel fees and engineers fees incurred by Lender in
connection with the review of plans, specifications and Permits and the
monitoring of the Restoration, shall be paid by Borrower. Upon completion of the
Restoration, Borrower shall deliver to Lender an Officer's Certificate (or if
the cost of such Restoration shall exceed $250,000, a certificate of an
Engineer) stating that (A) all materials installed and work and labor performed
in connection with the Restoration have been paid for in full, (B) no mechanics'
or other Liens on the Property arising out of the Restoration exist which have
not been bonded or otherwise discharged of record, (C) the Restoration has been
completed in compliance with the plans and specifications submitted to Lender
and all Legal Requirements and (D) all Permits required for use of the Property
after the Restoration have been obtained, together with such other evidence of
the foregoing as Lender may request.
(b) Lender shall make all or any portion of any Insurance Proceeds
received by Lender pursuant to Section 2.6.8(a) (after deducting out Lender's
cost of obtaining such Insurance Proceeds, including, without limitation,
reasonable attorneys' fees) available to pay the costs of the Restoration. If
such Insurance Proceeds are less than $100,000, Lender shall pay such Insurance
Proceeds over to the Borrower upon receipt of an Officer's Certificate stating
the costs of such Restoration to which such Insurance Proceeds shall be applied.
If the Insurance Proceeds equal or exceed $100,000, such Insurance Proceeds
shall
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be paid by Lender to, or as directed by, Borrower, less retainage customary in
the area where the Property is located, from time to time during the course of
the Restoration (but not more frequently than once per calendar month), upon (x)
receipt of a written request for such disbursement by Borrower accompanied by an
Officer's Certificate (or if the cost of such Restoration shall exceed $250,000,
a certificate of an Engineer) stating that (1) all materials installed and work
and labor performed to date (except to the extent they are to be paid for out of
the requested payment) in connection with the Restoration have been paid for in
full, and (2) no mechanics' or other Liens on the Property arising out of the
Restoration exist which have not been bonded or otherwise discharged or
released, together with such other evidence of the foregoing as Lender may
request, and (y) compliance with such other reasonable conditions as Lender may
from time to time impose and (z) compliance with such other conditions as may be
imposed by the Ground Lease.
(c) Any amount of Insurance Proceeds which remains after payment of
the costs of any restoration or reconstruction, shall be applied as provided in
Section 2.6.8(a).
7.2.3 Condemnation. (a) Borrower shall promptly give Lender notice
of the actual or threatened commencement of any Condemnation proceeding relating
to the Property and shall deliver to Lender copies of any and all papers served
in connection with such proceedings. Following any Condemnation of less than all
of the Property, provided that Lender shall make Condemnation Proceeds available
pursuant to Section 7.2.3(b), Borrower shall promptly and diligently perform
such restoration and reconstruction of the affected Property as is necessary to
retain, as nearly as possible, the economic value of the Property, regardless of
whether Condemnation Proceeds payable with respect thereto shall be sufficient
to pay for such restoration and reconstruction. The plans and specifications and
Permits for such restoration and reconstruction shall be submitted to Lender in
advance and shall be reasonably satisfactory to Lender in all respects. Such
restoration and reconstruction shall be done in compliance with all Legal
Requirements, and Borrower shall carry builder's risk insurance satisfactory to
Lender in connection therewith. Lender, its agents and representatives shall
have the right to inspect the Property to monitor such restoration and
reconstruction. All reasonable costs and expenses incurred by Lender, its agents
or representatives in connection with such restoration and reconstruction,
including, without limitation, counsel fees and
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engineers fees incurred by Lender in connection with the review of plans,
specifications and Permits and the monitoring of such restoration and
reconstruction, shall be paid by Borrower. Upon completion of such restoration
and reconstruction, Borrower shall deliver to Lender an Officer's Certificate
(or if the cost of such restoration and reconstruction shall exceed $250,000, a
certificate of an Engineer) stating that (A) all materials installed and work
and labor performed in connection with such restoration and reconstruction have
been paid for in full, (B) no mechanics' or other Liens on the Property arising
out of such restoration and reconstruction exist which have not been bonded or
otherwise discharged of record, (C) such restoration and reconstruction have
been completed in compliance with the plans and specifications submitted to
Lender and all Legal Requirements and (D) all Permits required for use of the
Property after such restoration and reconstruction have been obtained, together
with such other evidence of the foregoing as Lender may request.
(b) Lender shall make all or any portion of any Condemnation
Proceeds received by Lender (after deducting out Lender's costs of obtaining
such Condemnation Proceeds, including, without limitation, reasonable attorneys'
fees) available to pay the costs of any restoration and reconstruction of the
Property required under the Ground Lease. If such Condemnation Proceeds are less
than $100,000, Lender shall pay such Condemnation Proceeds over to the Borrower
upon receipt of an Officer's Certificate stating the costs of such Restoration
to which such Condemnation Proceeds shall be applied. If the Condemnation
Proceeds equal or exceed $100,000, such Condemnation Proceeds shall be paid by
Lender to, or as directed by, Borrower, less retainage customary in the area
where the Property is located, from time to time during the course of such
restoration and reconstruction (but not more frequently than once per calendar
month), upon (x) receipt of a written request for such disbursement by the
applicable Borrower accompanied by an Officer's Certificate (or if the cost of
such restoration and reconstruction shall exceed $250,000, a certificate of an
Engineer) stating that (1) all materials installed and work and labor performed
to date (except to the extent they are to be paid for out of the requested
payment) in connection with such restoration and reconstruction have been paid
for in full, and (2) no mechanics' or other Liens on the Property arising out of
such restoration and reconstruction exist which have not been bonded or
otherwise discharged or released, together with such other evidence of the
foregoing as Lender may request, and (y)
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compliance with such other reasonable conditions as Lender may from time to time
impose and (z) compliance with such other conditions as may be imposed by the
Ground Lease.
(c) Any amount of Condemnation Proceeds that remains after payment
of the costs of any restoration or reconstruction, shall be applied as provided
in Section 2.6.8(b).
(d) Notwithstanding any Condemnation (including but not limited to
any transfer made in lieu of or in anticipation of the exercise of such taking),
Borrower shall continue to pay the Loan at the time and in the manner provided
for its payment in the Note and the Loan shall not be reduced until any
Condemnation Proceeds shall have been actually received and applied by Lender,
after the deduction of expenses of collection as provided above, to the
reduction of the Indebtedness, if permitted hereunder. 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. If the Property subject to the Condemnation proceeding is sold,
through foreclosure or otherwise, prior to the receipt by Lender of such
Condemnation Proceeds, Lender shall have the right, notwithstanding the
limitations on recourse under the Loan Documents and whether or not a deficiency
judgment on the Note shall have been sought, recovered, denied or available
hereunder, to receive said Condemnation Proceeds, or a portion thereof
sufficient to pay the Indebtedness.
Section 7.3 Required Repairs.
Borrower shall promptly commence and diligently continue the
Required Repairs at the Property, provided that Long-Term Required Repairs shall
be commenced as may be reasonably required to permit the completion thereof by
the dates required pursuant to the following sentence. It shall be an Event of
Default under this Agreement if Borrower does not complete the Short-Term
Required Repairs at the Property by the first (1st) anniversary of the Closing
Date or, with respect to any Long-Term Required Repair by the first to occur of
(a) the fifth (5th) anniversary of the Closing Date or (b) the date by which
such Long-Term Required Repair may be required to be completed pursuant to any
applicable Franchise Agreement.
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Section 7.4 FF&E Replacements.
7.4.1 Performance of FF&E Replacements. (a) Borrower shall make FF&E
Replacements when required by sound hotel management practices in order to keep
the Property in condition and repair consistent with requirements under the
applicable Franchise Agreement and Borrower's standards and practices as of the
Closing Date, but in any event not below prevailing standards for hotel
properties of similar age, size, construction and the then-current franchise
affiliation in the metropolitan area in which the Property is located, and to
keep the Property from deteriorating. Borrower 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.
(b) Upon Lender's request, Borrower shall deliver copies of and
assign to Lender any contract or subcontract relating to such FF&E Replacements.
(c) Borrower shall permit Lender and Lender's agents and
representatives (including, without limitation, Lender's engineer, architect, or
inspector) to enter onto the Property, upon reasonable prior notice, 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 the Property. Borrower shall cause
all contractors and subcontractors to cooperate with Lender and such agents and
representatives in connection with such inspections.
(d) In the event Lender determines, in its reasonable discretion,
that any FF&E Replacement is not being performed in a workmanlike or timely
manner or that any FF&E Replacement has not been completed in a workmanlike
manner and timely manner, Lender may elect to withhold disbursement under
Section 2.6.7 (e) for such unsatisfactory FF&E Replacement and, if Borrower has
failed to remedy any deficiencies in the performance of such FF&E Replacement
within fifteen (15) days after notice thereof by Lender, to proceed under
existing contracts or to contract with third parties to complete such FF&E
Replacement and to apply any funds in the FF&E Sub-Account toward the costs to
complete such FF&E Replacement, upon five (5) Business Days' prior written
notice.
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(e) In order to facilitate Lender's making the FF&E Replacements
pursuant to subsection (d) above, Borrower grants Lender the right to enter onto
the Property and perform any and all work and acquire all materials necessary to
complete or make the FF&E Replacements and/or employ watchmen to protect the
Property from damage. All sums so expended by Lender shall be deemed to have
been advanced under the Loan to Borrower and secured by the Mortgage encumbering
the Property. For this purpose Borrower 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 such Borrower pursuant to
subsection (d) above. Such power of attorney shall be deemed to be a power
coupled with an interest and cannot be revoked. Borrower empowers said
attorney-in-fact as follows: (i) to use any funds in the FF&E Sub-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 the Property, or as may be
necessary or desirable for the completion of the FF&E Replacements; (v) to
execute all applications and certificates in the name of such Borrower which may
be required by any contract documents relating to such FF&E Replacements; (vi)
to prosecute and defend all actions or proceedings relating to the FF&E
Replacements in connection with the Property; and (vii) to do any and every act
which such Borrower might do in its own behalf to fulfill the terms of this
Agreement relating to the FF&E Replacements.
(f) In addition to any other insurance required under the Loan
Documents, Borrower 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 by Legal Requirements in connection with a particular FF&E
Replacement. All such policies shall be in form and amount reasonably
satisfactory to Lender.
(g) All FF&E Replacements shall be constructed, installed or
completed, as applicable, free and clear of all mechanic's, materialman's or
other Liens and in compliance with all Legal Requirements and all Insurance
Requirements.
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(h) Nothing in this Section 7.4.1 nor the exercise by Lender of its
rights hereunder shall: (i) require Lender to expend funds in addition to such
funds as may be on deposit from time to time in the FF&E Sub-Account to make or
complete any FF&E Replacements; (ii) obligate Lender to make or complete any
FF&E Replacements; (iii) obligate Lender to demand from Borrowers additional
sums to make or complete any FF&E Replacements; or (iv) be construed as
constituting Lender a "mortgagee in possession" of the Property.
(i) It shall be an Event of Default under this Agreement if Borrower
fails to comply with any provision of this Section 7.4.1 and such failure is not
cured within ten (10) days after notice from Lender or, if such failure is not
reasonably susceptible to cure within such ten (10) day period, if Borrower
shall fail to commence to cure such failure within such ten (10) day period or
to complete such cure within such longer period, not to exceed sixty (60) days
or, if such cure shall require construction, one hundred eighty (180) days,
except as such 180-day period may be extended to the extent Borrower's cure of
such failure is prevented by fire or other casualty, acts of God, strike or
other labor trouble of general application (but not a labor dispute directed
particularly at Borrower) or similar event (excluding financial difficulties of
Borrower) beyond the control of Borrower, as may be required to complete the
same with reasonable diligence.
7.4.2 Indemnification. Borrower shall indemnify Lender and hold
Lender harmless from and against any and all actions, suits, claims, demands,
liabilities, losses, damages, obligations, 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, except for any
such actions, suits, claims, demands, liabilities, losses, damages, obligations,
costs and expenses arising solely out of the willful misconduct or gross
negligence of Lender. Borrower shall assign to Lender all rights and claims
Borrower 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.
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Section 7.5 Inspections.
Without limiting any other rights provided to Lender under the Loan
Documents, Lender shall have the right to inspect the Property, at Borrower's
expense (a) once during any DSCR Restricted Period and (b) after receipt of any
report indicating that such Property has failed an inspection by the Franchisor.
VIII. DEFAULTS
Section 8.1 Event of Default.
(a) Each of the following events occurring with respect to Borrower,
or the Property shall constitute an "Event of Default" hereunder:
(i) if Borrower fails to make any payment required to fund the Debt
Service Payment Sub-Account, the Basic Carrying Costs Sub-Account, the FF&E
Sub-Account and, during any Operative Period and any DSCR Restricted Period, the
Operations and Maintenance Expense Sub-Account, in full on any Due Date and such
failure continues for two (2) days, provided that if such grace period shall end
on a day other than a Business Day, such grace period shall be extended to the
next Business Day;
(ii) if Borrower fails to pay all or any portion of the principal
amount of the Loan on the Maturity Date;
(iii) if Borrower fails to pay any amount (other than amounts that
may be referred to in clauses (i) and (ii) above) payable by Borrower pursuant
to this Agreement or any other Loan Document when due and such failure continues
for five (5) days after Lender delivers written notice thereof to Borrower,
provided that if such grace period shall end on a day other than a Business Day,
such grace period shall be extended to the next Business Day;
(iv) the continuation of any Franchise Restricted Period for ninety
(90) days;
(v) if any representation or warranty made by any Borrower herein or
in any other Loan Document, or in any report, certificate, financial statement
or other instrument, agreement or document furnished by Borrower in connection
with this Agreement or any other Loan Document, shall be misleading in any
material respect as of the date representation or warranty was
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made and such misleading respect shall not have been remedied within fifteen
(15) days of the earlier of discovery by Borrower or written notice by Lender;
(vi) if Borrower or any general partner of Borrower shall make an
assignment for the benefit of creditors;
(vii) if a receiver, liquidator or trustee shall be appointed for
Borrower or any general partner of Borrower or if Borrower or any general
partner of Borrower 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, Borrower or any general partner of
Borrower, or if any proceeding for the dissolution or liquidation of Borrower or
any general partner of Borrower shall be instituted; provided, however, if such
appointment, adjudication, petition or proceeding was involuntary and not
consented to by Borrower or such general partner, upon the same not being
discharged, stayed or dismissed within thirty (30) days, or if Borrower or any
general partner of Borrower shall generally not be paying its debts as they
become due;
(viii) if Borrower attempts to (A) assign its respective rights
under this Agreement or any of the other Loan Documents or any interest herein
or therein or (B) transfer the Property or any interest therein in contravention
of the Loan Documents;
(ix) if Borrower breaches any of its covenants contained in Section
6.1 or any covenant contained in Section 4.1(dd) hereof and such breach is not
remedied within five (5) days of the earlier of discovery by Borrower or written
notice by Lender;
(x) if an Event of Default as defined or described in the Note, the
Mortgage or any of the other Loan Documents occurs, whether as to Borrower or
the Property;
(xi) if the Ground Lease is cancelled, surrendered, terminated,
modified, amended or supplemented without the prior written consent of Lender in
its sole discretion;
(xii) if any default, beyond the applicable notice and grace period,
shall occur under the Ground Lease;
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(xiii) if Borrower shall continue to be in Default under any of the
other terms, covenants or conditions of this Agreement or any other Loan
Document, for ten (10) days after written notice from Lender, in the case of any
default which can be cured by the payment of a sum of money, or for thirty (30)
days after notice from Lender in the case of any other default; provided,
however, that if such non-monetary default is susceptible of cure but cannot
reasonably be cured within such 30-day period and provided further that Borrower
shall have commenced to cure such default within such 30-day period and
thereafter diligently and expeditiously proceeds to cure the same, such 30-day
period shall be extended for such time as is reasonably necessary for Borrower
in the exercise of due diligence to cure such default, such additional period
not to exceed sixty (60) days or, if such cure shall require construction, one
hundred eighty (180) days, except as such 180-day period may be extended to the
extent Borrower's cure of such default is prevented by fire or other casualty,
acts of God, strike or other labor trouble of general application (but not a
labor dispute directed particularly at Borrower) or similar event (excluding
financial difficulties of Borrower) beyond the control of Borrower, as may be
required to complete the same with reasonable diligence;
(xiv) if the Policies required to be procured and maintained by
Borrower are not so procured and maintained in accordance with the terms hereof;
or
(xv) if Borrower shall fail to complete the Required Repairs as
required under Section 7.3.
(b) Upon the occurrence of an Event of Default (other than an Event
of Default described in clauses (vi), (vii) or (viii) above) and at any time
thereafter the Lender may, in addition to any other rights or remedies available
to it pursuant to this Agreement and the other Loan Documents or at law or in
equity, take such action, without notice or demand, that Lender deems advisable
to protect and enforce its rights against Borrower and in and to the Property,
including, without limitation, giving notice to Borrower that the Indebtedness
is immediately due and payable, and Lender may enforce or avail itself of any or
all rights or remedies provided in the Loan Documents against Borrower and the
Property, including, without limitation, all rights or remedies available at law
or in equity. Upon any Event of Default described in clauses (vi), (vii) or
(viii) above, the Indebtedness shall immediately and
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automatically become due and payable, without notice or demand, and Borrower
hereby expressly waives any such notice or demand, anything contained herein or
in any other Loan Document to the contrary notwithstanding.
Section 8.2 Remedies.
(a) Upon the occurrence of an Event of Default, all or any one or
more of the rights, powers, privileges and other remedies available to Lender
against Borrower under this Agreement or any of the other Loan Documents or at
law or in equity may be exercised by Lender at any time and from time to time,
whether or not all or any of the Indebtedness shall be declared due and payable,
and whether or not Lender shall have commenced any foreclosure proceeding or
other action for the enforcement of its rights and remedies under any of the
Loan Documents with respect to the Property. Any such actions taken by Lender
shall be cumulative and concurrent and may be pursued independently, singly,
successively, together or otherwise, at such time and in such order as Lender
may determine in its sole discretion, to the fullest extent permitted by law,
without impairing or otherwise affecting the other rights and remedies of Lender
permitted by law, equity or contract or as set forth herein or in the other Loan
Documents.
Section 8.3 Remedies Cumulative.
The rights, powers and remedies of Lender under this Agreement shall
be cumulative and not exclusive of any other right, power or remedy which Lender
may have against Borrower pursuant to this Agreement or the other Loan
Documents, or existing at law or in equity or otherwise. Lender's rights, powers
and remedies may be pursued singly, concurrently or otherwise, at such time and
in such order as Lender may determine in Lender's sole discretion. No delay or
omission to exercise any remedy, right or power accruing upon an Event of
Default shall impair any such remedy, right or power or shall be construed as a
waiver thereof, but any such remedy, right or power may be exercised from time
to time and as often as may be deemed expedient. A waiver of one default or
Event of Default with respect to Borrower shall not be construed to be a waiver
with respect to any subsequent default or Event of Default by Borrower, or to
impair any remedy, right or power consequent thereon.
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IX. MISCELLANEOUS
Section 9.1 Survival.
This Agreement and all covenants, agreements, representations and
warranties made herein and in the certificates delivered pursuant hereto shall
survive the making by Lender of the Loan and the execution and delivery to
Lender of the Note, and shall continue in full force and effect so long as all
or any of the Indebtedness of Borrower is outstanding and unpaid. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party. All covenants,
promises and agreements contained in this Agreement shall be binding upon, and
shall inure to the benefit of, Lender, together with its successors and assigns,
and Borrower, together with its permitted successors and assigns.
Section 9.2 Lender's Discretion.
Whenever 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 whether arrangements or terms are satisfactory or not satisfactory shall
(except as is otherwise specifically herein provided) be in the sole discretion
of Lender and shall be final and conclusive.
Section 9.3 Governing Law.
(a) This Agreement was negotiated in the State of New York, and made
by Lender and accepted by Borrower in the State of New York, and the proceeds of
the Note delivered pursuant hereto shall be disbursed from the State of New
York, which State the parties agree has a substantial relationship to the
parties and to the underlying transaction embodied hereby, and in all respects,
including, without limiting the generality of the foregoing, matters of
construction, validity and performance, this Agreement and the obligations
arising hereunder shall be governed by, and construed in accordance with, the
laws of the State of New York applicable to contracts made and performed in such
State and any applicable law of the United States of America, except that at all
times the provisions for the creation, perfection, and enforcement of the liens
and security
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interests created pursuant hereto and pursuant to the other Loan Documents shall
be governed by and construed according to the law of the State in which the
Property is located, it being understood that, to the fullest extent permitted
by the law of such State, the law of the State of New York shall govern the
validity and the enforceability of all Loan Documents and all of the
Indebtedness or obligations arising hereunder or thereunder. To the fullest
extent permitted by law, Borrower hereby unconditionally and irrevocably waives
any claim to assert that the law of any other jurisdiction governs this
Agreement and the Note, and this Agreement and the Note shall be governed by and
construed in accordance with the laws of the State of New York pursuant to
Section 5-1401 of the New York General Obligations Law.
(b) Any suit, action or proceeding against Lender or Borrower
arising out of or relating to this Agreement shall be instituted in any federal
or state court in New York, New York, pursuant to Section 5-1402 of the New York
General Obligations Law, or, at Lender's discretion, in the State where the
Property is located, and Borrower waives any objection which it may now or
hereafter have to the laying of venue of any such suit, action or proceeding,
and Borrower hereby irrevocably submits to the jurisdiction of any such court in
any suit, action or proceeding. Borrower does hereby designate and appoint C.T.
Corporation System, 1633 Broadway, New York, New York 10019, as its authorized
agent to accept and acknowledge on its behalf service of any and all process
which may be served in any such suit, action or proceeding in any federal or
state court in New York, New York, and agrees that service of process upon said
agent at said address and written notice of said service of Borrower mailed or
delivered to Borrower in the manner provided herein shall be deemed in every
respect effective service of process upon Borrower's in any such suit, action or
proceeding in the State of New York. Borrower (i) shall give prompt notice to
Lender of any changed address of its authorized agent hereunder, (ii) may at any
time and from time to time designate a substitute authorized agent with an
office in New York, New York (which office shall be designated as the address
for service of process), provided that Borrower shall promptly designate such a
substitute if its authorized agent ceases to have an office in New York, New
York or is dissolved without leaving a successor.
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Section 9.4 Modification, Waiver in Writing.
No modification, amendment, extension, discharge, termination or
waiver of any provision of this Agreement, or of the Note, or of any other Loan
Document, nor consent to any departure by Borrower therefrom, shall in any event
be effective unless the same shall be in a writing signed by the party against
whom enforcement is sought, and then any such waiver or consent shall be
effective only in the specific instance, and for the purpose, for which given.
Except as otherwise expressly provided herein, no notice to, or demand on
Borrower, shall entitle Borrower to any other or future notice or demand in the
same, similar or other circumstances.
Section 9.5 Delay Not a Waiver.
Neither any failure nor any delay on the part of Lender in insisting
upon strict performance of any term, condition, covenant or agreement, or
exercising any right, power, remedy or privilege hereunder, under the Note or
under any other Loan Document, or any other instrument given as security
therefor, shall operate as or constitute a waiver thereof, nor shall a single or
partial exercise thereof preclude any other future exercise, or the exercise of
any other right, power, remedy or privilege. In particular, and not by way of
limitation, by accepting payment after the date on which the same is due of any
amount payable under this Agreement, the Note or any other Loan Document, Lender
shall not be deemed to have waived any right either to require prompt payment
when due of all other amounts due under this Agreement, the Note or the other
Loan Documents, or to declare a default for failure to effect prompt payment of
any such other amount.
Section 9.6 Notices.
All notices, consents, approvals and requests required or permitted
hereunder or under any other Loan Document shall be given in writing and shall
be effective for all purposes if hand delivered or sent by (a) certified or
registered United States mail, postage prepaid, return receipt requested, or (b)
nationally recognized overnight delivery service, either commercial or United
States Postal Service, with proof of attempted delivery, addressed if to Lender
at its address set forth on the first page hereof, and if to Borrower to
Borrower's
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<PAGE>
address set forth on the first page hereof, or at such other address and person
as shall be designated from time to time by any party hereto, as the case may
be, in a written notice to the other parties hereto in the manner provided for
in this Section. A copy of all notices, consents, approvals and requests
directed to Borrower shall be delivered to Stearns Weaver Miller Weissler
Alhadeff & Sitterson, P.A., 150 West Flagler Street, Suite 2200, Miami, Florida
33130, Attention: Robert I. Weissler, Esq. A notice shall be deemed to have been
given: in the case of hand delivery, at the time of delivery; in the case of
registered or certified mail, when delivered or upon the first attempted
delivery on a Business Day; or in the case of overnight delivery service, when
delivered or upon the first attempted delivery on a Business Day.
Section 9.7 Trial by Jury.
BORROWER, TO THE FULLEST EXTENT THAT IT MAY LAWFULLY DO SO, WAIVES
TRIAL BY JURY IN ANY ACTION OR PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY
TORT ACTION, BROUGHT BY ANY PARTY HERETO WITH RESPECT TO THIS AGREEMENT, THE
NOTE, OR THE OTHER LOAN DOCUMENTS.
Section 9.8 Headings.
The Article and/or Section headings and the Table of Contents in
this Agreement are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose.
Section 9.9 Successors and Assigns; Assignment.
This Agreement shall be binding upon and shall inure to the benefit
of each party hereto and their respective permitted successors and assigns.
Lender shall have the right, upon notice to Borrower's to transfer, sell or
assign this Agreement and any of the other Loan Documents and the obligations
hereunder to any Person who purchases or otherwise acquires an interest in the
Loan.
-85-
<PAGE>
Section 9.10 Severability.
Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
Section 9.11 Preferences.
Lender shall have the continuing and exclusive right to apply or
reverse and reapply any and all payments by Borrower to any portion of the
obligations of Borrower hereunder. To the extent Borrower makes a payment or
payments to Lender, which payment or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds received, the obligations hereunder or
part thereof intended to be satisfied shall be revived and continue in full
force and effect, as if such payment or proceeds had not been received by
Lender.
Section 9.12 Waiver of Notice.
Borrower shall not be entitled to any notices of any nature
whatsoever from Lender except with respect to matters for which (a) this
Agreement or the other Loan Documents specifically and expressly provide for the
giving of notice by Lender to Borrower and (b) Borrower is not, pursuant to
applicable law, permitted to waive the giving of notice. To the extent permitted
by Applicable Law, Borrower hereby expressly waives the right to receive any
notice from Lender with respect to any matter for which this Agreement or the
other Loan Documents do not specifically and expressly provide for the giving of
notice by Lender to Borrower.
Section 9.13 Expenses; Indemnity.
Borrower covenants and agrees to reimburse Lender upon receipt of
written notice from Lender for all reasonable costs
-86-
<PAGE>
and expenses (including reasonable attorneys' fees and disbursements) incurred
by Lender in connection with (i) the negotiation, preparation, execution,
delivery and administration of any consents, amendments, waivers or other
modifications to this Agreement and the other Loan Documents and any other
documents or matters requested by Borrower; (iii) the filing and recording fees
and expenses, title insurance and other similar expenses incurred in creating
and perfecting the Liens in favor of Lender pursuant to this Agreement and the
other Loan Documents; (iv) enforcing or preserving any rights, in response to
third party claims or the prosecuting or defending of any action or proceeding
or other litigation, in each case against, under or affecting Borrower, this
Agreement, the other Loan Documents, the Property, or any other security given
for the Loan; and (v) enforcing any obligations of or collecting any payments
due from Borrower under this Agreement, the other Loan Documents or with respect
to the Property or in connection with any refinancing or restructuring of the
credit arrangement provided under this Agreement in the nature of a "work-out"
or of any insolvency or bankruptcy proceedings; provided, however, that Borrower
shall not be liable for the payment of any such costs and expenses to the extent
the same arise by reason of the gross negligence, illegal acts, fraud or willful
misconduct of any of Lender.
Section 9.14 Exhibits Incorporated.
The Exhibits and Schedules annexed hereto are hereby incorporated
herein as a part of this Agreement with the same effect as if set forth in the
body hereof.
Section 9.15 Offsets, Counterclaims and Defenses.
Any assignee of Lender's interest in and to this Agreement, the Note
and the other Loan Documents shall take the same free and clear of all offsets,
counterclaims or defenses which Borrower may have against any assignor of such
documents that are unrelated to the Loan, and no such unrelated counterclaim or
defense shall be interposed or asserted by Borrower in any action or proceeding
brought by any such assignee upon such documents and any such right to interpose
or assert any such unrelated offset, counterclaim or defense in any such action
or proceeding is hereby expressly waived by Borrower.
-87-
<PAGE>
Section 9.16 No Joint Venture or Partnership.
Borrower and Lender intend that the relationships created hereunder
and under the other Loan Documents be solely that of borrower and lender.
Nothing herein or therein is intended to create a joint venture, partnership,
tenancy-in-common, or joint tenancy relationship between Borrower and Lender nor
to grant Lender any interest in the Property other than that of mortgagee or
lender.
Section 9.17 Publicity.
Each of Lender and Borrower shall keep confidential this Agreement,
the Loan and any person, entity or information revealed to such party by the
other during the term of this Agreement and for a period of six (6) months after
the expiration hereof, unless the party seeking to disclose any information
hereunder shall have obtained the prior written consent of the other party,
which consent shall not be unreasonably withheld or delayed. Notwithstanding the
foregoing, Lender and Borrower acknowledge that (a) each party shall have the
right, at its option and expense but with the prior written consent of the other
party, which shall not be unreasonably withheld or delayed, to engage in
reasonable publicity and public relations pertaining to this Agreement and the
Loan, which publicity may include press releases reasonably acceptable to the
other party and (b) neither party shall have any right to prevent the other from
making any news releases, filing or statements which such other party has been
advised by legal counsel are required by law.
Section 9.18 Waiver of Marshalling of Assets.
To the fullest extent Borrower may legally do so, Borrower waives
all rights to a marshalling of the assets of such Borrower, such Borrower's
partners, if any, and others with interests in Borrower, and of such Borrower's
Property, or to a sale in inverse order of alienation in the event of
foreclosure of the interests hereby created, and agrees not to assert any right
under any laws pertaining to the marshalling of assets, the sale in inverse
order of alienation, homestead exemption, the administration of estates of
decedents, or any other matters whatsoever to defeat, reduce or affect the right
of Lender under the Loan Documents to a sale of the Property for the collection
of the Indebtedness without any prior or different resort for
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<PAGE>
collection, or the right of Lender or any deed of trust trustee to the payment
of the Indebtedness out of the net proceeds of the Property in preference to
every other claimant whatsoever.
Section 9.19 Waiver of Counterclaim.
Borrower hereby waives the right to assert a counterclaim, other
than a compulsory counterclaim, in any action or proceeding brought against it
by Lender or its agents, including, without limitation, any Servicer.
Section 9.20 Conflict; Construction of Documents.
In the event of any conflict between the provisions of this
Agreement and any of the other Loan Documents, the provisions of this Agreement
shall control. The parties hereto acknowledge that they were represented by
counsel in connection with the negotiation and drafting of the Loan Documents
and that such Loan Documents shall not be subject to the principle of construing
their meaning against the party which drafted same.
Section 9.21 Brokers and Financial Advisors.
Borrower hereby represents that it has dealt with no financial
advisors, brokers, underwriters, placement agents, agents or finders in
connection with the transactions contemplated by this Agreement other than
Donaldson, Lufkin & Jennette Securities Corporation, which Borrower will pay
pursuant to separate agreements. Borrower and Lender hereby agree to indemnify
and hold the other harmless from and against any and all claims, liabilities,
costs and expenses of any kind in any way relating to or arising from a claim by
any other Person that such Person acted on behalf of the indemnifying party in
connection with the transactions contemplated herein. The provisions of this
Section 9.21 shall survive the expiration and termination of this Agreement and
the repayment of the Indebtedness.
Section 9.22 Prior Agreements.
This Agreement and the other Loan Documents contain the entire
agreement of the parties hereto and thereto in respect of the transactions
contemplated hereby and thereby, and all prior agreements among or between such
parties, whether oral or written, including, without limitation, are superseded
with
-89-
<PAGE>
respect to the Loan by the terms of this Agreement and the other Loan Documents.
Section 9.23 Appointment of Servicer.
Lender may appoint a Servicer to administer the Loan, which Servicer
shall have the power and authority to exercise all of the rights and remedies of
Lender and to act as agent of Lender hereunder and under the Note, the Mortgage
and the other Loan Documents. Upon receipt of notice of the appointment of
Servicer, Borrower shall recognize Servicer as the agent of Lender and shall
make all payments and deliver all notices as directed by Servicer and accept all
notices from Servicer hereunder.
Section 9.24 Exculpation.
Notwithstanding any provision herein or in any of the Loan Documents
to the contrary, Lender shall not enforce the obligations contained in the Note,
this Agreement or the Mortgage or the other Loan Documents (other than the
Environmental Indemnity) by any action or proceeding wherein a money judgment
shall be sought against Borrower, except that Lender may bring a foreclosure
action, an action for specific performance or any other appropriate action or
proceeding to enable Lender to realize upon the Property, the Revenue and any
other collateral given to Lender to secure Borrower's obligations hereunder,
including, without limitation, any action to obtain a deficiency judgment
against Borrower, provided that such deficiency judgment shall be enforced only
against the Property, the Revenue and such other collateral, except as otherwise
expressly provided hereinafter. The provisions of this paragraph shall not,
however, limit the liability of Borrower for loss, costs or damage arising out
of the following matters: (i) any failure to apply the Revenue of the Property
to pay the operating expenses of the Property or to fulfill the then current
obligations of Borrower under this Agreement, the Note, the Mortgage or any
other Loan Document; (ii) any misapplication of Loss Proceeds, security deposits
or trust funds in violation of applicable law or the provisions of this
Agreement, the Mortgage or any other Loan Document; (iii) any collection of Rent
for more than one month in advance of the time when the same becomes due; (iv)
failure to pay all Impositions prior to the date on which such payments become
delinquent (subject to Lender's obligation to make disbursements from the Basic
Carrying Costs Sub-Account); (v) any willful misrepresentation by Borrower (or
any constituent
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<PAGE>
partner or shareholder of Borrower) in connection with Borrower's application,
negotiation or documentation of the Loan; or (vi) a fraudulent conveyance or a
fraudulent transfer of the Properties or any part thereof or any other
properties or assets of Borrower; (vii) any material misrepresentation or breach
of warranty or covenant made by Borrower under the Environmental Indemnity.
Nothing herein shall be deemed (w) to be a waiver of any right which Lender may
have under any bankruptcy law of the United States or of any State in which any
part of the Property is located to file a claim for the full amount of the Loan
or to require that the Property and any other collateral securing the Loan shall
continue to secure all of the Indebtedness; (x) to impair the validity of the
Indebtedness; (y) to impair the right of Lender as mortgagee or secured party to
foreclose any Lien or (z) impair the right of Lender to obtain the Recourse
Distributions received by Borrower including, without limitation, the right to
proceed against any constituent partner or shareholder of Borrower to the extent
any such Recourse Distribution has actually theretofore been distributed to such
constituent partner or shareholder. The provisions of this Section 9.24 shall be
inapplicable to Borrower if any petition for bankruptcy, reorganization or
arrangement pursuant to federal or state law shall be filed by, consented to or
acquiesced in by or with respect to such Borrower or if such Borrower shall
institute any proceeding for the dissolution or liquidation of such Borrower or
if such Borrower shall make an assignment for the benefit of creditors, in which
event Lender shall have recourse against all of the assets of such Borrower and
the Recourse Distributions received by the constituent partners and shareholders
of such Borrower. For purposes of this Section 9.24, the term "Recourse
Distributions" shall mean the Revenue arising from the Property to the extent
received by Borrower (or actually received by any partner or shareholder of
Borrower if not actually received by Borrower) after the occurrence and written
notice (including any Consultant's Notice) of an Event of Default.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their duly authorized representatives, all as of the day and
year first above written.
LENDER:
COLUMN FINANCIAL, INC.
By: /s/ David S. Foster
------------------------------------
Name: DAVID S. FOSTER
Title: Vice President
BORROWER:
EAST WASHINGTON HOSPITALITY
LIMITED PARTNERSHIP,
a Florida limited partnership
By: Servico East Washington, Inc.,
a Florida corporation, as its
general partner
/s/ David Buddemeyer
------------------------------------
David Buddemeyer, President
<PAGE>
SCHEDULE A
GROUND LEASE AND LEGAL DESCRIPTION
Ground Lease, dated as of June 30, 1984, between Jayson P. Breitlinger, a
married man dealing with his sole and separate property, and Stephen J. Szalay
and June M. Szalay, husband and wife, as Landlord, (the "Original Landlord") and
Triple T Inns Arizona, Inc., an Arizona corporation, and Gordon H. Marks, a
married man dealing with his sole and separate property, as Tenant, (the
"Original Tenant") as assigned by the Original. Tenant to TH Properties ("TH"),
an Arizona general partnership, by instrument recorded in the Official Records
of Maricoca County, Arizona as Recording No. 84-512297 and assumed by TH
pursuant to an Assumption of Ground Lease recorded in Recording No. 84-512298;
as amended by an Amendment to Ground Lease recorded in Recording No. 85-558465;
as assigned by TH to Bancwest Mortgage Corporation ("Bancwest"), an Arizona
corporation, by instrument recorded in Recording 92-302754 and in Recording No.
92-302755; as amended in Recording No. 92-0302756; as assigned by Bancwest to
Kearny Street Real Estate Company, L.P. ("Kearny"), a Delaware limited
partnership doing business in Arizona as Kearny Street Real Estate Company
Limited Partnership by instrument recorded in Recording No. 93-423861; as
assigned by the Original Landlord to S&J Investments L.L.C. ("S&J"), an Arizona
limited liability company by instrument recorded in Recording No. 93-557178; as
assigned by Kearny to Beck Summit Hotel Management L.L.C. ("Beck"), an Arizona
limited liability company by instrument recorded in Recording No. 93-557179; a
twenty-five percent (25%) interest in which was assigned by Beck to Carroll
Partners, Inc. ("CPI"), a Florida corporation, by instrument dated the date
hereof, which twenty-five percent (25%) interest was assigned by CPI to Triple T
Inns of Pennsylvania, Inc. ("Triple T"), a Florida corporation, by instrument
dated the date hereof; all of which leasehold interest was assigned by Beck and
Triple T to Borrower by instrument dated the date hereof; as further amended by
Amendment of Ground Lease dated the date hereof between S&J and Borrower,
affecting the real property described below:
That part of the Northeast quarter of the Northwest quarter of Section 7,
Township 1 North, Range 4 East of the Gila and Salt River Base and Meridian,
Maricopa County, Arizona, described as follows:
1 of 3
<PAGE>
thence South 00 degrees 25 minutes 45 seconds East along said right of way line
and along the Westerly line of said parcel of land, a distance of 182.00 feet;
thence South 44 degrees 04 minutes 45 seconds West, a distance of 25.35 feet to
the True Point of Beginning;
Except that part described as follows:
Commencing at a point in the East line of said Northwest quarter from which the
Northeast corner thereof bears North 01 degree 09 minutes West a distance of
1050.28 feet;
thence South 89 degrees 19 minutes 00 seconds West a distance of 82.10 feet to
the Point of Beginning on the North right of way line of Washington Street;
thence continuing South 89 degrees 19 minutes 00 seconds West along said right
of way line a distance of 297.40 feet;
thence North 44 degrees 03 minutes 12 seconds East a distance of 40.01 feet;
thence North 89 degrees 19 minutes 00 seconds East a distance of 55.84 feet;
thence South 00 degrees 41 minutes 00 seconds East a distance of 19.42 feet;
thence North 89 degrees 19 minutes 00 seconds East a distance of 106.66 feet;
thence South 85 degrees 51 minutes 45 seconds East a distance of 107.12 feet to
the Point of Beginning; and
Except from that portion thereof described in Deed recorded in Docket 10074,
page 657, all oil, gas and other hydrocarbons, geothermal resources and all
other minerals, whether similar to those herein specified or not.
2 of 2
<PAGE>
SCHEDULE B
FRANCHISE AGREEMENT
Holiday Inn Select Change of Ownership Agreement dated June 29, 1995
between Holiday Inns Franchising, Inc. and Service Management Corp.
<PAGE>
SCHEDULE C
REQUIRED REPAIRS
MECHANICAL, ELECTRICAL, PLUMBING SHORT-TERM LONG-TERM
- -------------------------------- ---------- ---------
Replace leaking hot water $ 3,000
recirculation piping on
roof
Replace jacuzzi heater $ 2,500
Maintain aluminum $20,000
conductor terminations
Continue to replace $ 5,000
existing smoke detectors
Test and replace guestroom $ 5,000
ground fault devices
TOTALS $ 8,000 $ 27,500
<PAGE>
SCHEDULE D
FF&E REPLACEMENTS
GUEST ROOMS
Sleeping Area
Case Goods (dressers, armoires, etc.)
Seating (chairs, sofas, etc.)
Soft Goods (drapes, spreads, etc.)
Lighting
Artwork/Accessories
Mattress/Box Springs
Bed Boxes
Televisions
Carpet
HVAC
Wallcovering/Paint
Ceiling Treatments
Key System
Facsimile Machines
Personal Computers and Accessories
Bathroom
Vanity
Faucets
Regrout Wall Tile
Regrout/Repair Flooring
Lighting
Wallcovering/Paint
Mirrors
Replace Wall Tile
Replace Fixtures
Replace Flooring
Ceiling Treatments
CORRIDORS
Carpet
Wallcovering/Paint
Lighting
Artwork/Accessories
Window Treatments
Ceiling Treatments
1 of 6
<PAGE>
Lighting/Artwork
Furniture
Signage
Ice Machine
Doors
MEETING ROOMS
Chairs
Tables
Wallcovering/Paint
Carpet
Lighting
Artwork/Accessories
AV Equipment/Display Boards
Portable Bars & Staging
Divider Walls
Ceiling Treatments
PREFUNCTION AREAS
Seating
Tables
Carpet
Wallpapering
Lighting/Artwork
Artwork/Accessories
Telephone Carrels
Ceiling Treatments
Window Treatments
BREAKOUT ROOMS
Tables
Chairs
Window Treatments
Lighting
Artwork/Accessories
Carpet
Wallcovering/Paint
Ceiling Treatments
Presentation Equipment
BEVERAGE OUTLET
Chairs/Stools
Tables
2 of 6
<PAGE>
Lighting
Artwork/Accessories
Carpeted Floors
Hard-Surfaced Floors
Wallcovering/paint
Window Treatments
Audio & Video Equipment
Bar Equipment
Ceiling Treatments
Rebuild/Replace Bar
RESTAURANT
Tables
Chairs/Booths
Window Treatments
Lighting
Artwork/Accessories
Carpeted Floors
Hard-Surfaced Floors
Ceiling Treatments
Service Equipment
Salad Bar/Hot Buffet Line
PUBLIC RESTROOMS
Vanity
Faucets
Regrout Wall Tile
Lighting
Replace Wall Tile
Replace Fixtures
Mirrors
Wallcovering/Paint
Regrout/Repair Flooring
Replace Flooring
Ceiling Treatments
Partitions
EXECUTIVE OFFICES
Decor
Computer and Accounting Equipment
Seating
Desks
Filing Cabinets
3 of 6
<PAGE>
Copiers
Facsimile Machines
Personal Computers
Printers
LOBBY/FRONT DESK
Seating (sofas, chairs, etc.)
Case Goods (tables, hutches, etc.)
Carpeted Floors
Hard-Surfaced Floor
Wallcovering/Paint
Lighting
Artwork/Accessories
Window Treatments
Ceiling Treatments
Bell Carts
Signage
Rebuild Front Desk
LAUNDRY AREA/HOUSEKEEPING
Washers
Dryers
Operating Equipment
Dry Cleaning Equipment
Valet Equipment
Linen Ironer
Linen Folder
KITCHEN
Walk-in Coolers/Freezer
Reach-in Coolers/Freezers
Line Equipment (stoves, ovens, broilers, cookers, steamers,
etc.)
Dishwasher
Ceiling Treatments
Lighting
Flooring
BUILDING SYSTEMS
P1umbing
Electrical
HVAC
Hot Water Heater/Storage Tanks
4 of 6
<PAGE>
Boilers
Chillers
Air Handling Units
Pumps & Water Treatment
Generator
BUILDING GENERAL
Roof
Exterior Cladding/Facade
Window and Door Systems and Railings
Porte Cochere/Canopy
Entry Vestibule
Exterior Signage
Structured Parking
Surface Parking
Landscaping
Landscaping & Maintenance Equipment
Exterior Stairwells, Walkways & Railings
Pool and Pool Pumps
Pool Deck
Tennis Courts
Elevators/Escalators (Mechanics)
Elevator Cars/Interiors
Accessory Locks
Locks & Lock Systems
Satellite Dish
Whirlpool
Sauna
Exercise Equipment
Playground
Game Room
Balconies
Maintenance Equipment - General
Interior Signage
TECHNOLOGY
Telephone Sets
Telephone Switch/Call Accounting Systems
Energy Management System
Food and Beverage Point of Sale System
Sales and Marketing System
Back Office System
Timekeeping and Productivity System
5 of 6
<PAGE>
Office Automation
Security/Life Safety
Front Office and Property Management System
6 of 6
<PAGE>
EXHIBIT "F"
EQUIPMENT LEASES
ProClean
Vending Concessions USA
<PAGE>
SCHEDULE OF PERMITS
<TABLE>
<CAPTION>
====================================================================================================================================
Name of Date Expiration
License/Permit License No. Issued Issued To Date Status
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
1. Arizona Department Of 11071001 03/28/95 Mr. Benjamin 03/31/96 Annual Renewal
Liquor Licenses and Holiday Inn Airport
Control East
Alcoholic Beverage License Agent: Lawrence J.
Hotel - Motel Benjamin
T.H. Operating
Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
2. City of Phoenix Liquor 92100719 N/A Holiday Inn Airport 09/30/95 Not Transferable
# 11 Hotel/Motel East
- ------------------------------------------------------------------------------------------------------------------------------------
3. Maricopa Department SG11279 N/A Triple T Hotel Mgmt 09/30/95 Not Transferable
of Environmental Corp.
Management Division of Christy's
Environmental Services
Permit to Operate:
(Eating & Drinking)
- ------------------------------------------------------------------------------------------------------------------------------------
4. Maricopa Department SG11283 N/A Triple V Hotel Mgmt 09/30/95 Not Transferable
of Environmental Corp.
Management Division of In Flight Lounge
Environmental Services
Permit to Operate:
(Eating & Drinking)
- ------------------------------------------------------------------------------------------------------------------------------------
5. Maricopa Department SG11284 N/A Triple T Mgmt Corp. 09/30/95 Not Transferable
of Environmental Holiday Inn Airport
Management Division of East
Environmental Services
Permit to Operate:
(Public Accommodation)
- ------------------------------------------------------------------------------------------------------------------------------------
6. Maricopa Department P5184 N/A Beck Summit Hotel Mgmt 09/30/95 Not Transferable
of Environmental Holiday Inn Airport
Management Division of East
Environmental Services
Permit to Operate:
(Main & Therapy
- Non-Diving Semipublic)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Name of Date Expiration
License/Permit License No. Issued Issued To Date Status
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
7. Maricopa Department A8700968 N/A Beck Summit Hotel 08/30/95 Not Transferable
of Environmental Mgmt Co. Inc.
Management Division of Holiday Inn Airport
Environmental Services East
Division of Air Pollution
Control
Annual Operating -
Permit to Operate
Fuel Burn-Comm
Generator
- ------------------------------------------------------------------------------------------------------------------------------------
8. City of Phoenix - Finance 94007519 N/A Holiday Inn Airport 12/31/95 Non-Transferable
Department Tax Division East
Privilege License
- ------------------------------------------------------------------------------------------------------------------------------------
9. City of Phoenix, Arizona 08/11/87
Building Safety Department
Certificate of Occupancy
(5-story parking garage)
- ------------------------------------------------------------------------------------------------------------------------------------
10. City of Phoenix, 08/11/87
Arizona Building Safety
Department
Certificate of Occupancy
(10-story hotel)
- ------------------------------------------------------------------------------------------------------------------------------------
11. Arizona Department of O7-322839-H 05/01/86 TH Operating Not Transferable
Revenue License & Corporation (DBA)
Registration Section Holiday Inn Airport
(Transaction Privilege East
Tax License)
- ------------------------------------------------------------------------------------------------------------------------------------
12. Arizona Department of O7-315486-Q 05/01/86 TN Operating Not Transferable
Revenue License & Corporation
Registration (Notice of
Employer withholding)
====================================================================================================================================
</TABLE>
-2-
<PAGE>
SCHEDULE G
LEASES
LEASE RENEWAL
TENANT/LESSEE EXPIRATION RENT OPTIONS
------------- ---------- ---- -------
Hazelwood Enterprises, Inc. 12/31/98 $1,200/mo. None
<PAGE>
SCHEDULE H
FORM OF OPERATING STATEMENT
----------------
Available Room Nights.
Room Nights Sold:
ADR
REVPAR __________
----------------
--------------------------------------
%of
TU Revenue
---------------- ----------------
Departmental Revenue
Rooms
Food
Beverage
Telephone
Other
---------------- ----------------
Total Revenue
Departmental Costs & Expenses
Rooms
Food
Beverage
Telephone
Other
---------------- ----------------
Total Departmental Costs & Expenses
General & Unapplied Expense
General & Administration
Advertising & Promotion
Repairs & Maintenance
Utilities
---------------- ----------------
Total General & Unapplied Expenses
House Profit
Other Operating Expenses
Management Fees (4% of Total Revenues)
Equipment Rentals
Insurance
Property and Other Taxes (prior to refunds)
Other (Incl. Prior Yr. Adj. and Ground Rent)
---------------- ----------------
Total Other Operting Costs
---------------- ----------------
Net Operating Income
was (@ approp. %)
---------------- ----------------
Cash Available For Debt Service
---------------- ----------------
Debt Service
---------------- ----------------
NM Income
================ ================
---------------------------------------
----------------
DSCR:
----------------
<PAGE>
SCHEDULE I
OPERATIONS AND MAINTENANCE PROGRAMS
None.
<PAGE>
SCHEDULE J
LITIGATION
None.
<PAGE>
SCHEDULE K
FAIR MARKET VALUE
$17,663,296.00
<PAGE>
Exhibit 10.11.2
PROMISSORY NOTE
U.S. $11,000,000 Executed and Delivered
in the City of
New York, New York
As of June 29, 19%
1. FOR VALUE RECEIVED, EAST WASHINGTON HOSPITALITY LIMITED
PARTNERSHIP, a Florida limited partnership, having an address at Servico Centre
South, 1601 Belvedere Road, West Palm Beach, Florida 33406 (the "Maker"),
promises to pay to the order of COLUMN FINANCIAL, INC., a Delaware corporation,
having an office at 3414 Peachtree Road, N.E., Suite 1140, Atlanta, Georgia
30326-1113, or its successors or assigns (collectively, the "Payee"), the
principal sum of Eleven Million Dollars ($11,000,000), in lawful money of the
United States of America with interest thereon from the date of this Note at the
Interest Rate (hereinafter defined).
2. The interest rate (the "Interest Rate") shall be Nine and
45/100ths (9.45%) percent per annum. Interest on the principal sum of this Note
shall be calculated on the basis of a 360 day year consisting of twelve (12)
months of thirty (30) days each. However, interest due and payable for a period
of less than a full calendar month shall be calculated by multiplying the actual
number of days elapsed in such period by a daily rate based on a 360-day year.
3. Maker shall make (a) a payment of interest only in the amount of
Two Thousand Eight Hundred Eighty-Seven And 50/100 Dollars ($2,887.50) on July
1, 1995 and (b) thereafter monthly payments of principal and interest on the
unpaid principal balance, payable in arrears, in the amount of One Hundred Two
Thousand One Hundred Seventy-Five And 54/100 Dollars ($102,175.54) on the first
Business Day (as hereinafter defined) of each calendar month (the "Due Date").
The unpaid principal sum and all interest thereon and all other sums and fees
then payable under this Note shall be due and payable on the first Business Day
of July, 2010 (the "Maturity Date"). All payments under this Note shall be paid
directly into the Central Account (as defined in the Loan Agreement (as
hereinafter defined)) by wire transfer of immediately available funds to:
The First National Bank of Chicago
Chicago, Illinois
ABA #071000013
Credit Clearing A/C No. 75217682
Ref: DLJ/Servico/Phoenix Lease
or to such other designated bank or place, or in such other manner, as Payee may
reasonably specify in writing from time to
<PAGE>
time. The term "Business Day" shall mean any day other than a Saturday, Sunday
or any other day on which national banks in New York, New York are not open for
business.
4. The whole of the principal sum of this Note, together with all
interest accrued and unpaid thereon, and all other sums and fees payable
hereunder and under the Loan Agreement, the Deed of Trust (as hereinafter
defined) and the other Loan Documents (as defined in the Loan Agreement) (such
amounts hereinafter collectively referred to as the "Indebtedness") shall become
immediately due and payable at the option of Payee on the happening of any Event
of Default (as defined in the Loan Agreement), subject to Section 8.1(b) of the
Loan Agreement.
5. (a) The outstanding principal balance of this Note may not be
prepaid, in whole or in part, on or prior to the fourth anniversary of the date
hereof (the "Lock-Out Date"), except in connection with the application by
Lender of (i) any Loss Proceeds (as defined in the Loan Agreement) to the
principal amount of the Indebtedness pursuant to Section 2.6.8 of the Loan
Agreement, (ii) any amounts on deposit in the Capital Expenditure Sub-Account to
the Indebtedness during any DSCR Restricted Period or Franchise Restricted
Period (as such terms are defined in the Loan Agreement) pursuant to Section
2.6.7(f) of the Loan Agreement, (iii) any amounts on deposit in the Curtailment
Reserve Fund Sub-Account to the Indebtedness during any Operative Period (as
such terms are defined in the Loan Agreement) pursuant to Section 2.6.7(g) of
the Loan Agreement and (iv) any prepayments of the outstanding principal amount
of the Indebtedness made pursuant to the Deed of Trust in connection with a
change in control of Servico, Inc. After the Lock-Out Date, and provided that no
Event of Default shall have occurred and be continuing under the Loan Documents,
Maker may, on any Due Date, upon not less than thirty (30) days prior written
notice to Payee, prepay the principal amount of the Indebtedness, in whole or in
part, by wire transfer to the Central Account as provided in Paragraph 3 above
of (A) the portion of the principal amount of the Indebtedness to be prepaid,
(B) interest accrued and unpaid on the outstanding principal balance of the
Indebtedness to and including the date of such prepayment, (C) the Yield
Maintenance Premium, if any, payable with respect to such prepayment, and (D)
any other amounts which have accrued and are owing under the Loan Documents
through the date of such prepayment. Each notice of a voluntary prepayment of
all or any portion of the principal amount of the Indebtedness shall specify (I)
the prepayment date, (II) the amount of such prepayment and the amount of
interest thereon and other amounts to be delivered in connection therewith, and
(III) the amount of the Yield Maintenance Premium believed by Maker to be
payable in connection with such prepayment. The amount of the Yield Maintenance
Premium, interest and other amounts payable in connection with any prepayment
shall be subject to confirmation by Payee.
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<PAGE>
(b) The term "Yield Maintenance Premium" shall mean an amount to be
paid to Payee upon the prepayment of the Indebtedness in whole or in part at any
time before the first Due Date (the "10th Anniversary Due Date") following the
tenth (10th) anniversary of the date hereof for any reason, whether said
prepayment is made voluntarily or involuntarily or before, upon or after the
acceleration of the Indebtedness by Payee following the occurrence of an Event
of Default (provided, however, that no Yield Maintenance Premium shall be
payable in connection with any prepayment made as a result of Lender's
application to the Indebtedness of Loss Proceeds pursuant to Section 2.6.8 of
the Loan Agreement or of amounts on deposit in the Capital Expenditure
Sub-Account pursuant to Section 2.6.7(f) (ii) of the Loan Agreement), which
amount shall be equal to the greater of: (i) (A) with respect to a prepayment
made prior to the first Due Date (the "5th Anniversary Due Date") following the
fifth (5th) anniversary of the date hereof, two percent (2%) or (B) with respect
to a prepayment made on or after the 5th Anniversary Due Date but before the
10th Anniversary Due Date, one percent (1%) of the portion of the principal
balance of the Loan being prepaid, or (ii) the product of (A) the excess, if
any, of (I) the present value (as determined by discounting at a rate equal to
(y) the Treasury Constant Maturity Yield Index published during the second full
week preceding the date on which such Yield Maintenance Premium is payable for
instruments having a maturity coterminous with the remaining term of this Note
plus (z) fifty (50) basis points) of the stream of payments of principal and
interest that would be made on the Indebtedness if such prepayment of principal
were not made, including any payment due on the Maturity Date, over (II) the
principal balance of the Indebtedness immediately prior to such prepayment,
multiplied by (B) a fraction of which the numerator is the amount of principal
so prepaid and the denominator is the principal balance immediately prior to
such prepayment. The determination of the Yield Maintenance Premium shall be
made by Payee and shall, absent manifest error, be final, conclusive and binding
upon all parties. The term "Treasury Constant Maturity Yield Index" shall mean
the average yield for "This Week" as reported by the Federal Reserve Board in
Federal Reserve Statistical Release H.15(519). If there is no Treasury Constant
Maturity Yield Index for instruments having a maturity coterminous with the
remaining term of this Note, then the index referred to in clause (ii) (A) (I)
above shall be equal to the weighted average yield to maturity of the Treasury
Constant Maturity Yield Indices with maturities next longer and shorter than the
remaining term of the Note, calculated by averaging (and rounding upward to the
nearest whole multiple of 1/100 of 1% per annum, if the average is not such a
multiple) the yields of the relevant Treasury Constant Maturity Yield Indices
(rounded, if necessary, to the nearest 1/100 of 1%, with any figure of 1/200 of
1% or above rounded upward).
6. Maker agrees that (a) if any amount payable under this Note, the
Loan Agreement or any other Loan Document is not
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<PAGE>
paid within the grace period provided with respect to such payment under Section
8.1 of the Loan Agreement or, if no grace period is provided thereunder with
respect to such payment, on the date on which such payment is due, whether by
acceleration or otherwise, Maker shall pay interest at the Default Rare (as
hereinafter defined) with respect to such amount, upon demand from time to time,
to the extent permitted by applicable law, from the date such amount was due
until such amount has been paid by Maker and (b) upon the occurrence of any
Event of Default, Payee shall have the option, upon three (3) Business Days'
notice given to Maker, of increasing the rate of interest on the entire unpaid
principal balance of this Note (provided, however, that such rate of interest
shall be increased automatically and without notice for all such amounts as
hereinafter provided, upon the occurrence of any of the events set forth in
Section 8.1(a)(vi), (vii) and (viii) of the Loan Agreement), effective from the
date of Maker's initial default with respect to such Event of Default without
allowance for any applicable notice and/or grace period, to the Default Rate.
The term "Default Rate" shall mean a rate of interest equal to the greater of
(a) fifteen percent (15%) per annum or (b) 500 basis points above the "Prime
Rate" published in The Wall Street Journal as of the date notice is sent to
Maker, which interest Maker agrees to pay and which interest shall be secured by
the Deed of Trust. For purposes of the foregoing, if more than one Prime Rate is
published in The Wall Street Journal for the applicable day, the average of the
Prime Rates shall be used. The Prime Rate (or the average of Prime Rates) will
be rounded up to the nearest one-fourth of one percent. In the event that The
Wall Street Journal should cease or temporarily interrupt publication, then the
Prime Rate shall mean the daily average prime rate published in another business
newspaper, or business section of a newspaper, of national standing chosen by
Payee. In the event that a prime rate is no longer generally published or is
limited, regulated or administered by a governmental or quasi-governmental body,
then Payee shall select a comparable interest rate index which is readily
available and verifiable to Maker but is beyond Payee's control. This substitute
index will also be rounded up to the nearest one-fourth of one percent.
Notwithstanding the foregoing, if the unpaid principal sum or any other amount
required to be paid on the Maturity Date or upon acceleration of the
Indebtedness is not paid when due, then interest shall thereafter be computed
and paid at the Default Rate without notice to Maker. The preceding sentence
shall not be construed as an agreement or privilege to extend the date of the
payment of the Indebtedness, nor as a waiver of any other right or remedy
accruing to Payee by reason of the occurrence of an Event of Default.
7. This Note is given to evidence a loan (the "Loan") by Payee to
Maker pursuant to that certain Loan Agreement dated the date hereof (the "Loan
Agreement") between Payee and Maker and is secured by, among other things, that
certain Deed of Trust
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<PAGE>
(the "Deed of Trust") dated the date hereof given by Maker to Chicago Title
Insurance Company for the benefit of Payee covering certain premises more
particularly described in the Deed of Trust.
8. Notwithstanding any provision herein, the total liability for
payments in the nature of interest hereunder shall not exceed the applicable
limits imposed by any applicable State or Federal interest rate laws. If any
payments in the nature of interest, additional interest, and other charges made
hereunder are held to be in excess of the applicable limits imposed by any
applicable State or Federal laws, the amount held to be in excess of such limits
shall be considered payment of principal and the Indebtedness shall be reduced
by such amount of principal in the inverse order of maturity so that the total
liability for payments in the nature of interest, additional interest and other
charges shall not exceed the applicable limits imposed by any applicable State
or Federal interest rate laws. For the purposes of calculating the actual amount
of interest, additional interest and other amounts paid and/or payable
hereunder, in respect of laws pertaining to usury or such other laws, all sums
paid or agreed to be paid to the holder hereof for the use, forbearance or
detention of the Indebtedness outstanding from time to time shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread from
the date of disbursement of the proceeds of this Note until payment in full of
all of the Indebtedness, so that the actual rate of interest on account of the
Indebtedness is uniform through the term hereof. The terms and provisions of
this Paragraph 8 shall control and supersede every other provision of all
agreements between Maker or any endorser and Payee.
9. If any monthly principal and interest payment or any other
amounts payable under this Note, the Deed of Trust, the Loan Agreement or the
other Loan Documents is not paid in full within the grace period provided with
respect to such payment under Section 8.1 of the Loan Agreement or, if no grace
period is provided thereunder with respect to such payment, on the date on which
such payment is due, then a late charge equal to the lesser of five percent (5%)
of such unpaid amount, or the maximum amount permitted by applicable law (the
"Late Payment Charge") shall be deemed to be immediately assessed and shall be
immediately due and payable. Such Late Payment Charge shall automatically become
due to Payee without notice and shall be paid to defray the expenses incurred by
Payee in handling and processing such delinquent payment, and to compensate
Payee for the loss of the use of such delinquent payment, and such amount shall
be secured by the Deed of Trust. Such charges shall be in addition to interest
at the Default Rate and all other rights and remedies available to Payee upon
the occurrence of an Event of Default or a default under this Note, the Deed of
Trust, the Loan Agreement or the other Loan Documents.
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<PAGE>
10. Notwithstanding any provision herein or in any of the Loan
Documents (other than the Environmental Indemnity (as defined in the Loan
Agreement)) to the contrary, in any action brought to enforce the obligations of
Maker under this Note, the Loan Agreement, the Deed of Trust or the other Loan
Documents (other than the Environmental Indemnity), the judgment or decree shall
be enforceable against Maker only to the extent of its interest in the Mortgaged
Property (as defined in the Deed of Trust) and any other collateral given to
Payee to secure the Indebtedness, and any such judgment shall not be subject to
execution on, nor be a lien on, other assets of Maker other than its interest in
the Mortgaged Property and any other collateral given to Payee to secure the
Indebtedness, except as otherwise expressly provided hereinafter. The provisions
of this Paragraph 10 shall not, however, limit the liability of Maker for loss,
costs or damage arising out of the following matters: (i) any failure to apply
the Revenue (as defined in the Loan Agreement) of the Mortgaged Property to pay
the operating expenses of the Mortgaged Property or to fulfill the then current
obligations of Maker under this Note, the Loan Agreement, the Deed of Trust or
any other Loan Document; (ii) any misapplication of Loss Proceeds (as defined in
the Loan Agreement), security deposits or trust funds in violation of applicable
law or the provisions of the Loan Agreement or any other Loan Document; (iii)
any collection of rent for more than one month in advance of the time when the
same becomes due; (iv) failure to pay all real estate taxes and assessments
prior to the date on which such payments become delinquent (subject to Lender's
obligation to make disbursements from the Basic Carrying Costs Sub-Account (as
defined in the Loan Agreement)); (v) any willful misrepresentation by Maker (or
any constituent partner or shareholder of Maker) in connection with Maker's
application, negotiation or documentation of the Loan; (vi) a fraudulent
conveyance or a fraudulent transfer of the Mortgaged Property or any part
thereof or any other properties or assets of Maker; or (vii) any material
misrepresentation or breach of warranty or covenant made by Maker under the
Environmental Indemnity. Nothing herein shall be deemed (w) to be a waiver of
any right which Payee may have under any bankruptcy law of the United States or
of any State in which any part of the Mortgaged Property is located to file a
claim for the full amount of the Loan or to require that all of the Mortgaged
Property and any other collateral given to secure the Loan shall continue to
secure all of the Indebtedness; (x) to impair the validity of the Indebtedness;
(y) to impair the right of Payee as beneficiary or secured party to foreclose
any lien or security interest or (z) impair the right of Payee to obtain the
Recourse Distributions received by Maker, including, without limitation, the
right to proceed against any constituent partner or shareholder of Maker to the
extent any such Recourse Distribution has actually theretofore been distributed
to such constituent partner or shareholder. The provisions of this Paragraph 10
shall be inapplicable to Maker if any petition for bankruptcy, reorganization or
arrangement pursuant to federal or state law
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<PAGE>
shall be filed by, consented to or acquiesced in by or with respect to Maker or
if Maker shall institute any proceeding for the dissolution or liquidation of
Maker or if Maker shall make an assignment for the benefit of creditors, in
which event Payee shall have recourse against all of the assets of Maker and the
Recourse Distributions received by the constituent partners and shareholders of
Maker. For purposes of this Paragraph 10, the term "Recourse Distributions"
shall mean the Revenues arising from the Mortgaged Property to the extent
received by Maker (or actually received by any partner or shareholder of Maker
if not actually received by Maker) after the occurrence and written notice
(including any Consultant's Notice (as defined in the Loan Agreement)) of an
Event of Default.
11. This Note may not be modified, amended, waived, extended,
changed, discharged or terminated orally or by any act or failure to act on the
part of Maker or Payee, 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. Any such written waiver or consent
shall be effective only in the specific instance, and for the purpose, for which
given. Except as otherwise expressly provided herein, no notice to or demand on
Makers shall entitle Makers to any other or future notice or demand in the same,
similar or other circumstances.
12. Maker and all other persons or parties who may become liable for
the payment of all or any part of the Indebtedness does hereby expressly and
unconditionally waive (a) presentment and demand for payment, notice of
dishonor, protest, notice of protest and non-payment and notice of any kind,
including, without limitation, any notice of intention to accelerate and notice
of acceleration, except as expressly provided herein, and (b) in connection with
any suit, action or proceeding brought by Payee on this Note, any and every
right it may have to (i) interpose any counterclaim therein (other than a
counterclaim which can only be asserted in the suit, action or proceeding
brought by Payee on this Note and cannot be maintained in a separate action) and
(ii) have the same consolidated with any other or separate suit, action or
proceeding. Except as provided in the Loan Agreement, no release of any security
for the Indebtedness or extension of time for payment of this Note or any
installment hereof, and no alteration, amendment or waiver of any provision of
this Note, the Deed of Trust, the Loan Agreement or any other Loan Document made
by agreement between Payee and any such other person or party shall release,
discharge, modify, change or affect the liability of Maker, and any other person
who may become liable for the payment of all or any part of the Indebtedness,
under any other provision of this Note or the Deed of Trust. MAKER WAIVES THE
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF ANY KIND ARISING OUT OF OR
RELATING TO THIS NOTE OR THE INTERPRETATION, BREACH OR ENFORCEMENT HEREOF.
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<PAGE>
13. In the event that it should become necessary to employ counsel
to collect the Indebtedness or to protect or foreclose the security hereof, or
pursue its rights under the Loan Documents, Maker agrees to pay reasonable
attorneys' fees for the services and disbursements of such counsel whether or
not suit be brought.
14. All of the terms, covenants and conditions contained in the Loan
Agreement, the Deed of Trust and all other Loan Documents are hereby made part
of this Note to the same extent and with the same force as if they were fully
set forth herein.
15. (a) This Note was negotiated in New York, and executed and
delivered by Maker and accepted by Payee in the State of New York, and the
proceeds of the Note delivered pursuant hereto were disbursed from New York,
which State the parties agree has a substantial relationship to the parties and
to the underlying transaction embodied hereby, and in all respects, including,
without limiting the generality of the foregoing, matters of construction,
validity and performance, this Note and the obligations arising hereunder shall
be governed by, and construed in accordance with, the laws of the State of New
York applicable to contracts made and performed in such State and any applicable
law of the United States of America, except that at all times the provisions for
the creation, perfection, and enforcement of the liens and security interests
created pursuant to the Loan Agreement, the Deed of Trust and the other Loan
Documents shall be governed by and construed according to the law of the State
in which the Property (as defined in the Loan Agreement) is located, it being
understood that, to the fullest extent permitted by law of such State, the law
of the State of New York shall govern the validity and the enforceability of all
Loan Documents, and the Indebtedness or obligations arising hereunder or
thereunder. To the fullest extent permitted by law, Maker hereby unconditionally
and irrevocably waives any claim to assert that the law of any other
jurisdiction governs this Note and the Loan Agreement and this Note and the Loan
Agreement shall be governed by and construed in accordance with the laws of the
State of New York pursuant to ss.5-1401 of the New York General Obligations Law.
(b) Any suit, action or proceeding against Maker or Payee
arising out of or relating to this Note shall be instituted in any federal or
state court in New York, New York, pursuant to ss.5-1402 of the New York General
Obligations Law, or, at Payee's discretion, in any state where the Mortgaged
Property is located and Maker waives any objection which it may now or hereafter
have to the laying of venue of any such suit, action or proceeding, and Maker
hereby irrevocably submits to the jurisdiction of any such court in any suit,
action or proceeding. Maker does hereby designate and appoint C.T. Corporation
System, 1633 Broadway, New York, New York 10019, as its authorized agent
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<PAGE>
to accept and acknowledge on its behalf service of any and all process which may
be served in any such suit, action or proceeding in any federal or state court
in New York, New York, and agrees that service of process upon said agent at
said address and written notice of said service of Maker mailed or delivered to
Maker in the manner provided in the Deed of Trust, shall be deemed in every
respect effective service of process upon Maker, in any such suit, action or
proceeding in the State of New York. Maker (i) shall give prompt notice to the
Payee of any changed address of its authorized agent hereunder, (ii) may at any
time and from time to time designate a substitute authorized agent with an
office in New York, New York (which office shall be designated as the address
for service of process), and (iii) shall promptly designate such a substitute if
its authorized agent ceases to have an office in New York, New York or is
dissolved without leaving a successor.
16. Wherever possible, each provision of this Note shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Note shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Note.
17. Supplementing the provisions of Paragraph 8 hereof, Maker agrees
that, for the purposes of Arizona law, the effective rate of interest shall be
the Interest Rate stated in this Note plus any additional rate of interest
resulting from any other charges in the nature of interest paid or to be paid in
connection with this Note, the Loan Agreement and the other Loan Documents. All
fees, charges, goods and things in action or any other sums or things of value,
other than the interest resulting from the Interest Rate and the Default Rate,
as applicable, paid or payable by Maker (collectively, "Additional Sums"),
whether pursuant to this Note, the Loan Agreement, the Loan Documents or any
other document or instrument in any way pertaining to this lending transaction,
or otherwise with respect to this lending transaction, shall, for the purpose of
any laws of the State of Arizona that may limit the maximum amount of interest
to be charged with respect to this lending transaction, be payable by Maker as,
and shall be deemed to be, additional interest, and for such purposes only, the
agreed upon and "contracted for rate of interest" of this lending transaction
shall be deemed to be increased by the rate of interest resulting from the
Additional Sums. Maker understands and believes that this lending transaction
complies with the usury laws of the State of Arizona; however, for purposes of
Arizona law, if any interest or other charges in connection with this lending
transaction are ever determined to exceed the maximum amount permitted by law,
then Maker agrees that (a) the amount of interest or charges payable pursuant to
this lending transaction shall be reduced to the maximum amount permitted by law
and (b) any excess amount
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<PAGE>
previously collected from Maker in connection with this lending transaction that
exceeded the maximum amount permitted by law, hereunder as provided herein. If
the outstanding principal balance hereunder has been paid in full, the excess
amount paid will be refunded to Maker.
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<PAGE>
IN WITNESS WHEREOF, Maker has duly executed this Note the day and
year first above written.
EAST WASHINGTON HOSPITALITY
LIMITED PARTNERSHIP,
a Florida limited partnership
By: Servico East Washington, Inc.,
a Florida corporation, as its
general partner
By: /s/ David Buddemeyer
---------------------------------
David Buddemeyer, President
<PAGE>
Exhibit 10.12.1
LOAN AGREEMENT
Dated as of January 31, 1995
By and Between
McKNIGHT MOTEL, INC., a Pennsylvania corporation,
as Borrower
AND
COLUMN FINANCIAL, INC., a Delaware corporation,
as Lender
<PAGE>
TABLE OF CONTENTS
Page
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I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION .............................. 1
Section 1.1 Definitions ........................................... 1
Section 1.2 Principles of Construction ............................ 16
II. GENERAL TERMS ........................................................ 16
Section 2.1 Loan Commitment; Disbursement to Borrower ............. 16
2.1.1 The Loan .............................................. 16
2.1.2 Disbursement to Borrower .............................. 16
2.1.3 The Note .............................................. 17
Section 2.2 Use of Proceeds ....................................... 17
Section 2.3 Loan Repayment and Prepayments; Refinancing Debt
Service Coverage Ratio; Extensions .................... 17
2.3.1 Repayments; Refinancings .............................. 17
2.3.2 Prepayments ........................................... 18
2.3.3 Pro Forma Debt Service Coverage Ratio ................. 18
2.3.4 Extensions ............................................ 18
Section 2.4 Intentionally Deleted ................................. 18
Section 2.5 Interest .............................................. 18
2.5.1 Generally ............................................. 18
2.5.2 Default Rate; Post-Maturity Interest .................. 18
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Page
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Section 2.6 Payments; Computations ................................ 19
2.6.1 Making of Payments .................................... 19
2.6.2 Computations .......................................... 19
2.6.3 Late Payment Charge ................................... 19
2.6.4 Application of Payments ............................... 19
Section 2.7 Central Account; Deposits and Distributions ........... 19
2.7.1 Deposits in Central Account ........................... 19
2.7.2 Establishment of Central Account and Sub-Accounts ..... 20
2.7.3 Funding of Basic Sub-Accounts ......................... 21
2.7.4 Deposits During Operative Period and DSCR Restricted
Period ................................................ 22
2.7.5 Eligible Investments .................................. 23
2.7.6 Interest on Accounts .................................. 23
2.7.7 Payment of Debt Service; Disbursement of Funds in Basic
Sub-Accounts; Excess Property Income................... 24
2.7.8 Payment of Loss Proceeds; Borrower's Right to Release . 32
III. CONDITIONS PRECEDENT ................................................. 34
Section 3.1 Conditions Precedent to Closing ....................... 34
IV. REPRESENTATIONS AND WARRANTIES ....................................... 37
Section 4.1 Borrower's Representations ............................ 37
Section 4.2 Survival of Representations ........................... 47
V. AFFIRMATIVE COVENANTS ................................................ 48
Section 5.1 Borrower's Covenants................................... 48
VI. NEGATIVE COVENANTS ................................................... 56
Section 6.1 Borrower's Negative Covenants ......................... 56
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Page
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VII. SPECIAL PROVISIONS ................................................... 58
Section 7.1 Cooperation ........................................... 58
7.1.1 Cooperation ........................................... 58
7.1.2 Additional Financial Reporting Requirements ........... 59
Section 7.2 Insurance; Casualty and Condemnation................... 59
7.2.1 Insurance ............................................. 59
7.2.2 Casualty and Restoration .............................. 62
7.2.3 Condemnation .......................................... 64
Section 7.3 Required Repairs....................................... 66
Section 7.4 FF&E Replacements ..................................... 67
7.4.1 Performance of FF&E Replacements ...................... 67
7.4.2 Additional Replacements ............................ deleted
7.4.3 Indemnification ....................................... 69
Section 7.5 Inspections ........................................... 69
VIII. DEFAULTS ............................................................ 69
Section 8.1 Event of Default ...................................... 69
Section 8.2 Remedies .............................................. 72
Section 8.3 Remedies Cumulative ................................... 72
IX. MISCELLANEOUS ........................................................ 73
Section 9.1 Survival .............................................. 73
Section 9.2 Lender's Discretion ................................... 73
Section 9.3 Governing Law ......................................... 73
Section 9.4 Modification, Waiver in Writing ....................... 74
Section 9.5 Delay Not a Waiver..................................... 75
Section 9.6 Notices ............................................... 75
Section 9.7 Trial by Jury ......................................... 75
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Page
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Section 9.8 Headings .............................................. 76
Section 9.9 Successors and Assigns; Assignment .................... 76
Section 9.10 Severability .......................................... 76
Section 9.11 Preferences ........................................... 76
Section 9.12 Waiver of Notice ...................................... 76
Section 9.13 Intentionally Deleted ................................. 77
Section 9.14 Expenses; Indemnity ................................... 77
Section 9.15 Exhibits Incorporated ................................. 77
Section 9.16 Offsets, Counterclaims and Defenses ................... 77
Section 9.17 No Joint Venture or Partnership ....................... 78
Section 9.18 Publicity ............................................. 78
Section 9.19 Waiver of Marshalling of Assets ....................... 78
Section 9.20 Waiver of Counterclaim ................................ 79
Section 9.21 Conflict; Construction of Documents ................... 79
Section 9.22 Brokers and Financial Advisors ........................ 79
Section 9.23 Prior Agreements ...................................... 79
Section 9.24 Intentionally Deleted ................................. 80
Section 9.25 Appointment of Servicer ............................... 80
Section 9.26 Exculpation ........................................... 80
-iv-
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SCHEDULES
Schedule A -- Legal Description
Schedule B -- Intentionally Deleted
Schedule C -- Franchisor and Franchise Agreement
Schedule D -- Intentionally Deleted
Schedule E -- Required Repairs
Schedule F -- FF&E Replacements
Schedule G -- Permits
Schedule H -- Equipment Leases
Schedule I -- Leases
Schedule J -- Form of Operating Statement
Schedule K -- Operations and Maintenance Programs
Schedule L -- Litigation
Schedule M -- Fair Market Value
-v-
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LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of January 31, 1995, by and among
COLUMN FINANCIAL, INC., having an address at 3414 Peachtree Road, Suite 1140,
Atlanta, Georgia 30326-1113, Attention: Robert A. Barnes, Esq., together with
its successors and assigns, including, without limitation, the Loan Purchaser,
as lender ("Lender"), and McKnight Motel, Inc., a Pennsylvania corporation,
having an address at Servico Centre South, 1601 Belvedere Road, West Palm Beach,
Florida 33406, Attention: Chief Executive Officer, as borrower ("Borrower").
All capitalized terms used herein shall have the respective meanings
set forth in Section 1 hereof.
W I T N E S S E T H:
WHEREAS, Borrower desire to obtain the Loan from Lender;
WHEREAS, Lender is willing to make the Loan to Borrower, subject to
and in accordance with the terms of this Agreement and the other Loan Documents;
WHEREAS, Lender's interest in the Loan may be purchased by the Loan
Purchaser on or after the Closing Date; and
WHEREAS, Borrower consent to the transfer described in the preceding
Recital.
NOW, THEREFORE, in consideration of the covenants, agreements,
representations and warranties set forth in this Agreement, and other good and
valuable consideration, the parties hereto hereby covenant, agree, represent and
warrant as follows:
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1 Definitions.
For all purposes of this Agreement, except as otherwise expressly
required or unless the context clearly indicates a contrary intent:
"Accountant's Certificate" shall have the meaning set forth in
Section 2.7.7(d)(i).
"Accountant's Certificate Default" shall have the meaning set forth
in Section 2.7.7(e) (ii).
"Affiliate" shall mean, as to any Person, any other Person that,
directly or indirectly, is in control of, is
<PAGE>
controlled by or is under common control with such Person or is a director or
officer of such Person or of an Affiliate of such Person.
"Agreement" shall mean this Loan Agreement, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.
"Principal Balance" shall mean the outstanding principal balance of
the Loan.
"ALTA" shall mean American Land Title Association, or any successor
thereto.
"Annual Operating Budget" shall mean, with respect to the Property,
an annual operating budget, showing all projected items of Revenue and Operating
Expenses, prepared on an accrual basis in accordance with GAAP and certified by
Borrower.
"Assignment of Leases" shall mean that certain first priority
Assignment of Leases, Rents and Revenues, dated as of the date hereof, from
Borrower, as assignor, to Lender, as assignee, with respect to the Property,
assigning to Lender all of Borrower's interest in and to the Leases, the Rents
and the Revenue of the Property as security for the Loan, as such Assignment of
Leases may be amended, restated, replaced, supplemented or otherwise modified
from time to time.
"Assignment of Consulting Agreement" shall mean, that certain first
priority Assignment and Subordination of Management Agreement, dated as of
January 31, 1995 from Borrower and Consultant with respect to the Property,
assigning to Lender all of Borrower's interest in and to the Consulting
Agreement with respect to the Property as security for the Loan and
subordinating, pursuant to its terms, such Consulting Agreement and any Lien or
rights created thereunder to the Lien and to the terms, covenants and provisions
of the Loan Documents, as such Assignment of Consulting Agreement may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.
"Bank" shall mean First National Bank of Chicago and any other
financial institution subsequently selected by Lender.
"Bankruptcy Order" shall mean that certain Order Confirming Debtors'
Plan of Reorganization filed on May 7, 1992 in that certain bankruptcy
proceeding captioned In re Servico, Inc., et al. in the United States Bankruptcy
Court, Southern District of Florida, Miami Division, Case No.
90-36655-BKC-AJC-X.
"Basic Carrying Costs" shall mean (a) with respect to the Property,
the sum of the following costs for the relevant Fiscal Year or payment period:
(i) Impositions with respect to the Property and (ii) insurance premiums for the
Policies with respect to the Property.
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"Basic Carrying Costs Monthly Installment" shall mean an amount
equal to (i) one-twelfth (1/12) of an amount estimated by Lender to be necessary
to pay the Impositions for the Property payable during the next ensuing twelve
(12) months, giving effect to any amount deposited in the Basic Carrying Costs
Sub-Account on the Closing Date and (ii) during any Operative Period, DSCR
Restricted Period and Franchise Restricted Period, one-twelfth (1/12) of an
amount estimated by Lender to be necessary to pay the premiums on the Policies
for the Property due during the next ensuing twelve (12) months for the renewal
of the coverage afforded by the Policies upon the expiration thereof. In the
event any of the Policies is a blanket policy insuring risks other than those
associated with the Property, the amount set forth in (ii) above shall be the
premium that would be payable to continue such policy in effect for just the
Property, as set forth in the Insuror's Letter.
"Basic Carrying Costs Sub-Account" shall mean the sub-account of the
Central Account established and maintained pursuant to Section 2.7.2 to provide
for payment of Basic Carrying Costs for the Property.
"Basic Sub-Accounts" shall have the meaning specified in Section
2.7.2.
"Borrower" shall have the meaning specified in the first Paragraph
hereof. Any reference to "Borrower", "any Borrower" or "the applicable
Borrower", or any similar reference shall be deemed to refer to Borrower.
"Borrower Material Adverse Effect" shall have the meaning specified
in Section 4.1(a).
"Borrower's Accountant" shall mean Ernst & Young or any other
Independent firm of certified public accountants approved by Lender, which
approval shall not be unreasonably withheld or delayed.
"Building Evaluation Resorts" shall mean those certain Building
Evaluation Reports prepared by the Engineer and delivered to Lender in
connection with the Loan.
"Business Day" shall mean any day other than a Saturday, Sunday or
any other day on which national banks in New York are not open for business.
"Capital Expenditures Budget" shall mean, with respect to the
Property, an annual budget, prepared on an accrual basis in accordance with GAAP
and certified by Borrower, showing all proposed capital expenditures.
"Capital Expenditure Sub-Account" shall mean a sub-account of the
Central Account established pursuant to Section 2.7.2 hereof for the purpose of
holding certain Excess Property
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Income during any DSCR Restricted Period or any Franchise Restricted Period.
"Cash Flow Available for Debt Service" shall mean, with respect to
the Property with respect to any period, the excess of (a) the Revenue for such
period, determined on an accrual basis, less (b) the Operating Expenses for the
same period, including, for the purposes of calculating Cash Flow Available for
Debt Service, all FF&E Installments calculated with respect to the Revenues for
such period or, with respect to any period prior to the Closing Date, FF&E
Installments that would have been calculated with respect to such period if this
Agreement had been in effect.
"Casualty" shall have the meaning specified in Section 7.2.2(a).
"Central Account" shall mean such Eligible Account maintained by
Lender at the Bank, in the name of Lender or its successors or assigns (as
secured party), as shall be designated by Lender.
"Certificate" shall mean any certificate evidencing interests in the
Loan issued pursuant to the Trust and Servicing Agreement.
"Certificateholder" shall mean the holder of a Certificate.
"Closing Date" shall mean the date of the closing of the Loan.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
as it may be further amended from time to time, any successor statutes thereto,
and applicable U.S. Department of Treasury regulations issued pursuant thereto
in temporary or final form.
"Collateral Security Documents" shall mean any right, document or
instrument given as security for the Note, including, without limitation, the
Mortgage, the Assignment of Leases and the Assignment of Consulting Agreement,
as the same may be amended, restated, replaced, supplemented or otherwise
modified from time to time.
"Commitment" shall have the meaning specified in Section 2.3.1
hereof.
"Condemnation" shall mean any temporary or permanent taking of all
or any part of any Property, or interest therein or right or use thereof, as a
result of, any proceeding in condemnation or eminent domain.
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<PAGE>
"Condemnation Proceeds" shall have the meaning specified in Section
2.7.8(b) hereof.
"Consultant" shall mean Servico Management Corp., a Florida
corporation, and its permitted successors and assigns.
"Consultant Control Change" shall have the meaning specified in
Section 5.1(j).
"Consultant Control Notice" shall have the meaning specified in
Section 5.1(j).
"Consultant's Certifications" shall mean those certifications
required to be delivered by Consultant under Section 5.1(k) (iv).
"Consultant's Notice" shall have the meaning specified in Section
2.7.1.
"Consulting Agreement" shall mean that certain Management Agreement
dated January 1, 1988 between Southfield and Borrower, as assigned to
Consultant.
"Curtailment Reserve Fund Sub-Account" shall mean the sub-account of
the Central Account established and maintained pursuant to Section 2.7.2 hereof
during the Operative Period for the purpose of holding certain Excess Property
Income.
"Debt Service" shall mean, with respect to any particular period of
time, scheduled principal and interest payments under the Note.
"Debt Service Payment Sub-Account" shall mean the sub-account of the
Central Account established and maintained pursuant to Section 2.7.2 hereof for
the purposes of making Debt Service payments.
"Default Rate" shall have the meaning specified in the Note.
"Depositor" shall mean the entity described as such in the Trust and
Servicing Agreement, and its successors and assigns.
"DSCR Determination Date" shall mean each January 1, April 1, July 1
and October 1, commencing on April 1, 1995.
"DSCR Restricted Period" shall have the meaning specified in Section
2.3.3 hereof.
"Due Date" shall mean the first Business Day of each calendar month.
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<PAGE>
"Eligible Account" shall mean a segregated account held by and at
the Bank or an account that is either: (a) maintained with 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 such holding company) have been rated by the Rating Agency in one
of its two highest rating categories or the short-term commercial paper of which
is rated by the Rating Agency in its highest rating category at the time of any
deposit therein; or (b) a trust account or accounts maintained with a federal or
state chartered depository institution or trust company with trust powers acting
in its fiduciary capacity, provided that any such state chartered institution or
trust company shall be subject to regulations or has established internal
guidelines regarding fiduciary funds on deposit substantially similar to federal
regulation 12 C.F.R. 910 (b). The title of each Eligible Account shall indicate
that funds held therein are held in trust for the uses and purposes set forth
herein.
"Eligible Investments" shall mean any one or more of the following
acquired at a purchase price of not greater than par:
(a) direct obligations of, or obligations fully guaranteed as
to payment of principal and interest by, the United States or any
agency or instrumentality thereof, provided such obligations are
backed by the full faith and credit of the United States of America;
(b) fully FDIC-insured demand and time deposits; and
(c) interests in money market or common trust funds which as
of the date of acquisition of the interest in such fund has been
approved for investment by trust funds securing obligations rated
AAAm or AAAm-G by Standards & Poor's Ratings Group, Inc. and P-1 by
Moody's Corporation.
"Engineer" shall mean RKTL Associates, Inc., which is acknowledged
by Lender and Borrower to be an Independent Person, or any other Independent
engineer or engineering firm reasonably approved by Lender.
"Engineering Escrow Sub-Account" shall mean a sub-account of the
Central Account established pursuant to Section 2.7.2 hereof, for the purpose of
holding funds to pay for the Required Repairs.
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<PAGE>
"Environmental Consultant" shall mean Environmental Management
Group, Inc. or any other Independent environmental consulting firm reasonably
approved by Lender.
"Environmental Indemnity" shall mean the certain Environmental
Indemnity Agreement of even date herewith, by Borrower in favor of Lender with
respect to environmental conditions on the Property, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
"Equipment" shall have the meaning specified in the Mortgage with
respect to the Property.
"Equipment Lease" shall mean a lease or other financing arrangement
with respect to any furniture, fixtures and equipment (including, without
limitation, any motor vehicle) used in the operation of the Property.
"Event of Default" shall have the meaning specified in Section 8.1.
"Excess Property Income" shall mean the amounts available in the
Central Account during any Operative Period, any DSCR Restricted Period or any
Franchise Restricted Period after the allocations under clauses (a) through (e),
inclusive, of Section 2.7.3 have been made.
"FF&E Monthly Installment" shall mean a payment on each Due Date in
an amount equal to the sum of the product for each of the Property of (a) the
Revenue of the Property for the calendar month prior to the calendar month
immediately preceding the Due Date in question and (b) four percent (4.0%).
"FF&E Replacements" shall have the meaning specified in Section
2.7.7(e).
"FF&E Sub-Account" shall mean a sub-account of the Central Account
established pursuant to Section 2.7.2 hereof for the purpose of holding reserves
to fund FF&E Replacements.
"Fiscal Year" shall mean that period beginning on the first Friday
after the last Thursday in December of each year and ending on the last Thursday
in December, which Fiscal Year shall be composed of four (4) quarters composed
of thirteen (13) weeks each.
"Franchise Agreement" shall mean that certain franchise agreement
more specifically identified on Schedule C annexed hereto, and any other
Franchise Agreement entered into by a Borrower with respect to the Property with
the consent of Lender in accordance with the terms hereof.
"Franchise Agreement Letter" shall mean that certain Letter
Agreement by Borrower and Franchisor in favor of Lender,
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<PAGE>
with respect to the Property, establishing Lender's rights with respect to the
Franchise Agreement, as such Franchise Agreement Letter may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
"Franchise Restricted Period" shall have the meaning specified in
Section 6.1(a).
"Franchisor" shall mean, with respect to the Property, which is
subject to a Franchise Agreement, the franchisor with respect thereto, as same
are identified on Schedule C annexed hereto or any replacement franchisor
approved by Lender pursuant to the Assignment of Franchise Agreement.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as of the date of the applicable financial report.
"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.
"Impositions" shall mean all real estate and personal property taxes
and all other taxes, levies, assessments and other similar charges, general and
special, ordinary and extraordinary, foreseen and unforeseen, of every kind and
nature whatsoever, which at any time prior to, at or after the execution hereof
may be assessed, levied or imposed by, in each case, a Governmental Authority
upon the Property or the Revenue or the ownership, use, occupancy or enjoyment
thereof, and any interest, costs or penalties with respect to any of the
foregoing, provided that water, sewer and utility charges not be deemed to be an
Imposition.
"Improvements" shall have the meaning specified in the Mortgage with
respect to the Property.
"Indebtedness" shall mean the indebtedness in the original principal
amount set forth in, and evidenced by, the Note, together with all other
obligations and liabilities of Borrower due or to become due to Lender pursuant
to the Note, this Agreement or any other Loan Document, including, without
limitation, all interest thereon and all Yield Maintenance Premiums due in
connection therewith.
"Independent" means, when used with respect to any Person, a Person
who (i) is in fact independent, (ii) does not have any direct financial interest
or any material indirect financial interest in Borrower, or in any Affiliate of
Borrower or any constituent partner, shareholder, member or beneficiary of
Borrower, and (iii) is not connected with Borrower or any Affiliate of Borrower
or any constituent partner, shareholder,
-8-
<PAGE>
member or beneficiary of Borrower as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.
In each instance where the opinion or certificate of an Independent Person is
required in order to comply with any of the provisions hereof, the opinion or
certificate so supplied shall include a statement that the individual executing
the same has read this definition and that the Person supplying such opinion or
certificate is Independent within the meaning hereof.
"Independent Director" shall have the meaning specified in Section
4.1(dd) (xv).
"Insurance Proceeds" shall have the meaning specified in Section
2.7.8(a).
"Insurance Requirements" shall mean, with respect to the each
Property, all material terms of any insurance policy required pursuant to this
Agreement or the related Loan Documents, all material requirements of the issuer
of any such policy, and all material regulations and then current standards
applicable to or affecting the Property or any part thereof or any use or
condition thereof, which may, at any time, be recommended by the state insurance
commissioner or other state regulatory body, if any, having jurisdiction over
the Property, or such other body exercising similar functions.
"Insuror's Letter" shall mean a letter provided by the issuer of the
Policies setting forth, with respect to any such Policy that is a blanket policy
covering risks other than those associated with the Property, the annual premium
that would be required to keep such Policies in effect for just the Property and
making the statement required pursuant to clause (B) of the final sentence of
Section 7.2.1(c), as such letter shall be updated from time to time as the
amounts of the premiums for the Policies shall change.
"Interest Rate" shall have the meaning specified in the Note.
"Late Payment Charge" shall have the meaning specified in the Note.
"Lease" shall mean any lease, or, to the extent of the interest
therein of Borrower, any sublease or subsublease, letting, license, concession
or other agreement (whether written or oral and whether now or hereafter in
effect) pursuant to which any person is granted a possessory interest in, or
right to use or occupy all or any portion of any space in the Property, and
every modification, amendment or other agreement relating thereto and every
guarantee of the performance and observance of the covenants, conditions and
agreements to be performed and observed thereunder, excluding, however, any
occupancy of hotel rooms by guests in the ordinary course of business.
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"Legal Requirements" shall mean all federal, state, county,
municipal and other governmental statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions of Governmental Authorities to
which the Property or any part thereof or the construction, use, alteration or
operation thereof, or any part thereof, is subject, including, without
limitations, all zoning, land use, building, and environmental statutes, laws,
codes, resolutions and ordinances, whether now or hereafter enacted and in
force, and all permits, licenses, variances and authorizations and regulations
relating thereto, and all covenants, agreements, restrictions and encumbrances
contained in any instruments, either of record or known to Borrower, at any time
in force affecting the Property or any part thereof, including, without
limitation, any which may (i) require repairs, modifications or alterations in
or to the Property or any part thereof or (ii) in any way limit the use and
enjoyment thereof.
"Lender" shall have the meaning specified in the first Paragraph
hereof.
"Lien" shall mean any mortgage, deed of trust, lien, pledge,
hypothecation, assignment, security interest, or any other encumbrance, charge
or transfer of, on or affecting the Property or any portion thereof or Borrower,
or any interest therein, including, without limitation, any conditional sale or
other title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing, any financing statement, and
mechanic's, materialmen's and other similar liens and encumbrances.
"Loan" shall mean the loan, evidenced by the Note, and secured by
the Mortgage and the other Collateral Security Documents, to be made by Lender
to Borrower pursuant hereto.
"Loan Documents" shall mean, collectively, this Agreement, the Note,
the Mortgage, the Environmental Indemnity and the other Collateral Security
Documents and any other document executed or delivered by or on behalf of
Borrower in connection with the Loan.
"Loan Purchaser" shall mean any purchaser of the Loan from the
Lender, such purchaser's designee, the respective successors and/or assigns of
such purchaser or designee and any subsequent holder of the Note.
"Loan Year" shall mean each one (1) year period commencing on the
Closing Date and on each anniversary of the Closing Date.
"Lock-Out Date" shall have the meaning specified in the Note.
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<PAGE>
"Long-Term Required Repairs" shall mean those Required Repairs
designated as "long-term" on Schedule E annexed hereto.
"Long-Term Required Repairs Installment" shall mean a payment in the
amount of $39,458.33 to be made by Borrower to Lender on each of the Closing
Date and the first Due Date occurring after each of the first two anniversaries
of the Closing Date, to be deposited in the Engineering Escrow Account, provided
that if the Borrower shall expend funds (other than funds disbursed by Lender
hereunder) in payment of the costs of any Long-Term Required Repair (other than
a Long-Term Required Repair designated as "providing a sprinkler system for the
building" on Schedule E annexed hereto) and shall deliver to Lender reasonably
satisfactory evidence of such payment, together with the contractor's
certification required to be delivered as a condition of disbursement pursuant
to Section 2.7.7(d) (ii) with respect to such Long-Term Required Repair,
Borrower shall, upon reasonable approval of the foregoing by Lender, receive a
credit in the amount of such payment against the amount of the Long-Term
Required Repairs Installment next due, if any, provided that the amount of such
credit together with any disbursements made from the Engineering Escrow
Sub-Account, expressed as a percentage of the costs allocated for such item on
Schedule E, shall not exceed the percentage of the work on such item then
completed.
"Loss Proceeds" shall have the meaning specified in Section 2.7.8(c)
hereof.
"Major Required Repair" shall have the meaning specified in Section
2.7.7 (d).
"Maturity Date" shall mean March 1, 2010, subject to extension as
provided in Section 2.3.4.
"Minor Required Repair" shall have the meaning specified in Section
2.7.7(d)(i).
"Mortgage" shall mean, with respect to the Property, that certain
first priority Mortgage, Security Agreement and Assignment of Leases and Rents
executed and delivered by Borrower Property as security for the Loan and
encumbering the Property, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
"Note" shall mean that certain Promissory Note of even date
herewith, made by Borrower in favor of Lender, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
"Officer's Certificate" shall mean a certificate delivered to Lender
by Borrower which is signed by an officer of Borrower who also serves as Chief
Executive Officer, Chief Financial Officer, Treasurer, Controller or Vice
President of Servico, Inc.
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"Operating Expenses" shall mean all ordinary and customary expenses
payable in the ordinary course of operating the Property as a hotel project
(such expenses being determined on an accrual basis for the relevant calculation
period, unless otherwise expressly provided herein) but excluding distributions
to stockholders or partners of Borrower, Debt Service payable by Borrower,
income taxes, non-cash items such as depreciation and any fees payable to the
Consultant in excess of four percent (4%) of Revenue.
"Operations and Maintenance Expense Monthly Installment" shall mean
with respect to each month in a particular year, an amount, as determined by
Lender, equal to the aggregate of one-twelfth (1/12th) of the product for the
Property of (a) 1.05 and (b) the Operating Expenses for the Property in the
immediately preceding Fiscal Year.
"Operations and Maintenance Expense Sub-Account" shall mean a
sub-account of the Central Account established and maintained during any
Operative Period, any DSCR Restricted Period and any Franchise Restricted Period
pursuant to Section 2.7.2 hereof relating to the payment of Operating Expenses.
"Operative Period" shall mean (a) any period during which a monetary
Event of Default shall have occurred and be continuing, (b) if Borrower fails to
provide Lender with a Commitment on or prior to the Refinance Notification Date,
the period commencing on the Refinance Notification Date and ending on the date
the Indebtedness has been paid in full, and (c) if Borrower provides Lender with
a Commitment on or prior to the Refinance Notification Date and the Void
Commitment Date occurs, the period commencing on the Void Commitment Date and
ending on the date the Indebtedness has been paid in full.
"Other Charges" shall have the meaning specified in Section 5.1(b).
"Permits" shall have the meaning specified in Section 4.1(w).
"Permitted Encumbrances" shall mean, with respect to the Property,
(a) the Liens created by the Loan Documents, (b) all Liens, encumbrances and
other matters disclosed in the Title Insurance Policy relating to the Property
or any part thereof or in UCC-11 searches delivered to Lender, (c) Liens for
Impositions not yet due and payable or being contested in good faith and by
appropriate proceedings in accordance with the applicable provisions of the Loan
Documents, (d) Equipment Leases and any conditional sale agreement with respect
to the purchase of any Equipment, provided the same have been or shall be
entered into by Borrower in the ordinary course of business, (e) Liens given by
Borrower to finance capital improvements to the Property as permitted under the
Mortgage, subject to the prior written approval of Lender, in its sole
discretion, which approval shall
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not be granted if such Lien would result in any withdrawal, downgrade or other
adverse effect on any rating of the Certificates issued by the Rating Agency,
(f) other Liens expressly permitted by the terms of the Loan Documents and (g)
such other title and survey exceptions as Lender has approved or may approve in
writing in Lender's sole discretion.
"Person" shall mean any individual, corporation, partnership, joint
venture, estate, trust, unincorporated association, any federal, state, county
or municipal government or any bureau, department or agency thereof and any
fiduciary acting in such capacity on behalf of any of the foregoing.
"Policies" shall have the meaning specified in Section 7.2.1(c).
"Premises" shall, with respect to the Property, have the meaning
specified in the granting clause of the Mortgage encumbering the Property.
"Pro Forma Debt Service Coverage Ratio" shall mean, with respect to
any DSCR Determination Date, the ratio of (a) the aggregate Cash Flow Available
for Debt Service for the Property determined on an accrual basis for the twelve
(12) month period ending with the calendar month prior to the calendar month
immediately preceding such DSCR Determination Date to (b) the aggregate amount
of Debt Service scheduled to be due during the twelve (12) month period
immediately following such DSCR Determination Date, assuming, for the purpose of
this calculation, that no payments of principal other than scheduled
amortization payments will be made during such period.
"Property" shall mean the parcel of real property, as more fully
described in Schedule A attached hereto, and the Improvements thereon owned by
Borrower and encumbered by the Mortgage, together with all rights and property
pertaining to such real property and Improvements, as more particularly
described in the granting clauses of the Mortgage and referred to therein as the
"Mortgaged Property".
"Qualified Institutional Lender" shall mean a financial institution
or other lender with a long term credit rating which is not less than investment
grade.
"Rating Agency" shall mean Fitch Investors Service, Inc.
"Recourse Distributions" shall have the meaning specified in Section
9.26.
"Refinance Notification Date" shall have the meaning specified in
Section 2.3.1 hereof.
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"Rents" shall mean, with respect to the Property, all rents, income,
issues, revenues and profits arising from the Leases and renewals thereof.
"Required Repairs" shall mean those repairs, if any, with respect to
the Property specified in Schedule E annexed hereto.
"Required Repairs Installment" shall mean the Long-Term Required
Repairs Installment and the Sprinkler Installment.
"Restoration" shall have the meaning specified in Section 7.2.2(a).
"Revenue" shall mean all Rents and all other revenue of any kind
derived from the Property, all determined on an accrual basis (unless otherwise
indicated) in accordance with GAAP consistently applied, after deducting all
allowances for rebates and adjustments, whether cash or credit, derived directly
or indirectly from any source including, without limitation: rental of rooms;
food and beverage; sales from gift or other shops managed directly by Borrower
or any agent of Borrower; telephone; net vending income (gross vending revenue
reduced by the amount payable to equipment vendors for the use thereof);
commissions; net rentals of cars, bicycles and other items; meeting room
rentals, all net revenue received from any third party concessionaires operating
any concession under any agreement with Borrower or its agents, and other
persons occupying space at the Property and/or rendering services to guests
staying at the Property; and any form of incentive payments or awards received
by Borrower from any source whatsoever which are attributable to the operation
of the Property.
"Securitization Transaction" shall mean the transactions
contemplated by the Trust and Servicing Agreement, including, without
limitation, (a) the assignment and transfer of the Loan and the Loan Documents
to the Depositor, (b) the issuance, sale and rating of the Certificates, and (c)
the assignment and transfer of the Loan and the Loan Documents to the Trustee
for the benefit of the Certificateholders.
"Servicer" shall mean (a) the entity described as such in the Trust
and Servicing Agreement or its successor in interest, or if any successor
servicer is appointed pursuant to the Trust and Servicing Agreement, such
successor servicer or (b) any other entity appointed to service the Loan
pursuant to Section 9.25.
"Short-Term Required Repairs" shall mean any Required Repairs not
designated "long-term" on Schedule E annexed hereto.
"Short-Term Required Repair Deposit" shall mean an amount equal to
the aggregate of one hundred twenty-five percent
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(125%) of the estimated costs of Short-Term Required Repairs for the Property as
set forth on Schedule E annexed hereto.
"Southfield" shall mean Southfield Hotel Group II, a Michigan
limited partnership.
"Sprinkler Installment" shall mean a payment in the amount of
$112,500 to be made by Borrower to Lender on the Closing Date and the first Due
Date occurring after each of the first four anniversaries of the Closing Date,
to be deposited in the Engineering Escrow Account, provided that if Borrower
shall expend any funds (other than amounts disbursed by Lender hereunder) in
payment of any Long-Term Required Repair designated as "providing a sprinkler
system for the building" on Schedule E annexed hereto and shall deliver to
Lender reasonably satisfactory evidence of such payment, together with the
contractor's certification required to be delivered as a condition of
disbursement pursuant to Section 2.7.7(d) (ii) with respect to such Long-Term
Required Repair, Borrower shall, upon reasonable approval of the foregoing by
Lender, receive a credit in the amount of such payment against the amount of the
Sprinkler Installment next due, if any, provided that the amount of such credit
together with any disbursements made, from the Engineering Escrow Sub-Account,
expressed as a percentage of the costs allocated for such item on Schedule E,
shall not exceed the percentage of the work on such item then completed.
"State" shall mean, with respect to the Property, the State or
Commonwealth in which the Property or any part thereof is located.
"Survey" shall mean a survey of the Property prepared by a surveyor,
licensed in the State, in accordance with ALTA standards and satisfactory to
Lender and the company or companies issuing the Title Insurance Policy, and
containing a certification of such surveyor satisfactory to Lender.
"Survey Requirements" shall have the meaning specified in Section
3.1 (c) (iii).
"Term Sheet" shall have the meaning specified in Section 9.23.
"Title Insurance Policy" shall mean, with respect to the Property,
the ALTA extended coverage mortgagee title insurance policy (1970 form B or
other loan policy acceptable to Lender) issued with respect to the Property and
insuring the lien of the Mortgage encumbering the Property and containing such
endorsements and affirmative assurances as Lender shall reasonably require (to
the extent authorized in the State).
"Trust and Servicing Agreement" shall mean any trust and servicing
agreement or pooling and servicing agreement pursuant to which the Loan is
assigned to a Trustee in trust and
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one or more classes of Certificates are issued representing beneficial ownership
interests in the Loan and the other assets of such trust.
"Trustee" shall mean the entity described as such in the Trust and
Servicing Agreement or its successor in interest, or if any successor trustee is
appointed pursuant to the Trust and Servicing Agreement, such successor trustee.
"UCC" or "Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect in the State in which the Property as located.
"Void Commitment Date" shall have the meaning specified in Section
2.3.1 hereof.
"Yield Maintenance Premium" shall have the meaning specified in the
Note.
Section 1.2 Principles of Construction.
All references to sections, schedules and exhibits are to sections,
schedules and exhibits in or to this Agreement unless otherwise specified.
Unless otherwise specified, the words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
Unless otherwise specified, all meanings attributed to defined terms herein
shall be equally applicable to both the singular and plural forms of the terms
so defined. All accounting terms not specifically defined herein shall be
construed in accordance with GAAP, as modified herein.
II. GENERAL TERMS
Section 2.1 Loan Commitment: Disbursement to Borrower.
2.1.1 The Loan. Subject to and upon the terms and conditions set
forth herein, Lender hereby agrees to make the Loan to Borrower on the Closing
Date, in the original principal amount set forth in the Note, which Loan shall
mature on the Maturity Date. Borrower hereby agrees to accept the Loan on the
Closing Date, subject to and upon the terms and conditions set forth herein.
2.1.2 Disbursement to Borrower. Borrower may request and receive
only one borrowing hereunder in respect of the Loan and any amount borrowed and
repaid hereunder in respect of the Loan may not be reborrowed. Borrower shall,
on the Closing Date, receive the Loan, subject to the direction given by
Borrower as to the application of Loan proceeds to pay certain closing costs
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and to fund (i) the Basic Carrying Cost Sub-Account in an amount equal to (a)
the amount necessary to enable Lender to make each payment of Impositions coming
due during the twelve (12) months following the Closing Date on the date each
such payment is due, taking into account the Basic Carrying Costs Monthly
Installments that will be due and payable before each such payment of
Impositions is due plus (b) twice the amount indicated in the Insuror's Letter
as the premium necessary to keep the Policies in effect for one month and (ii)
the Engineering Escrow Sub-Account in an amount equal to (a) the Short-Term
Required Repair Deposit plus (b) the first Long-Term Required Repair Installment
plus (c) the first Sprinkler Installment, in accordance with the provisions of
this Agreement.
2.1.3 The Note. The Loan shall be evidenced by the Note, in the
original principal amount of the Loan. The Note shall bear interest as provided
in such Note, and shall be subject to repayment and prepayment as provided in
Section 2.3. The Note shall be entitled to the benefits of this Agreement and
shall be secured by the Mortgage, the Assignment of Leases and the other
Collateral Security Documents.
Section 2.2 Use of Proceeds.
Borrower shall use the proceeds of the Loan disbursed to it pursuant
to Section 2.1. to (i) repay and discharge any existing loans relating to the
Property, except the Permitted Encumbrances, (ii) pay all past-due Basic
Carrying Costs, if any, in respect of the Property, (iii) fund the Basic
Carrying Costs Sub-Account, as provided in Section 2.1.2, and the Engineering
Escrow Sub-Account and (iv) pay costs and expenses incurred in connection with
the Closing of the Loan, as mutually approved by Lender and Borrower. Any
remaining proceeds of the Loan shall be used for commercial purposes only.
Section 2.3 Loan Repayment and Prepayments; Refinancing; Extensions.
2.3.1 Repayment; Refinancings. Borrower shall repay the Loan in
accordance with the provisions of the Note. Borrower shall deliver to Lender a
written commitment or engagement letter (a "Commitment"), which Commitment shall
set forth specific terms and conditions for the refinancing of the entire
outstanding amount of the Loan from a Qualified Institutional Lender or Lenders
or a nationally recognized investment banking firm or firms on or before that
date which is six (6) months prior to the Maturity Date (the "Refinance
Notification Date"). If Borrower fails to deliver such Commitment prior to the
Refinancing Notification Date or if such Commitment is delivered on or before
the Refinance Notification Date, but lapses, terminates or is otherwise
withdrawn prior to the funding of such Commitment and the use of the proceeds
thereof to pay the entire outstanding amount of the Loan (the date upon which
such Commitment lapses, terminates or is otherwise withdrawn is hereinafter
referred to
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as the "Void Commitment Date"), unless the Indebtedness shall have been paid in
full prior to the Refinance Notification Date or the Void Commitment Date, as
the case may be, an Operative Period shall be in effect and all Excess Property
Income shall be applied by Lender pursuant to Section 2.7.3(f).
2.3.2 Prepayments. The Loan may be prepaid only as provided in the
Note.
2.3.3 Pro Forma Debt Service Coverage Ratio. If on any DSCR
Determination Date, the Pro Forma Debt Service Coverage Ratio, is less than or
equal to 1.2/1.0, then for the period (the "DSCR Restricted Period") commencing
on such DSCR Determination Date and ending on the next DSCR Determination Date
on which the Pro Forma Debt Service Coverage Ratio exceeds 1.2/1.0 all Excess
Property Income for all the Property shall be deposited in the Central Account
and allocated as provided in Section 2.7.3(g), provided that if a DSCR
Restricted Period and an Operative Period shall both be in effect with respect
to any period of time, such period will be deemed an Operative Period for the
purposes of this Agreement.
2.3.4 Extensions. At the request of Borrower, which request must be
made at least one hundred eighty (180) days prior to the Maturity Date, Lender
shall have the option, in its sole discretion, to extend the maturity of the
Loan to the next anniversary of the Maturity Date, provided, however, in no
event shall Lender extend the maturity of the Loan beyond March 1, 2015.
Section 2.4 Intentionally Deleted.
Section 2.5 Interest.
2.5.1 Generally. Borrower shall pay interest at the Interest Rate on
the outstanding principal balance of the Loan on each Due Date.
2.5.2 Default Rate; Post-Maturity Interest. If Borrower shall fail
to make any payment of principal, interest, Yield Maintenance Premiums or any
other amount payable by Borrower under the Note, this Agreement or any other
Loan Documents within the grace period provided with respect to such payment
under Section 8.1 or, if no grace period is provided, on the date on which such
payment is due, whether by acceleration or otherwise, Borrower shall pay
interest at the Default Rate with respect to such amounts and/or with respect to
the entire unpaid principal balance of the Loan as provided in the Note. The
preceding sentence shall not be construed as an agreement or privilege to extend
the date for payment of any such amounts nor as a waiver of any other right or
remedy accruing to Lender by reason of the occurrence of an Event of Default.
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Section 2.6 Payments; Computations.
2.6.1 Making of Payments. Each payment by Borrower hereunder or
under the Note shall be made directly into the Central Account by wire transfer
of immediately available funds to:
The First National Bank of Chicago
Chicago, Illinois
ABA #071000013
Credit Clearing A/C No. BNF=7521-7623/DES
Ref: DLJ/Servico/McKnight
or to such other designated bank or place, or in such other manner, as Payee may
from time to time specify in writing. Whenever any payment hereunder or under
the Note shall be stated to be due on a day which is not a Business Day, such
payment shall be made on the next succeeding Business Day.
2.6.2 Computations. Interest payable hereunder or under the Note by
Borrower shall be computed on the basis of a 360-day year consisting of twelve
(12) months of thirty (30) days each except that interest due and payable for a
period less than a full month shall be calculated by multiplying the actual
number of days elapsed in such period by a daily rate based on said 360-day
year.
2.6.3 Late Payment Charge. If any principal, interest, Yield
Maintenance Premiums or any other sums due under the Loan Documents is not paid
in full within three (3) Business Days of the date on which it is due, Borrower
shall pay to Lender a Late Payment Charge pursuant to the Note.
2.6.4 Application of Payments. Unless otherwise expressly provided
herein, all payments received on account of the Indebtedness shall be applied,
first, to accrued and unpaid interest, second, to the outstanding principal
balance of the Loan, third, to any Yield Maintenance Premium then due and
payable and thereafter to other amounts payable under the Loan Documents.
Section 2.7 Central Account; Deposits and Distributions.
2.7.1 Deposits in Central Account. (a) On each Due Date, Borrower
shall pay, or cause to be paid, to Lender, by wire transfer directly to the
Central Account as provided in Section 2.6.1 or as otherwise directed by Lender,
(i) the payment of Debt Service then due and payable, together with all Yield
Maintenance Premiums and other amounts payable under the Note, this Agreement
and the other Loan Documents, (ii) the Basic Carrying Costs Monthly Installment,
(iii) the FF&E Monthly Installment, (iv) during any Operative Period, DSCR
Restricted Period or Franchise
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Restricted Period, (A) the Operations and Maintenance Expense Monthly
Installment and (B) all Excess Property Income and (v) if such Due Date is the
first Due Date occurring after each of the first four anniversaries of the
Closing Date, the Required Repairs Installment, all for application as provided
herein.
(b) On each Due Date, Lender shall allocate all funds deposited into
the Central Account to the Debt Service Payment Sub-Account, the Basic Carrying
Costs Sub-Account, the Engineering Escrow Sub-Account (if such Due Date is the
first Due Date occurring after each of the first four anniversaries of the
Closing Date) and the FF&E Sub-Account, in that order, provided that during any
Operative Period, any DSCR Restricted Period or any Franchise Restricted Period,
Lender shall allocate such funds pursuant to Section 2.7.3.
(c) Upon commencement of any Operative Period, any DSCR Restricted
Period or any Franchise Restricted Period, Lender may deliver a Consultant's
Notice to Consultant. Borrower shall cause Consultant, upon receipt by
Consultant of a notice from Lender so directing Consultant (a "Consultant's
Notice") until directed otherwise by Lender, to collect all Revenue (determined
for the purposes of this provision on a cash basis) relating to the Property and
pay over all such Revenue to Lender by wire transfer directly to the Central
Account as provided in Section 2.6.1 or as may be otherwise designated from time
to time by Lender. From and after the day immediately following the date on
which a Consultant's Notice is received, Consultant shall collect all of the
Revenue of the Property and shall deposit such funds, within one (1) Business
Day after receipt thereof, directly into the Central Account. Upon termination
of the applicable Operative Period, DSCR Restricted Period or Franchise
Restricted Period, provided no other such period shall then be in effect, Lender
shall deliver a notice to Consultant directing Consultant that from and after
the date of such notice Consultant shall not be required to collect and pay over
Revenue pursuant to the applicable Consultant's Notice.
(d) Borrower pledges, assigns and grants a security interest to
Lender in all amounts deposited into the Central Account, as security for
payment of all sums due under the Loan and the performance of all other terms
and covenants of the Loan Documents and this Agreement on Borrower's part to be
paid and performed.
2.7.2 Establishment of Central Account and Sub-Accounts. Lender
shall establish and maintain the Central Account with the Bank, in the name of
Lender, as secured party. The Central Account shall be an Eligible Account and
shall include (a) the Debt Service Payment Sub-Account, (b) the Basic Carrying
Costs Sub-Account, (c) the FF&E Sub-Account, (d) the Engineering Escrow
Sub-Account, (e) the Operations and Maintenance Expense Sub-Account, (f) the
Curtailment Reserve Fund Sub-Account and (g) the Capital Expenditure Sub-Account
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(collectively, the "Basic Sub-Accounts"), to which certain funds shall be
allocated and from which disbursements shall be made pursuant to the terms of
this Agreement. The Central Account and the Basic Sub-Accounts shall be under
the sole dominion and control of Lender. Borrower hereby irrevocably directs and
authorizes Lender to deposit funds into and withdraw funds from the Central
Account and the Basic Sub-Accounts in accordance with the terms and conditions
of this Agreement. Borrower shall have no direct right of withdrawal in respect
of the Central Account or the Basic Sub-Accounts, but shall have the right to
receive disbursements as provided herein. Each transfer of funds to be made
hereunder shall be made only to the extent that funds are on deposit in the
Central Account or the affected Basic Sub-Account and Lender shall have no
responsibility to make additional funds available in the event that funds on
deposit are insufficient.
2.7.3 Funding of Basic Sub-Accounts During Operative Period, DSCR
Restricted Period and Franchise Restricted Period. During any Operative Period,
DSCR Restrictive Period and any Franchise Restricted Period, Lender shall
allocate all funds deposited into the Central Account each day among the Basic
Sub-Accounts in the following priority:
(a) first, to the Basic Carrying Costs Sub-Account, until an
amount equal to the sum of (i) an amount equal to the Basic Carrying Costs
Monthly Installment for any prior month(s), to the extent not previously paid,
plus (ii) an amount equal to the Basic Carrying Cost Monthly Installment due on
the current Due Date, has been allocated to the Basic Carrying Costs
Sub-Account;
(b) second, to the Operations and Maintenance Expense
Sub-Account, until an amount equal to the sum of (i) an amount equal to the
Operations and Maintenance Expense Monthly Installment for any prior month(s),
to the extent not previously paid, plus (ii) an amount equal to the Operations
and Maintenance Expense Monthly Installment due on the current Due Date, has
been allocated to the Operations and Maintenance Expense Sub-Account;
(c) third, to the Debt Service Payment Sub-Account, until an
amount equal to the sum of (i) the amount, if any, deducted therefrom during any
preceding month to pay any amounts due to any other Basic Sub-Account in
accordance with the provisions of this Section 2.7 to the extent not previously
reimbursed by such other Basic Sub-Account to the Debt Service Payment
Sub-Account, plus (ii) an amount equal to the payment of Debt Service for any
prior month(s), to the extent not previously paid, plus (iii) an amount equal to
the payment of Debt Service for the current Due Date (and any other amounts
required to be paid under the Note on such Due Date), has been allocated to the
Debt Service Payment Sub-Account;
(d) fourth, but only if all of the Required Repair
Installments have not yet been paid, to the Engineering
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Escrow Sub-Account, until an amount equal to the sum of (i) the amount, if any,
deducted therefrom during any preceding month to pay any amounts due to any
other Basic Sub-Account in accordance with the provisions of this Section 2.7 to
the extent not previously reimbursed by such other Basic Sub-Account to the
Engineering Escrow Sub-Account, plus (ii) an amount equal to the payment of any
portion of any Required Repairs Installment previously payable, to the extent
not previously paid, plus (iii) an amount equal to the aggregate of the Required
Repairs Installment, if any, payable hereunder on the first Due Date occurring
after the next anniversary of the Closing Date divided by the number of Due
Dates to occur between the date such funds are received and the first Due Date
occurring after the next anniversary of the Closing Date, inclusive;
(e) fifth, to the FF&E Sub-Account, until an amount equal to
the sum of (i) the amount, if any, deducted therefrom during any preceding month
to pay any amounts due to any other Basic Sub-Account in accordance with the
provisions of this Section 2.7 to the extent not previously reimbursed by such
other Basic Sub-Account to the FF&E Sub-Account, plus (ii) an amount equal to
the FF&E Monthly Installment for any prior month(s), to the extent not
previously paid, plus (iii) an amount equal to the FF&E Monthly Installment due
on the current Due Date, has been allocated to the FF&E Sub-Account;
(f) sixth, but only during any Operative Period, to the
Curtailment Reserve Fund Sub-Account to be applied pursuant to Section 2.7.7(g),
unless Lender shall elect, in its sole discretion, to disburse all or any
portion of such funds in payment of any Operating Expenses or any other charges
affecting all or a portion of the Property, upon such terms and conditions as
Lender shall elect; and
(g) seventh, but only during any DSCR Restricted Period or any
Franchise Restricted Period, to the Capital Expenditure Sub-Account, to be
disbursed as provided in Section 2.7.7(f).
2.7.4 Deposits During Operative Period, DSCR Restricted Period and
Franchise Restricted Period. If on any Due Date during any Operative Period,
DSCR Restricted Period or any Franchise Restricted Period, the funds then on
deposit in the Central Account shall be less than the amount of funds which are
required to be deposited therein pursuant to Section 2.7.3(a) through (d) for
such Due Date, Borrower shall be obligated to deposit immediately available
funds (in addition to Revenue) by wire transfer directly into the Central
Account as provided in Section 2.6.1, on such Due Date (subject to the grace
period provided in Section 8.1(a) (i)), in the amount of such deficiency, and
failure to make such deposit shall be an Event of Default hereunder. Lender may
(but shall not be obligated to) withdraw funds from the Debt Service Payment
Sub-Account the Engineering Escrow Sub-Account, the FF&E Sub-Account, the
Curtailment Reserve
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Sub-Account or the Capital Expenditure Sub-Account (in each case to the extent
funds are available in each such Basic Sub-Account) and pay any deficiency in
any other Basic Sub-Account, in such order of priority as Lender determines in
Lender's sole discretion. Lender shall not withdraw or disburse funds from the
Basic Carrying Costs Sub-Account or the Operation and Maintenance Sub-Account
except as expressly provided in Section 2.7.7(b) and (c).
2.7.5 Eligible Investments. Lender shall direct the Bank to invest
and reinvest any balance in the Central Account from time to time in Eligible
Investments, provided that (a) the maturities of the Eligible Investments on
deposit in the Central Account, if fixed, shall, to the extent such dates are
ascertainable, be selected and coordinated to become due not later than the day
before any disbursements from the Central Account and the Basic Sub-Accounts
must be made, (b) all such Eligible Investments shall be held in the name of
Lender (as secured party) and be under the sole dominion and control of Lender,
and (c) no Permitted Investment shall be made unless Lender shall retain a
perfected first priority Lien in such Permitted Investment securing the
Indebtedness and all filings and other actions necessary to ensure the validity,
perfection, and priority of such Lien have been taken and Lender shall have been
provided with an opinion of counsel satisfactory to Lender confirming the
perfection of such Lien in such Eligible Investment. All funds in the Central
Account that are invested in an Eligible Investment shall be deemed to be held
in the Central Account for all purposes of this Agreement and the other Loan
Documents. Neither Lender nor the Bank shall have any liability for any loss in
investments of funds in the Central Account that are invested in Eligible
Investments and no such loss shall affect Borrower's obligation to fund, or
liability for funding, the Central Account, as the case may be. Borrower agrees
that Borrower shall include all such earnings on the Central Account as income
of the Borrower for federal and applicable state tax purposes.
2.7.6 Interest on Accounts. All interest paid or other earnings on
the Eligible Investments made hereunder shall be deposited into the Central
Account and shall be allocated to the Basic Sub-Account which contained the
funds with respect to which such interest was paid or other earnings earned. All
such interest and earnings shall be treated as Revenue. Except during a DSCR
Restricted Period, a Franchise Restricted Period, an Operative Period or any
period when an Event of Default has occurred and is continuing, all such
interest paid or other earnings earned with respect to funds in the Basic
Carrying Costs Sub-Account and the Debt Service Payment Sub-Account shall, after
each anniversary of the Closing Date, at Lender's option, either be paid over to
Borrower or, on notice to Borrower, credited against the amounts payable by
Borrower on the next Due Date. Except for amounts to be paid or credited to
Borrower pursuant to the preceding sentence, all interest paid or earnings
earned with
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respect to funds on deposit in any Basic Sub-Account shall be retained in such
Basic Sub-Account and disbursed pursuant to Section 2.7.7.
2.7.7 Payment of Debt Service; Disbursement of Funds in Basic
Sub-Accounts; Excess Property Income. Transfers and payments from the Central
Account and the Basic Sub-Accounts shall be made in accordance with the
following provisions:
(a) Payment of Debt Service. On each Due Date during the term
of the Loan, Lender shall withdraw from the Debt Service Payment
Sub-Account and apply to the Indebtedness an amount equal to the sum
of all payments of Debt Service and any other amounts payable to
Lender under the Note, this Agreement or the other Loan Documents,
provided that if any such payment of Debt Service or other amounts
is past due, Lender shall make such withdrawal immediately upon
allocation of funds to the Debt Service Payment Sub-Account.
(b) Payment of Basic Carrying Costs. Borrower shall use its
best efforts to cause all notices of the amount and due date of
payments of Basic Carrying Costs to be sent to Lender at least ten
(10) Business Days prior to such due date. Provided that (i) Lender
has received notice of the amount and due date of any payment of
Basic Carrying Costs and (ii) there are sufficient funds available
in the Basic Carrying Costs Sub-Account, Lender shall make such
payment of Basic Carrying Costs directly to the Governmental
Authority or insuror entitled thereto. If the amount in the Basic
Carrying Costs Sub-Account is not sufficient to pay the Basic
Carrying Costs, Borrower shall pay to Lender, within five (5)
Business Days of written notice, an amount which Lender shall
estimate as sufficient to make up the deficiency. Notwithstanding
anything contained herein to the contrary, Borrower may only request
disbursements from the Basic Carrying Costs Sub-Account to pay
premiums on the Policies to the extent of amounts deposited in the
Basic Carrying Costs Sub-Account pursuant to clause (ii) of the
definition of "Basic Carrying Costs Monthly Installment".
Nevertheless, Lender shall also have the right, without Borrower's
request, but not the obligation, to disburse amounts in the Basic
Carrying Costs Sub-Account in payment of premiums for the Policies
if Borrower shall fail to pay the same when due.
(c) Payment of Operating Expenses. (i) Borrower hereby agrees
to pay, or cause to be paid, when due all Operating Expenses with
respect to the Property (whether or not any amounts on deposit in
the Operations and Maintenance Expense Sub-Account shall be
sufficient for such purpose); provided that Borrower may contest any
Operating Expenses which it in good faith disputes, provided that
(A) no Lien shall attach to the Property (except for the Lien of any
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Impositions being contested by Borrower as permitted under the Loan
Documents), (B) Borrower shall have demonstrated to Lender's
reasonable satisfaction that it has established adequate reserves to
provide for payment of such Operating Expense, if ultimately
required, and (C) failure to pay such Operating Expense shall not
have a material adverse effect on the operation of the Property.
Borrower may, not more frequently than twice in any calendar month,
give Lender written notice, at least five (5) Business Days prior to
the due date with respect to any Operating Expenses, requesting that
Lender pay such Operating Expenses on behalf of Borrower on or prior
to the due date thereof, which notice shall be accompanied by (I) an
Officer's Certificate specifying the Operating Expenses for which
payment is requested and certifying that all requested amounts are
properly payable hereunder and (II) evidence reasonably satisfactory
to Lender that all Operating Expenses for which disbursements have
previously been requested have been paid. Provided that (A) Lender
has received the Consultant's Certifications for the most recent
period for which the same are due, and (B) there are sufficient
funds available in the Operations and Maintenance Expense
Sub-Account, Lender shall, as Lender in its sole discretion shall
determine, either make such payments out of such Basic Sub-Account
or disburse funds from such Basic Sub-Account to Borrower or to the
Consultant on behalf of Borrower for the purpose of making payment
of such Operating Expenses within five (5) Business Days of receipt
of the documentation required hereby; provided that if an Event of
Default with respect to any amounts payable under the Loan Documents
shall have occurred and be continuing or the Indebtedness shall have
been accelerated, Lender shall disburse payments of Operating
Expenses only to third parties entitled to payment thereof.
(ii) Notwithstanding anything to the contrary contained
herein, Lender shall not be obligated to make any disbursement from
the Operations and Maintenance Sub-Account to pay Basic Carrying
Costs, Debt Service, the costs of any FF&E Replacements, the costs
of Required Repairs or legal fees in connection with any dispute
arising under any Loan Document or any management or consulting fees
in excess of four percent (4%) of Revenues with respect to the
Property.
(d) Payment of Costs of Required Repairs. (i) Borrower shall
pay all costs in connection with the performance of the Required
Repairs (without regard to the amount of money then available in the
Engineering Escrow Sub-Account). With respect to any Required Repair
for which the cost set forth on Exhibit E annexed hereto is less
than the greater of (A) $75,000 or (B) one and one-half percent
(1.5%) of the initial Principal Balance for the Property (a "Minor
Required Repair"), Borrower may submit one request
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for a disbursement from the Engineering Escrow Sub-Account of the
actual cost of such Required Repair, provided that all requests by
Borrower for disbursements for Minor Required Repairs in any
calendar month shall be submitted simultaneously and each such
request shall be accompanied by an Officer's Certificate specifying
the costs to be paid from such disbursement and certifying that all
requested amounts are properly payable hereunder and that (I) all
costs of Required Repairs for which disbursements have previously
been made hereunder have been paid to the extent due and payable and
(II) any amounts disbursed by Lender for the costs of Required
Repairs that are not yet due and payable have been reserved by
Borrower for payment of such costs. Borrower shall cause Borrower's
Accountant to deliver to Lender, on or before the first day of each
February, May, August and November of each Fiscal Year, commencing
on May 1, 1995, a certificate of Borrower's Accountant (an
"Accountant's Certificate") stating that (A) Borrower's Accountant
has reviewed (I) all Officer's Certificates delivered by Borrower
pursuant to the preceding sentence during the quarter of Borrower's
Fiscal Year last ended, (II) the invoice from the appropriate
contractor or supplier for each expenditure for which an advance
from the Engineering Escrow Sub-Account was requested pursuant to
such Officer's Certificates, (III) the cancelled check written by
Borrower in payment of each such invoice, (IV) all receipts and
other evidence of payment received by Borrower with respect to such
payments and (V) such evidence as Borrower's Accountant, in its
professional judgment, deems necessary to establish that all amounts
requested by Borrower to be disbursed from the Engineering Escrow
Sub-Account during such quarter of the Fiscal Year have in fact been
expended for purposes permitted under this Agreement and (B) all
amounts disbursed by Lender during such quarter of Borrower's Fiscal
Year (I) (x) were in fact expended in payment of amounts payable out
of funds on deposit in the Engineering Escrow Sub-Account under the
terms of this Agreement or (y) have been reserved by Borrower for
payment of such amounts or (II), if any such disbursements were not
used to pay amounts properly payable hereunder or reserved for
future payment of such amounts, specifying the amounts so
misapplied, provided that upon completion of any Minor Required
Repair and payment in full of costs payable in connection therewith,
Borrower shall not be required to account for any excess funds
disbursed from the Engineering Sub-Account in connection with such
Minor Required Repair. If any such Accountant's Certificate shall
indicate that amounts disbursed from the Engineering Escrow
Sub-Account were misapplied, Borrower shall immediately deposit in
the Central Account, for allocation to the Engineering Escrow
Sub-Account, funds equal to the amount so misapplied.
(ii) With respect to any Required Repair for which the cost
set forth on Exhibit E annexed hereto is not
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less than the greater of (A) $75,000 or (B) one and one-half percent
(1.5%) of the initial Principal Balance for the Property (a "Major
Required Repair"), Borrower may from time to time, but not more
frequently than once in any calendar month, request a disbursement
from the Engineering Escrow Account of amounts to pay for the costs
of such Major Required Repair, accompanied by an Officer's
Certificate specifying the costs to be paid from such disbursement
and certifying that all such costs are properly payable hereunder,
provided that (I) prior to commencement of such Major Required
Repair, Borrower shall have submitted to Lender a budget for such
Major Required Repair and a plan detailing the time frames for each
stage of such work, the percentage of the total Major Required
Repair represented by each stage and the percentage of the budget
allocated to each such stage, (II) such request shall be accompanied
by (x) a certification of the Independent contractor setting forth
the percentage of the Major Required Repair then completed and (y)
evidence reasonably satisfactory to Lender that all costs of such
Major Required Repair for which disbursements have previously been
made hereunder have been paid; and (III) Lender shall not be
required to advance any funds from the Engineering Escrow
Sub-Account with respect to any Major Required Repair to the extent
that the aggregate funds advanced for such item, expressed as a
percentage of the costs allocated for such item on Schedule E, would
exceed the percentage of the work on such item then completed.
(iii) Provided that (A) no Event of Default has occurred and
is continuing, (B) Lender has received the Consultant's
Certifications and the Accountant's Certificates for the most recent
period for which the same are due and the conditions set forth in
subparagraphs (i) and (ii) above have been met, Lender shall
disburse to Borrower the funds in the Engineering Escrow Sub-Account
with respect to the Property to pay the costs of the Required
Repairs, up to the amount set forth on Schedule E annexed hereto for
each such Required Repair, subject to Borrower's right to request
disbursement of excess funds pursuant to clause (v) below; provided
that Lender may condition the disbursement of the final twenty-five
percent (25%) of the funds in the Engineering Escrow Sub-Account
with respect to any Major Required Repair upon an inspection by
Lender or its agent, at Borrower's expense, to confirm that such
item has been completed.
(iv) After completion of the Short-Term Required Repairs and
after completion of the Long-Term Required Repairs to the Property,
Borrower shall submit to Lender (A) (I) with respect to Required
Repairs that were not Major Required Repairs, an Officers
Certificate or (II) with respect to any Major Required Repairs, a
certificate from
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the Engineer, stating, in either case, that all Short-Term Required
Repairs or Long-Term Required Repairs, as applicable, have been
completed in good and workmanlike manner and in accordance with all
Legal Requirements, that all Permits necessary for the use or
occupancy of the Property upon completion of such Required Repairs
have been obtained (with copies of all such Permits attached), (B)
at Lender's option, a title search for the Property indicating that
the Property is free from all liens, claims and other encumbrances
not previously approved by Lender, and (C) such other evidence as
Lender shall reasonably request that the Required Repairs to the
Property have been completed and paid for, including, without
limitation, copies of lien waivers.
(v) If, after completion of all Short-Term Required Repairs, a
portion of the funds deposited in the Engineering Escrow Sub-Account
with respect to the Short-Term Required Repairs remains on deposit,
Borrower may submit an Officer's Certificate stating that all
Short-Term Required Repairs with respect to the Property have been
completed in compliance herewith, that all amounts payable in
connection with such Short-Term Required Repairs have been paid and
that Borrower is entitled to receive a disbursement of the remaining
funds on deposit in the Engineering Escrow Sub-Account with respect
to the Short-Term Required Repairs. Lender shall, at Lender's
option, pay such funds remaining in the Engineering Escrow
Sub-Account applicable to the Short-Term Required Repairs to
Borrower or, upon notice to Borrower, apply such amount to the
amounts payable hereunder on the next Due Date.
(vi) If, after completion of all Required Repairs with respect
to the Property, a portion of the funds deposited in the Engineering
Escrow Sub-Account with respect to the Property remains on deposit
and/or any Required Repairs Installments are not yet due and payable
with respect to the Property, Borrower may submit an Officer's
Certificate stating that all Required Repairs with respect to the
Property have been completed in compliance herewith, that all
amounts payable in connection with such Required Repairs have been
paid and that Borrower is entitled to receive a disbursement of the
remaining funds on deposit in the Engineering Escrow Sub-Account
with respect to the Property and/or that any Required Repairs
Installments with respect to the Property not yet due and payable
should be waived. Lender shall, at Lender's option, pay such funds
remaining in the Engineering Escrow Sub-Account applicable to the
Property to Borrower or, upon notice to Borrower, apply such amount
to the amounts payable hereunder on the next Due Date, and any
Required Repairs Installments with respect to the Property not yet
due and payable shall be waived.
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<PAGE>
(vii) Upon the occurrence of an Event of Default with respect
to any amounts payable under the Loan Documents or the acceleration
of the Indebtedness, Lender may apply the funds on deposit in the
Engineering Escrow Sub-Account, as Lender in its sole discretion may
determine, either (A) in payment of any costs of Required Repairs or
any other charges affecting all or any portion of the Property or
(B) in payment, in such order as Lender may elect, of the
Indebtedness then due and payable, whether by acceleration or
otherwise; provided, however, that no such application shall be made
by operation of law or otherwise until actually made by Lender as
herein provided.
(e) Disbursement from FF&E Sub-Account. (i) Borrower shall pay
the costs of those items listed on Schedule F annexed hereto (the
"FF&E Replacements") (without regard to any amounts on deposit in
the FF&E Sub-Account). Borrower may, not more frequently than once
in any calendar month and not with respect to any requested
disbursement of less than $1,000, give Lender written notice
requesting that Lender pay for the costs of any FF&E Replacements
performed or to be performed in accordance with Section 7.4 hereof,
which notice shall be accompanied by an Officer's Certificate from
Borrower stating (A) the specific FF&E Replacements for which the
disbursement is requested, (B) the quantity -and price of each item
purchased, if the FF&E Replacement includes the purchase or
replacement of specific items, (C) the price of all materials
(grouped by type or category) used or to be used in any FF&E
Replacement other than the purchase or replacement of specific
items, (D) the cost of all contracted labor or other services
applicable to each FF&E Replacement for which such request for
disbursement is made, (E) that all FF&E Replacements have been or
will be made in accordance with all Legal Requirements and (F) that
all costs incurred in connection with the FF&E Replacements subject
to such disbursement are costs payable from the FF&E Sub-Account
pursuant to the terms of this Agreement.
(ii) Borrower shall cause Borrower's Accountant to deliver to
Lender, on or before the first day of each February, May, August and
November of each Fiscal Year, commencing on May 1, 1995, an
Accountant's Certificate stating that (A) Borrower's Accountant has
reviewed (I) all officer's Certificates delivered by Borrower
pursuant to subparagraph (i) above during the quarter of Borrower's
Fiscal Year last ended, (II) the invoice from the appropriate
contractor or supplier for each expenditure for which an advance
from the FF&E Sub-Account was requested pursuant to such Officer's
Certificates, (III) the cancelled check written by Borrower in
payment of each such invoice, (IV) all receipts and other evidence
of payment received by Borrower with respect to such payments and
(V) such evidence as Borrower's Accountant, in its professional
judgment,
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deems necessary to establish that all amounts requested by Borrower
to be disbursed from the FF&E Sub-Account during such quarter of the
Fiscal Year have in fact been expended for purposes permitted under
this Agreement and (B) all amounts disbursed by Lender during such
quarter of Borrower's Fiscal Year were in fact expended in payment
of amounts payable out of funds on deposit in the FF&E Sub-Account
under the terms of this Agreement. If Borrower's Accountant is
unable to deliver the Accountant's Certificate containing the
certifications required under the preceding sentence when due, or if
any Accountant's Certificate contains any incorrect statement
(either occurrence is herein referred to as an "Accountant's
Certificate Default"), thereafter the Officer's Certificate
delivered in connection with any request for a disbursement from the
FF&E Sub-Account shall, in addition to all the other matters
described in clause (i) above, (Y) state that all costs for which
such disbursement is requested have been paid in full by Borrower
and (Z) be accompanied by copies of invoices for all items or
materials purchased and all contracted labor or services provided
and each request shall include copies of lien waivers or other
evidence satisfactory to Lender of payment of all such amounts.
(iii) If (A) the cost of an FF&E Replacement exceeds $10,000
and (B) the contractor performing such FF&E Replacement requires
periodic payments pursuant to terms of a written contract, a copy of
which has been delivered to Lender, a request for disbursement from
the FF&E Sub-Account may be made from time to time to make such
periodic payments when payable under such contract, provided (I) all
other conditions in this Agreement for disbursement have been
satisfied, (II) funds remaining in the FF&E Sub-Account are, in
Lender's judgment, sufficient to complete such FF&E Replacement and
other FF&E Replacements when required, and (III) each contractor or
subcontractor receiving payments under such contract shall have
provided a waiver of lien with respect to amounts which have been
paid to that contractor or subcontractor and, if requested by
Lender, Borrower shall have delivered copies of such lien waivers to
Lender.
(iv) Except for requests for disbursement described in clause
(iii) above, each request for disbursement from the FF&E Sub-Account
shall be made only after completion of the FF&E Replacement for
which disbursement is requested and Borrower, shall make only one
simultaneous submission of such requests in any calendar month.
Borrower shall provide Lender evidence of completion of the FF&E
Replacements subject to such requests satisfactory to Lender in its
reasonable judgment and the Officer's Certificates submitted in
connection with such requests shall state that all costs of the FF&E
Replacements subject thereto have been paid in full.
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<PAGE>
(v) Provided that (A) no Event of Default has occurred and is
continuing, (B) Lender has received the Consultant's Certifications
and the Accountant's Certificate for the most recent period for
which the same are due, (C) the requirements set forth in this
clause (e) and Section 7.4 of this Agreement are satisfied and (D)
there are sufficient funds available in the FF&E Sub-Account, Lender
shall disburse to Borrower amounts from the FF&E Sub-Account
necessary to pay the actual costs of the FF&E Replacements, provided
that after the occurrence of an Accountant's Certificate of Default,
such disbursements shall be made only to reimburse Borrower for
actual costs of FF&E Replacements that Borrower has demonstrated
pursuant to subparagraph (ii) above have already been paid and that
are properly payable from the FF&E Sub-Account under this Agreement.
Lender shall not be obligated to make disbursements from the FF&E
Sub-Account to pay, or to reimburse Borrower for, the costs of
routine maintenance to the Property or for costs which are to be
disbursed from the Required Repair Fund.
(vi) Upon the occurrence of an Event of Default with respect
to any amounts payable under the Loan Documents or acceleration of
the Indebtedness, Lender may apply the funds on deposit in the FF&E
Sub-Account, as Lender in its sole discretion may determine, either
(A) in payment of the costs of any FF&E Replacements or other
charges affecting all or any portion of the Property or (B) in
payment, in such order as Lender may elect, of the Indebtedness then
due and payable, whether by acceleration or otherwise, any Yield
Maintenance Premium payable with respect to any portion applied in
reduction of the principal balance of the Loan; provided, however,
that no such application shall be deemed to have been made by
operation of law or otherwise until actually made by Lender as
herein provided.
(f) Disbursement of Funds in Capital Expenditure Sub-Account.
(i) Notwithstanding anything to the contrary contained in the Note,
this Agreement or the other Loan Documents, Lender may elect to (a)
retain the funds on deposit in the Capital Expenditure Sub-Account
as additional collateral to secure repayment of the Indebtedness and
performance of the other obligations of Borrower hereunder or (b)
disburse such funds in payment of the costs and expenses of any
improvement, repair or replacement approved by Lender, in its sole
discretion, to the Property, the cost of which Borrower would be
required to capitalize for federal income tax purposes, provided,
however, that notwithstanding the foregoing, if the Pro Forma Debt
Service Coverage Ratio has been (I) less than or equal to 1.2/1.0 on
two (2) consecutive DSCR Determination Dates, exclusive, with
respect to any DSCR Restricted Period, of the initial DSCR
Determination Date on which the Pro Forma Debt Service Coverage
Ratio fell below 1.2/1.0, Lender may elect to apply
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any funds on deposit in the Capital Expenditure Sub-Account as a
prepayment of the principal balance of the Loan or other amounts
payable in connection therewith, on the next occurring Due Date,
with no Yield Maintenance Payable in connection with such
application, or (II) at least equal to 1.3/1.0 for four (4)
consecutive DSCR Determination Dates, Lender shall, at Lender's
option, either pay over any funds on deposit in the Capital
Expenditure Sub-Account to Borrower or credit such funds, on notice
to Borrower, against the amounts payable by Borrower on the next Due
Date, provided that nothing contained in this clause (II) shall
limit Lenders rights elsewhere in this paragraph (f) (i). If any
Franchise Restricted Period shall terminate prior to the occurrence
of an Event of Default hereunder and no DSCR Restricted Period is
then in effect, Lender shall, at Lender's option, either pay over
any funds on deposit in the Capital Expenditure Sub-Account to
Borrower or credit such funds, on notice to Borrower, against the
amounts payable by Borrower on the next Due Date.
(ii) Borrower may, not more frequently than once in each
calendar month, give Lender written notice requesting that Lender
pay the costs of, or reimburse Borrower for payment of the costs of
any such capital improvement, repair or replacement, together with
an Officer's Certificate from Borrower stating the amounts of
charges for which disbursement is requested and that such charges
are properly payable hereunder, and, if required, satisfactory
evidence of the progress and/or completion of such capital
improvement and the cost thereof, satisfactory evidence that any and
all completed capital improvement, repair or replacement work
complies with Legal Requirements and lien waivers, copies of bills,
invoices and other evidence as may be required by Lender to
establish that the costs of any such capital improvement, repair or
replacement for which reimbursement is requested, or for which
disbursement has been previously made, have been paid by Borrower.
(g) Disbursement of Funds in Curtailment Reserve Fund
Sub-Account. Lender shall apply the funds on deposit in the
Curtailment Reserve Fund Sub-Account as a prepayment of the
principal balance of the Loan, together with any Yield Maintenance
Premium and other amounts payable in connection therewith on the
next occurring Due Date.
2.7.8 Payment of Loss Proceeds: Borrower's Right to Release. (a) In
the event of a Casualty with respect to the Property, Lender and Borrower shall
cause all proceeds under any insurance policy required to be maintained by
Borrower ("Insurance Proceeds") to be paid by the respective insurers directly
into the Central Account, except for Insurance Proceeds relating to Equipment
subject to Equipment Leases that require such insurance proceeds be paid to the
lessor thereunder. Unless
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Lender shall elect or be required to make such Insurance Proceeds available to
Borrower for Restoration pursuant to Section 7.2.2 (a), Lender shall (after
deducting out Lender's cost of recovering such Insurance Proceeds, including,
without limitation, reasonable attorneys' fees) apply such Insurance Proceeds on
the next occurring Due Date as a prepayment of the principal balance of the Loan
in accordance with the terms of the Note. If such Insurance Proceeds are to be
made available for Restoration of the Property, Lender shall hold such funds in
a segregated bank account at the Bank, which, to the extent feasible in the
context of the administration of construction disbursement draw requests, shall
be interest bearing, and shall disburse such funds in accordance with Section
7.2.2(b).
(b) In the event of a Condemnation of the Property, Lender and
Borrower shall cause all of the proceeds in respect of any Condemnation
("Condemnation Proceeds") to be paid directly into the Central Account. Unless
Lender shall elect or be required to make such Condemnation Proceeds available
to Borrower pursuant to Section 7.2.3(a), Lender shall (after deducting out
Lender's cost of recovering such Condemnation Proceeds, including, without
limitation, reasonable attorneys' fees) apply such Condemnation Proceeds on the
next occurring Due Date as a prepayment of the principal balance of the Loan in
accordance with the terms of the Note. If such Condemnation Proceeds are to be
made available to Borrower, Lender shall hold any such funds not immediately
disbursed to Borrower in a segregated bank account at the Bank, which, to the
extent feasible in the context of the purposes for which Lender shall disburse
such funds, shall be interest-bearing, and shall disburse such funds in
accordance with Section 7.2.3(a).
(c) If any Insurance Proceeds or Condemnation Proceeds
(collectively, "Loss Proceeds") are received by Borrower, such Loss Proceeds
shall be received in trust for Lender, shall be segregated from other funds of
Borrower, and shall be forthwith paid into the Central Account, to be applied or
disbursed in accordance with the foregoing.
(d) If Lender shall apply any Loss Proceeds as a prepayment of the
principal balance of the Loan as provided above, Borrower may elect to have the
Property released from the Lien of the Mortgage, notwithstanding anything to the
contrary contained herein, without payment of any Yield Maintenance Premium and
whether or not the Lock-Out Date shall have occurred, provided that (i) (A) the
Loss Proceeds applied by Lender toward payment of the Loan shall be at least
equal to the then current Principal Balance for the Property or (B) Borrower
shall pay to Lender any amount by which the then current Principal Balance for
Property exceeds the amount of Loss Proceeds so applied toward payment of the
Loan.
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III. CONDITIONS PRECEDENT
Section 3.1 Conditions Precedent to Closing.
The obligation of Lender to make the Loan hereunder is subject to
the fulfillment by Borrower, or waiver by Lender, of the following conditions
precedent no later than the Closing Date:
(a) Representations and Warranties: Compliance with Conditions. The
representations and warranties of Borrower contained in this Agreement and the
other Loan Documents shall be true and correct in all material respects on and
as of the Closing Date, and no event shall have occurred and be continuing that
would constitute, by reason of the execution, delivery and performance of this
Agreement or the other Loan Documents, the grant of the Liens on the Property
contemplated hereby, the making of the Loan, or the consummation of the other
transactions contemplated by this Agreement or the other Loan Documents, a
Default or an Event of Default; and Borrower shall be in compliance in all
material respects with all terms and conditions set forth in this Agreement and
in each other Loan Document on its part to be observed or performed.
(b) Loan Agreement. Note and Environmental Agreement. Lender shall
have received an original of this Agreement, the Note and the Environmental
Indemnity in each case duly executed and delivered on behalf of Borrower.
(c) Delivery of Mortgage: Assignment of Leases: Franchise Agreement
Letter and Assignment of Consulting Agreement: Title Insurance: Reports: Leases.
(i) Mortgage, Assignment of Leases, Franchise Agreement Letter
and Assignment of Consulting Agreement. Lender shall have received
from Borrower fully executed and acknowledged counterparts of the
Mortgage, the Assignment of Leases, the Franchise Agreement Letter
and the Assignment of Consulting Agreement relating to the Property
and evidence that counterparts of the Mortgage and Assignment of
Leases for the Property have been delivered to the title company for
recording so as to effectively create upon such recording, in the
reasonable judgment of Lender, valid and enforceable Liens upon the
Property, of the requisite priority, in favor of Lender (or such
other trustee as may be required or desired under local law),
subject only to the Permitted Encumbrances and such other Liens as
are permitted pursuant to the Loan Documents.
(ii) Title Insurance. Lender shall have received the Title
Insurance Policy for the Mortgage, or a marked, re-dated and
recertified title commitment establishing the form of the Title
Insurance Policy and providing title
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insurance effective as of the Closing Date, issued by First American
Title Insurance Company and dated as of the Closing Date, with
endorsements, reinsurance and direct access agreements acceptable to
Lender. Such policy shall (A) provide coverage in amounts
satisfactory to Lender, (B) insure Lender that the Mortgage creates
a valid first priority Lien on the Property, free and clear of all
exceptions from coverage other than Permitted Encumbrances and
standard exceptions and exclusions from coverage (as modified by the
terms of any endorsements), (C) contain such endorsements and
affirmative coverages as Lender may request, and (D) name Lender.
The Title Insurance Policy shall be assignable without charge.
Lender also shall have received evidence that all premiums in
respect of such title policy have been paid.
(iii) Survey. Lender shall have received a current survey of
the Property in form and content satisfactory to Lender, prepared by
a professional and properly licensed land surveyor satisfactory to
Lender in accordance with the 1992 Minimum Standard Detail
Requirements for ALTA/ACSM Land Title Survey (the "Survey
Requirements") and certified to the issuer of the Title Insurance
Policy, Lender and its successors and assigns by a certification in
the form set forth in paragraph 8 of the Survey Requirements. Such
survey shall reflect the same legal description contained in the
Title Insurance Policy relating to the Property referred to in
clause (ii) above and shall meet the requirements of an "Urban
Survey as set forth in the Survey Requirements and shall include
items 1, 2, 3, 4, 6, 7, 8, 9, 10, 11 and 13 set forth on Table A of
the Survey Requirements.
(iv) Insurance. Lender shall have received certified copies of
the Policies required hereby, together with original certificates
issued by the insuror evidencing such Policies, naming Lender as an
additional insured or loss payee, together with evidence
satisfactory to Lender that such policies are in full force and
effect, that all premiums then payable for the existing policy
period have been paid and that such policies may not lapse or be
terminated without at least thirty (30) days notice to Lender.
(v) Environmental Reports. Lender shall have received a Phase
I environmental report and, if indicated, a Phase II environmental
report in respect of the Property, in each case satisfactory to
Lender.
(vi) Zoning. With respect to the Property, Lender shall have
received, at Lender's option, (i) letters or other evidence with
respect to the Property from the appropriate municipal authorities
(or other Persons
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acceptable to Lender) concerning applicable zoning laws, or (ii) a
zoning opinion letter from Borrower's local counsel, in form and
substance satisfactory to Lender.
(vii) Encumbrances. Borrower shall have taken or caused to be
taken such actions to provide Lender, as of the Closing Date, with a
valid, perfected, first priority Lien with respect to the Mortgage
in the Property, subject only to applicable Permitted Encumbrances,
and Lender shall have received satisfactory evidence thereof.
(d) Related Documents. Each additional Loan Document not
specifically referenced herein, but relating to the transactions contemplated
herein, shall have been duly authorized, executed and delivered by all parties
thereto and Lender shall have received and approved certified copies thereof.
(e) Delivery of Organizational Documents. On or before the Closing
Date, Borrower shall deliver or cause to be delivered to Lender copies certified
by Borrower of all organizational documentation related to Borrower and/or its
formation, structure, existence, good standing and/or qualification to do
business, as Lender may request in its sole discretion, including, without
limitation, good standing certificates, qualifications to do business in the
appropriate jurisdictions, resolutions authorizing the entering into of the Loan
and incumbency certificates.
(f) Opinions of Borrower's Counsel. Lender shall have received (i)
opinions of counsel for Borrower with respect to due formation of Borrower, due
authorization, execution and delivery of the Note, this Agreement and the other
Loan Documents and enforceability of the Note, this Agreement and the other Loan
Documents and (ii) opinions of counsel for Borrower (who shall be satisfactory
to Lender), in the State in which the Property is located with respect to (A)
enforceability of the Mortgage, the Assignment of Leases and the other Loan
Documents with respect to the Property located in such State, (B) perfection of
Lender's security interest in the Revenue of the Property, (C) perfection of
Lender's security interest in all liquor licenses, restaurant licenses and hotel
operating licenses with respect to the Property, if permitted under the laws of
such State and (D) adequacy of Permits listed on an affidavit of an officer of
Borrower with respect to the Property, to the knowledge of such counsel, each in
form and substance satisfactory to Lender, dated as of the Closing Date and
addressing such matters as Lender may reasonably request.
(g) Budgets. Borrower shall have delivered the Capital Expenditures
Budget and the Annual Operating Budget for the Property for the prior Fiscal
Year and the current Fiscal Year (on a forecast basis).
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(h) Basic Carrying Costs. Borrower shall have paid all Basic
Carrying Costs relating to the Property which is due and payable through the
Closing Date, including, without limitation, all Impositions relating to
Borrower or the Property, which amounts may be funded with proceeds of the Loan.
(i) Completion of Proceedings. All corporate and other proceedings
taken or to be taken in connection with the transactions contemplated by this
Agreement and other Loan Documents shall be reasonably satisfactory in form and
substance to Lender, and Lender shall have received all such counterpart
originals or certified copies of such documents as Lender may reasonably
request.
(j) Evidence of Insurance Premiums. Borrower shall have delivered,
or caused to be delivered, the Insuror's Letter.
IV. REPRESENTATIONS AND WARRANTIES
Section 4.1 Borrower's Representations.
Borrower represents and warrants that:
(a) Organization. Borrower has been duly organized and is validly
existing and in good standing under the laws of the jurisdiction of its
formation. Borrower and any general partner of any Borrower has requisite
corporate or partnership power and authority to (i) own its properties, (ii)
transact the businesses in which it is now engaged, (iii) execute and deliver
this Agreement, the Note, the Mortgage and the other Loan Documents and (iv)
consummate the transactions contemplated hereby and thereby. Borrower is duly
qualified to do business and is in good standing in the jurisdiction where its
Property is located and in each other jurisdiction where it is required to be so
qualified in connection with the ownership, maintenance, management and
operation of its Property, except where the failure to be so qualified or in
good standing would not have a material adverse effect on the financial
condition or the business of Borrower or the ownership, condition or operation
of its Property (a "Borrower Material Adverse Effect"). Borrower possesses all
rights, licenses, permits and authorizations, governmental or otherwise,
necessary to entitle it to own its properties and to transact the businesses in
which it is now engaged. The sole business of Borrower is the ownership,
management and operation of Individual Property.
(b) Authorization: Enforceability. The execution, delivery and
performance of Borrower's obligations under this Agreement, the Note, the
Mortgage and the other Loan Documents has been duly authorized by all requisite
corporate or partnership action of Borrower, including, where required, the
consent of its partners or shareholders and directors. This
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Agreement, the Note, the Mortgage and such other Loan Documents have been duly
executed and delivered by or on behalf of Borrower and constitute legal, valid
and binding obligations of Borrower enforceable against Borrower in accordance
with their respective terms, subject to applicable bankruptcy, insolvency and
similar laws affecting rights of creditors generally and to general principles
of equity (regardless of whether enforcement is sought in a proceeding in equity
or at law).
(c) No Conflicts. The execution, delivery and performance of this
Agreement, the Note, the Mortgage and the other Loan Documents by Borrower will
not conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any Lien
(other than pursuant to the Loan Documents) upon any of the property or assets
of Borrower pursuant to the terms of any indenture, mortgage, deed of trust,
loan agreement, partnership agreement or other agreement or instrument to which
Borrower is a party or to which any of Borrower's property or assets is subject,
which conflict, breach, default or imposition of Lien would have a Borrower
Material Adverse Effect, nor will such action result in any violation of the
provisions of any statute or any order, rule or regulation of any Governmental
Authority having jurisdiction over Borrower or Borrower's Property or assets,
and any consent, approval, authorization, order, registration or qualification
of or with any Governmental Authority required for the execution, delivery and
performance by Borrower of this Agreement, the Note, the Mortgage or any other
Loan Documents has been obtained and is in full force and effect.
(d) Litigation. Except as set forth on Schedule L, there are no
actions, suits or proceedings at law or in equity by or before any Governmental
Authority for which service has been made on Borrower or any Affiliate or, to
the knowledge of Borrower, threatened against or affecting Borrower or the
Property, which actions, suits or proceedings are not covered by insurance and,
if determined against Borrower or the Property, would materially adversely
affect the condition (financial or otherwise) or business of such Borrower or
the condition or ownership of the Property.
(e) Agreements. Borrower is not a party to any agreement or
instrument or subject to any restriction which would materially adversely affect
Borrower or the Property, or Borrower's business, properties or assets,
operations or condition, financial or otherwise. Borrower is not in default in
the performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any agreement or instrument to which it is a party or
by which Borrower or the Property is bound, except for any defaults that would
not have a Borrower Material Adverse Effect.
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(f) Title. Borrower has good, legal title in fee to the real
property comprising part of the Property as nominee for Southfield and good
title to the balance of the Property, free and clear of all Liens, restrictions,
covenants, easements and other matters affecting title whatsoever, except the
Permitted Encumbrances. The Mortgage, when properly recorded in the real
property records of the county or parish where the Property is located, and the
other Collateral Security Documents, together with any Uniform Commercial Code
financing statements required to be filed in connection therewith, will create
(i) a valid, perfected first priority Lien on the Property, subject only to
Permitted Encumbrances and (ii) perfected security interests in and to, and
perfected collateral assignments of, all personalty (including the Leases) and
other collateral described therein, all in accordance with the terms thereof, in
each case subject only to any applicable Permitted Encumbrances. There are no
outstanding options or rights of first refusal affecting any of the Property.
There are no claims for payment for work, labor or materials affecting the
Property which is or may become a lien prior to, or of equal priority with, the
Liens created by the Loan Documents. All of the Permitted Encumbrances reflected
in the Title Insurance Policy are customary exceptions for commercial mortgage
lending transactions involving properties similar to the Property.
(g) No Bankruptcy Filing. Neither Borrower nor, to the best of
Borrower's knowledge, Southfield is contemplating either the filing of a
petition by it under any state or federal bankruptcy or insolvency laws or the
liquidation of all or a major portion of Borrower's or Southfield's assets or
property, and Borrower has no knowledge of any Person contemplating the filing
of any such petition against it. Except for the Bankruptcy Order, neither
Borrower nor Southfield is currently the subject of any bankruptcy or similar
proceeding under any state or federal law and the Property is not currently
under the jurisdiction of any bankruptcy court or other court having similar
jurisdiction.
(h) Full and Accurate Disclosure. No statement of fact made by
Borrower in this Agreement or in any of the other Loan Documents contains any
untrue statement of a material fact or omits to state any material fact
necessary to make statements contained herein or therein not misleading. There
is no material fact presently known to Borrower which has not been disclosed to
Lender which adversely affects, or might reasonably be expected to adversely
affect, the Property or the business, operations or condition (financial or
otherwise) of Borrower.
(i) No Plan Assets. Borrower is not an "employee benefit plan," as
defined in Section 3(3) of ERISA, subject to Title I of ERISA, and none of the
assets of Borrower constitutes or will constitute "plan assets" of one or more
such plans within the meaning of 29 C.F.R. Section 2510.3-101.
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(j) Compliance. Borrower and the Property and the use thereof comply
in all material respects with all applicable Legal Requirements, including,
without limitation, parking requirements. Borrower is not in default or
violation of any order, writ, injunction, decree or demand of any Governmental
Authority, the violation of which would materially adversely affect the
condition (financial or otherwise) or business of Borrower.
(k) Contracts. There are no material contracts, excluding Leases,
Equipment Leases, Franchise Agreement and cable television contracts affecting
the Property that would be binding upon Lender or its designee after foreclosure
or transfer in lieu of foreclosure of the Property that are not terminable on
one month's notice or less without cause and without penalty or premium.
(l) Financial Information. All financial data of the Borrower,
including, without limitation, the statements of cash flow and income and
operating expense, that have been delivered to Lender (i) are true, complete and
correct in all material respects, (ii) fairly represent the financial condition
of the Property and Borrower as of the date of such reports, and (iii) have been
prepared in accordance with GAAP, consistently applied throughout the periods
covered, except as disclosed therein. As of the date of this Agreement, Borrower
has no material contingent liability, liability for taxes (other than taxes not
yet due and payable) or other unusual or forward commitment. Since June 30,
1994, there has been no material adverse change in the results of operations of
the Property or the assets, liabilities or financial condition of Borrower.
Except as disclosed in such financial statements, Borrower has not incurred any
obligation or liability, contingent or otherwise, which would materially
adversely affect its business operations or the Property.
(m) Condemnation. Neither Borrower nor any Affiliate of Borrower has
received notice of any proceeding with respect to Condemnation, nor, to
Borrower's best knowledge, is any Condemnation contemplated, with respect to all
or any portion of the Property.
(n) Federal Reserve Regulations. No part of the proceeds of the Loan
will be used for the purpose of purchasing or acquiring any "margin stock"
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System or for any other purpose which would be inconsistent with such
Regulation U or any other Regulations of such Board of Governors, or for any
purposes prohibited by Legal Requirements or by the terms and conditions of this
Agreement or the other Loan Documents.
(o) Utilities and Public Access. The Property has rights of access
to public ways and is served by water, gas,
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electric, telephone, sanitary sewer and storm drain facilities adequate to
service the Property for its respective intended use. To the knowledge of
Borrower, except as disclosed in the surveys, all public utilities necessary or
convenient to the full use and enjoyment of the Property is located in the
public right-of-way abutting the Property, and all such utilities are connected
so as to serve the Property without passing over other property. All roads
necessary for access to the Property for its current purpose have been completed
and dedicated to public use and accepted by all Governmental Authorities. No
road providing access to the Property is currently (i) closed or severely
restricted in use or (ii) to the best of Borrower's knowledge, contemplated to
be relocated, closed or severely restricted in use.
(p) Not a Foreign Person. Borrower is not a "foreign person" within
the meaning of 1445(f) (3) of the I.R.C.
(q) Separate Lots. The Property is comprised of one (l) or more
parcels, which constitutes a separate tax lot and does not constitute a portion
of any other tax lot not a part of the Property. The Property is not assessed
jointly with any other real property constituting a separate tax lot or with any
personal property not constituting part of the Property such that the lien of
any taxes which may be levied against such personal property shall be assessed
or levied or charged as a lien on the Property.
(r) Assessments. There are no pending or, to the best of Borrower's
knowledge, proposed special or other assessments for public improvements or
otherwise affecting the Property, except for Permitted Encumbrances, nor, to the
best of Borrower's knowledge, are there any contemplated improvements to any of
the Property that may result in such special or other assessments.
(s) No Defenses. As of the Closing Date, this Agreement, the Note
and the other Loan Documents are not subject to any right of rescission,
set-off, counterclaim or defense by Borrower, including the defense of usury,
and Borrower has not asserted any right of rescission, set-off, counterclaim or
defense with respect thereto.
(t) No Prior Assignment. Lender is the assignee of all Borrower's
interests under the Leases and there are no prior assignments of any of the
Leases or any portion of the Revenue which are presently outstanding.
(u) Insurance. Borrower has obtained and has delivered to Lender the
Policies, or certified copies thereof, together with original certificates
evidencing such Policies, reflecting the insurance coverages, amounts and other
requirements set forth herein, which Policies are in full force and effect and
may not lapse or be terminated without at least
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thirty (30) days notice to Lender or ten (10) days for nonpayment of premiums.
(v) Use of Properties. The Property is used exclusively for hotel
purposes and other appurtenant and related uses.
(w) Certificate of Occupancy: Permits and Licenses. Borrower has
obtained all permits, licenses, approvals and franchises, including, without
limitation, certificates of occupancy, hotel licenses and liquor licenses (the
"Permits"), required by Legal Requirements in order to use and operate the
Property for hotel use as currently operated, except for Permits the failure of
which to so obtain would not have a Borrower Material Adverse Effect. All such
Permits are (i) listed on Schedule G annexed hereto, (ii) have been validly
issued and are in full force and effect and (iii) are issued in or have been
transferred into the name of the Borrower that owns the Property, except as
indicated on Schedule G. Where permitted by Legal Requirements, Borrower has
granted Lender a valid, perfected first priority security interest in all such
Permits. All fees due and payable with respect to each Permit have been paid.
There are no proceedings pending or threatened which may result in the
revocation, suspension or, to the best of Borrower' knowledge, termination of
any Permit. The Property is operated in compliance, in all material respects,
with the related Permits.
(x) Flood Zone. None of the Improvements on the Property are located
in a flood hazard area as defined by the Federal Emergency Management Agency.
(y) Physical Condition. To the best of Borrower' knowledge, except
as disclosed in the Building Evaluation Reports, the Property, including,
without limitation, all buildings, parking facilities, sidewalks, storm drainage
systems, roofs, plumbing systems, HVAC systems, fire protection systems,
electrical systems, equipment, elevators, exterior sidings and doors,
landscaping, irrigation systems and all other Improvements thereon are in
operating condition, order and repair in all material respects. To the best of
Borrower' knowledge, except as disclosed in the Building Evaluation Reports,
there exists no structural or other material defect in the Property, whether
latent or otherwise. Neither Borrower nor any Affiliate of Borrower has received
written notice from any insurance company or bonding company of any defects or
inadequacies in any of the Properties, or any part thereof, which would
adversely affect the insurability of the same or cause the imposition of
extraordinary premiums or charges thereon or of any termination or threatened
termination of any policy of insurance or bond.
(z) Solvency. The fair saleable value of Borrower's assets exceeds
and will, immediately following the making of the
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Loan, exceed such Borrower's total liabilities, including, without limitation,
subordinated, unliquidated, disputed and contingent liabilities. The fair
saleable value of Borrower's assets is and will, immediately following the
making of the Loan, be greater than Borrower's probable liabilities, including
its contingent liabilities, on its debts as such debts become absolute and
matured. In the good faith judgment of Borrower, Borrower's assets constitute,
and immediately following the making of the Loan will constitute, reasonably
sufficient capital to carry out its business as conducted or as proposed to be
conducted. Borrower does not intend to, or believe that it will, incur debts and
liabilities (including, without limitation, contingent liabilities and other
commitments) beyond its ability to pay such debts as they mature.
(aa) Casualty. The Property has not sustained any material loss or
interference with its operations from fire, explosion, flood or other calamity,
or from any labor dispute or any action, order or decree by any Governmental
Authority.
(bb) Components of Value. The portions of the Property constituting
real property interests have a fair market value as of the date hereof at least
equal to seventy percent (70%) of the original principal balance of the Loan.
The portion of the Property constituting interests in real property has a fair
market value as of the date hereof at least equal to seventy percent (70%) of
the Principal Balance for the Property.
(cc) Filing and Recording Taxes. All transfer taxes, deed stamps,
intangible taxes or other amounts in the nature of transfer taxes required to be
paid by any Person under applicable Legal Requirements in connection with the
transfer of the Property to Borrower have been paid. All mortgage, mortgage
recording, stamp, intangible or other similar tax required to be paid by any
Person under applicable Legal Requirements in connection with the execution,
delivery, recordation, filing, registration, perfection or enforcement of any of
the Loan Documents, including, without limitation, the Mortgage encumbering the
Property have been paid, and, under current Legal Requirements, the Mortgage is
enforceable in accordance with its terms by Lender (or any subsequent holder
thereof) against the Property.
(dd) Single-Purpose. Borrower hereby represents and warrants to, and
covenants with, Lender that, as of the date hereof and until such time as the
Indebtedness shall be paid in full, except as otherwise provided herein, in the
other Loan Documents or in the Consulting Agreement, the Borrower, and if
Borrower is a limited partnership, the general partner of Borrower:
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(i) does not own and shall not own any asset other than the Property
or, in the case of a general partner, its interest in Borrower;
(ii) is not engaged and shall not engage in any business other than
those necessary for the ownership, use, management or operation of the such
Individual Property and any transactions entered into in connection with such
business with any Affiliate of Borrower or the general partner, other than any
such transactions embodied in the Loan Documents and the Consulting Agreement,
shall be entered into 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 an Affiliate of Borrower or such general partner;
(iii) has not incurred, created or assumed any currently outstanding
debt, and shall not incur, create or assume any debt, secured or unsecured,
direct or contingent (including guaranteeing any obligation), other than the
Indebtedness, trade indebtedness incurred in the ordinary course of the
Borrower's or the general partner's business (including the financing of
insurance premiums) and the Permitted Encumbrances, except as may be otherwise
expressly permitted hereunder;
(iv) has not made any currently outstanding, and shall not make any,
loans or advances to any third party (including any Affiliate of Borrower or
such general partner);
(v) is and shall be solvent and paying its liabilities (including,
as applicable, reasonable allocations of personnel and overhead expenses) from
its assets as the same shall become due;
(vi) has done or caused to be done and shall do or cause to be done
all things necessary to preserve its existence, and shall not, nor shall any
general partner thereof, as applicable, amend, modify or otherwise change its
articles of incorporation or by-laws or partnership agreement, as applicable
without the prior written consent of Lender, in its sole discretion;
(vii) shall observe all corporate or partnership formalities, as
applicable, and conduct and operate its business as presently conducted and
operated;
(viii) shall maintain books and records and bank accounts separate
from those of its Affiliates or any other Person;
(ix) shall maintain a separate business office at the Property;
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(x) shall be, and at all times shall hold itself out to the public
as, a legal entity separate and distinct from any other entity, including any
Affiliate thereof, provided that Borrower may identify its Property as
associated with the applicable Franchisor;
(xi) shall file its own tax returns, if required by the Code;
(xii) shall maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations;
(xiii) shall not seek or consent to the liquidation, dissolution or
winding up, in whole or in part, of Borrower or the general partner, nor enter
into any consolidation, merger, joint venture, syndication or other combination;
(xiv) shall not commingle its funds and other assets with those of
any Affiliate or any other Person;
(xv) has caused, and at all times shall cause, there to be at least
one duly appointed member of the board of directors (an "Independent Director")
of Borrower or the general partner who has not been at the time of such
individual's appointment, and may not have been at any time during the preceding
two years (A) a stockholder of, or an officer, director (other than with respect
to such Independent Director's service as director of Borrower or the general
partner) or employee of, Borrower or any of its Affiliates, or the general
partner or any of its Affiliates, (B) a customer or supplier to Borrower or any
of its Affiliates, or to the general partner or any of its Affiliates, (C) a
person or other entity controlling any such stockholder, supplier or customer,
or (D) a member of the immediate family of any such stockholder, officer,
employee, supplier or customer or any other director of Borrower or the general
partner. As used in this subsection (dd), the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise;
(xvi) has not caused, and shall not cause, the board of directors of
Borrower or the general partner to take any action which, under the terms of any
certificate of incorporation, by-laws or any voting trust agreement with respect
to Borrower's common stock, requires the unanimous affirmative vote of one
hundred percent (100%) of the members of the board of directors, unless at the
time of such action there shall be at least one member who is an Independent
Director;
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(xvii) shall comply with the provisions of its articles of
incorporation or by-laws or partnership agreement, as applicable; and
(xviii) shall use separate and distinct invoices and stationery and
checks that indicate, by printed or typed identification, that Borrower is the
entity for which payment is made.
(ee) Enforceability of Franchise and Consulting Agreement. Each of
the Franchise Agreement and the Consulting Agreement have been duly authorized,
executed and delivered or duly assumed by Borrower and constitutes a valid and
legally binding instrument enforceable against Borrower in accordance with its
terms, subject to the effects of bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally and general equitable principles (whether considered in a proceeding
in equity or at law).
(ff) Compliance with Franchise Agreement. A true and complete copy
of the Franchise Agreement (including all amendments, agreements, side letters
and other documents relating thereto) has been delivered to Lender and there are
no other documents or agreements between Borrower or any Franchisor with respect
to the Property. All amounts due and payable under the Franchise Agreement
through the Closing Date have been paid, and to Borrower's knowledge, there is
no default by either party under any Franchise Agreement and no event has
occurred and is continuing which, with the passage of time and/or the giving of
notice, would constitute a default or event of default by either party under any
Franchise Agreement, except in any case for defaults that would not have a
Borrower Material Adverse Effect. Any work on the Property required by the
Franchisor under any Franchise Agreement to have been completed prior to the
date hereof has been completed and either (i) has been approved by such
Franchisor or (ii) Borrower knows of no reason why such work should not be
approved. All necessary consents, if any, of any Franchisor to the transactions
contemplated by this Agreement and the other Loan Documents have been obtained.
(gg) Compliance with Consulting Agreement. A true and complete copy
of the Consulting Agreement has been delivered to Lender and there are no other
agreements or documents providing for the management or the supervision of the
Property. All amounts due and payable under the Consulting Agreement as of the
Closing Date have been paid and, to the best of Borrower's knowledge, there is
no default in any material respect by any party under the Consulting Agreement,
and no event has occurred and is continuing which, with the passage of time
and/or the giving of notice, would constitute a default or event of default in
any material respect by any party under the Consulting Agreement.
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(hh) Equipment Leases. True and complete copies of all Equipment
Leases (including all amendments, agreements, side letters and documents
relating thereto) have been delivered to Lender. All Equipment Leases are listed
on Schedule H annexed hereto and, except as set forth on Schedule H, all of such
Equipment Leases are unmodified. All of the Equipment Leases are in full force
and effect and there is no default in any material respect by Borrower
thereunder, nor, to the best knowledge of Borrower, by the lessor or other party
thereunder and, to the best knowledge of Borrower, no event has occurred and is
continuing which, with the passage of time and/or the giving of notice, would
constitute a default or event of default in any material respect under any such
Equipment Leases. Except for items subject to the Equipment Leases, all
furniture, fixtures, equipment and personal property used in connection with the
ownership, operation, management and maintenance of the Property is owned by
Borrower.
(ii) No Encroachments. To the best knowledge of Borrower, except as
disclosed in the Surveys or Title Insurance Policy, all improvements comprising
a portion of the Property lie wholly within the boundary and building
restriction lines of the Property and no improvements on adjoining properties
encroach upon the Property in any respect.
(jj) Leases. Schedule I, annexed hereto, sets forth all Leases
affecting any part of the Properties. All such Leases are in full force and
effect and have not been amended or modified except as set forth on Schedule I.
To the best of Borrower's knowledge, no material default has occurred and is
continuing thereunder.
(kk) Beneficial Interests Encumbered.. Borrower and Borrower as
nominee has full power and authority to execute and deliver a mortgage
encumbering all legal and beneficial interests in the Property without the
consent of, or the execution and delivery of any document by, any third party
that has not been obtained. Upon foreclosure of the related Mortgage on the
Property, Lender or any purchaser at foreclosure would take title free and clear
of any interests of Southfield.
(ll) Bankruptcy Order. Neither Borrower nor any Affiliate of
Borrowers is in default in any material respect under its obligations under the
Bankruptcy Order.
Section 4.2 Survival of Representations.
Borrower agrees that all of the representations and warranties of
Borrower set forth in Section 4.1 and elsewhere in this Agreement and in the
other Loan Documents shall survive for so long as any amount remains owing to
Lender under this Agreement or any of the other Loan Documents. All
representations, warranties, covenants and agreements made in
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this Agreement or in the other Loan Documents by Borrower shall be deemed to
have been relied upon by Lender notwithstanding any investigation heretofore or
hereafter made by Lender or on its behalf.
V. AFFIRMATIVE COVENANTS
Section 5.1 Borrower's Covenants.
From the date hereof and until payment and performance in full of
all obligations of Borrower under the Loan Documents or the earlier release of
the Lien of the Mortgage (and all related obligations) from the Property in
accordance with the terms of this Agreement and the other Loan Documents,
Borrower hereby covenants and agrees with Lender that:
(a) Existence: Compliance with Legal Requirements and Insurance
Requirements. Borrower shall do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its existence, rights,
licenses, permits and corporate franchises and comply with all Legal
Requirements applicable to it and its Property. Borrower shall at all times use
its best efforts to maintain, preserve and protect all its corporate franchises
and trade names and preserve all the remainder of its property used or useful in
the conduct of its business and shall keep its Property, including, without
limitation, all Equipment, in satisfactory working order and repair and in
compliance with all Legal Requirements and Insurance Requirements, and from time
to time make, or cause to be made, all reasonably necessary repairs, renewals,
replacements, betterments and improvements thereto in order to maintain such
Property in compliance with the prevailing standards for a hotel property of
similar age, size, construction and the then applicable franchise affiliation in
the metropolitan area in which such Property is located, all as more fully
provided in the Mortgage.
(b) Impositions and Other Charges. Borrower shall pay all
Impositions, now or hereafter levied or assessed or imposed against its Property
or any part thereof, subject to Lender's obligation to disburse funds from the
Basic Carrying Costs Sub-Account pursuant to Section 2.7.7(b) and shall pay all
water, sewer, maintenance and other charges now or hereafter levied or assessed
or imposed against the Property or any part thereof (the "Other Charges") as
same become due and payable. Borrower shall not suffer, and Borrower shall
promptly cause to be paid and discharged, any Lien whatsoever which may be or
become a lien or charge against the Property other than Permitted Encumbrances,
and shall promptly pay for all utility services provided to its Property.
Borrower shall furnish to Lender or its designee upon request, receipts for the
payment, or other evidence reasonably satisfactory to Lender of payment, of such
Impositions, Other
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Charges and said utility services prior to the date the same shall become
delinquent, except with respect to amounts that Lender is obligated to disburse
pursuant to Section 2.7.7(b). After prior written notice to Lender, Borrower, at
its own expense, may contest by appropriate legal proceeding, promptly initiated
and conducted in good faith and with due diligence, the amount or validity or
application in whole or in part of any Impositions or Other Charges, provided
that (i) no Event of Default has occurred and is continuing, (ii) such
proceeding shall suspend the collection of the Impositions or Other Charges from
the Property, (iii) such proceeding shall be permitted under and be conducted in
accordance with the provisions of any other instrument to which Borrower or the
Property is subject and shall not constitute a default thereunder, and (iv)
Borrower shall have furnished such security as may be required in the
proceeding, or as may be reasonably requested by Lender, to insure the payment
of any such Impositions or Other Charges, together with all interest and
penalties thereon.
(c) Litigation. Borrower shall give prompt written notice to Lender
of any litigation or governmental proceedings pending or threatened against
Borrower which might materially adversely affect Borrower's condition (financial
or otherwise) or its business or its Property.
(d) Access to Premises. Borrower shall permit agents,
representatives and employees of Lender to inspect the Property or any part
thereof at reasonable hours upon reasonable advance notice.
(e) Notice of Default. Borrower shall promptly advise Lender of any
material adverse change in Borrower's condition, financial or otherwise, or of
the occurrence of any default or Event of Default of which Borrower has
knowledge.
(f) Cooperate in Legal Proceedings. Borrower shall cooperate fully
with Lender with respect to any proceedings before any Governmental Authority
with respect to Borrower or the Property which may in any way affect the rights
of Lender hereunder or any rights obtained by Lender under any of the other Loan
Documents and, in connection therewith, permit Lender, at its election and at
Borrower' expense, to participate in any such proceedings.
(g) Perform Loan Documents. Borrower shall observe, perform and
satisfy all the terms, provisions, covenants and conditions of, and shall pay
when due all costs, fees and expenses to the extent required under the Loan
Documents executed and delivered by, or applicable to, Borrower.
(h) Insurance Benefits. Borrower shall cooperate with Lender in
obtaining for Lender the benefits of any proceeds of any insurance lawfully or
equitably payable in connection with its Property, and Lender shall be
reimbursed for any expenses
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incurred in connection therewith (including reasonable attorneys' fees and
disbursements, and the payment by Borrower of the expense of an appraisal on
behalf of Lender if reasonably requested by Lender in case of a fire or other
casualty affecting its Property or any part thereof) out of such insurance
proceeds.
(i) Further Assurances; Supplemental Mortgage Affidavits. (i)
Borrower shall, at Borrower's sole cost and expense:
(A) furnish to Lender all instruments, documents, boundary surveys,
footing or foundation surveys, certificates, plans and specifications,
appraisals, title and other insurance reports and agreements, and each and every
other document, certificate, agreement and instrument required to be furnished
by Borrower pursuant to the terms of the Loan Documents or reasonably requested
by Lender in connection therewith;
(B) execute and deliver to Lender such documents, instruments,
certificates, assignments and other writings, and do such other acts necessary
or desirable to evidence, preserve and/or protect, and to maintain Lender's
perfected lien upon, and security interest in, the collateral (including,
without limitation, the Central Account and all funds on deposit therein) at any
time securing or intended to secure the obligations of Borrower under the Loan
Documents, as Lender may reasonably require; and
(C) do and execute all and such further lawful and reasonable acts,
conveyances and assurances for the better and more effective carrying out of the
intents and purposes of this Agreement and the other Loan Documents, as Lender
shall reasonably require from time to time.
(ii) As of the date hereof, Borrower represents that it has paid all
state, county and municipal recording and all other taxes imposed upon the
execution and recordation of the Mortgage against the Property.
(j) Management of Mortgaged Property. Borrower covenants and agrees
with Lender that (i) its Property will be managed at all times by the Consultant
pursuant to the Consulting Agreement, (ii) immediately upon the occurrence of a
fifty percent (50%) or more change in control of the Consultant (a "Consultant
Control Change"), Borrower will promptly give Lender notice thereof (a
"Consultant Control Notice") and (iii) any Consulting Agreement may be
terminated by Lender (A) For Cause (as defined below) at any time, (B) at any
time after the occurrence and during the continuance of an Event of Default with
respect to any amounts payable hereunder or under the Note, the Mortgage or the
other Loan Documents, (C) upon commencement of any foreclosure proceeding with
respect to the Property and (D) after any Consultant Control Change with respect
to the
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applicable Consultant if the Rating Agency has failed to confirm, after written
request, in writing that as a result of such Consultant Control Change the then
current rating of the Certificates will not be downgraded, withdrawn or
otherwise adversely affected. Upon such termination, a substitute managing agent
shall be appointed by Borrower, subject to Lender's approval, in Lender's sole
discretion, for the Property. As used in this subsection (j), the term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of Consultant, whether through
ownership of voting securities, by contract or otherwise, and the term "For
Cause" means on account of Consultant's gross negligence, willful misconduct or
fraud or Consultant's default beyond the expiration of any applicable notice or
grace period in the performance of its obligations under the applicable
Consulting Agreement. The Consulting Agreements shall be subject and subordinate
in all respects to the Lien and to the terms, covenants and provisions of the
Mortgage and the other Loan Documents in accordance with those certain
Assignments of Consulting Agreements, dated as of the date hereof. Provided no
Event of Default has occurred and is then continuing hereunder, Consultant shall
be entitled to collect fees under the Consulting Agreement, provided that any
such fees in excess of four percent (4%) of Revenues shall not be paid or
collected unless all amounts then payable under the Loan Documents shall have
been paid in full and Operating Expenses are being paid consistent with
Borrower's practices in effect as of the Closing Date and Borrower shall not
reasonably expect future Revenue to be insufficient to pay Operating Expenses
accrued or thereafter accruing. Borrower further covenants and agrees that
Borrower shall require the Consultant to maintain at all times during the term
of the Loan worker's compensation insurance as required by Governmental
Authorities. Borrower shall perform its obligations under the Consulting
Agreements.
(k) Financial Reporting.
(i) Borrower will keep and maintain or will cause to be kept and
maintained on a Fiscal Year basis, in accordance with GAAP, proper and accurate
books, records and accounts reflecting all of the financial affairs of Borrower
and all items of income and expense in connection with the operation on an
individual basis of the Property and in connection with any services or
Equipment provided in connection with the operation thereof, whether such income
or expense be realized by Borrower or by any other Person whatsoever, excepting
lessees unrelated to and unaffiliated with Borrower who have leased from
Borrower portions of the Property for the purpose of occupying the same. Lender
shall have the right from time to time at all times during normal business hours
upon reasonable notice to examine such books, records and accounts at the office
of Borrower or other Person maintaining such books, records and accounts and to
make such copies or extracts thereof as Lender shall desire. After the
occurrence of an Event of Default, Borrower shall pay any
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reasonable costs and expenses incurred by Lender in connection with such
examination.
(ii) Borrower will furnish to Lender annually (with a copy to the
Rating Agency), within one hundred twenty (120) days following the end of each
Fiscal Year of Borrower, a certified complete copy of the financial statement of
Borrower, prepared on a combined basis, audited by Borrower's Accountant in
accordance with GAAP covering on a combined basis the operation of the Property
for such Fiscal Year and containing a statement of Revenues and Operating
Expenses, a statement of assets and liabilities and a statement of Borrower's
equity. Together with Borrower's annual combined financial statement, Borrower
shall furnish to Lender an unaudited operating statement for the Property,
accompanied by an Officer's Certificate representing as of the date thereof (A)
that the annual operating statement accurately represents the operation of the
related Property, in accordance with GAAP consistently applied and (B) whether
there exists an event or circumstance which constitutes a default or Event of
Default under the Loan Documents executed and delivered by, or applicable to
Borrower, and if such default or Event of Default exists, the nature thereof,
the period of time it has existed and the action then being taken to remedy the
same.
(iii) Borrower shall timely file any and all required reports with
the Securities and Exchange Commission, required to be filed pursuant to the
Securities Exchange Act of 1934, as amended.
(iv) Borrower will furnish, or cause to be furnished, to Lender
monthly (with a copy to the Rating Agency), within twenty (20) days following
the end of each month, both (A) a true, complete and correct cash flow statement
with respect to the Property on an individual basis in form reasonably
acceptable to Lender showing (I) all cash receipts of any kind whatsoever and
all cash payments and disbursements for such month, and (II) year-to-date
summaries of such cash receipts, payments and disbursements, (III) all Revenue
and Operating Expenses for such month and (IV) all Revenue and Operating
Expenses for the preceding twelve (12) full calendar months and (B) an
operations statement with respect to the Property prepared on an accrual basis,
in the form of Schedule J annexed hereto, showing the operations of the Property
for the preceding twelve (12) full calendar months and (C) a balance sheet for
Borrower, together with a certification of the applicable Consultant (a
"Consultant's Certification") stating that, in all material respects, (a) each
such cash flow statement and operating statement is true, complete and correct
and (b) all Operating Expenses with respect to the Property which have accrued
as of the last day of the month preceding the delivery of such cash flow
statement have been fully paid or otherwise provided for by or on behalf of
Borrower.
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(v) Borrower shall furnish to Lender (with a copy to the Rating
Agency), within fourteen (14) days after request, such further detailed
information with respect to the operation of the Property and the financial
affairs of Borrower as may be reasonably requested by Lender.
(vi) Lender shall have the right to audit, at Lender's expense,
Borrower's books and records to determine Revenue and Operating Expenses for the
Property; provided, however, that if such audit reveals a misstatement of
Revenue or Operating Expenses in any financial statement submitted by or on
behalf of Borrower by more than five percent (5%) of such amount for the period
which is the subject of such audit, Borrower shall reimburse Lender on demand
for the cost of such audit.
(l) Business and Operations. Borrower will continue to engage in the
businesses presently conducted by it as and to the extent the same are necessary
for the ownership, maintenance, management and operation of its Property.
Borrower will qualify to do business and will remain in good standing under the
laws of each jurisdiction as and to the extent the same are required for the
ownership, maintenance, management and operation of its Property.
(m) Title to the Property. Borrower will warrant and defend (i) the
title to the Property and every part thereof, subject only to the Permitted
Encumbrances, and (ii) the validity and priority of the Liens of the Mortgage
and the Assignment of Leases on the Property, subject only to the Permitted
Encumbrances, in each case against the claims of all Persons whomsoever.
Borrower shall reimburse Lender for any losses, costs, damages or expenses
(including reasonable attorneys' fees and court costs) incurred by Lender if an
interest in the Property, other than as permitted hereunder, is claimed by
another Person.
(n) Costs of Enforcement. In the event (i) that the Mortgage is
foreclosed in whole or in part or is put into the hands of an attorney for
collection, suit, action or foreclosure, (ii) of the foreclosure of any other
mortgage encumbering any of the Property in which proceeding Lender is made a
party, or (iii) of the bankruptcy, insolvency, rehabilitation or other similar
proceeding in respect of Borrower or an assignment by Borrower for the benefit
of its creditors, Borrower, its successors or assigns, shall be chargeable with
and agree to pay all costs of collection and defense, including attorneys' fees
in connection therewith and in connection with any appellate proceeding or
post-judgment action involved therein, which shall be due and payable hereunder
together with all required service or use taxes.
(o) Estoppel Statement. Borrower, within ten (10) days after request
from Lender, shall from time to time furnish to Lender a statement, duly
acknowledged and certified by
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Borrower, setting forth (i) the amount then owing by Borrower in respect of the
Indebtedness, (ii) the date through which interest on the Loan has been paid,
and (iii) any offsets, counterclaims, credits or defenses to the payment of
Borrower's obligations under the Loan Documents and acknowledging that this
Agreement and the other Loan Documents executed and delivered by, or applicable
to, Borrower are legal, valid and binding obligations of Borrower and have not
been modified or, if modified, giving the particulars of such modification.
Lender, within ten (10) days after a request by Borrower, shall from time to
time, but not more frequently than four (4) times in any calendar year, furnish
to Borrower a statement, duly acknowledged and certified by Lender, setting
forth (A) the amount then owing by Borrower with respect to the Indebtedness,
(B) the date through which Interest on the Loan has been paid and (C) that, to
the best of Lender's knowledge, no default has occurred hereunder, and
acknowledging that this Agreement and the other Loan Documents have not been
modified, or if modified, giving the particulars of such modification.
(p) Loan Proceeds. The proceeds of the Loan shall be used only for
the purposes set forth in Section 2.2.
(q) Permits. Borrower shall comply, and cause its Property to be
operated in compliance, in all material respects, with all Permits and shall
extend or renew any Permit that may expire.
(r) Annual Operating Budget and Capital Expenditures Budget.
Borrower shall prepare and deliver to Lender, not less than fifteen (15)
Business Days prior to the commencement of each Fiscal Year of Borrower, (i) an
Annual Operating Budget with respect to the Property for such ensuing Fiscal
Year, and (ii) a Capital Expenditures Budget with respect to the Property for
such ensuing Fiscal Year.
(s) Confirmation of Representations. In addition to and not in
limitation of the covenants and agreements of Borrower contained in Section 7.1,
Borrower shall deliver, in connection with any Securitization Transaction, one
or more Officer's Certificates certifying as to the accuracy of all
representations made by Borrower in the Loan Documents as of the date of the
closing of such Securitization Transaction or specifying any changes in the
accuracy of such representations.
(t) No Joint Assessment. Borrower shall not suffer, permit or
initiate the joint assessment of the Property (i) with any other real property
constituting a tax lot separate from the Property, and (ii) with any other
personal property, whereby the lien of any taxes which may be levied against
such other personal property shall be assessed or levied or charged to the
Property.
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(u) Leasing Matters. Any Lease with respect to the Property that
covers more than one thousand (1,000) rentable square feet shall be written on a
form of lease which has been approved by Lender, which approval shall not be
unreasonably withheld. Upon request, Borrower shall furnish Lender with executed
copies of all Leases. All proposed Leases or renewals of existing leases entered
into after the Closing Date shall be on commercially reasonable terms and shall
not contain any terms which would materially affect Lender's' rights under the
Loan Documents. All Leases executed after the date hereof shall be subordinate
to the Mortgage encumbering the Property. Borrower (i) shall observe and perform
the obligations imposed upon the lessor under the Leases in a commercially
reasonable manner; (ii) shall enforce, and may amend or terminate, the terms,
covenants and conditions contained in the Leases upon the part of the lessee
thereunder to be observed or performed in a commercially reasonable manner;
(iii) shall not collect any of the rents more than one (l) month in advance
(other than security deposits); (iv) shall not execute any other assignment of
lessor's interest in the Leases or the Revenue (except as contemplated by the
Loan Documents); (v) shall not alter, modify or change the terms of the Leases
in a manner inconsistent within the provisions of the Loan Documents; and (vi)
shall execute and deliver at the request of Lender all such further assurances,
confirmations and assignments in connection with the Leases as Lender shall from
time to time require.
(v) Financing Statements. Borrower shall, promptly upon Lender's
request, at Borrower's sole cost and expense, timely file or refile, or cause to
be filed or refiled, all continuations and any assignments of any of the Uniform
Commercial Code Financing Statements filed in connection with the Loan, as
appropriate, in the appropriate recording or filing offices, such that Lender
will continue to have a valid and perfected first priority lien on the
collateral subject to such financing statements.
(w) Equipment Leases. Borrower shall observe and perform or cause to
be observed or performed all of its obligations under all Equipment Leases and
replace any expired Equipment Leases with similar agreements as necessary to
maintain the operating standards of its Property.
(x) Franchise Inspection Reports. Borrower shall deliver to Lender,
or cause the Consultant to deliver to Lender, a copy of each inspection report
of any Franchisor with respect to the Property within five (5) Business Days
after Borrower's or Consultant's receipt thereof.
(y) Compliance with Franchise Agreement. Borrower shall operate its
Property as a hotel open for business under the Franchise Agreement, and shall
perform all of its obligations under the Franchise Agreement.
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(z) Operations and Maintenance Programs. The Borrower that owns the
Property referred to on Schedule K annexed hereto shall cause such Property to
be operated and maintained in all material respects in accordance with those
certain operations and maintenance programs, approved by the Environmental
Consultant, listed on Schedule K and shall deliver an Officer's Certificate to
Lender within thirty (30) days of the Closing Date stating that such Borrower
has instructed the relevant employees at the Property in compliance with such
operations and maintenance program.
(aa) Insuror's Letter. Borrower shall deliver an updated Insuror's
Letter within ten (10) Business Days of any change in the premiums payable with
respect to the Policies.
VI. NEGATIVE COVENANTS
Section 6.1 Borrower's Negative Covenants.
From the date hereof until payment and performance in full of all
obligations of Borrower under the Loan Documents or the earlier release of the
Liens of the Mortgage (and all related obligations) from the Property in
accordance with the terms of this Agreement and the other Loan Documents,
Borrower covenants and agrees with Lender that none of them will do, directly or
indirectly, any of the following:
(a) Operation of Property. Borrower shall not, without the prior
consent of Lender, which consent shall not be unreasonably withheld or delayed,
amend, modify, terminate or extend, or consent to an assignment of Franchisor's
or Consultant's rights under, any Franchise Agreement or Consulting Agreement
relating to the Property or otherwise replace Franchisor or Consultant of the
Property or enter into any other management or franchise agreements with respect
to the Property. Notwithstanding the foregoing, if the Franchise Agreement shall
expire or be terminated, other than any termination by Borrower or on account of
Borrower's default thereunder, Borrower shall enter into a new Franchise
Agreement, in form and substance reasonably satisfactory to Lender. During any
Franchise Restricted Period, all Excess Property Income for the Property shall
be deposited in the Central Account and allocated as provided in Section
2.7.3(g), provided that if a Franchise Restricted Period and a DSCR Restricted
Period shall both be in effect with respect to any period of time, such period
will be deemed a DSCR Restricted Period for the purposes of this Agreement and
if a Franchise Restricted Period and an Operative Period shall both be in effect
with respect to any period of time, such period of time shall be deemed an
Operative Period for the purposes of this Agreement. A "Franchise Restricted
Period" shall mean any period of time during which the Franchise Agreement shall
have been expired or been terminated, other than
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a termination by Borrower or on account of Borrower's default thereunder, and
shall not have been replaced by a new Franchise Agreement pursuant to this
subsection. It shall be an Event of Default hereunder if any Franchise
Restricted Period shall continue for more than ninety (90) days.
(b) Liens. Borrower shall not, without the prior written consent of
Lender, create, incur, assume or suffer to exist any Lien on any portion of the
Property or permit any such action to be taken, except:
(i) Permitted Encumbrances; or
(ii) Liens for Impositions or Other Charges not yet due or which are
being contested in compliance with Section 5.1(b)
(c) Dissolution. Borrower shall not dissolve, terminate, liquidate,
merge with or consolidate into another Person
(d) Chance In Business. Borrower shall not enter into any line of
business other than the ownership and operation of its Property, or make any
material change in the scope or nature of its business objectives, purposes or
operations, or undertake or participate in activities other than the continuance
of its present business.
(e) Debt Cancellation. Borrower shall not cancel or otherwise
forgive or release any claim or debt (other than termination of Leases in
accordance herewith) owed to Borrower by any Person, except for adequate
consideration and in the ordinary course of Borrower's business.
(f) Affiliate Transactions. Borrower shall not enter into, or be a
party to, any transaction with an Affiliate of Borrower or of any partner of
Borrower except (a) under the Consulting Agreement, (b) in the ordinary course
of business and on terms which are fully disclosed to Lender in advance and are
no less favorable to Borrower or such Affiliate than would be obtained in a
comparable arm's-length transaction with an unrelated third party or (c) as may
be otherwise expressly provided for hereunder.
(g) Zoning. Borrower shall not initiate or consent to any zoning
reclassification of all or any portion of its Property or seek any variance
under any existing zoning ordinance or use or permit the use of any portion of
the Property in any manner that could result in such use becoming a
non-conforming use under any zoning ordinance or any other applicable land use
law, rule or regulation, without the prior consent of Lender.
(h) Assets. Borrower shall not purchase or own any properties other
than its Property.
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(i) Debt. Borrower shall not create, incur or assume any debt other
than the Indebtedness and other than unsecured, short-term trade indebtedness
incurred in the ordinary course of operating its Property (including financing
of insurance premiums) and Permitted Encumbrances.
(j) Misapplication of Funds. Borrower shall not, or permit any
Consultant to, (i) distribute any Revenue to any Borrower or any partners or
shareholders thereof either (A) in violation of the provisions of Section 2.7
hereof or (B) unless true and correct Consultant's Certifications as referred to
in Section 5.1(k) (iv) shall have been delivered for the most recent period for
which the same are due, or (ii) misappropriate any security deposit made under
any Lease or portion thereof.
(k) Southfield Partnership Agreement. McKnight Motel, Inc. shall
not, without the prior written consent of Lender, in Lender's sole discretion,
consent to any modification, amendment, extension or termination of that certain
Third Amended and Restated Agreement of Limited Partnership of Southfield Hotel
Group II dated January 30, 1995 by S.A.I. Corp., McKnight Motel, Inc. and
Southfield Associated Group nor consent, or authorize Southfield to engage in
any business not authorized under such agreement.
VII. SPECIAL PROVISIONS
Section 7.1 Cooperation.
7.1.1 Cooperation. (a) Lender intends to make the Loan pursuant to
and in accordance with the Loan Documents and the Loan Purchaser intends to
purchase the Loan, in each case, prior to effecting any Securitization
Transaction. Borrower shall, at Lender's cost and expense, including, without
limitation, reasonable legal fees, cooperate in good faith with the Lender, the
Loan Purchaser, any Servicer and the Securities and Exchange Commission in
effecting such Securitization Transaction, including obtaining Franchise
Agreement Letters for the benefit of the Loan Purchaser, and shall cooperate in
good faith to implement all requirements imposed by the Rating Agency or any
rating agencies including, without limitation, changes to the Loan and the Loan
Documents occasioned by the Securitization Transaction and all additional
conditions imposed by such rating agencies in connection with any rating of the
Certificates, including, without limitation, delivery of opinions of counsel
acceptable to such Rating Agencies and addressing such matters as such Rating
Agencies may reasonably require; provided, however, that Borrower shall not act
as a Depositor or issuer in connection with a Securitization Transaction or be
required to acquiesce in respect of material modifications to the Loan or the
Loan Documents, including, without limitation, any modifications (whether
material or not) relating to (i) the interest rate
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payable in respect of the Loan, (ii) the Maturity Date, (iii) the amortization
of the Loan, (iv) the calculation of Yield Maintenance Premiums or the instances
in which such Yield Maintenance Premiums are applicable, (v) the limitations on
recourse set forth in the Loan Documents, (vi) the conditions for release of an
Individual Property set forth in Section 2.4 or (vii) the Cash Management
Agreement.
(b) The Loan Purchaser, at its election, may determine to resell the
Loan or retain title to the Loan instead of implementing the Securitization
Transaction. In such event, Borrower shall cooperate in good faith with the Loan
Purchaser in connection with effecting any such resale or retention of the Loan.
7.1.2 Additional Financial Reporting Reaquirements.
Borrower hereby agrees that Borrower shall, at Borrowers' cost and
expense, execute and deliver all documentation and statistical information as
may be reasonably requested by Lender and take all action deemed reasonably
necessary or desirable by Lender, in both cases for the implementation of the
Securitization Transaction(s) including, without limitation, delivery of (i)
audited financial statements fulfilling Securities and Exchange Commission
requirements as to form, content and period covered, (ii) consents of experts
fulfilling Securities and Exchange Commission requirements, (iii) other matters
as may be customary for offerings of securities similar to the Certificates,
(iv) the satisfaction of all reasonable Rating Agency requirements with respect
to documentation and statistical information and (v) all ongoing periodic
reporting requirements under the Securities Exchange Act of 1934, as amended,
arising out of the registration of the Certificates.
Section 7.2 Insurance: Casualty and Condemnation.
7.2.1 Insurance. (a) Borrower, at its sole cost and expense, shall
keep the Property insured during the entire term of the Loan for the mutual
benefit of such Borrower and Lender on an "All Risk" basis, including without
limitation, insurance against loss or damage by fire and against loss or damage
by other risks and hazards covered by a standard extended coverage policy,
including, but not limited to, riot and civil commotion, vandalism, malicious
mischief, burglary and theft. Such insurance shall be in an amount (i) equal to
the then full replacement cost of the Improvements (exclusive of footings and
foundations) and Equipment, without deduction for physical depreciation, and
(ii) such that the insurer would not deem Borrower a co-insurer under said
policies, provided that if such coverage is provided under a blanket policy,
such coverage may be provided through a "loss limit" policy in the amount of not
less
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than $100,000,000 per occurrence and not in the aggregate (which amount may be
increased, in Lender's reasonable discretion, if the number of properties
covered by such blanket policy is increased after the Closing Date). The
policies of insurance carried in accordance with this Section shall be paid
monthly or quarterly in advance and, unless such policies shall be blanket
policies pursuant to the preceding sentence, shall contain the "Replacement Cost
Endorsement" with a waiver of depreciation.
(b) Borrower, at its sole cost and expense, for the mutual benefit
of Borrower and Lender, shall also obtain and maintain, or cause to be
maintained, during the entire term of the Loan the following policies of
insurance with respect to the Property:
(i) flood insurance if any part of the Property is 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 (and any amendment or successor act
thereto) in an amount at least equal to the lesser of the Principal Balance
attributable to such Individual Property or the maximum limit of coverage
available with respect to the Improvements and Equipment under said Act,
whichever is less;
(ii) comprehensive public liability insurance in the amount of
$5,000,000 or such additional amount reasonably requested by Lender, including
broad form property damage, blanket contractual and personal injuries (including
death resulting therefrom) coverages;
(iii) business interruption insurance in an amount not less than the
Revenues projected by Lender for the Property for a period of twenty-four (24)
months at one hundred percent (100%) occupancy, provided that notwithstanding
the foregoing, if the hazard insurance under paragraph (a) above is provided
under a "loss limit" blanket policy as permitted thereunder, such business
interruption insurance may be included in such policy, provided that such
insurance shall provide coverage for the Property for the actual loss of Cash
Flow Available for Debt Service for the Property sustained due to the suspension
of operations during the period of the restoration of operations and continuing
normal Operating Expenses incurred during such period. The term "period of
restoration" as used in this subparagraph means the period of time (a) from the
date of the applicable Casualty until the date on which the Restoration of the
Property, if prosecuted with reasonable diligence, should be completed and (b)
from the date on which the Restoration of the Property is technically completed
until the earlier of (I) the date on which the business operations and condition
of the Property should be restored to their status prior to such Casualty, if
pursued with reasonable diligence, and (II) the date which is sixty (60)
consecutive days after the actual completion of the Restoration;
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(iv) insurance against loss or damage from leakage of sprinklers or
explosion of steam boilers, air conditioning equipment, high pressure piping,
machinery and equipment, pressure vessels or similar apparatus now or hereafter
installed on the Property;
(v) Worker's compensation insurance with respect to any employees of
Borrower or of Consultant employed at the Property, as required by Governmental
Authorities, or Legal Requirements; and
(vi) such other or additional insurance as may from time to time be
reasonably required by Lender.
(c) All policies of insurance (the "Policies") required pursuant to
this Section 7.2.1: (i) shall be issued by an insurer rated "A" (or the
equivalent) by the Rating Agency and satisfactory to Lender, (ii) shall contain
the standard New York mortgagee non-contribution clause (or equivalent) naming
Lender as the person to whom all payments made by such insurance company, with
respect to property losses, shall be paid (except with respect to (A) Equipment
subject to an Equipment Lease that requires insurance proceeds to be paid to the
lessor thereunder and (B) provided no Event of Default shall have occurred and
be continuing, refunds of premiums made as a result of policy audits), (iii)
shall be maintained throughout the term of this Agreement without cost to
Lender, (iv) shall contain a waiver of subrogation, (v) shall be delivered to
Lender (or Lender shall receive original certificates of insurance and certified
copies of all Policies), (vi) shall contain such provisions as Lender deems
reasonably necessary or desirable to protect its interest including, without
limitation, endorsements providing that neither Borrower, Lender nor any other
party shall be a co-insurer under said Policies and that Lender shall receive at
least thirty (30) days' prior written notice of any modification or
cancellation, except that Lender shall receive ten (10) days' prior written
notice of any cancellation for non-payment of any premium, and (vii) shall be
reasonably satisfactory to Lender and shall be approved by Lender as to amounts,
form, risk coverage, deductibles, loss payees, and insureds, which approval
shall not be unreasonably withheld or delayed. Borrower shall pay the premiums
for such Policies as the same become due and payable. Not later than ten (10)
days prior to the expiration date of each of the Policies, Borrower will deliver
to Lender satisfactory evidence of the renewal of each of the Policies. The
Policies may be part of a blanket policy only if the provider of such blanket
policy provides Borrower and Lender with a letter confirming that coverage for
the Property will not be cancelled or reduced because of any matter relating to
any property covered thereby.
(d) All insurers shall be authorized to issue insurance in the State
in which the Property is located.
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(e) In the event Borrower fails to provide, maintain, keep in force,
or deliver and furnish to Lender the Policies required hereunder, Lender may
procure such insurance as Lender shall deem appropriate, and Borrower will
reimburse Lender for all premiums paid by Lender promptly upon demand by Lender,
together with interest thereon at the Default Rate from the date of demand. The
amounts advanced by Lender to pay for such insurance, together with such
interest thereon, shall be a part of the Indebtedness and secured by the
Mortgage.
(f) Borrower shall pay, or cause to be paid, all premiums therefor
not later than the date due and shall submit to Lender, within three (3)
Business Days of the date such premium payment is due, other than with respect
to payments disbursed from the Basic Carrying Costs Sub-Account, a copy of each
check written in payment of such premiums or other evidence reasonably
satisfactory to Lender that such premium has been paid, or, if such payment
shall be made by wire transfer, evidence of such transfer reasonably
satisfactory to Lender.
7.2.2 Casualty and Restoration. (a) Borrower shall give prompt
written notice to Lender of any damage to or destruction of all or any portion
of the Property (any such event being herein referred to as a "Casualty").
Provided that Lender shall make Insurance Proceeds available pursuant to Section
7.2.2(b), Borrower shall promptly and diligently restore, replace, rebuild and
repair the Property as nearly as possible to the value and condition of the
Property immediately prior to such Casualty (such restoration, replacement,
rebuilding and repair is herein referred to as the "Restoration"), regardless of
whether Insurance Proceeds shall be payable with respect to such Casualty or
shall be sufficient to pay for the Restoration. The plans and specifications and
Permits for the Restoration shall be submitted to Lender in advance and shall be
reasonably satisfactory to Lender in all respects. The Restoration shall be done
in compliance with all Legal Requirements, and Borrower shall carry builder's
risk insurance satisfactory to Lender in connection with the Restoration.
Lender, its agents and representatives shall have the right to inspect the
Property to monitor the Restoration. All reasonable costs and expenses incurred
by Lender, its agents or representatives in connection with the Restoration,
including, without limitation, counsel fees and engineers fees incurred by
Lender in connection with the review of plans, specifications and Permits and
the monitoring of the Restoration, shall be paid by Borrower. Upon completion of
the Restoration, Borrower shall deliver to Lender an Officer's Certificate (or
if the cost of such Restoration shall exceed $250,000, a certificate of an
Engineer) stating that (A) all materials installed and work and labor performed
in connection with the Restoration have been paid for in full, (B) no mechanics'
or other Liens on the Property arising out of the Restoration exist which have
not been bonded or otherwise discharged of record, (C) the Restoration has been
completed in compliance with the plans and specifications submitted to Lender
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and all Legal Requirements and (D) all Permits required for use of the Property
after the Restoration have been obtained, together with such other evidence of
the foregoing as Lender may request.
(b) Lender may elect to make all or any portion of any Insurance
Proceeds received by Lender pursuant to Section 2.7.8(a) (after deducting out
Lender's cost of obtaining such Insurance Proceeds, including, without
limitation, reasonable attorneys' fees) available to pay the costs of the
Restoration, provided that Lender shall make such Insurance Proceeds (after
deducting Lender's cost as aforesaid) available to pay the costs of the
Restoration if (i) such Insurance Proceeds are paid to Lender prior to February
1, 2007, (ii) (A) the Insurance Proceeds received with respect to any Casualty
(after deducting out such costs) shall not exceed fifty percent (50%) of the
fair market value for the Property as set forth on Schedule M annexed hereto or
(B) such Insurance Proceeds (after deducting out such costs) shall equal or
exceed fifty percent (50%) of such fair market value for the Property and the
ratio of (x) the Cash Flow Available for Debt Service for the Property for the
twelve (12) month period ending with the last day of the last full month prior
to such Casualty for which Lender shall have received financial reports for the
Property pursuant to Section 5.1(k) (iv) to (y) the aggregate amount of payments
of principal and interest that would be payable over the twelve (12) months
following the date of such Casualty in order to amortize the current Principal
Balance for the Property, with interest at the Interest Rate, over the period
from the date of such Casualty to the Maturity Date shall be at least equal to
1.62/1.0, unless, in such case, Borrower shall elect not to perform the
Restoration, (iii) no Default or Event of Default shall have occurred and be
continuing and (iv) Borrower shall have deposited with Lender an amount equal
to the difference between the cost of the Restoration, as reasonably estimated
by Lender, and the amount of Insurance Proceeds to be made available by Lender
to pay such costs. If such Insurance Proceeds are less than $100,000, Lender
shall pay such Insurance Proceeds over to the Borrower in question upon receipt
of an Officer's Certificate stating the costs of such Restoration to which such
Insurance Proceeds shall be applied. If the Insurance Proceeds equal or exceed
$100,000 and are to be made available to pay the costs of the Restoration, such
Insurance Proceeds shall be paid by Lender to, or as directed by, Borrower, less
retainage customary in the area where the Property is located, from time to time
during the course of the Restoration (but not more frequently than once per
calendar month), upon (x) receipt of a written request for such disbursement by
Borrower accompanied by an Officer's Certificate (or if the cost of such
Restoration shall exceed $250,000, a certificate of an Engineer) stating that
(1) all materials installed and work and labor performed to date (except to the
extent they are to be paid for out of the requested payment) in connection with
the Restoration have been paid for in full, and (2) no mechanics' or other Liens
on the Property arising out of
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the Restoration exist which have not been bonded or otherwise discharged or
released, together with such other evidence of the foregoing as Lender may
request, and (y) compliance with such other reasonable conditions as Lender may
from time to time impose.
(c) Any amount of Insurance Proceeds which Lender does not elect, or
is not required, to make available to pay the costs of the Restoration, or which
remains after payment of the costs of any restoration or reconstruction, shall
be applied as provided in Section 2.7.8(a).
7.2.3 Condemnation. (a) Borrower shall promptly give Lender notice
of the actual or threatened commencement of any Condemnation proceeding relating
to the Property and shall deliver to Lender copies of any and all papers served
in connection with such proceedings. Following any Condemnation of less than all
of the Property, provided that Lender shall make Condemnation Proceeds available
pursuant to Section 7.2.3(b), Borrower shall promptly and diligently perform
such restoration and reconstruction of the affected Property as is necessary to
retain, as nearly as possible, the economic value of the Property, regardless of
whether Condemnation Proceeds payable with respect thereto shall be sufficient
to pay for such restoration and reconstruction. The plans and specifications and
Permits for such restoration and reconstruction shall be submitted to Lender in
advance and shall be reasonably satisfactory to Lender in all respects. Such
restoration and reconstruction shall be done in compliance with all Legal
Requirements, and Borrower shall carry builder's risk insurance satisfactory to
Lender in connection therewith. Lender, its agents and representatives shall
have the right to inspect the Property to monitor such restoration and
reconstruction. All reasonable costs and expenses incurred by Lender, its agents
or representatives in connection with such restoration and reconstruction,
including, without limitation, counsel fees and engineers fees incurred by
Lender in connection with the review of plans, specifications and Permits and
the monitoring of such restoration and reconstruction, shall be paid by
Borrower. Upon completion of such restoration and reconstruction, Borrower shall
deliver to Lender an Officer's Certificate (or if the cost of such restoration
and reconstruction shall exceed $250,000, a certificate of an Engineer) stating
that (A) all materials installed and work and labor performed in connection with
such restoration and reconstruction have been paid for in full, (B) no
mechanics' or other Liens on the Property arising out of such restoration and
reconstruction exist which have not been bonded or otherwise discharged of
record, (C) such restoration and reconstruction have been completed in
compliance with the plans and specifications submitted to Lender and all Legal
Requirements and (D) all Permits required for use of the Property after such
restoration and reconstruction have been obtained, together with such other
evidence of the foregoing as Lender may request.
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(b) Any Condemnation Proceeds received by Lender (after deducting
out Lender's costs of obtaining such Condemnation Proceeds, including, without
limitation, reasonable attorneys' fees) may, in Lender's discretion, be either
retained and applied by Lender toward payment of the Loan or, at the discretion
of Lender be disbursed, either in whole or in part, to Borrower for such
purposes and upon such conditions as Lender shall designate, provided that
Lender shall make such Condemnation Proceeds (after deducting Lender's cost as
aforesaid) available to pay the costs of such restoration and reconstruction if
(i) such Condemnation Proceeds (after deducting out such costs) are paid to
Lender prior to February 1, 2007, (ii) (A) the Condemnation Proceeds received
with respect to any Condemnation shall not exceed fifty percent (50%) of the
fair market value for the Property as set forth on Schedule M, or (B) such
Condemnation Proceeds shall equal or exceed fifty percent (50%) of such fair
market value for the Property and the ratio of (x) the Cash Flow Available for
Debt Service for such Individual Property for the twelve (12) month period
ending with the last day of the last full month prior to such Condemnation for
which Lender shall have received financial reports for the Property pursuant to
Section 5.1(k) (iv) to (y) the aggregate amount of payments for principal and
interest that would be payable over the twelve (12) months following the date of
such Condemnation in order to amortize the current Principal Balance for the
Property, with interest at the Interest Rate, over the period from the date of
such Condemnation to the Maturity Date shall be at least equal to 1.62/1.0,
unless in such case Borrower shall elect not to perform such restoration and
construction, (iii) the remainder of the Property is, in Lender's reasonable
judgment, susceptible to being restored or reconstructed to a satisfactory
economic value, (iv) no Default or Event of Default shall have occurred and be
continuing and (v) Borrower shall have deposited with Lender an amount equal to
the difference between the cost of such restoration and reconstruction, as
reasonably estimated by Lender, and the amount of Insurance Proceeds to be made
available by Lender to pay such costs. If such Condemnation Proceeds are less
than $100,000, Lender shall pay such Condemnation Proceeds over to the Borrower
upon receipt of an Officer's Certificate stating the costs of such Restoration
to which such Condemnation Proceeds shall be applied. If the Condemnation
Proceeds equal or exceed $100,000 and are to be made available to pay the costs
of such restoration and reconstruction, such Condemnation Proceeds shall be paid
by Lender to, or as directed by, Borrower, less retainage customary in the area
where the Property is located, from time to time during the course of such
restoration and reconstruction (but not more frequently than once per calendar
month), upon (x) receipt of a written request for such disbursement by the
applicable Borrower accompanied by an Officer's Certificate (or if the cost of
such restoration and reconstruction shall exceed $250,000, a certificate of an
Engineer) stating that (1) all materials installed and work and labor performed
to date (except to the extent they are to be paid for out of the requested
payment) in connection with such
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restoration and reconstruction have been paid for in full, and (2) no mechanics'
or other Liens on the Property arising out of such restoration and
reconstruction exist which have not been bonded or otherwise discharged or
released, together with such other evidence of the foregoing as Lender may
request, and (y) compliance with such other reasonable conditions as Lender may
from time to time impose.
(c) Any amount of Condemnation Proceeds that Lender does not elect,
or is not required, to make available to Borrower, or that remains after payment
of the costs of any restoration or reconstruction, shall be applied as provided
in Section 2.7.8(b).
(d) Notwithstanding any Condemnation (including but not limited to
any transfer made in lieu of or in anticipation of the exercise of such taking),
Borrower shall continue to pay the Loan at the time and in the manner provided
for its payment in the Note and the Loan shall not be reduced until any
Condemnation Proceeds shall have been actually received and applied by Lender,
after the deduction of expenses of collection as provided above, to the
reduction of the Indebtedness, if permitted hereunder. 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. If the Property subject to the Condemnation proceeding is sold,
through foreclosure or otherwise, prior to the receipt by Lender of such
Condemnation Proceeds, Lender shall have the right, notwithstanding the
limitations on recourse under the Loan Documents and whether or not a deficiency
judgment on the Note shall have been sought, recovered, denied or available
hereunder, to receive said Condemnation Proceeds, or a portion thereof
sufficient to pay the Indebtedness.
Section 7.3 Required Repairs.
Borrower shall promptly commence and diligently continue the
Required Repairs at the Property, provided that Long-Term Required Repairs shall
be commenced as may be reasonably required to permit the completion thereof by
the dates required pursuant to the following sentence. It shall be an Event of
Default under this Agreement if Borrower does not complete the Short-Term
Required Repairs at the Property by the first (1st) anniversary of the Closing
Date or, with respect to any Long-Term Required Repair by the first to occur of
(a) the fifth (5th) anniversary of the Closing Date or (b) the date by which
such Long-Term Required Repair may be required to be completed pursuant to any
applicable Franchise Agreement.
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Section 7.4 FF&E Replacements.
7.4.1 Performance of FF&E Replacements. (a) Borrower shall make FF&E
Replacements when required by sound hotel management practices in order to keep
the Property in condition and repair consistent with requirements under the
applicable Franchise Agreement and Borrower's standards and practices as of the
Closing Date, but in any event not below prevailing standards for hotel
properties of similar age, size, construction and the then-current franchise
affiliation in the metropolitan area in which the Property is located, and to
keep the Property from deteriorating. Borrower 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.
(b) Upon Lender's request, Borrower shall deliver copies of and
assign to Lender any contract or subcontract relating to such FF&E Replacements.
(c) Borrower shall permit Lender and Lender's agents and
representatives (including, without limitation, Lender's engineer, architect, or
inspector) to enter onto the Property, upon reasonable prior notice, 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 the Property. Borrower shall cause
all contractors and subcontractors to cooperate with Lender and such agents and
representatives in connection with such inspections.
(d) In the event Lender determines, in its reasonable discretion,
that any FF&E Replacement is not being performed in a workmanlike or timely
manner or that any FF&E Replacement has not been completed in a workmanlike
manner and timely manner, Lender may elect to withhold disbursement under
Section 2.7.7 (e) for such unsatisfactory FF&E Replacement and, if Borrower has
failed to remedy any deficiencies in the performance of such FF&E Replacement
within fifteen (15) days after notice thereof by Lender, to proceed under
existing contracts or to contract with third parties to complete such FF&E
Replacement and to apply any funds in the FF&E Sub-Account toward the costs to
complete such FF&E Replacement, upon five (S) Business Days' prior written
notice.
(e) In order to facilitate Lender's making the FF&E Replacements
pursuant to subsection (d) above, Borrower grants Lender the right to enter onto
the Property and perform any and all work and acquire all materials necessary to
complete or make the FF&E Replacements and/or employ watchmen to protect the
Property from damage. All sums so expended by Lender shall be deemed to have
been advanced under the Loan to Borrower and secured by the Mortgage encumbering
the Property. For this
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purpose Borrower 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 such Borrower pursuant to subsection (d) above.
Such power of attorney shall be deemed to be a power coupled with an interest
and cannot be revoked. Borrower empowers said attorney-in-fact as follows: (i)
to use any funds in the FF&E Sub-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 the Property, or as may be necessary or desirable for the completion of
the FF&E Replacements; (v) to execute all applications and certificates in the
name of such Borrower which may be required by any contract documents relating
to such FF&E Replacements; (vi) to prosecute and defend all actions or
proceedings relating to the FF&E Replacements in connection with the Property;
and (vii) to do any and every act which such Borrower might do in its own behalf
to fulfill the terms of this Agreement relating to the FF&E Replacements.
(f) In addition to any other insurance required under the Loan
Documents, Borrower 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 by Legal Requirements in connection with a particular FF&E
Replacement. All such policies shall be in form and amount reasonably
satisfactory to Lender.
(g) All FF&E Replacements shall be constructed. installed or
completed, as applicable, free and clear of all mechanic's, materialman's or
other Liens and in compliance with all Legal Requirements and all Insurance
Requirements.
(h) Nothing in this Section 7.4.1 nor the exercise by Lender of its
rights hereunder shall: (i) require Lender to expend funds in addition to such
funds as may be on deposit from time to time in the FF&E Sub-Account to make or
complete any FF&E Replacements; (ii) obligate Lender to make or complete any
FF&E Replacements; (iii) obligate Lender to demand from Borrowers additional
sums to make or complete any FF&E Replacements; or (iv) be construed as
constituting Lender a "mortgagee in possession" of the Property.
(i) It shall be an Event of Default under this Agreement if Borrower
fails to comply with any provision of this Section 7.4.1 and such failure is not
cured within ten (10) days after notice from Lender or, if such failure is not
reasonably susceptible to cure within such ten (10) day period, if Borrower
shall fail to commence to cure such failure within such ten (10)
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day period or to complete such cure within such longer period, not to exceed
sixty (60) days or, if such cure shall require construction, one hundred eighty
(180) days, except as such 180-day period may be extended to the extent
Borrower's cure of such failure is prevented by fire or other casualty, acts of
God, strike or other labor trouble of general application (but not a labor
dispute directed particularly at Borrower) or similar event (excluding financial
difficulties of Borrower) beyond the control of Borrower, as may be required to
complete the same with reasonable diligence.
7.4.2 Indemnification. Borrower shall indemnify Lender and hold
Lender harmless from and against any and all actions, suits, claims, demands,
liabilities, losses, damages, obligations, 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, except for any
such actions, suits, claims, demands, liabilities, losses, damages, obligations,
costs and expenses arising solely out of the willful misconduct or gross
negligence of Lender. Borrower shall assign to Lender all rights and claims
Borrower 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.
Section 7.5 Inspections.
Without limiting any other rights provided to Lender under the Loan
Documents, Lender shall have the right to inspect the Property, at Borrower's
expense (a) once during any DSCR Restricted Period and (b) after receipt of any
report indicating that such Property has failed an inspection by the Franchisor.
VIII. DEFAULTS
Section 8.1 Event of Default.
(a). Each of the following events occurring with respect to
Borrower, or the Property shall constitute an "Event of Default" hereunder:
(i) if Borrower fails to make any payment required to fund the Debt
Service Payment Sub-Account, the Basic Carrying Costs Sub-Account, the FF&E
Sub-Account and, during any Operative Period and any DSCR Restricted Period, the
Operations and Maintenance Expense Sub-Account, in full on any Due Date and such
failure continues for two (2) days, provided that if such grace period shall end
on a day other than a Business Day, such grace period shall be extended to the
next Business Day;
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(ii) if Borrower fails to pay all or any portion of the principal
amount of the Loan on the Maturity Date;
(iii) if Borrower fails to pay any amount (other than amounts that
may be referred to in clauses (i) and (ii) above) payable by Borrower pursuant
to this Agreement or any other Loan Document when due and such failure continues
for five (5) days after Lender delivers written notice thereof to Borrower,
provided that if such grace period shall end on a day other than a Business Day,
such grace period shall be extended to the next Business Day;
(iv) the continuation of any Franchise Restricted Period for ninety
(90) days;
(v) if any representation or warranty made by any Borrower herein or
in any other Loan Document, or in any report, certificate, financial statement
or other instrument, agreement or document furnished by Borrower in connection
with this Agreement or any other Loan Document, shall be misleading in any
material respect as of the date representation or warranty was made and such
misleading respect shall not have been remedied within fifteen (15) days of the
earlier of discovery by Borrower or written notice by Lender;
(vi) if Borrower or any general partner of Borrower shall make an
assignment for the benefit of creditors;
(vii) if a receiver, liquidator or trustee shall be appointed for
Borrower or any general partner of Borrower or if Borrower or any general
partner of Borrower 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, Borrower or any general partner of
Borrower, or if any proceeding for the dissolution or liquidation of Borrower or
any general partner of Borrower shall be instituted; provided, however, if such
appointment, adjudication, petition or proceeding was involuntary and not
consented to by Borrower or such general partner, upon the same not being
discharged, stayed or dismissed within thirty (30) days, or if Borrower or any
general partner of Borrower shall generally not be paying its debts as they
become due;
(viii) if Borrower attempts to (A) assign its respective rights
under this Agreement or any of the other Loan Documents or any interest herein
or therein or (B) transfer the Property or any interest therein in contravention
of the Loan Documents;
(ix) if Borrower breaches any of its covenants contained in Section
6.1 or any covenant contained in Section 4.1(dd) hereof and such breach is not
remedied within five (5)
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days of the earlier of discovery by Borrower or written notice by Lender;
(x) if an Event of Default as defined or described in the Note, the
Mortgage or any of the other Loan Documents occurs, whether as to Borrower or
the Property;
(xi) if Borrower shall continue to be in Default under any of the
other terms, covenants or conditions of this Agreement or any other Loan
Document, for ten (10) days after written notice from Lender, in the case of any
default which can be cured by the payment of a sum of money, or for thirty (30)
days after notice from Lender in the case of any other default; provided,
however, that if such non-monetary default is susceptible of cure but cannot
reasonably be cured within such 30-day period and provided further that Borrower
shall have commenced to cure such default within such 30-day period and
thereafter diligently and expeditiously proceeds to cure the same, such 30-day
period shall be extended for such time as is reasonably necessary for Borrower
in the exercise of due diligence to cure such default, such additional period
not to exceed sixty (60) days or, if such cure shall require construction, one
hundred eighty (180) days except as such 180-day period may be extended to the
extent Borrower's cure of such default is prevented by fire or other casualty,
acts of God, strike or other labor trouble of general application (but not a
labor dispute directed particularly at Borrower) or similar event (excluding
financial difficulties of Borrower) beyond the control of Borrower, as may be
required to complete the same with reasonable diligence;
(xii) if the Policies required to be procured and maintained by
Borrower are not so procured and maintained in accordance with the terms hereof;
or
(xiii) if Borrower shall fail to complete the Required Repairs as
required under Section 7.3.
(b) Upon the occurrence of an Event of Default (other than an Event
of Default described in clauses (vi), (vii) or (viii) above) and at any time
thereafter the Lender may, in addition to any other rights or remedies available
to it pursuant to this Agreement and the other Loan Documents or at law or in
equity, take such action, without notice or demand, that Lender deems advisable
to protect and enforce its rights against Borrower and in and to the Property,
including, without limitation, giving notice to Borrower that the Indebtedness
is immediately due and payable, and Lender may enforce or avail itself of any or
all rights or remedies provided in the Loan Documents against Borrower and the
Property, including, without limitation, all rights or remedies available at law
or in equity. Upon any Event of Default described in clauses (vi), (vii) or
(viii) above, the Indebtedness shall immediately and automatically become due
and payable, without notice or demand,
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and Borrower hereby expressly waives any such notice or demand, anything
contained herein or in any other Loan Document to the contrary notwithstanding.
Section 8.2 Remedies.
(a) Upon the occurrence of an Event of Default, all or any one or
more of the rights, powers, privileges and other remedies available to Lender
against Borrower under this Agreement or any of the other Loan Documents or at
law or in equity may be exercised by Lender at any time and from time to time,
whether or not all or any of the Indebtedness shall be declared due and payable,
and whether or not Lender shall have commenced any foreclosure proceeding or
other action for the enforcement of its rights and remedies under any of the
Loan Documents with respect to the Property. Any such actions taken by Lender
shall be cumulative and concurrent and may be pursued independently, singly,
successively, together or otherwise, at such time and in such order as Lender
may determine in its sole discretion, to the fullest extent permitted by law,
without impairing or otherwise affecting the other rights and remedies of Lender
permitted by law, equity or contract or as set forth herein or in the other Loan
Documents.
(b) Intentionally deleted.
Section 8.3 Remedies Cumulative.
The rights, powers and remedies of Lender under this Agreement shall
be cumulative and not exclusive of any other right, power or remedy which Lender
may have against Borrower pursuant to this Agreement or the other Loan
Documents, or existing at law or in equity or otherwise. Lender's rights, powers
and remedies may be pursued singly, concurrently or otherwise, at such time and
in such order as Lender may determine in Lender's sole discretion. No delay or
omission to exercise any remedy, right or power accruing upon an Event of
Default shall impair any such remedy, right or power or shall be construed as a
waiver thereof, but any such remedy, right or power may be exercised from time
to time and as often as may be deemed expedient. A waiver of one default or
Event of Default with respect to Borrower shall not be construed to be a waiver
with respect to any subsequent default or Event of Default by Borrower, or to
impair any remedy, right or power consequent thereon.
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IX. MISCELLANEOUS
Section 9.1 Survival.
This Agreement and all covenants, agreements, representations and
warranties made herein and in the certificates delivered pursuant hereto shall
survive the making by Lender of the Loan and the execution and delivery to
Lender of the Note, and shall continue in full force and effect so long as all
or any of the Indebtedness of Borrower is outstanding and unpaid. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party. All covenants,
promises and agreements contained in this Agreement shall be binding upon, and
shall inure to the benefit of, Lender, together with its successors and assigns,
and Borrower, together with its permitted successors and assigns.
Section 9.2 Lender's Discretion.
Whenever 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 whether arrangements or terms are satisfactory or not satisfactory shall
(except as is otherwise specifically herein provided) be in the sole discretion
of Lender and shall be final and conclusive.
Section 9.3 Governing Law.
(a) This Agreement was negotiated in the State of New York, and made
by Lender and accepted by Borrower in the State of New York, and the proceeds of
the Note delivered pursuant hereto shall be disbursed from the State of New
York, which State the parties agree has a substantial relationship to the
parties and to the underlying transaction embodied hereby, and in all respects,
including, without limiting the generality of the foregoing, matters of
construction, validity and performance, this Agreement and the obligations
arising hereunder shall be governed by, and construed in accordance with, the
laws of the State of New York applicable to contracts made and performed in such
State and any applicable law of the United States of America, except that at all
times the provisions for the creation, perfection, and enforcement of the liens
and security interests created pursuant hereto and pursuant to the other Loan
Documents shall be governed by and construed according to the law of the State
in which the Property is located, it being understood that, to the fullest
extent permitted by the law of such State, the law of the State of New York
shall govern the validity and the enforceability of all Loan Documents and all
of the Indebtedness or obligations arising hereunder or thereunder.
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<PAGE>
To the fullest extent permitted by law, Borrower hereby unconditionally and
irrevocably waives any claim to assert that the law of any other jurisdiction
governs this Agreement and the Note, and this Agreement and the Note shall be
governed by and construed in accordance with the laws of the State of New York
pursuant to Section 5-1401 of the New York General Obligations Law.
(b) Any suit, action or proceeding against Lender or Borrower
arising out of or relating to this Agreement shall be instituted in any federal
or state court in New York, New York, pursuant to Section 5-1402 of the New York
General Obligations Law, or, at Lender's discretion, in the State where the
Property is located, and Borrower waives any objection which it may now or
hereafter have to the laying of venue of any such suit, action or proceeding,
and Borrower hereby irrevocably submits to the jurisdiction of any such court in
any suit, action or proceeding. Borrower does hereby designate and appoint C.T.
Corporation System, 1633 Broadway, New York, New York 10019, as its authorized
agent to accept and acknowledge on its behalf service of any and all process
which may be served in any such suit, action or proceeding in any federal or
state court in New York, New York, and agrees that service of process upon said
agent at said address and written notice of said service of Borrower mailed or
delivered to Borrower in the manner provided herein shall be deemed in every
respect effective service of process upon Borrower's in any such suit, action or
proceeding in the State of New York. Borrower (i) shall give prompt notice to
Lender of any changed address of its authorized agent hereunder, (ii) may at any
time and from time to time designate a substitute authorized agent with an
office in New York, New York (which office shall be designated as the address
for service of process), provided that Borrower shall promptly designate such a
substitute if its authorized agent ceases to have an office in New York, New
York or is dissolved without leaving a successor.
Section 9.4 Modification, Waiver in Writing.
No modification, amendment, extension, discharge, termination or
waiver of any provision of this Agreement, or of the Note, or of any other Loan
Document, nor consent to any departure by Borrower therefrom, shall in any event
be effective unless the same shall be in a writing signed by the party against
whom enforcement is sought, and then any such waiver or consent shall be
effective only in the specific instance, and for the purpose, for which given.
Except as otherwise expressly provided herein, no notice to, or demand on
Borrower, shall entitle Borrower to any other or future notice or demand in the
same, similar or other circumstances.
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Section 9.5 Delay Not a Waiver.
Neither any failure nor any delay on the part of Lender in insisting
upon strict performance of any term, condition, covenant or agreement, or
exercising any right, power, remedy or privilege hereunder, under the Note or
under any other Loan Document, or any other instrument given as security
therefor, shall operate as or constitute a waiver thereof, nor shall a single or
partial exercise thereof preclude any other future exercise, or the exercise of
any other right, power, remedy or privilege. In particular, and not by way of
limitation, by accepting payment after the date on which the same is due of any
amount payable under this Agreement, the Note or any other Loan Document, Lender
shall not be deemed to have waived any right either to require prompt payment
when due of all other amounts due under this Agreement, the Note or the other
Loan Documents, or to declare a default for failure to effect prompt payment of
any such other amount.
Section 9.6 Notices.
All notices, consents, approvals and requests required or permitted
hereunder or under any other Loan Document shall be given in writing and shall
be effective for all purposes if hand delivered or sent by (a) certified or
registered United States mail, postage prepaid, return receipt requested, or (b)
nationally recognized overnight delivery service, either commercial or United
States Postal Service, with proof of attempted delivery, addressed if to Lender
at its address set forth on the first page hereof, and if to Borrower to
Borrower's address set forth on the first page hereof, or at such other address
and person as shall be designated from time to time by any party hereto, as the
case may be, in a written notice to the other parties hereto in the manner
provided for in this Section. A copy of all notices, consents, approvals and
requests directed to Borrower shall be delivered to Stearns Weaver Miller
Weissler Alhadeff & Sitterson, P.A., 150 West Flagler Street, Suite 2200, Miami,
Florida 33130, Attention: Alison W. Miller, Esq. A notice shall be deemed to
have been given: in the case of hand delivery, at the time of delivery; in the
case of registered or certified mail, when delivered or upon the first attempted
delivery on a Business Day; or in the case of overnight delivery service, when
delivered or upon the first attempted delivery on a Business Day.
Section 9.7 Trial by Jury.
BORROWER, TO THE FULLEST EXTENT THAT IT MAY LAWFULLY DO SO, WAIVES
TRIAL BY JURY IN ANY ACTION OR PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY
TORT ACTION, BROUGHT BY ANY PARTY HERETO WITH RESPECT TO THIS AGREEMENT, THE
NOTE, OR THE OTHER LOAN DOCUMENTS.
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<PAGE>
Section 9.8 Headings.
The Article and/or Section headings and the Table of Contents in
this Agreement are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose.
Section 9.9 Successors and Assigns: Assignment.
This Agreement shall be binding upon and shall inure to the benefit
of each party hereto and their respective permitted successors and assigns.
Lender shall have the right, upon notice to Borrower's to transfer, sell or
assign this Agreement and any of the other Loan Documents and the obligations
hereunder to any Person who purchases or otherwise acquires an interest in the
Loan.
Section 9.10 Severability.
Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
Section 9.11 Preferences.
Lender shall have the continuing and exclusive right to apply or
reverse and reapply any and all payments by Borrower to any portion of the
obligations of Borrower hereunder. To the extent Borrower makes a payment or
payments to Lender, which payment or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds received, the obligations hereunder or
part thereof intended to be satisfied shall be revived and continue in full
force and effect, as if such payment or proceeds had not been received by
Lender.
Section 9.12 Waiver of Notice.
Borrower shall not be entitled to any notices of any nature
whatsoever from Lender except with respect to matters for which (a) this
Agreement or the other Loan Documents specifically and expressly provide for the
giving of notice by Lender to Borrower and (b) Borrower is not, pursuant to
applicable law,
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<PAGE>
permitted to waive the giving of notice. To the extent permitted by Applicable
Law, Borrower hereby expressly waives the right to receive any notice from
Lender with respect to any matter for which this Agreement or the other Loan
Documents do not specifically and expressly provide for the giving of notice by
Lender to Borrower.
Section 9.13 Intentionally Deleted.
Section 9.14 Expenses; Indemnity.
Borrower covenants and agrees to reimburse Lender upon receipt of
written notice from Lender for all reasonable costs and expenses (including
reasonable attorneys' fees and disbursements) incurred by Lender in connection
with (i) the negotiation, preparation, execution, delivery and administration of
any consents, amendments, waivers or other modifications to this Agreement and
the other Loan Documents and any other documents or matters requested by
Borrower; (iii) the filing and recording fees and expenses, title insurance and
other similar expenses incurred in creating and perfecting the Liens in favor of
Lender pursuant to this Agreement and the other Loan Documents; (iv) enforcing
or preserving any rights, in response to third party claims or the prosecuting
or defending of any action or proceeding or other litigation, in each case
against, under or affecting Borrower, this Agreement, the other Loan Documents,
the Property, or any other security given for the Loan; and (v) enforcing any
obligations of or collecting any payments due from Borrower under this
Agreement, the other Loan Documents or with respect to the Property or in
connection with any refinancing or restructuring of the credit arrangement
provided under this Agreement in the nature of a "work-out" or of any insolvency
or bankruptcy proceedings; provided, however, that Borrower shall not be liable
for the payment of any such costs and expenses to the extent the same arise by
reason of the gross negligence, illegal acts, fraud or willful misconduct of any
of Lender.
Section 9.15 Exhibits Incorporated.
The Exhibits and Schedules annexed hereto are hereby incorporated
herein as a part of this Agreement with the same effect as if set forth in the
body hereof.
Section 9.16 Offsets, Counterclaims and Defenses.
Any assignee of Lender's interest in and to this Agreement, the Note
and the other Loan Documents shall take the same free and clear of all offsets,
counterclaims or defenses
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<PAGE>
which Borrower may have against any assignor of such documents that are
unrelated to the Loan, and no such unrelated counterclaim or defense shall be
interposed or asserted by Borrower in any action or proceeding brought by any
such assignee upon such documents and any such right to interpose or assert any
such unrelated offset, counterclaim or defense in any such action or proceeding
is hereby expressly waived by Borrower.
Section 9.17 No Joint Venture or Partnership.
Borrower and Lender intend that the relationships created hereunder
and under the other Loan Documents be solely that of borrower and lender.
Nothing herein or therein is intended to create a joint venture, partnership,
tenancy-in-common, or joint tenancy relationship between Borrower and Lender nor
to grant Lender any interest in the Property other than that of mortgagee or
lender.
Section 9.18 Publicity.
All news releases, publicity or advertising by Borrower or its
Affiliates through any media intended to reach the general public which refers
to the Loan Documents or the Loan, to the Lender, the Loan Purchaser, the
Depositor, the Servicer or the Trustee shall be subject to the prior written
approval of Lender, provided that Lender shall have no right to prevent Borrower
from making any news releases, filings or statements required by Legal
Requirements.
Section 9.19 Waiver of Marshalling of Assets.
To the fullest extent Borrower may legally do so, Borrower waives
all rights to a marshalling of the assets of such Borrower, such Borrower's
partners, if any, and others with interests in Borrower, and of such Borrower's
Property, or to a sale in inverse order of alienation in the event of
foreclosure of the interests hereby created, and agrees not to assert any right
under any laws pertaining to the marshalling of assets, the sale in inverse
order of alienation, homestead exemption, the administration of estates of
decedents, or any other matters whatsoever to defeat, reduce or affect the right
of Lender under the Loan Documents to a sale of the Property for the collection
of the Indebtedness without any prior or different resort for collection, or the
right of Lender or any deed of trust trustee to the payment of the Indebtedness
out of the net proceeds of the Property in preference to every other claimant
whatsoever.
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<PAGE>
Section 9.20 Waiver of Counterclaim.
Borrower hereby waives the right to assert a counterclaim, other
than a compulsory counterclaim, in any action or proceeding brought against it
by Lender or its agents, including, without limitation, any Servicer.
Section 9.21 Conflict; Construction of Documents.
In the event of any conflict between the provisions of this
Agreement and any of the other Loan Documents, the provisions of this Agreement
shall control. The parties hereto acknowledge that they were represented by
counsel in connection with the negotiation and drafting of the Loan Documents
and that such Loan Documents shall not be subject to the principle of construing
their meaning against the party which drafted same.
Section 9.22 Brokers and Financial Advisors.
Borrower hereby represents that it has dealt with no financial
advisors, brokers, underwriters, placement agents, agents or finders in
connection with the transactions contemplated by this Agreement other than the
Blackstone Group L.P. and Donaldson, Lufkin & Jenrette Securities Corporation,
which Borrower will pay pursuant to separate agreements. Borrower and Lender
hereby agree to indemnify and hold the other harmless from and against any and
all claims, liabilities, costs and expenses of any kind in any way relating to
or arising from a claim by any other Person that such Person acted on behalf of
the indemnifying party in connection with the transactions contemplated herein.
The provisions of this Section 9.22 shall survive the expiration and termination
of this Agreement and the repayment of the Indebtedness.
Section 9.23 Prior Agreements.
This Agreement and the other Loan Documents contain the entire
agreement of the parties hereto and thereto in respect of the transactions
contemplated hereby and thereby, and all prior agreements among or between such
parties, whether oral or written, including, without limitation, the Commitment
Letter dated July 19, 1994 between DLJ Mortgage Capital, Inc. and Servico, Inc.,
and those certain supplemental letters dated August 19, 1994 and August 29, 1994
by DLJ Mortgage Capital, Inc. to Servico Hotels & Resorts (together with any
subsequent term sheets, supplemental letters or amendments, the "Term Sheet")
are superseded with respect to the Loan by the terms of this Agreement and the
other Loan Documents, except for the provisions of Schedule I of the Term Sheet,
as the same may be amended, which shall survive the execution and delivery of
this Agreement and the other Loan Documents.
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<PAGE>
Section 9.24 Intentionally deleted.
Section 9.25 Appointment of Servicer.
Lender may appoint a Servicer to administer the Loan, which Servicer
shall have the power and authority to exercise all of the rights and remedies of
Lender and to act as agent of Lender hereunder and under the Note, the Mortgage
and the other Loan Documents. Upon receipt of notice of the appointment of
Servicer, Borrower shall recognize Servicer as the agent of Lender and shall
make all payments and deliver all notices as directed by Servicer and accept all
notices from Servicer hereunder.
Section 9.26 Exculpation.
Notwithstanding any provision herein or in any of the Loan Documents
to the contrary, Lender shall not enforce the obligations contained in the Note,
this Agreement or the Mortgage or the other Loan Documents (other than the
Environmental Indemnity) by any action or proceeding wherein a money judgment
shall be sought against Borrower, except that Lender may bring a foreclosure
action, an action for specific performance or any other appropriate action or
proceeding to enable Lender to realize upon the Property, the Revenue and any
other collateral given to Lender to secure Borrower's obligations hereunder,
including, without limitation, any action to obtain a deficiency judgment
against Borrower, provided that such deficiency judgment shall be enforced only
against the Property, the Revenue and such other collateral, except as otherwise
expressly provided hereinafter. The provisions of this paragraph shall not,
however, limit the liability of Borrower for loss, costs or damage arising out
of the following matters: (i) any failure to apply the Revenue of the Property
to pay the operating expenses of the Property or to fulfill the then current
obligations of Borrower under this Agreement, the Note, the Mortgage or any
other Loan Document; (ii) any misapplication of Loss Proceeds, security deposits
or trust funds in violation of applicable law or the provisions of this
Agreement, the Mortgage or any other Loan Document; (iii) any collection of Rent
for more than one month in advance of the time when the same becomes due; (iv)
failure to pay all Impositions prior to the date on which such payments become
delinquent (subject to Lender's obligation to make disbursements from the Basic
Carrying Costs Sub-Account); (v) any willful misrepresentation by Borrower (or
any constituent partner or shareholder of Borrower) in connection with
Borrower's application, negotiation or documentation of the Loan; or (vi) a
fraudulent conveyance or a fraudulent transfer of the Properties or any part
thereof or any other properties or assets of Borrower; (vii) any material
misrepresentation or breach of warranty or covenant made by Borrower under the
Environmental Indemnity. Nothing herein shall be deemed (w) to be a waiver of
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<PAGE>
any right which Lender may have under any bankruptcy law of the United States or
of any State in which any part of the Property is located to file a claim for
the full amount of the Loan or to require that the Property and any other
collateral securing the Loan shall continue to secure all of the Indebtedness;
(x) to impair the validity of the Indebtedness; (y) to impair the right of
Lender as mortgagee or secured party to foreclose any Lien or (z) impair the
right of Lender to obtain the Recourse Distributions received by Borrower
including, without limitation, the right to proceed against any constituent
partner or shareholder of Borrower to the extent any such Recourse Distribution
has actually theretofore been distributed to such constituent partner or
shareholder. The provisions of this Section 9.26 shall be inapplicable to
Borrower if any petition for bankruptcy, reorganization or arrangement pursuant
to federal or state law shall be filed by, consented to or acquiesced in by or
with respect to such Borrower or if such Borrower shall institute any proceeding
for the dissolution or liquidation of such Borrower or if such Borrower shall
make an assignment for the benefit of creditors, in which event Lender shall
have recourse against all of the assets of such Borrower and the Recourse
Distributions received by the constituent partners and shareholders of such
Borrower. For purposes of this Section 9.26, the term "Recourse Distributions"
shall mean the Revenue arising from the Property to the extent received by
Borrower (or actually received by any partner or shareholder of Borrower if not
actually received by Borrower) after the occurrence and written notice
(including any Consultant's Notice) of an Event of Default.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their duly authorized representatives, all as of the day and
year first above written.
LENDER:
COLUMN FINANCIAL, INC.
By: /s/ Kieran P. Quinn
-------------------------------------
Name: Kieran P. Quinn
Title: Vice President & COO
BORROWER:
McKNIGHT MOTEL, INC.,
a Pennsylvania corporation
By: /s/ David Buddemeyer, President
-------------------------------------
David Buddemeyer, President
<PAGE>
SECOND AMENDMENT OF LOAN AGREEMENT
THIS AMENDMENT OF LOAN AGREEMENT entered into as of this 18th day
of July, 1995 by and between McKNIGHT MOTEL, INC., a Pennsylvania corporation
("Borrower") and COLUMN FINANCIAL, INC., a Delaware corporation ("Lender").
W I T N E S S E T H:
WHEREAS, pursuant to a Loan Agreement dated as of January 31, 1995
between Borrower and Lender (as heretofore amended the "Loan Agreement"), Lender
has made a loan in the original principal amount of $3,900,000.00 to Borrower
evidenced by a Promissory Note dated as of January 31, 1995 and secured by
certain security documents, including a Mortgage, Security Agreement and
Assignment of Leases and Rents of the same date recorded on February 7, 1995 in
Official Record Book 14744, page 032 in the Recorder of Deeds at Allegheny
County, Pennsylvania and an Assignment of Leases, Rents and Revenues of the same
date also recorded on February 7, 1995 in Official Record Book 09398, page 597
in the Recorder of Deeds of Allegheny County, Pennsylvania, which Mortgage and
Assignment encumber certain real property located in Allegheny County,
Pennsylvania;
WHEREAS, the Loan Agreement has been amended by that certain
Amendment of Loan Agreement dated as of June 29, 1995 between Borrower and
Lender; and
WHEREAS, the parties wish to correct certain references in the Loan
Agreement to amounts to be deposited into the Engineering Escrow Sub-Account (as
defined in the Loan Agreement);
NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and of the mutual covenants herein contained, the parties hereto
agree as follows:
1. The Loan Agreement is hereby amended as follows:
(a) The definition of "Long-Term Required Repairs Installment" in
Section 1.1 is hereby amended by deleting the amount of $39,458.33 and replacing
it with the amount of $41,875.
<PAGE>
(b) The definition of "Sprinkler Installment" in Section 1.1 is
hereby amended by deleting the amount of $112,500 and replacing it with the
amount of $67,500.
(c) Schedule E is hereby amended in its entirety to read as set
forth in the form of Schedule E attached hereto.
2. In the event of any conflict or inconsistency between the
provisions of this Second Amendment of Loan Agreement and the provisions of the
Loan Agreement, the provisions of this Second Amendment of Loan Agreement shall
govern.
3. The terms and conditions of the Loan Agreement remain in full
force and effect, without alteration or modification except as expressly
provided herein.
4. This Second Amendment of Loan Agreement shall be binding upon,
and shall inure to the benefit of, the parties hereto and their respective
successors and assigns. The Loan Agreement, as amended by this Second Amendment
of Loan Agreement, may not be further modified or amended except in a written
instrument executed by the parties hereto.
5. This Second Amendment of Loan Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on the day and year first set forth above.
WITNESS: McKNIGHT MOTEL, INC.,
a Pennsylvania corporation
/s/ [ILLEGIBLE] By: /s/ David Buddemeyer
- ----------------------------------- -------------------------------------
Name:
Title: President
WITNESS: COLUMN FINANCIAL, INC.,
/s/ Linda L. Keller By: /s/ David S. Foster
- ----------------------------------- -------------------------------------
Linda L. Keller Name: DAVID S. FOSTER
Title: Vice President
<PAGE>
SCHEDULE E
REQUIRED REPAIRS
Holiday Inn McKnight Road
Architectural Short-Term Long-Term
- ------------- ---------- ---------
o Replace low roof above public areas $ 75,000
o Clean & recaulk storefront at public areas $ 5,625
o Repair damaged stucco spandrel $ 1,250
o Repave access drive and parking lots
(except lower lot) $ 37,500
o Repair sidewalk at Restaurant and at front lot $ 3,125
o Repair and refinish penthouse $ 4,375
o Replace corner and mullions at restaurant
storefront $ 625
Mechanical, Electrical, Plumbing
- --------------------------------
o Provide sprinkler system for building $337,500
o Replace kitchen supply air unit $ 25,000
o Replace electrical panel $ 625
o Install disconnect $ 625
TOTAL $ 28,125 $463,125
<PAGE>
AMENDMENT OF LOAN AGREEMENT
THIS AMENDMENT OF LOAN AGREEMENT entered into as of the 29th day of
June, 1995 by and between McKNIGHT MOTEL, INC., Pennsylvania corporation
("Borrower") and COLUMN FINANCIAL, INC., a Delaware Corporation ("Lender").
W I T N E S S E T H:
WHEREAS, pursuant to a Loan Agreement dated as of January 31, 1995
between Borrower and Lender the ("Loan Agreement"), Lender has made a loan in
the original principal amount of $3,900,000.00 to Borrower evidenced by a
Promissory Note (the "Note") dated as of January 31, 1995 and secured by certain
security documents, including a Mortgage, Security Agreement and Assignment of
Leases and Rents of the same date recorded on February 7, 1995 in Official
Record Book 14744, page 032 in the Recorder of Deeds of Allegheny County,
Pennsylvania and an Assignment of Leases, Rents and Revenues of the same date
also recorded on February 7, 1995 in Official Record Book 09398, page 597 in the
Recorder of Deeds of Allegheny County, Pennsylvania, which Mortgage and
Assignment encumber certain real property located in Allegheny County,
Pennsylvania; and
WHEREAS, the parties have entered into that certain Amendment of
Promissory Note dated the date hereof, pursuant to which the maturity date of
the Note and other terms thereof were amended.
NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and of the mutual covenants herein contained, the parties hereto
agree as follows:
1. The Loan Agreement is hereby amended as follows:
(a) The definition of "Maturity Date" in Section 1.1 is hereby
amended in its entirety to read as follows:
"Maturity Date" shall mean March 1, 2005, subject to extension as
provided in Section 2.3.4.
<PAGE>
(b) Section 2.3.4 is amended by deleting the date "March 1, 2015"
and substituting therefor the date "March 1, 2010".
2. In the event of any conflict or inconsistency between the
provisions of this Amendment of Loan Agreement and the provisions of the Loan
Agreement, the provisions of this Amendment of Loan Agreement shall govern.
3. The terms and conditions of the Loan Agreement remain in full
force and effect, without alteration or modification except as expressly
provided herein.
4. This agreement shall be binding upon, and shall inure to the
benefit of, the parties hereto and their respective successors and assigns. The
Loan Agreement, as amended by this Agreement, may not be further modified or
amended except in a written instrument executed by the parties hereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on the day and year first set forth above.
WITNESS: McKNIGHT MOTEL, INC.,
a Pennsylvania corporation
[ILLEGIBLE] By: /s/ David Buddemeyer
- ----------------------------------- -------------------------------------
Name: David Buddemeyer
Title: President
WITNESS: COLUMN FINANCIAL, INC.,
/s/ Joan Delle Donne By: /s/ Robert A. Barnes
- ----------------------------------- -------------------------------------
Name: ROBERT A. BARNES
Title: Vice President and General
Counsel
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<PAGE>
Exhibit 10.12.2
PROMISSORY NOTE
U.S. $3,900,000 Executed and Delivered
in the City of
New York, New York
As of January 31, 1995
1. FOR VALUE RECEIVED, MCKNIGHT MOTEL, INC., a Pennsylvania
Corporation, having an address at Servico Centre South, 1601 Belvedere Road,
West Palm Beach, Florida 33406 (the "Maker"), promises to pay to the order of
COLUMN FINANCIAL, INC., a Delaware corporation, having an office at 3414
Peachtree Road, N.E., Suite 1140, Atlanta, Georgia 30326-1113, or its successors
or assigns (collectively, the "Payee"), the principal sum of THREE MILLION NINE
HUNDERED THOUSAND AND 00/100 Dollars ($3,900,000), in lawful money of the United
States of America with interest thereon from the date of this Note at the
Interest Rate (hereinafter defined).
2. The interest rate (the "Interest Rate") shall be Ten and
74/100ths (10.74%) percent per annum. Interest on the principal sum of this Note
shall be calculated on the basis of a 360 day year consisting of twelve (12)
months of thirty (30) days each. However, interest due and payable for a period
of less than a full calendar month shall be calculated by multiplying the actual
number of days elapsed in such period by a daily rate based on a 360-day year.
3. Maker shall make (a) a payment of interest only in the amount of
Thirty Thousand Two Hundred Fifty One and no 00/100ths Dollars ($30,251.00) on
March 1, 1995 and (b) thereafter monthly payments of principal and interest on
the unpaid principal balance, payable in arrears, in the amount of Thirty Nine
Thousand Five Hundred Sixty Seven and 56/100ths Dollars ($39,567.56) on the
first Business Day (as hereinafter defined) of each calendar month (the "Due
Date"). The unpaid principal sum and all interest thereon and all other sums and
fees then payable under this Note shall be due and payable on the first Business
Day of March, 2010 (the "Maturity Date"). All payments under this Note shall be
paid directly into the Central Account (as defined in the Loan Agreement (as
hereinafter defined)) by wire transfer of immediately available funds to:
The First National Bank of Chicago
Chicago, Illinois
ABA #071000013
Credit Clearing A/C No. BNF=7521-7623/DES
Ref: DLJ/Servico/McKnight
or to such other designated bank or place, or in such other manner, as Payee may
reasonably specify in writing from time to
<PAGE>
time. The term "Business Day" shall mean any day other than a Saturday, Sunday
or any other day on which national banks in New York, New York are not open for
business.
4. The whole of the principal sum of this Note, together with all
interest accrued and unpaid thereon, and all other sums and fees payable
hereunder and under the Loan Agreement, the Mortgage (as hereinafter defined)
and the other Loan Documents (as defined in the Loan Agreement) (such amounts
hereinafter collectively referred to as the "Indebtedness") shall become
immediately due and payable at the option of Payee on the happening of any Event
of Default (as defined in the Loan Agreement), subject to Section 8.1(b) of the
Loan Agreement.
5. (a) The outstanding principal balance of this Note may not be
prepaid, in whole or in part, on or prior to the fourth anniversary of the date
hereof (the "Lock-Out Date"), except in connection with the application by
Lender of (i) any Loss Proceeds (as defined in the Loan Agreement) to the
principal amount of the Indebtedness pursuant to Section 2.7.8 of the Loan
Agreement, including any payments made with respect to a release of any
Individual Property (as defined in the Loan Agreement) from the lien of the
Mortgage pursuant to Section 2.7.8(d) of the Loan Agreement in connection with
such application of Loss Proceeds, (ii) any amounts on deposit in the Capital
Expenditure Sub-Account to the Indebtedness during any DSCR Restricted Period or
Franchise Restricted Period (as such terms are defined in the Loan Agreement)
pursuant to Section 2.7.7(f) of the Loan Agreement, (iii) any amounts on deposit
in the Curtailment Reserve Fund Sub-Account to the Indebtedness during any
Operative Period (as such terms are defined in the Loan Agreement) pursuant to
Section 2.7.7(g) of the Loan Agreement and (iv) any prepayments of the
outstanding principal amount of the Indebtedness made pursuant to the Mortgage
in connection with a change in control of Servico, Inc. After the Lock-Out Date,
and provided that no Event of Default shall have occurred and be continuing
under the Loan Documents, Maker may, on any Due Date, upon not less than thirty
(30) days prior written notice to Payee, prepay the principal amount of the
Indebtedness, in whole or in part, by wire transfer to the Central Account as
provided in Paragraph 3 above of (A) the portion of the principal amount of the
Indebtedness to be prepaid, (B) interest accrued and unpaid on the outstanding
principal balance of the Indebtedness to and including the date of such
prepayment, (C) the Yield Maintenance Premium, if any, payable with respect to
such prepayment, and (D) any other amounts which have accrued and are owing
under the Loan Documents through the date of such prepayment. Each notice of a
voluntary prepayment of all or any portion of the principal amount of the
Indebtedness shall specify (I) the prepayment date, (II) the amount of such
prepayment and the amount of interest thereon and other amounts to be delivered
in connection therewith, (III) the amount of the Yield Maintenance Premium
believed by Maker to be payable in connection
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with such prepayment, and (IV) whether Maker intends to obtain a release of the
Mortgage encumbering any Individual Property in connection with such prepayment.
The amount of the Yield Maintenance Premium, interest and other amounts payable
in connection with any prepayment shall be subject to confirmation by Payee.
(b) The term "Yield Maintenance Premium" shall mean an amount to be
paid to Payee upon the prepayment of the Indebtedness in whole or in part at any
time before the first Due Date (the "10th Anniversary Due Date") following the
tenth (l0th) anniversary of the date hereof for any reason, whether said
prepayment is made voluntarily or involuntarily or before, upon or after the
acceleration of the Indebtedness by Payee following the occurrence of an Event
of Default (provided, however, that no Yield Maintenance Premium shall be
payable in connection with any prepayment made as a result of Lender's
application to the Indebtedness of Loss Proceeds pursuant to Section 2.7.8 of
the Loan Agreement or of amounts on deposit in the Capital Expenditure
Sub-Account pursuant to Section 2.7.7(f) (ii) of the Loan Agreement), which
amount shall be equal to the greater of: (i) (A) with respect to a prepayment
made prior to the first Due Date (the "5th Anniversary Due Date") following the
fifth (5th) anniversary of the date hereof, two percent (2%) or (B) with respect
to a prepayment made on or after the 5th Anniversary Due Date but before the
10th Anniversary Due Date, one percent (1%) of the portion of the principal
balance of the Loan being prepaid, or (ii) the product of (A) the excess, if
any, of (I) the present value (as determined by discounting at a rate equal to
(y) the Treasury Constant Maturity Yield Index published during the second full
week preceding the date on which such Yield Maintenance Premium is payable for
instruments having a maturity coterminous with the remaining term of this Note
plus (z) fifty (50) basis points) of the stream of payments of principal and
interest that would be made on the Indebtedness if such prepayment of principal
were not made, including any payment due on the Maturity Date, over (II) the
principal balance of the Indebtedness immediately prior to such prepayment,
multiplied by (B) a fraction of which the numerator is the amount of principal
so prepaid and the denominator is the principal balance immediately prior to
such prepayment. The determination of the Yield Maintenance Premium shall be
made by Payee and shall, absent manifest error, be final, conclusive and binding
upon all parties. The term "Treasury Constant Maturity Yield Index" shall mean
the average yield for "This Week" as reported by the Federal Reserve Board in
Federal Reserve Statistical Release H.15(519). If there is no Treasury Constant
Maturity Yield Index for instruments having a maturity coterminous with the
remaining term of this Note, then the index referred to in clause (ii) (A) (I)
above shall be equal to the weighted average yield to maturity of the Treasury
Constant Maturity Yield Indices with maturities next longer and shorter than the
remaining term of the Note, calculated by averaging (and rounding upward to the
nearest whole
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<PAGE>
multiple of 1/100 of 1% per annum, if the average is not such a multiple) the
yields of the relevant Treasury Constant Maturity Yield Indices (rounded, if
necessary, to the nearest 1/100 of 1%, with any figure of 1/200 of 1% or above
rounded upward).
6. Maker agrees that (a) if any amount payable under this Note, the
Loan Agreement or any other Loan Document is not paid within the grace period
provided with respect to such payment under Section 8.1 of the Loan Agreement
or, if no grace period is provided thereunder with respect to such payment, on
the date on which such payment is due, whether by acceleration or otherwise,
Maker shall pay interest at the Default Rate (as hereinafter defined) with
respect to such amount, upon demand from time to time, to the extent permitted
by applicable law, from the date such amount was due until such amount has been
paid by Maker and (b) upon the occurrence of any Event of Default, Payee shall
have the option, upon three (3) Business Days' notice given to Maker, of
increasing the rate of interest on the entire unpaid principal balance of this
Note (provided, however, that such rate of interest shall be increased
automatically and without notice for all such amounts as hereinafter provided,
upon the occurrence of any of the events set forth in Section 8.1(a)(vi), (vii)
and (viii) of the Loan Agreement), effective from the date of Maker's initial
default with respect to such Event of Default without allowance for any
applicable notice and/or grace period, to the Default Rate. The term "Default
Rate" shall mean a rate of interest equal to the greater of (a) fifteen percent
(15%) per annum or (b) 500 basis points above the "Prime Rate" published in The
Wall Street Journal as of the date notice is sent to Maker, which interest Maker
agrees to pay and which interest shall be secured by the Mortgage. For purposes
of the foregoing, if more than one Prime Rate is published in The Wall Street
Journal for the applicable day, the average of the Prime Rates shall be used.
The Prime Rate (or the average of Prime Rates) will be rounded up to the nearest
one-fourth of one percent. In the event that The Wall Street Journal should
cease or temporarily interrupt publication, then the Prime Rate shall mean the
daily average prime rate published in another business newspaper, or business
section of a newspaper, of national standing chosen by Payee. In the event that
a prime rate is no longer generally published or is limited, regulated or
administered by a governmental or quasi-governmental body, then Payee shall
select a comparable interest rate index which is readily available and
verifiable to Maker but is beyond Payee's control. This substitute index will
also be rounded up to the nearest one-fourth of one percent. Notwithstanding the
foregoing, if the unpaid principal sum or any other amount required to be paid
on the Maturity Date or upon acceleration of the Indebtedness is not paid when
due, then interest shall thereafter be computed and paid at the Default Rate
without notice to Maker. The preceding sentence shall not be construed as an
agreement or privilege to extend the date of the payment of the Indebtedness,
nor as a waiver of any other right or remedy
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<PAGE>
accruing to Payee by reason of the occurrence of an Event of Default.
7. This Note is given to evidence a loan (the "Loan") by Payee to
Maker pursuant to that certain Loan Agreement dated the date hereof (the "Loan
Agreement") between Payee and Maker and is secured by, among other things, that
certain Mortgage (the "Mortgage") dated the date hereof given by Maker to Payee
covering certain premises more particularly described in the Mortgage.
8. Notwithstanding any provision herein, the total liability for
payments in the nature of interest hereunder shall not exceed the applicable
limits imposed by any applicable State or Federal interest rate laws. If any
payments in the nature of interest, additional interest, and other charges made
hereunder are held to be in excess of the applicable limits imposed by any
applicable State or Federal laws, the amount held to be in excess of such limits
shall be considered payment of principal and the Indebtedness shall be reduced
by such amount of principal in the inverse order of maturity so that the total
liability for payments in the nature of interest, additional interest and other
charges shall not exceed the applicable limits imposed by any applicable State
or Federal interest rate laws. For the purposes of calculating the actual amount
of interest, additional interest and other amounts paid and/or payable
hereunder, in respect of laws pertaining to usury or such other laws, all sums
paid or agreed to be paid to the holder hereof for the use, forbearance or
detention of the Indebtedness outstanding from time to time shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread from
the date of disbursement of the proceeds of this Note until payment in full of
all of the Indebtedness, so that the actual rate of interest on account of the
Indebtedness is uniform through the term hereof. The terms and provisions of
this Paragraph 8 shall control and supersede every other provision of all
agreements between Maker or any endorser and Payee.
9. If any monthly principal and interest payment or any other
amounts payable under this Note, the Mortgage, the Loan Agreement or the other
Loan Documents is not paid in full within the grace period provided with respect
to such payment under Section 8.1 of the Loan Agreement or, if no grace period
is provided thereunder with respect to such payment, on the date on which such
payment is due, then a late charge equal to the lesser of five percent (5%) of
such unpaid amount, or the maximum amount permitted by applicable law (the "Late
Payment Charge") shall be deemed to be immediately assessed and shall be
immediately due and payable. Such Late Payment Charge shall automatically become
due to Payee without notice and shall be paid to defray the expenses incurred by
Payee in handling and processing such delinquent payment, and to compensate
Payee for the loss of the use of such delinquent payment, and such amount shall
be secured
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<PAGE>
by the Mortgage. Such charges shall be in addition to interest at the Default
Rate and all other rights and remedies available to Payee upon the occurrence of
an Event of Default or a default under this Note, the Mortgage, the Loan
Agreement or the other Loan Documents.
10. Notwithstanding any provision herein or in any of the Loan
Documents (other than the Environmental Indemnity (as defined in the Loan
Agreement)) to the contrary, in any action brought to enforce the obligations of
Maker under this Note, the Loan Agreement, the Mortgage or the other Loan
Documents (other than the Environmental Indemnity), the judgment or decree shall
be enforceable against Maker only to the extent of its interest in the Mortgaged
Property (as defined in the Mortgage) and any other collateral given to Payee to
secure the Indebtedness, and any such judgment shall not be subject to execution
on, nor be a lien on, other assets of Maker other than its interest in the
Mortgaged Property and any other collateral given to Payee to secure the
Indebtedness, except as otherwise expressly provided hereinafter. The provisions
of this Paragraph 10 shall not, however, limit the liability of Maker for loss,
costs or damage arising out of the following matters: (i) any failure to apply
the Revenue (as defined in the Loan Agreement) of the Mortgaged Property to pay
the operating expenses of the Mortgaged Property or to fulfill the then current
obligations of Maker under this Note, the Loan Agreement, the Mortgage or any
other Loan Document; (ii) any misapplication of Loss Proceeds (as defined in the
Loan Agreement), security deposits or trust funds in violation of applicable law
or the provisions of the Loan Agreement or any other Loan Document; (iii) any
collection of rent for more than one month in advance of the time when the same
becomes due; (iv) failure to pay all real estate taxes and assessments prior to
the date on which such payments become delinquent (subject to Lender's
obligation to make disbursements from the Basic Carrying Costs Sub-Account (as
defined in the Loan Agreement)); (v) any willful misrepresentation by Maker (or
any constituent partner or shareholder of Maker) in connection with Maker's
application, negotiation or documentation of the Loan; (vi) a fraudulent
conveyance or a fraudulent transfer of the Mortgaged Property or any part
thereof or any other properties or assets of Maker; or (vii) any material
misrepresentation or breach of warranty or covenant made by Maker under the
Environmental Indemnity. Nothing herein shall be deemed (w) to be a waiver of
any right which Payee may have under any bankruptcy law of the United States or
of any State in which any part of the Mortgaged Property is located to file a
claim for the full amount of the Loan or to require that all of the Mortgaged
Property and any other collateral given to secure the Loan shall continue to
secure all of the Indebtedness; (x) to impair the validity of the Indebtedness;
(y) to impair the right of Payee as mortgagee or secured party to foreclose any
lien or security interest or (z) impair the right of Payee to obtain the
Recourse Distributions received by Maker, including, without limitation,
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<PAGE>
the right to proceed against any constituent partner or shareholder of Maker to
the extent any such Recourse Distribution has actually theretofore been
distributed to such constituent partner or shareholder. The provisions of this
Paragraph 10 shall be inapplicable to Maker if any petition for bankruptcy,
reorganization or arrangement pursuant to federal or state law shall be filed
by, consented to or acquiesced in by or with respect to Maker or if Maker shall
institute any proceeding for the dissolution or liquidation of Maker or if Maker
shall make an assignment for the benefit of creditors, in which event Payee
shall have recourse against all of the assets of Maker and the Recourse
Distributions received by the constituent partners and shareholders of Maker.
For purposes of this Paragraph 10, the term "Recourse Distributions" shall mean
the Revenues arising from the Mortgaged Property to the extent received by Maker
(or actually received by any partner or shareholder of Maker if not actually
received by Maker) after the occurrence and written notice (including any
Consultant's Notice (as defined in the Loan Agreement)) of an Event of Default.
11. This Note may not be modified, amended, waived, extended,
changed, discharged or terminated orally or by any act or failure to act on the
part of Maker or Payee, 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. Any such written waiver or consent
shall be effective only in the specific instance, and for the purpose, for which
given. Except as otherwise expressly provided herein, no notice to or demand on
Makers shall entitle Makers to any other or future notice or demand in the same,
similar or other circumstances.
12. Maker and all other persons or parties who may become liable for
the payment of all or any part of the Indebtedness does hereby expressly and
unconditionally waive (a) presentment and demand for payment, notice of
dishonor, protest, notice of protest and non-payment and notice of any kind,
including, without limitation, any notice of intention to accelerate and notice
of acceleration, except as expressly provided herein, and (b) in connection with
any suit, action or proceeding brought by Payee on this Note, any and every
right it may have to (i) interpose any counterclaim therein (other than a
counterclaim which can only be asserted in the suit, action or proceeding
brought by Payee on this Note and cannot be maintained in a separate action) and
(ii) have the same consolidated with any other or separate suit, action or
proceeding. Except as provided in the Loan Agreement, no release of any security
for the Indebtedness or extension of time for payment of this Note or any
installment hereof, and no alteration, amendment or waiver of any provision of
this Note, the Mortgage, the Loan Agreement or any other Loan Document made by
agreement between Payee and any such other person or party shall release,
discharge, modify, change or affect the liability of Maker, and any other person
who
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may become liable for the payment of all or any part of the Indebtedness, under
any other provision of this Note or the Mortgage. MAKER WAIVES THE RIGHT TO
TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF ANY KIND ARISING OUT OF OR RELATING
TO THIS NOTE OR THE INTERPRETATION, BREACH OR ENFORCEMENT HEREOF.
13. In the event that it should become necessary to employ counsel
to collect the Indebtedness or to protect or foreclose the security hereof, or
pursue its rights under the Loan Documents, Maker agrees to pay reasonable
attorneys' fees for the services and disbursements of such counsel whether or
not suit be brought.
14. All of the terms, covenants and conditions contained in the Loan
Agreement, the Mortgage and all other Loan Documents are hereby made part of
this Note to the same extent and with the same force as if they were fully set
forth herein.
15. (a) This Note was negotiated in New York, and executed and
delivered by Maker and accepted by Payee in the State of New York, and the
proceeds of the Note delivered pursuant hereto were disbursed from New York,
which State the parties agree has a substantial relationship to the parties and
to the underlying transaction embodied hereby, and in all respects, including,
without limiting the generality of the foregoing, matters of construction,
validity and performance, this Note and the obligations arising hereunder shall
be governed by, and construed in accordance with, the laws of the State of New
York applicable to contracts made and performed in such State and any applicable
law of the United States of America, except that at all times the provisions for
the creation, perfection, and enforcement of the liens and security interests
created pursuant to the Loan Agreement, the Mortgage and the other Loan
Documents shall be governed by and construed according to the law of the State
in which the applicable Individual Property (as defined in the Loan Agreement)
is located, it being understood that, to the fullest extent permitted by law of
such State, the law of the State of New York shall govern the validity and the
enforceability of all Loan Documents, and the Indebtedness or obligations
arising hereunder or thereunder. To the fullest extent permitted by law, Maker
hereby unconditionally and irrevocably waives any claim to assert that the law
of any other jurisdiction governs this Note and the Loan Agreement and this Note
and the Loan Agreement shall be governed by and construed in accordance with the
laws of the State of New York pursuant to 5-1401 of the New York General
Obligations Law.
(b) Any suit, action or proceeding against Maker or Payee
arising out of or relating to this Note shall be instituted in any federal or
state court in New York, New York, pursuant to 5-1402 of the New York General
Obligations Law, or, at Payee's discretion, in any state where the Mortgaged
Property is located and Maker waives any objection which it may now or
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hereafter have to the laying of venue of any such suit, action or proceeding,
and Maker hereby irrevocably submits to the jurisdiction of any such court in
any suit, action or proceeding. Maker does hereby designate and appoint C.T.
Corporation System, 1633 Broadway, New York, New York 10019, as their authorized
agent to accept and acknowledge on their behalf service of any and all process
which may be served in any such suit, action or proceeding in any federal or
state court in New York, New York, and agrees that service of process upon said
agent at said address and written notice of said service of Maker mailed or
delivered to Maker in the manner provided in the Mortgage, shall be deemed in
every respect effective service of process upon Maker, in any such suit, action
or proceeding in the State of New York. Maker (i) shall give prompt notice to
the Payee of any changed address of their authorized agent hereunder, (ii) may
at any time and from time to time designate a substitute authorized agent with
an office in New York, New York (which office shall be designated as the address
for service of process), and (iii) shall promptly designate such a substitute if
its authorized agent ceases to have an office in New York, New York or is
dissolved without leaving a successor.
16. Wherever possible, each provision of this Note shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Note shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Note.
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IN WITNESS WHEREOF, Maker has duly executed this Note the day and
year first above written.
MCKNIGHT MOTEL, INC., a
Pennsylvania corporation
By: /s/ David Buddemeyer
-----------------------------
David Buddemeyer, President
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<PAGE>
Exhibit 10.13.1
LOAN AGREEMENT
IN THE AMOUNT OF $3,322,817
Dated December 8, 1998
BETWEEN
LODGIAN AMI, INC.
BORROWER
AND
BANC ONE CAPITAL FUNDING CORPORATION
LENDER
<PAGE>
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS 1
1.1 Defined Terms 1
ARTICLE 2 BORROWER'S REPRESENTATIONS, WARRANTIES AND COVENANTS 8
2.1 Representations, Warranties and Covenants 8
2.2 Representations Remade 14
ARTICLE 3 GENERAL CONDITIONS OF LOAN 15
3.1 Loan Documents 15
3.2 Additional Requirements 15
ARTICLE 4 FURTHER COVENANTS OF BORROWER 18
4.1 Covenants 18
ARTICLE 5 AGREEMENT TO LEND 27
5.1 Agreement to Lend 27
ARTICLE 6 INSURANCE AND CASUALTY 27
6.1 Insurance Provisions 27
ARTICLE 6A RENOVATION WORK 33
6A.1 Construction 33
6A.2 Completion 33
6A.3 Compliance with Laws 34
6A.4 Other Remedies of Lender 34
ARTICLE 7 BORROWER'S DEFAULT 34
7.1 Events of Default 34
7.2 Remedies 36
ARTICLE 8 MISCELLANEOUS 37
8.1 Indemnification 37
8.2 Defense of Claims 38
8.3 Performance by Lender 38
8.4 Transfer or Assignment 38
8.5 Lender's Actions 39
<PAGE>
8.6 Time is of the Essence 39
8.7 Waivers 39
8.8 Notices 39
8.9 Successors and Assigns 40
8.10 No Partnership 40
8.11 Brokerage Claims 40
8.12 Publicity 41
8.13 Documents Satisfactory to Lender 41
8.14 Additional Assurances 41
8.15 Entire Agreement 41
8.16 Severability 41
8.17 No Third Party Beneficiary 41
8.18 CHOICE OF LAW 41
8.19 Limitation on Liability 42
8.20 WRITTEN AGREEMENT 44
8.21 Cross-Collateralizations 44
8.22 Intentionally Omitted 45
8.23 Intentionally Omitted 45
8.24 WAIVER OF JURY TRIAL 45
8.25 Consent to Jurisdiction 45
Exhibit A Legal Description
Exhibit B-1 Additional Note
Exhibit B-2 Primary Note
Exhibit C Permitted Encumbrances
Exhibit D Insurance Requirements
Exhibit E Renovation Work
Schedule 1 Description of Ground Lease
<PAGE>
THIS LOAN AGREEMENT (this "Agreement") is dated effective as of December
8, 1998 between LODGIAN AMI, INC., a Maryland corporation, with an office and
principal place of business at Two Live Oak Center, 3445 Peachtree Road, NE,
Suite 700, Atlanta, Georgia 30326 ("Borrower") and BANC ONE CAPITAL FUNDING
CORPORATION, an Ohio corporation having a principal place of business at 150
East Gay Street, 24th Floor, Columbus, Ohio 43215 ("Lender").
R E C I T A L S
The Borrower desires to borrow from Lender up to $3,322,817 for the
financing and renovation of that certain piece or parcel of real property
located at 6323 Governor Ritchie Highway, Glen Burnie, Maryland 21061 (the
"Land"), known as the Holiday Inn - Glen Burnie North (the "Hotel") consisting
of a 128-room hotel and all other improvements located thereon and together with
all furniture, equipment and other personal property now or hereafter used in
the management and operation of the Hotel (the "Personal Property"). The Land
and the Improvements (as defined below) are hereinafter collectively referred to
as the "Premises." The Premises and the Personal Property are hereinafter
collectively referred to as the "Property." Lender has agreed to make the loan
to Borrower pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the covenants,
conditions and agreements contained herein, Borrower and Lender agree as
follows:
ARTICLE 1
DEFINITIONS
1.1 Defined Terms. In this Agreement, the following terms shall have the
following meanings:
"Accounting Period" -- shall mean each of the four (4) week periods
designated by Borrower as a fiscal period of the Hotel, except that an
Accounting Period may occasionally contain five (5) weeks when necessary to
conform Borrower's accounting system to the calendar.
"Additional Note" -- the Promissory Note from Borrower to Lender of even
date herewith in the stated principal amount of Three Hundred Ninety Eight
Thousand Seven Hundred Thirty Eight Dollars ($398,738). A copy of the Additional
Note is attached hereto as Exhibit B-1.
"Advance" -- an advance by Lender to Borrower in accordance with the Note
or this Agreement.
<PAGE>
"Affiliate" -- of any person or entity shall mean any other person or
entity directly or indirectly controlling, under common control with, or
controlled by such person or entity. For purposes of the definition of
Affiliate, "control" when used with respect to any person or entity means the
power to direct the management and policies of such person or entity, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
relative to the foregoing.
"Assignment of Accounts" -- the Assignment of Accounts and Security
Agreement of even date herewith from Borrower to Lender.
"Assignment of Permits and Contracts" -- the Assignment of Licenses,
Permits and Contracts, (specifically including the management agreement relating
to the Property) of even date herewith from Borrower to Lender.
"Assignment of Leases" -- the Assignment of Leases and Rents of even date
herewith from Borrower to Lender.
"Bankruptcy Code" -- the United States Bankruptcy Code and any similar
state or federal law now or hereafter in effect relating to bankruptcy,
reorganization or insolvency, or the arrangement or adjustment of debts.
"Business Day" -- any day other than a Saturday, Sunday or legal holiday
on which commercial banks are authorized or required to be closed in Columbus,
Ohio.
"Calculation Date" -- January 20, 2000, and the twentieth day of every
third Loan Month thereafter prior to the Maturity Date.
"Calculation Period" -- the period of twelve (12) full calendar months
immediately preceding the calendar month which includes the Calculation Date.
"Capital Reserve" -- the furniture, fixtures and equipment reserve to be
held by Lender pursuant to the terms and conditions of Section 4.1.T.
"Cash Management Agreement" -- that certain Cash Management Agreement
dated January 31, 1995 among Servico, Inc., Servico Management Corporation and
certain of their subsidiaries and affiliates, including Borrower, as amended
November 24, 1998.
"Closing" -- the closing of the Loan contemplated by this Agreement.
<PAGE>
"Cross-Guaranty" -- the Guaranty Agreement of even date herewith from the
Related Parties to Lender in connection with the Loan.
"Code" -- the Internal Revenue Code of 1986, as amended, and the
Regulations promulgated thereunder.
"Costs" -- costs and expenses incurred directly relating to the Renovation
Work.
"Deferred Origination Fee" -- a deferred origination fee in the amount of
$58,481.58 payable to Lender in accordance with Section 4.Y.
"DSCR" -- the debt service coverage ratio as determined by Lender on each
Calculation Date by calculating the ratio of (x) the Net Operating Income from
the Property for the immediately preceding thirteen (13) Accounting Periods, to
(y) the sum of the payments of interest which are due and payable under the
Primary Note for the immediately following twelve (12) Loan Months.
"Default Rate" -- see Section 1 of the Primary Note.
"Environmental Indemnity" -- the Hazardous Substances Indemnity Agreement
of even date herewith from Borrower and Guarantors to Lender.
"Environmental Site Assessment Report" -- the Phase I Environmental Site
Assessment Report dated November 20, 1997, and updated September 21, 1998,
prepared by Building Evaluation Services & Technology, Inc.
"Estoppel Agreement" -- an Estoppel Agreement with respect to the Ground
Lease executed by the Ground Lessor and in form and substance acceptable to the
Lender.
"Event of Default" -- the occurrence of any one or more of the events set
forth in Section 7.1.
"Financing Statements" -- the UCC-1 Financing Statements naming Borrower
as debtor and Lender as secured party and filed with the offices of Maryland
Department of Assessments and Taxation, and Anne Arundel County Clerk of Circuit
Court, Maryland in connection with the Mortgage, the Security Agreement, the
Assignment of Leases, the Assignment of Permits and Contracts and the Assignment
of Accounts.
"Franchise Agreement" -- that certain Franchise Agreement dated May 28,
1998, between Borrower and Franchisor relating to the Property.
<PAGE>
"Franchisor" -- Holiday Hospitality Franchising, Inc.
"Governmental Authority" -- the United States of America, the state in
which the Property is located, the state under the laws of which Borrower is
organized, any state in which (or to residents of which) Borrower offers to sell
or lease any portion of the Property or Improvements have been or will be made
by or on behalf of Borrower, any political subdivision of any of them, and any
court, agency, department, commission, board, bureau or instrumentality of any
of them.
"Gross Revenues" -- for each Accounting Period shall mean all rents,
revenues and other payments earned by Borrower in cash or current funds or other
consideration from any source whatsoever in connection with its ownership,
operation and management of the Property, including all amounts earned by
Borrower from all tenants or other occupants of the Property. Gross Revenues
shall be determined on an accrual basis and in accordance with generally
accepted accounting principles consistently applied.
"Ground Lease" -- that certain lease more particularly described in
Schedule 1.
"Ground Lessor" -- Prime Hospitality Corp., successor by merger to General
Motor Inns, Inc.
"Guarantor" -- Lodgian, Inc., a Delaware corporation.
"Impac Loan" -- collectively, all outstanding indebtedness owing to Banc
One Capital Partners III, Ltd. or its Affiliates by Impac Hotel Group, L.L.C.
"Impositions" -- all taxes of every kind and nature, sewer rents, charges
for water, for setting or repairing meters and for all other utilities serving
the Premises, and assessments, levies, inspection and license fees and all other
charges imposed upon or assessed against the Premises or any portion thereof
(including the income derived from the Premises), and any stamp or other taxes
which might be required to be paid with respect to any of the Loan Documents,
any of which might, if unpaid, result in a lien on the Premises or any portion
thereof, regardless of to whom assessed.
"Improvements" -- the improvements existing upon the Land.
"Incipient Default" -- the existence of any condition or state of facts
which with the giving of notice by Lender or the passage of time, or both, would
constitute an Event of Default.
<PAGE>
"Indebtedness" -- all indebtedness, obligations, liabilities, amounts,
sums and expenses payable by Borrower under the Note, this Agreement and every
other Loan Document, together with interest thereon in accordance with the terms
and conditions of the Loan Documents.
"Interest Rate" -- shall mean the Interest Rate as defined in the Primary
Note.
"Knowledge of Borrower" -- any matter actually known or, with the exercise
of reasonable care or diligence, should have been known, to the Borrower or the
Guarantor.
"Lease" -- any lease (including any equipment lease) or other rental or
occupancy agreement, demising a portion of the Property, other than those with
hotel guests and the Ground Lease.
"Lender's Consultant" -- the architect or engineer retained by Lender to
inspect the Improvements or the Renovation Work on behalf of Lender; in the
event all or a portion of such functions are performed by Lender, references in
this Agreement to Lender's Consultant shall be deemed to such extent to be
references to Lender.
"Limited Guaranty" -- the Limited Guaranty and Indemnity Agreement of even
date herewith from Guarantor to Lender in connection with the Loan.
"Liquor License Agreement" -- the Liquor License Agreement of even date
herewith between Lender and Borrower.
"Loan" -- the loan evidenced by the Note and this Agreement.
"Loan Amount" -- Three Million Three Hundred Twenty Two Thousand Eight
Hundred and Seventeen Dollars ($3,322,817).
"Loan Documents" -- this Agreement, the Note, the Mortgage, the Security
Agreement, the Assignment of Leases, the Stock Pledge, the Limited Guaranty, the
Environmental Indemnity, the Assignment of Permits and Contracts, the Assignment
of Accounts, the Cross Guaranty, the Liquor License Agreement, the Financing
Statements and such other documents and agreements as Lender may require in
connection with the Loan.
"Loan Month" -- See Section 1 of the Primary Note.
"Loan Party" -- Borrower or the Guarantor.
"Management Agreement" -- the Consulting Agreement effective August 21,
1998 and amended November 24, 1998, by and between Borrower and Manager.
<PAGE>
"Manager" -- Servico Management Corp., a Florida corporation.
"Maturity Date" -- See Section 1 of the Additional Note and the Primary
Note, as applicable.
"Mortgage" -- the Purchase Money Leasehold Deed of Trust and Security
Agreement of even date herewith from Borrower to Lender on the Premises,
securing the Note and Borrower's obligations under the other Loan Documents.
"Net Cash Flow" -- for each Accounting Period shall mean Net Operating
Income reduced by all monthly payments of interest under the Note and all other
payments under the Note and the other Loan Documents actually paid by Borrower
and received by Lender during such Accounting Period.
"Net Operating Income" -- for each Accounting Period shall be calculated
by Lender based upon Lender's review of Borrower's monthly financial statements
provided to Lender pursuant to Section 4.1.K, together with such other
information as Lender may reasonably request, and shall mean the difference
between:
(1) the Gross Revenues for said Accounting Period; and
(2) all the Operating Expenses for said Accounting Period.
"Note" -- collectively, the Primary Note and the Additional Note.
"Operating Expenses" -- the reasonably necessary and customary costs and
expenses incurred, whether or not actually paid, by Borrower in connection with
its ownership, operation and management of the Property, determined on an
accrual basis and in accordance with generally accepted accounting principles
consistently applied and specifically including in Operating Expenses all
required payments made by Borrower into the Capital Reserve pursuant to Section
4.l.T of this Agreement, any payments made pursuant to Section 4.l.B of the
Agreement and any other reserve established pursuant to this Agreement;
specifically excluding from Operating Expenses, however (w) all capital
expenditures incurred by Borrower (x) principal, interest and all other payments
made under the Loan Documents, and costs and expenses incurred by Borrower in
connection with the closing of the Loan, and (y) depreciation and all other
non-cash expenses of the Property. For purposes of calculating DSCR, Lender
shall include Operating Expenses which were budgeted for the applicable
Accounting Period(s) and were incurred but not paid. Operating Expenses which
are paid less frequently than each
<PAGE>
Accounting Period and which are allocable evenly to each Accounting Period may
be prorated to reflect such allocation.
"Organizational Documents" -- Borrower's articles of incorporation, bylaws
and other organizational documents and any amendments or modifications thereto.
"Other Borrower Loans" -- that (i) certain loan to Borrower of even date
herewith in the original aggregate principal amount of $15,740,722 and secured
by the Holiday Inn International Airport; (ii) certain loan to Borrower of even
date herewith in the original aggregate principal amount of $35,073,117 and
secured by the Holiday Inn - Inner Harbor; and (iii) certain loan to Borrower of
even date herewith in the original aggregate principal amount of $5,214,292 and
secured by the Holiday Inn - Lancaster.
"Other Borrower Loan Documents" -- all documents, instruments or
agreements securing or evidencing the Other Borrower Loans from the Lender to
Borrower.
"Other Hotel Properties" -- The Holiday Inn International Airport, the
Holiday Inn - Inner Harbor, and the Holiday Inn - Visitor Center/Lancaster East,
in Lancaster, Pennsylvania.
"Permitted Encumbrances" -- the liens, claims, assessments, encumbrances
and rights of others encumbering title to the Premises and the Personal Property
which are set forth on Exhibit C.
"Permitted Transfers" -- any transfer, sale or issuance of stock in
Lodgian, Inc., a Delaware corporation.
"Primary Note" -- the Promissory Note from Borrower to Lender of even date
herewith in the stated principal amount of Two Million Nine Hundred Twenty Four
Thousand and Seventy Nine Dollars ($2,924,079). A copy of the Primary Note is
attached hereto as Exhibit B-2.
"Principal Amortization Reserve" -- the reserve of funds which may be held
and disbursed by Lender pursuant to Section 4.l.R.
"Proceeds" -- all proceeds, judgments, claims, compensation, awards or
damages and settlements with respect to the Property as a result of or in lieu
of any condemnation or taking of the Property or any portion thereof by eminent
domain or any casualty loss or damage to any of the Property or any portion
thereof.
"Related Parties" -- Servico Concord, Inc., a California corporation,
Penmoco, Inc., a Michigan corporation, and Island Motel Enterprises, Inc., a
Georgia corporation.
<PAGE>
"Related Party Loan Documents" -- all documents, instruments or agreements
securing or evidencing the Related Party Loans from the Lender to the Related
Parties.
"Related Party Loans" -- that certain loan to Servico Concord, Inc. of
even date herewith in the original aggregate principal amount of $8,449,183 and
secured by the Sheraton Hotel Concord and that certain loan to Penmoco, Inc. and
Island Motel Enterprises, Inc. of even date herewith in the original aggregate
principal amount of $4,199,869 and secured by the Holiday Inn Jekyll Island.
"Related Party Properties" -- the Sheraton Hotel Concord in Concord,
California and the Holiday Inn Jekyll Island in Jekyll Island, Georgia.
"Renovation Budget" -- the budget for the Renovation Work to be prepared
by the Borrower and delivered to Lender for its review and approval prior to the
Closing.
"Renovation Completion" -- the completion of the Renovation Work in
accordance with the requirements of Article 6A.
"Renovation Completion Date" -- April 30, 1999, the date on which all of
the Renovation Work is required to be completed in accordance with Article 6A
hereof.
"Renovation Plans" -- the plans and specifications for the Renovation Work
to be prepared by the Borrower and delivered to the Lender for its review and
approval prior to the Closing.
"Renovation Work" -- the work and projects described in Exhibit E.
"Required Coverage Standard" -- shall mean 1.25:1 for all Calculation
Dates on or before January 20, 2000 and 1.40:1 for all Calculation Dates
subsequent to January 20, 2000.
"Reserved Funds" -- all Net Cash Flow held by Lender pursuant to the terms
and conditions of Section 4.1.R.
"Security Agreement" -- the Security Agreement of even date herewith from
Borrower, as debtor, to Lender, as secured party.
"Stock Pledge" -- the Pledge of Stock executed by Servico Operations
Corporation pursuant to which Servico Operations Corporation pledges the Stock
of the Borrower and each Related Party to secure the obligations of Borrower
with respect to the Loan, the Other Borrower
<PAGE>
Loans and the Related Party Loans.
"Title Company" -- Chicago Title Insurance Company.
"Title Policy" -- a mortgagee's policy of title insurance issued on the
1992 ALTA form by the Title Company in the aggregate face amount of $3,322,817,
guaranteeing as of the date of the Closing, the Mortgage to be a valid first and
prior lien on Borrower's leasehold interest in the Premises (including any
easements appurtenant thereto) subject only to the Permitted Encumbrances. The
Title Policy shall contain such endorsements as Lender may reasonably require.
In this Agreement, the word "including" shall mean "including without
limitation."
ARTICLE 2
BORROWER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
1.2 Representations, Warranties and Covenants. Borrower hereby represents,
covenants and warrants as follows:
1. Accuracy of Recitals. Each of the recitals to this Agreement is true
and correct.
2. Organization of Borrower. Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the State of Maryland.
Borrower is and at all times prior to the repayment of the Loan shall remain a
single purpose entity, so called, whose sole assets are the Property and the
Other Hotel Properties and whose sole business interest is the ownership of a
leasehold interest in, and operation of, the Property and the Other Hotel
Properties. The Borrower has provided Lender with a true and accurate copy of
the Organizational Documents. The Borrower is duly registered as a foreign
corporation and currently in good standing under the laws of the State of
Pennsylvania. The status of Borrower as a duly organized and validly existing
corporation under Maryland law will not be terminated. The Borrower shall not
amend the Organizational Documents in any material respect, without the Lender's
prior written consent.
3. Authority and Enforceability. Borrower has full right, power and
authority to execute, deliver and carry out the terms and provisions of this
Agreement and the other Loan Documents and every other document and instrument
to be executed and delivered by Borrower pursuant to this Agreement. The person
executing and delivering this Agreement and the Loan Documents on behalf of
Borrower is duly authorized to so act on behalf of Borrower. This Agreement,
each other Loan Document and every other document and instrument to be executed
and delivered by
<PAGE>
any Loan Party, when executed and delivered shall constitute the duly
authorized, valid and legally binding obligation of the party or parties
executing the same, enforceable in accordance with their respective terms,
subject only to applicable bankruptcy, reorganization, moratorium and similar
laws affecting the enforceability of creditors' rights generally.
4. Maintenance of Existence. Borrower shall do all things necessary to
preserve and keep in full force and effect its existence and all franchises,
licenses, authorizations, registrations, permits and approvals under the laws of
the state of its incorporation and the State of Maryland, and shall comply with
all regulations, rules, ordinances, statutes, orders and decrees of any
governmental authority or court applicable to Borrower and to the Property or
any portion thereof.
5. No Default. Neither Borrower nor any other Loan Party is in default
under any material contract, agreement or commitment to which it is a party or
by which it is bound. The execution and delivery of this Agreement and the other
Loan Documents and any other documents or instruments to be executed and
delivered by Borrower or any other Loan Party pursuant hereto or thereto, the
consummation of the transactions herein or therein contemplated and compliance
with the terms and provisions hereof or thereof, will not (i) violate any law or
any regulation, order, writ or injunction of any court or governmental or
administrative department, commission, board, bureau, agency or instrumentality,
or (ii) conflict or be inconsistent with, or result in a breach of any of the
provisions of, or constitute a default under, any instrument, document,
agreement, or contract of any kind to which Borrower or any other Loan Party is
a party or by which Borrower or any other Loan Party or any of their respective
property is bound.
6. No Litigation. There are no petitions, actions, suits, or proceedings
pending or, to the Knowledge of Borrower, threatened against or affecting
Borrower or any other Loan Party or the Property, by or before any court or any
governmental, administrative, regulatory, adjudicatory or arbitrational body or
agency (including any such petition, action, suit or proceeding to alter or
declare invalid any laws, regulations, permits, certificates, restrictions or
agreements relating to the Property) which, if determined against the Property,
the Borrower or the Loan Party, would reasonably likely have a material adverse
effect on the condition (financial or otherwise) or business of the Borrower or
the Loan Party or the condition or ownership of the Property.
7. Compliance with Laws. To the Knowledge of Borrower and except as may be
disclosed to the Lender in the Environmental Site Assessment Report, the Title
Policy, the survey or the zoning letter with respect to the Premises, the use of
the Property as a hotel with a restaurant and bar does not violate (i) any
applicable law, regulation, ordinance or order of any kind whatsoever (including
any such relating to zoning, building and environmental protection), (ii) any
permit or license issued with respect to the Property, or (iii) any condition,
easement, right-of-way, covenant or restriction affecting the Property.
<PAGE>
8. Permits. To the Knowledge of Borrower, all necessary material and
required franchises, licenses, authorizations, registrations, permits and
approvals for the use and occupancy of the Premises have been obtained from all
Governmental Authorities having jurisdiction over the Premises so as to permit
the operation of the Property as herein contemplated. Borrower has provided
Lender with true and correct copies of all of the certificates of occupancy (to
the extent available) and the hotel operating license and liquor license
respecting the Property.
9. Title. Effective as of the Closing, Borrower will have good and
indefeasible leasehold interest in the Premises and good and indefeasible title
to all existing Personal Property, free and clear of all liens, claims,
assessments, encumbrances and rights of others other than the Permitted
Encumbrances. Borrower shall preserve such title to the Premises and the
Personal Property and will forever warrant and defend the same and the validity
and priority of the Mortgage to Lender against all claims whatsoever other than
the Permitted Encumbrances.
10. Easements. In addition to the Permitted Encumbrances, all proposed
easements, permits, licenses, and other instruments which would or might affect
the title to the Property have been submitted to Lender for Lender's approval
together with a survey showing the exact or, if applicable, proposed location
thereof. Borrower shall not subject the Property or any part thereof to any
restrictive covenant (including any restriction or exclusive use provision in
any lease or other occupancy agreement) without the prior written consent of
Lender.
11. Zoning. To the Knowledge of Borrower, and subject to any disclosures
in the zoning letters delivered to the Lender, (i) the Premises are zoned for
hotel use, which zoning is final, unconditional and in full force and effect,
(ii) the Premises are in compliance with all applicable zoning and land use
laws, regulations and ordinances, (iii) in the event that all or any part of the
Improvements are destroyed or damaged, said Improvements can be legally
reconstructed to their condition prior to such damage or destruction, and
thereafter exist for the same use without violating any zoning or other
ordinances applicable thereto and without the necessity of obtaining any
variances or special permits, (iv) the Property contains enough permanent
parking spaces to satisfy all requirements imposed by applicable laws with
respect to parking, (v) no legal proceedings are pending or threatened with
respect to the zoning of the Premises, and (vi) neither the zoning nor any other
right to construct, use or operate the Premises is in any way dependent upon or
related to any real estate other than the Premises. No tract map, parcel map,
condominium plan, condominium declaration, or plat of subdivision will be
recorded by Borrower with respect to the Premises without Lender's prior written
consent.
12. Complete Disclosure. Neither this Agreement nor any document,
financial statement, credit information, certificate or statement provided to
Lender by Borrower contains any untrue statement of material fact or omits to
state a fact necessary to make any statements made herein
<PAGE>
not misleading.
13. Agreements Affecting the Property. Borrower has provided Lender with
true and complete copies of all material contracts and agreements affecting the
Property, including, (i) the Management Agreement, (ii) all lease financings or
purchase money financings for equipment incurred as of the date hereof, and
(iii) all other contracts or agreements relating to the maintenance,
development, operation or management of the Property which either involve space
in excess of 1,000 square feet or payment obligations on the part of Borrower in
excess of $25,000 in any twelve (12) month period.
14. Brokerage Commissions. No brokerage fees or commissions are payable in
connection with the Loan.
15. Condemnation. Borrower has not received any notice from any
Governmental Authority or quasi-governmental body or agency or from any person
or entity with respect to (and Borrower does not know of) any actual or
threatened taking of the Premises, or any portion thereof, for any public or
quasi-public purpose or of any moratorium which may affect the use or operation
of the Property.
16. Year 2000 Compliance. All devices, systems, machinery, information
technology, computer software and hardware, and other date sensitive technology
(jointly and severally the "Systems") necessary for Borrower to carry on its
business as presently conducted and as contemplated to be conducted in the
future are Year 2000 Compliant or will be Year 2000 Compliant within a period of
time calculated to result in no material disruption of any of Borrower's
business operations. For purposes of these provisions, "Year 2000 Compliant"
means that such Systems are designed to be used prior to, during and after the
Gregorian calendar year 2000 A.D. and will operate during each such time period
without error relating to date data, specifically including any error relating
to, or the product of, date data which represents or references different
centuries or more than one century. Borrower: (1) has taken and continues to
undertake a detailed inventory, review, and assessment of all areas within its
business and operations that could be adversely affected by the failure of
Borrower to be Year 2000 Compliant on a timely basis; (2) is developing a
detailed plan and time line for becoming Year 2000 Compliant on a timely basis;
and (3) to date, has implemented that plan in accordance with timetable in all
material respects. The fair market value of all real and personal property, if
any, pledged to Lender as collateral to secure the Loan Agreement is not and
shall not be less than currently anticipated or subject to substantial
deterioration in value because of the failure of such collateral to be Year 2000
Compliant.
17. Access. Except as otherwise shown on the survey delivered to the
Lender, the Property has access to and full utilization of completed public
roads necessary for access to and full utilization of the Property for its
intended purposes.
<PAGE>
18. Tax Division. A tax division has been effected with respect to the
Premises so that it is taxed for ad valorem taxation without regard to or
inclusion of any other property. No subdivision or other approval is necessary
with respect to the Premises in order for Borrower to mortgage, convey and
otherwise deal with the Premises as a separate lot or parcel.
19. Non-Foreign Status of Borrower. Borrower is not a non-resident alien
for purposes of U.S. income taxation and is not a foreign corporation,
partnership, foreign trust or foreign estate (as said terms are defined in the
Code).
20. ERISA. Neither Borrower nor any Loan Party is a party to any plan
defined and regulated under the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") or Section 4975 of the Code. None of the assets of Borrower
or any Loan Party are "plan assets"" as defined in 29 C.F.R. ss.2509.75-2 or
ss.2510.3-101.
21. Mortgage. The Mortgage constitutes a valid and enforceable first lien
on Borrower's leasehold interest in the Premises, subject only to the Permitted
Encumbrances.
22. Security Interest. The Security Agreement and the Mortgage, together
with the Financing Statements filed in connection therewith, create a valid,
enforceable and perfected first priority security interest in the Collateral (as
defined therein) including the Personal Property, subject to no other interests,
liens or encumbrances other than the Permitted Encumbrances.
23. Intentionally Omitted.
24. Intentionally Omitted.
25. Bankruptcy. No petition in bankruptcy, whether voluntary or
involuntary, or assignment for the benefit of creditors, or any other action
involving debtors' and creditors' rights has been filed or threatened under the
laws of the United States of America or any state thereof, against the Borrower
or any other Loan Party or against any other entity in which the Borrower or any
other Loan Party is a shareholder, principal, managing member or general
partner.
26. Leases. There are no Leases affecting the Property. Borrower has not
executed any prior assignment of the Leases, nor has it performed any act or
executed any other instrument which might prevent Lender from operating under
any of the terms and conditions of the Assignment of Leases or which would limit
Lender in such operation; and Borrower further covenants and warrants to Lender
that Borrower has not executed or granted any modification whatsoever of the
Leases, except as herein indicated, and that the Leases are in full force and
effect, and that, except as otherwise disclosed to Lender in writing, there are
no defaults now existing under the
<PAGE>
Leases with respect to which Borrower has notified the tenant under the Leases.
27. Physical Condition of Property. Subject to the Renovation Work, all of
the Improvements are in good condition and repair except as otherwise expressly
provided in the Property Condition Report dated as of January 16, 1998, prepared
by Building Evaluation Services & Technology, Inc. (the "Property Condition
Report"). Since the date of the Property Condition Report, there have been no
material adverse changes to the physical condition of the Improvements. Borrower
is aware of no latent or patent structural or other significant defect or
deficiency in such Improvements except as may be disclosed in the Property
Condition Report. Water supply, storm and sanitary sewers, and electrical, gas
and telephone facilities are available to the Property within the boundary lines
of the Property, are sufficient to meet the reasonable needs of the Property as
now used or contemplated to be used, no other utility facilities are necessary
to meet the reasonable needs of the Property as now used, and design and
as-built conditions of the Property are such that surface and storm water does
not accumulate on the Property and, except as otherwise disclosed in writing to
Lender, does not drain from the Property across land of adjacent property
owners. Except as otherwise disclosed in writing to Lender, no part of the
Property is within a flood plain and none of the Improvements create an
encroachment over, across or upon any of the Property's boundary lines, rights
of way or easements, and no building or other improvement on adjoining land
create such an encroachment.
28. Mechanics' Liens. There are no mechanics' or materialmen's liens,
alienable bills or other claims constituting or that may constitute a lien on
the Property or any part thereof, and no work for which any such lien could be
asserted has been performed within the last 90 days, except as otherwise
disclosed in writing to Lender.
29. Payment of Liens. Borrower shall pay when due all payments and charges
due under or in connection with any liens and encumbrances on and security
interests in the Property or any portion thereof, all rents and charges under
any ground leases and other leases forming a part of the Property, and all
claims and demands of mechanics, materialmen, laborers and others which, if
unpaid, might result in or permit the creation of a lien on the Property or any
portion thereof, and shall cause the prompt (but in no event later than 30 days
after imposition), full and unconditional discharge of all liens imposed on or
against the Property or any portion thereof. Borrower shall do or cause to be
done, at the sole cost of Borrower, everything necessary to fully preserve the
initial priority of the Mortgage. If Borrower fails to make any such payment or
if a lien (other than a Permitted Encumbrance) attaches to the Property or any
portion thereof, Lender may (but shall not be obligated to) make such payment or
discharge such lien and Borrower shall reimburse Lender on demand for all such
Advances.
30. Commercial Purpose. Borrower holds its interests in the Property for
commercial or
<PAGE>
investment purposes.
31. Franchise Agreement. Borrower has provided Lender with a true and
complete copy of the Franchise Agreement and any other agreements with the
Franchisor related to the Property. The Franchise Agreement is in full force and
effect and free from default on the part of the Borrower. The Franchise
Agreement embodies the entire transaction between Borrower and the Franchisor
with respect to the operation of the Property. Borrower shall not modify, amend
or waive any provisions of the Franchise Agreement without Lender's prior
written consent. Borrower will promptly furnish Lender with copies of all
notices furnished to Borrower under the Franchise Agreement.
32. Management Agreement. Borrower has provided Lender with a true and
complete copy of the Management Agreement. The Management Agreement is in full
force and effect and free from default on the part of the Borrower and Manager.
The Management Agreement embodies the entire transaction between Borrower and
Manager with respect to the operation of the Property. Borrower shall not
terminate, modify, amend or waive any provisions of the Management Agreement
without Lender's prior written consent. Borrower will promptly furnish Lender
with copies of all notices furnished to Borrower under the Management Agreement.
33. Ground Lease. Borrower has provided Lender with a true and complete
copy of the Ground Lease, and there are no documents, agreements, or other
modifications to the Ground Lease other than those listed under the definition
of Ground Lease contained in this Agreement. The Ground Lease is in full force
and effect and free from default on the part of Borrower and the Ground Lessor,
and, to the Knowledge of Borrower, no events have occurred which, with the
passage of time, would constitute a default under the Ground Lease. The Borrower
shall provide to the Lender copies of all notices (including, without
limitation, notices of defaults by Borrower) received with respect to the Ground
Lease within five (5) Business Days of Borrower's receipt of the same. The
Ground Lease embodies the entire transaction between Borrower and the Ground
Lessor with respect to the Property. The amount of rental payable under the
Ground Lease and the terms of the Ground Lease, are as set forth under the
definition of Ground Lease. Borrower shall not modify, amend or waive any
provisions of the Ground Lease without the Lender's prior written consent.
34. Liquor License. Borrower has provided Lender with a true and complete
copy of the liquor license with respect to the Property. Said liquor license is
in full force and effect and free of all liens and encumbrances. To the
Knowledge of Borrower, Borrower is in compliance with all terms and conditions
of said liquor license.
1.3 Representations RemadeRepresentations Remade. Borrower warrants and
covenants that the foregoing representations and warranties will be true and
shall be deemed remade as of the date of the
<PAGE>
Closing. All representations, warranties and covenants made herein or in any
other Loan Document or in any certificate or other document delivered to Lender
by or on behalf of Borrower pursuant to or in connection with this Agreement or
any other Loan Document shall be deemed to have been relied upon by Lender,
notwithstanding any investigation heretofore or hereafter made by or on behalf
of Lender. All such representations, warranties and covenants shall survive the
making of the Loan and any or all of the Advances contemplated hereby and shall
continue in full force and effect until such time as the Loan has been paid in
full.
ARTICLE 3
GENERAL CONDITIONS OF LOAN
1.4 Loan Documents. It shall be a condition precedent to Lender's
obligation to make the Loan that at or before the Closing, Borrower shall
execute and deliver or cause to be duly executed and delivered to Lender all of
the Loan Documents and that all of the Loan Documents shall be in form and
substance satisfactory to Lender.
1.5 Additional RequirementsAdditional Requirements. In addition to the
Loan Documents, prior to the Closing, Borrower shall deliver or cause to be
delivered to Lender each of the following, all of which shall be in form and
substance satisfactory to Lender:
1. Title Policy. The Title Policy or a pro-forma policy evidencing the
same and satisfactory to the Lender in its sole discretion.
2. Survey. A current, as built survey of the Premises, certified to Lender
and the Title Company by a surveyor reasonably satisfactory to Lender, which
survey shall contain the minimum detail for land surveys as most recently
adopted by ALTA/ASCM, and which survey shall comply with Lender's survey
requirements and shall contain Lender's standard form certification. Said survey
shall show no state of facts or conditions reasonably objectionable to Lender.
3. Opinion. An opinion of Borrower's and Guarantor's counsel dated the
date of the Closing and relating to such matters with respect to this Agreement
and the transaction contemplated hereby (including usury and choice of laws) as
Lender may reasonably require. By its execution and delivery of this Agreement,
Borrower authorizes and directs such counsel to render such opinion.
4. Insurance. The insurance policies described on Exhibit D or
certificates of insurance evidencing the same, including without limitation,
evidence of insurance protection against the risks of hurricanes, satisfactory
to Lender in its sole discretion.
<PAGE>
5. UCC Searches. Uniform Commercial Code searches made in the State of
Maryland showing no filings relating to (i) the Personal Property, (ii) any
fixtures on the Premises, or (iii) the Collateral (as such term is defined in
the Security Agreement), other than those made pursuant to this Agreement or
otherwise approved by Lender in its sole discretion.
6. Organizational Documents. A certified copy of the Organizational
Documents, together with such other documents as Lender may require, including
evidence of the Borrower's good standing in the States of Maryland and
Pennsylvania, and resolutions authorizing the Loan transaction contemplated by
this Agreement.
7. Ground Lease. A copy of the Ground Lease certified by the Borrower to
be true, complete and accurate.
8. Appraisal and Engineer's Report. An independent appraisal of the
Property from a state certified appraiser engaged by Lender which indicates the
fair market value of the Property and is satisfactory to Lender in all respects,
and an engineer's report satisfactory to the Lender.
9. Environmental Assessment. The Environmental Site Assessment Report, a
letter from the consultant preparing the environmental site assessment stating
that Lender is authorized to rely on the information contained therein, and
evidence satisfactory to Lender of said environmental consultant's errors and
omissions insurance coverage.
10. Subordination of Management Agreement. A copy of the Management
Agreement (certified by the Borrower to be true, complete and accurate),
together with a subordination of the Management Agreement whereby the Management
Agreement is subordinated to the Mortgage and Lender is given the right to
terminate the Management Agreement or any replacement thereof upon the
occurrence of an Event of Default, without payment of any termination or other
fee or other liability on the part of Lender.
11. Leases/Subordination Agreements and Estoppels. Copies of all Leases,
which shall be satisfactory to Lender and certified by Borrower to be true,
complete and accurate, together with (i) an estoppel certificate executed by the
tenant under each Lease in form and substance reasonably satisfactory to Lender,
and (ii) a subordination, nondisturbance and attornment agreement executed by
each such tenant in form and substance reasonably satisfactory to Lender.
12. Licenses, Permits and Approvals. A final, unconditional certificate of
occupancy (if available) issued with respect to the Premises, together with the
hotel operating license and liquor license respecting the Property.
13. Agreements. Copies of all agreements described in Section 2.1M
certified by the
<PAGE>
Borrower to be true, complete and accurate.
14. Zoning. Evidence reasonably satisfactory to Lender as to the zoning
compliance of the Premises.
15. Lender's Inspection. A satisfactory inspection report of the Premises
prepared by an architect/engineer or other consultant reasonably satisfactory to
Lender.
16. Equity Contribution. Evidence satisfactory to Lender that the Borrower
or its Affiliate originally acquired the Property for not less than $2,970,000.
17. Financial Statements. Current financial statements satisfactory to the
Lender for the Borrower, and the Guarantor.
18. Renovation Budget and Plans. A copy of the Renovation Budget and the
Renovation Plans satisfactory to the Lender.
19. Franchise Agreement. A copy of the Franchise Agreement certified by
the Borrower to be true, complete and accurate.
20. Compliance with Laws. Evidence that the Property is in compliance with
all applicable laws, zoning and land use requirements, regulations and
ordinances, including all applicable environmental protection laws and the
Americans with Disabilities Act of 1990 (except as stated in the Environmental
Site Assessment Report).
21. Flood Hazards. Evidence as to whether or not the Property is or is to
be located in an area having special flood hazards as such term is used in the
federal Flood Disaster Protection Act of 1973. If any part of the Property is or
is to be located in an area having "special flood hazards," a flood insurance
policy or certificate thereof naming the Lender as mortgagee must be submitted
to the Lender.
22. Fees and Expenses. Payment by Borrower of all applicable mortgage and
recording taxes and all fees and charges in connection with the Loan, including
all fees and charges of Lender's legal counsel.
23. Ground Lease Estoppel. The originally executed Estoppel Agreement.
24. Application Fee. The application fee payable to Banc One Capital
Markets, Inc. in the amount of $25,000, which was earned upon Borrower's
acceptance of the term sheet, and which upon closing, shall be applied against
the fees and expenses referred to in Section 3.2(V), above.
<PAGE>
25. Intentionally Omitted.
26. Payment of Impac Loan. Evidence of payment in full of the Impac Loan
and all fees associated therewith in accordance with the requirements of the
intercreditor agreement(s) executed in connection therewith.
27. Other Items. Such other documents and instruments as Lender may
reasonably require.
<PAGE>
ARTICLE 4
FURTHER COVENANTS OF BORROWER
1.6 Covenants. Borrower hereby further covenants and agrees with Lender as
follows:
1. Taxes and Impositions.
(1) Borrower shall pay and discharge all Impositions prior to
delinquency. Borrower shall provide to Lender validated receipts or other
evidence satisfactory to Lender showing the payment of all real estate and
personal property taxes within 15 days after the same would otherwise have
become delinquent. Borrower's obligation to pay Impositions pursuant to this
Agreement shall include, to the extent permitted by applicable law, taxes
resulting from future changes in law which impose upon Lender an obligation to
pay any property taxes or other Impositions. Should Borrower default in the
payment of any Impositions, Lender may (but shall not be obligated to) pay such
Impositions or any portion thereof and Borrower shall reimburse Lender on demand
for all such Advances.
(2) Borrower shall not be required to pay, discharge or remove any
Imposition so long as Borrower contests in good faith such Imposition or the
validity, applicability or amount thereof by an appropriate legal proceeding
which operates to prevent the collection of such amounts and the sale of the
Property or any portion thereof; provided, however, that prior to the date on
which such Imposition would otherwise have become delinquent Borrower shall have
(i) given Lender prior written notice of such contest, and (ii) provided
reasonable evidence to Lender that Borrower has available funds to pay the
balance of such Imposition then remaining unpaid, and all interest, penalties,
costs and charges accrued or accumulated thereon. Any such contest shall be
prosecuted with due diligence, and Borrower shall promptly pay the amount of
such Imposition as finally determined, together with all interest and penalties
payable in connection therewith. Notwithstanding any provision of this Section
4.1.A to the contrary, Borrower shall pay any Imposition which it might
otherwise be entitled to contest if, in the reasonable discretion of Lender, the
Property is in jeopardy or in danger of being forfeited or
<PAGE>
foreclosed. If Borrower refuses to pay any such Imposition, Lender may (but
shall not be obligated to) make such payment and Borrower shall reimburse Lender
on demand for all such Advances.
2. Deposits.
(1) Borrower shall provide Lender with evidence of the timely
payment of all insurance premiums. For so long as Borrower's insurance coverages
are part of blanket coverages with other properties, Borrower shall not be
required to deposit in escrow any insurance premiums. Initially, so long as (i)
Borrower provides Lender with evidence of the timely payment of all real estate
and personal property taxes and (ii) Borrower is not required to make payments
of Reserve Funds pursuant to Section 4.1.R as of the most recent Calculation
Date, Borrower shall not be required to deposit in escrow any funds for real
estate and personal property taxes as hereinafter provided; provided, however,
Lender, in its sole discretion, may at any time require Borrower to do the
following:
(1) Deposit with Lender (or such agent of Lender as Lender may
designate in writing to Borrower from time to time), monthly,
on the due date of each monthly installment under the Note,
1/12th of the annual charges (as estimated by Lender) for all
real estate and personal property taxes; and
(2) Deposit with Lender, simultaneously with such above-referenced
monthly deposits, a sum of money which together with such
monthly deposits will be sufficient to make the payment of
each such charge at least 30 days prior to the date initially
due. Should such charges not be ascertainable at the time any
deposit is required to be made, the deposit shall be made on
the basis of the charges for the prior year or payment period,
as reasonably estimated by Lender. When the charges are fixed
for the then current year or period, Borrower shall deposit
any deficiency on demand.
(2) Any interest earned on the sums held by Lender pursuant to this
Section 4.1.B shall be added to said sums and shall be taxable to Borrower, and
shall, so long as no Event of Default shall have occurred, be disbursed by
Lender for the payment of the applicable real estate and personal property
taxes. Should an Event of Default occur, the funds so deposited may be applied
in payment of the charges for which such funds shall have been deposited or to
the payment of the Indebtedness or any other charges affecting the Property, as
Lender in its sole and absolute discretion may determine, but no such
application shall be deemed to have been made by operation of law or otherwise
until actually made by Lender as herein provided. Borrower shall provide Lender
with bills and all other documents necessary for the payment of the foregoing
charges at least 30 days prior to the date on which each payment thereof shall
first
<PAGE>
become due or promptly upon receipt of such bill.
3. Mortgage Taxes. Borrower shall pay any and all taxes, charges, filing,
registration and recording fees, excises and levies imposed upon Lender by
reason of their respective interests in, or measured by amounts payable under,
the Note, this Agreement, the Mortgage or any other Loan Document (other than
income, franchise and doing business taxes), and shall pay all stamp taxes and
other taxes required to be paid on the Note, this Agreement, the Mortgage or the
other Loan Documents. If Borrower fails to make such payment within five days
after notice thereof from Lender, Lender may (but shall not be obligated to) pay
the amount due, and Borrower shall reimburse Lender on demand for all such
Advances. If applicable law prohibits Borrower from paying such taxes, charges,
filing, registration and recording fees, excises, levies, stamp taxes or other
taxes, then Lender may declare the Indebtedness then unpaid to be due and
payable upon one hundred twenty (120) days prior written notice. In such event,
no prepayment fee shall be charged.
4. No Liens. Except for Permitted Encumbrances, and except as provided in
Section 4.1.F and Section 4.1.O, the Property shall be kept free and clear of
all liens, security interests and encumbrances of every nature or description
(whether for taxes or assessments, or charges for labor, materials, supplies or
services or any other thing). Other than the Permitted Encumbrances, Borrower
will not cause or permit any instrument or document affecting the Property to be
recorded without Lender's prior written consent thereto.
5. Condition of Premises. Consistent with current practice and industry
standards, Borrower shall keep and maintain the Property in good order,
condition and repair and shall make, as and when the same shall become
necessary, all structural and non-structural, exterior and interior, ordinary
and extraordinary, foreseen and unforeseen, repairs and maintenance necessary or
appropriate. Borrower shall suffer or commit no waste upon the Premises or any
portion thereof. Borrower shall, at its expense, promptly repair, restore,
replace or rebuild any part of the Property which may be damaged or destroyed by
any casualty (provided that, to the extent Borrower is entitled to receive
insurance Proceeds in accordance with the provisions of Article 6, such proceeds
are made available to Borrower) or as the result of any taking under the power
of eminent domain to the extent permitted given the size, scope and extent of
the taking. Borrower shall cause all repairs, maintenance, rebuilding,
replacement or restoration to be (in the reasonable opinion of Lender) of
substantially equivalent quality and to be performed in compliance with all
applicable requirements of any Governmental Authorities having jurisdiction,
including without limitation all federal, state, and local environmental laws.
Borrower shall not cause, suffer or permit the construction of any material
buildings, structures, or improvements on the Premises without the prior written
consent of Lender to the proposed construction as well as the plans and
specifications relating thereto. None of the buildings, structures, or
improvements erected or located on the Premises shall be removed, demolished or
<PAGE>
substantially or structurally altered in any material respect without the prior
written consent of Lender. Lender's consents hereunder shall not be unreasonably
withheld or delayed.
6. Personal Property. Effective as of the Closing, all of the Personal
Property will be owned by Borrower in Borrower's name except for those items
identified on Schedule 4.1.F attached hereto, which are leased by Borrower.
7. Compliance. Borrower shall comply with all (i) building, zoning, fire,
health, environmental, disability and use laws, and all other laws, codes,
ordinances, rules and regulations applicable to the Premises, the Improvements
or any part thereof or the construction of any improvements thereon, or the use
or enjoyment thereof, (ii) covenants and restrictions of record, and (iii)
easements which are in any way applicable to the Premises, the Improvements or
any part thereof or to the construction of any improvements thereon and the use
or enjoyment thereof. Without limiting the generality of the foregoing, any
asbestos or lead-based paint (or any other hazardous substance) located at the
Premises shall be handled and managed in compliance with all applicable federal,
state, and local laws and requirements.
8. Performance of Agreements. Borrower shall duly and punctually perform,
observe and comply with all of the terms, provisions, conditions, covenants and
agreements on its part to be performed, observed and complied with hereunder and
under (i) the other Loan Documents, (ii) the Permitted Encumbrances, (iii) the
Management Agreement, (iv) the Franchise Agreement, (v) the Ground Lease and
(vi) all agreements entered into or assumed by Borrower in connection with the
Property, and Borrower will not suffer or permit any default or Event of Default
(giving effect to any applicable notice requirements and cure periods) to exist
under any of the foregoing.
9. Lender's Expenses. Borrower shall, or shall cause the Guarantor to,
pay, on demand by Lender, all reasonable expenses, charges, costs and fees in
connection with the negotiation and documentation of the Loan, including all
registration and recording fees, insurance consultant fees, if any,
environmental consultant fees, costs of appraisals, costs or fees incurred in
connection with market studies, costs of engineering reports, cost of credit
reports, cost of audits, fees and disbursements of all counsel (both local and
special) for Lender, escrow fees, cost of surveys, fees and expenses of Lender's
Consultant or others employed by Lender to inspect the Premises from time to
time, and travel expenses incurred by Lender and Lender's agents and employees
in connection with the Loan. Notwithstanding the foregoing, so long as no Event
of Default exists, Borrower shall have no obligation to pay or reimburse Lender
for travel expenses in excess of $1,500 in any twelve month period. At Closing,
Lender may pay directly from the proceeds of the Loan each of the foregoing
expenses.
10. Intentionally Omitted.
<PAGE>
11. Financial Statements.
(1) Borrower shall provide to Lender (i) annual financial statements
of Borrower and Guarantor and all such financial statements shall be prepared in
accordance with generally accepted accounting principles, consistently applied
and shall be prepared by a certified public accountant reasonably satisfactory
to Lender, (ii) Loan Month (or, if applicable, Accounting Period) and quarterly
cash flow and operating statements for the Property prepared by and certified by
Borrower (which quarterly statements shall include the calculation of DSCR),
(iii) such other financial information as Lender may from time to time
reasonably request, and (iv) copies of all Federal income tax returns for
Borrower and Guarantor certified by Borrower and Guarantor, respectively, to be
true and correct. All such financial statements, cash flow statements and
operating statements shall be delivered to Lender as soon as possible but not
later than thirty (30) days after the close of each Loan Month (or, if
applicable, Accounting Period), and in the case of annual financial statements,
not later than one hundred twenty (120) days after the close of each fiscal
year. Said copies of Borrower's and Guarantor's federal income tax returns shall
be provided to Lender within thirty (30) days following their filing with the
Internal Revenue Service.
(2) Lender may, at Borrower's sole cost and expense and following
written notice to Borrower, require that any or all of the foregoing annual
financial statements be prepared on an "audited" basis, so called.
12. Management and Cash Management. Borrower shall provide competent and
responsible management for the Property by a management company, and pursuant to
a written management agreement, reasonably satisfactory to Lender. The existing
Manager and Management Agreement are satisfactory to Lender. Borrower shall not
enter into any other management agreement or arrangement with any other party
with respect to the management of the Property without Lender's prior written
consent. Borrower shall not modify, amend or terminate the Management Agreement
without Lender's prior written consent. Borrower shall provide Lender with
written notice of the occurrence of any event of default or condition which with
the giving of notice or passage of time, or both, would constitute an event of
default under the Management Agreement or any subsequent management agreement
which Lender may have approved. The Management Fee(s) shall not exceed a base
fee(s) in an amount equal to 5% of Gross Revenues. The payment of any Management
Fees over and above an amount equal to 3% of Gross Revenues shall be subordinate
to all payments to be made to Lender as provided in the Management,
Subordination and Estoppel Agreement among Lender, Borrower and Manager of even
date herewith. Borrower shall not modify, amend or terminate the Cash Management
Agreement in any material respect without Lender's prior written consent.
13. Due on Sale or Encumbrance. Except as otherwise expressly provided in
Section 8.4,
<PAGE>
Borrower shall not and shall not permit others to convey, assign, sell,
mortgage, encumber, pledge, hypothecate, grant a security interest in, grant
options with respect to, or otherwise dispose of (directly or indirectly,
voluntarily or involuntarily, by operation of law or otherwise, and whether or
not for consideration or of record) all or any portion of any legal or
beneficial interest in all or any portion of the Property or the Leases. Any
such transfer or encumbrance, as aforesaid, shall be deemed to be an Event of
Default hereunder, and shall entitle Lender to declare the Loan immediately due
and payable.
14. Estoppel Certificates. Within ten (10) Business Days following a
request by Lender, Borrower shall provide to Lender a duly acknowledged written
statement confirming the amount of the outstanding Indebtedness, the terms of
payment and maturity date of the Note, the date to which interest has been paid,
and whether any offsets or defenses exist against the Indebtedness. If any such
offsets or defenses are alleged to exist, the nature thereof shall be set forth
in detail. The Lender agrees to provide the Borrower, within ten (10) Business
Days following a request by Borrower, a payoff letter affirming the amount of
the Loan then outstanding.
15. Space Leases, Service Agreements and Equipment Leases. Borrower shall
not, without the prior written consent of Lender, enter into or modify, amend or
terminate (except upon a default by tenant) any lease of space (including
restaurants) with respect to the Premises or any portion thereof in excess of
1,000 square feet. Any lease of space entered into by Borrower with respect to
the Premises or any portion thereof shall (a) be subordinate to the lien of the
Mortgage, (b) be pursuant to an arms' length transaction and (c) not contain any
term which would materially affect Lender's rights under the Loan Documents.
Borrower shall not, without the prior written consent of Lender, enter into any
operating agreements or service contracts with respect to the Property ("Service
Agreements") other than (i) agreements or contracts to provide customary guest
services such as laundry, gift shop, or television cable services, or (ii) other
agreements the aggregate annual payments for which do not exceed $50,000. All
Service Agreements shall (a) be subordinate to the lien of the Mortgage and (b)
be pursuant to an arms' length transaction. Borrower shall not, without the
prior written consent of Lender, enter into any equipment lease which would
cause the aggregate annual payments by Borrower for all equipment leases to
exceed $25,000. All equipment leases shall be pursuant to an arms' length
transaction.
Within ten (10) days following the execution by Borrower of any new Lease,
Borrower shall deliver to Lender a Subordination, Non-Disturbance and Attornment
Agreement executed by the tenant under such Lease which is in form satisfactory
to Lender unless the Lease contains subordination, non-disturbance and
attornment provisions otherwise satisfactory to the Lender.
Borrower shall perform and comply with all of the landlord's obligations
under each Lease and shall not suffer or permit any breach or default on the
part of the landlord to occur
<PAGE>
thereunder.
16. Condemnation. Borrower shall not enter into any agreement for the
taking of the Premises or any part thereof with anyone authorized to acquire the
same in or by condemnation proceedings, or by the exercise of any power of
eminent domain, unless and until Lender shall have consented thereto in writing.
17. Litigation. Borrower shall promptly provide Lender with written notice
of any material litigation in which Borrower, any other Loan Party or the
Property is named as defendant which is not fully covered by insurance for which
the insurer has assumed the defense and acknowledged coverage, and Borrower
shall provide Lender with copies of all pleadings or orders filed or entered
therein or with respect thereto.
18. Principal Amortization Reserve.
(1) The DSCR shall be calculated by Lender on each Calculation Date
for the most recent Calculation Period. At all times prior to the Maturity Date,
if the DSCR on the most recent Calculation Date is less than the Required
Coverage Standard, Borrower shall, in addition to the regularly scheduled
monthly payments of interest due under the Note, deposit with Lender on or
before the twenty-fifth (25th) day of each month 100% of the Net Cash Flow for
the immediately preceding Accounting Period.
(2) Borrower shall make and Lender shall hold all such payments of
Reserved Funds in accordance with the following terms and conditions:
(1) All Reserved Funds held by Lender upon the Maturity Date or
upon the occurrence of an Event of Default may be applied by
Lender to the repayment of the Loan in accordance with the
terms and conditions of the Note.
(2) Provided that no Event of Default or Incipient Default exists,
if, on the next Calculation Date, the DSCR is greater than or
equal to the Required Coverage Standard, Lender shall return
to Borrower the Reserved Funds then held by Lender, and
Borrower's obligation to deposit the Reserved Funds with
Lender shall be suspended until any subsequent Calculation
Date when the DSCR is less than the Required Coverage
Standard.
(3) If Borrower is required to make payments of Reserved Funds
pursuant to this Section 4.1.R for four (4) consecutive
Calculation Dates, so long as no Event of Default or Incipient
Default exists, Lender may, on such fourth
<PAGE>
consecutive Calculation Date, apply all Reserved Funds to the
repayment of the Loan. No such repayment shall be subject to
any prepayment fee or premium. Thereafter, all Reserved Funds
may be applied by Lender, upon receipt, to the repayment of
the Loan, as aforesaid; provided, however, if on any
subsequent Calculation Date the DSCR shall be equal to or
greater than the Required Coverage Standard, Borrower's
obligation to deposit the Reserved Funds with Lender shall be
suspended until any Calculation Date thereafter when the DSCR
is less than the Required Coverage Standard.
(4) All interest accrued on the Reserved Funds shall be added to
the Reserved Funds and shall be disbursed in accordance with
the foregoing terms and conditions. All interest earned on the
Reserved Funds shall be taxable to Borrower.
19. Application of Gross Revenues; Distributions. Borrower shall promptly
apply all Gross Revenues to the payment of all current and past due Operating
Expenses and to the repayment of all sums currently due or past due under this
Loan, including all payments of Capital Reserve pursuant to Section 4.1T and
real estate tax escrow payments pursuant to Section 4.1.B of this Agreement, if
any. After the Renovation Completion and so long as no Event of Default or
Incipient Default exists, and subject to the provisions of Section 4.1.R,
Borrower may make dividends to its shareholders of Net Cash Flow after the
payment of all current and past due Operating Expenses, debt service on the
Loan, Capital Reserve payments, real estate tax escrow payments pursuant to
Section 4.1.B, if any, and all sums due and payable to Lender (for its own
account or to be held by it) at or prior to the time of said dividend.
20. Capital Reserve. Beginning on January 25, 1999, and continuing on the
twenty-fifth (25th) day of each Loan Month thereafter, Borrower shall deposit
with Lender on a monthly basis a reserve of not less than four percent (4%) of
Gross Revenues for the preceding Accounting Period. So long as no Event of
Default or Incipient Default (other than an Incipient Default which is
susceptible to cure and as to which Borrower is diligently pursuing such cure)
shall exist, Lender shall make said funds available to Borrower on the following
terms and conditions: (i) all Capital Reserve funds released by Lender to
Borrower shall be used to pay Borrower for the reasonable expenses actually
incurred by Borrower for the acquisition, repair, or replacement of furniture,
fixtures or equipment necessary for the management and operation of the Property
(based on invoices furnished by Borrower) under an annual budget approved by
Lender for said acquisitions, repairs and replacements; (ii) all requests by
Borrower for a disbursement of Capital Reserve funds shall be in writing and
shall not be made more frequently than once per Loan Month; (iii) each such
request for a disbursement shall be in an amount of not less than $10,000.00;
and (iv) Borrower shall provide Lender with invoices, contracts providing
<PAGE>
for progress payments or paid receipts covering the expenses for which Borrower
seeks payment or reimbursement from the Capital Reserve funds. Prior to the
disbursement of any Capital Reserve funds, Borrower shall also provide Lender
with (i) evidence satisfactory to Lender that Borrower has accepted possession
of said items and commenced using the same in the management and operation of
the Property, or the applicable contract requires an advance payment prior to
manufacture or delivery and (ii) paid receipts covering the expenses for which
Capital Reserve funds were previously disbursed.
21. Funds Deposited with Lender. All funds of Borrower which are deposited
with Lender pursuant to this Agreement or any other Loan Document shall be held
in a separate account and invested in an interest-bearing account (at not less
than money market rates). Any interest which accrues on said funds shall, at
Lender's sole option, be paid to Borrower or be held as part of the applicable
funds being held by Lender for the same purpose for which the principal sum of
said funds is being held by Lender. The Capital Reserve fund shall be reviewed
by the Lender annually on the anniversary of the Loan to determine if sufficient
sums are being funded for the expenses provided for herein. If the Lender
determines, in its reasonable discretion, that the Capital Reserve fund is
insufficient, Borrower shall pay all funding shortages within thirty (30) days
after notice by Lender. To secure all of Borrower's obligations to Lender under
the Loan Documents, Borrower hereby grants to Lender a security interest in all
funds now or hereafter deposited with Lender or otherwise in Lender's
possession, custody or control pursuant to the provisions of this Agreement or
any other Loan Document, including all funds deposited pursuant to Sections
4.1.B, 4.1.R, and 4.1.T of this Agreement. So long as any Event of Default
exists, Lender shall have such rights with respect to such funds and any
interest accrued thereon as are provided by applicable law and may apply such
funds towards the satisfaction of Borrower's obligations hereunder or under any
other Loan Documents. Without limiting any of the foregoing provisions, at the
request of Lender, Borrower shall execute and deliver from time to time such
documents as may be necessary or appropriate, in Lender's sole judgment, to
assure Lender that it has a first priority perfected security interest in and
lien on all funds deposited pursuant to Sections 4.1.B, 4.1.R, and 4.1.T of this
Agreement, including the creation of a deposit account in the name of Borrower
in a banking institution approved by Lender either within or outside of the
State of Ohio, as directed by Lender, into which any or all of such funds will
be deposited and maintained, subject to the rights of Lender with respect to
such funds as provided herein. Lender reserves the right to inspect such repairs
or replacements prior to the release of funds at Borrower's expense provided
that such inspection expenses shall not exceed $1,500 in any twelve (12) month
period.
22. Audit and Inspection by Lender. Lender shall have the right, upon
reasonable prior notice, and Borrower shall permit and shall cooperate with
Lender in arranging for, at any reasonable time and from time to time, Lender
and its representatives (i) to inspect the Property, and (ii) to review and
audit all books, records and financial statements of Borrower (including all
<PAGE>
supporting data and any other records from which the Net Cash Flow may be
determined); and Borrower shall make all such books of account and records
available for such examination at the office where the same are regularly
maintained. Lender shall have the right to copy, duplicate and make abstracts
from such books and records as Lender may require. If any audit by Lender
discloses that payments of Net Cash Flow which should have been made by Borrower
exceeds the sums which were actually made by Borrower, then Borrower shall,
within ten (10) days following written notice from Lender, pay to Lender the
difference between said amounts, together with interest on such amount at the
Default Rate from the date such amounts should have been paid to the date of
post-audit payment. Borrower shall pay Lender's costs and expenses incurred in
connection with no more than one (1) such audit per year. Borrower acknowledges
and agrees that (i) all of such audits, inspections and reports shall be made
for the sole benefit of Lender, and not for the benefit of Borrower or any third
party, and neither Lender nor Lender's auditors or inspectors or any of Lender's
representatives, agents or contractors assumes any responsibility or liability
(except to Lender) by reason of such audits, inspections or reports, (ii)
Borrower will not rely upon any of such audits, inspections or reports for any
purpose whatsoever, and (iii) the performance of such audits, inspections and
reports will not constitute a waiver of any of the provisions of this Agreement
or any other Loan Document or any of the obligations of Borrower hereunder or
thereunder. Borrower further acknowledges and agrees that neither Lender nor
Lender's inspectors, representatives, agents or contractors shall be deemed to
be in any way responsible for any matters related to design or construction of
the Improvements.
23. Appraisal. At any time during the term of the Loan, Borrower shall
cooperate with Lender and use reasonable efforts to assist Lender in obtaining
an appraisal of the Property. Such cooperation and assistance from Borrower
shall include but not be limited to the obligation to provide Lender or Lender's
appraiser with the following: (i) reasonable access to the Property, (ii) a
current certified rent roll for the Property in form and substance satisfactory
to Lender, current asking rents and a history of change in asking rents and
historical vacancy for the past three years, (iii) current and budgeted income
and expense statements for the prior three years, (iv) a site plan and survey of
Property (to the extent available and at no cost to Borrower), (v) the building
plans and specifications, including typical elevation and floor plans (to the
extent available and at no cost to Borrower), (vi) a photocopy of the deed
conveying the Property to Borrower, together with the legal description of the
Property, (vii) the current and prior year real estate tax bills, (viii) a
detailed list of past and scheduled capital improvements made during Borrower's
period of ownership and the costs thereof, (ix) a summary of the then current
ownership entity, (x) all environmental reports and other applicable information
relating to the Property, and (xi) copies of all recent appraisals/property
description information or brochures, including descriptions of amenities and
services relating to the Property. The appraiser performing any such appraisal
shall be engaged by Lender, and Lender shall be responsible for any fees payable
to said appraiser in connection with an appraisal of the Property.
<PAGE>
24. Accounts. Borrower agrees that, at any time requested by Lender in
writing after an Incipient Default or Event of Default has occurred, Borrower
will do all acts requested by Lender to perfect or confirm the continued
perfection of Lender's security interest in all of Borrower's bank accounts,
including, without limitation, appointing a collateral agent satisfactory to
Lender and segregating all of Borrower's funds from those of Manager or any
Affiliates.
25. Deferred Origination Fee. Borrower acknowledges that the Lender has
earned the Deferred Origination Fee as of the date hereof although the Lender
has agreed to defer its payment as hereinafter provided. Borrower agrees that it
shall pay the Deferred Origination Fee to the Lender when the Loan is paid or
becomes payable in full whether at the Maturity Date or upon earlier prepayment
or acceleration.
26. Limitation on Indebtedness. Borrower shall not, without the prior
written consent of Lender, create, assume, incur or guaranty, directly or
indirectly, any indebtedness or obligation, except for (i) lease financing or
purchase money financing for equipment, incurred after the date hereof, which is
secured by the equipment so leased or purchased and which lease or purchase
money financings do not contain payment obligations, in the aggregate, in excess
of $25,000 per year, or (ii) the Other Borrower Loans.
ARTICLE 5
AGREEMENT TO LEND
1.7 Agreement to Lend. On the basis of the covenants, agreements and
representations of Borrower contained in, and subject to the terms and
conditions set forth in, this Agreement and the other Loan Documents, Lender
agrees to lend to Borrower the principal sum of up to $3,322,817. The entire
proceeds of the Loan shall be disbursed by Lender at Closing. Borrower shall use
the Loan proceeds for the purpose for which they were advanced and for no other
purpose.
ARTICLE 6
INSURANCE AND CASUALTY
1.8 Insurance Provisions.
1. Insurance. Borrower, at its sole cost and expense, shall insure and
keep insured the Property against such perils and hazards, and in such amounts
and with such limits, as Lender may from time to time reasonably require. At the
time of the Closing, Lender's requirements for said insurance are set forth in
Exhibit D, which requirements Borrower acknowledges are
<PAGE>
reasonable and customary. Borrower shall also carry such other insurance, and in
such amounts, as Lender may from time to time reasonably require, against
insurable risks which at the time are commonly insured against in the case of
premises similarly situated, due regard being given to the availability of
insurance and to the type of construction, location, utilities, use and
occupancy of the Premises or any replacements or substitutions therefor
("Additional Insurance"). Such Additional Insurance may include flood,
hurricane, earthquake, war risk, nuclear explosion, demolition and contingent
liability from the operation of "nonconforming improvements" on the Premises,
and shall be obtained within 30 days after demand by Lender. Otherwise, Borrower
shall not obtain any separate or additional insurance which is contributing in
the event of loss, unless it is properly endorsed and otherwise reasonably
satisfactory to Lender in all respects. The Proceeds (as defined in the
Mortgage) of insurance paid on account of any damage to or destruction of the
Premises or any portion thereof shall be paid over to Lender to be applied as
hereinafter provided.
2. Evidence of Coverage. The insurance shall be evidenced by the original
policy or a true and certified copy of the original policy, or by certificates
of insurance. Said certified copies, original policies or certificates shall be
delivered to Lender at or prior to Closing. On or before the Closing and each
stated due date thereafter, Borrower shall pay all premiums and fees for the
insurance policies required hereunder. Borrower shall deliver certified copies
of all policies and renewals (or certificates evidencing the same) to Lender at
least thirty (30) days before the expiration of existing policies. Each such
policy shall provide that such policy may not be canceled or materially changed
except upon 30 days prior written notice of intention of non-renewal,
cancellation or material change to Lender, and that no act or thing done by
Borrower shall invalidate the policy as against Lender. Notwithstanding anything
to the contrary contained herein or in any provision of law, the Proceeds of
insurance policies coming into the possession of Lender and which are not to be
used for the Work (as hereinafter defined) shall not be deemed trust funds and
Lender shall be entitled to dispose of such Proceeds as hereinafter provided. If
Lender has not received satisfactory evidence of such renewal or substitute
insurance in the time frame herein specified, Lender shall have the right, but
not the obligation, to purchase such insurance for Lender's interest only. Any
amounts so disbursed by Lender pursuant to this Section 6.1.B shall be deemed to
be a part of the Loan and shall bear interest at the Default Rate. Nothing
contained in this Article 6 shall require Lender to incur any expense or take
any action hereunder, and inaction by Lender shall never be deemed a waiver of
any rights accruing to Lender on account of this Article 6.
3. Separate Insurance. Borrower shall not carry any separate insurance on
the Property concurrent in kind or form with any insurance required hereunder or
contributing in the event of loss without Lender's prior written consent, and
any such policy shall have attached a standard non-contributing mortgagee
clause, with loss payable to Lender, and shall meet all other requirements set
forth herein.
<PAGE>
4. Damage to or Destruction of Premises. In the event of any damage to or
destruction of the Premises, Borrower shall give prompt written notice to Lender
and, provided Lender makes the Proceeds available for the costs of repair,
restoration and rebuilding, Borrower shall promptly commence and diligently
continue to completion the repair, restoration and rebuilding of the Premises so
damaged or destroyed in full compliance with all legal requirements and with the
provisions of Section 6.1.F below, and free and clear from any and all liens and
claims. Such repair, restoration and rebuilding of the Premises are sometimes
hereinafter collectively referred to as the "Work." Borrower shall not adjust,
compromise or settle any claim(s) for insurance Proceeds without the prior
written consent of Lender unless such claim(s) does not exceed $100,000 in the
aggregate in which case no consent of Lender is required. Subject to Sections
6.1E and F, below, Lender shall have the option in its sole discretion to apply
any insurance Proceeds it may receive pursuant to the Mortgage (less any cost to
Lender of recovering and paying out such Proceeds, including reasonable
attorneys' fees) to the payment of the Indebtedness or to allow all or a portion
of such Proceeds to be used for the Work. If any insurance Proceeds are applied
to reduce the Indebtedness, Lender shall apply the same in the following order:
(1) first, to the payment of interest due on any Advances;
(2) next, to the principal amount of any Advances;
(3) next, to any Late Charges (as provided in the Note);
(4) next, to accrued interest then due under the Note; and
(5) finally, to the unpaid principal balance of the Note.
If Lender applies insurance Proceeds to reduce the Indebtedness, no
prepayment fee shall be due with respect to any prepayment effected thereby.
5. Restoration. Notwithstanding the provisions of Section 6.1.D above, if,
in Lender's reasonable judgment, the Work can be completed within 18 months of
the occurrence of said damage or destruction, then Lender shall, upon request by
Borrower, permit Borrower to use the insurance Proceeds for the Work (subject to
the provisions of, and less Lender's costs described in, Section 6.1.F below),
so long as Lender, in its reasonable judgment, is satisfied that as of each date
on which such insurance Proceeds are to be applied to payment thereof:
(1) The insurance Proceeds held by Lender in respect of the
applicable casualty equal or exceed such estimated cost of
effecting such repair and restoration, or
<PAGE>
such portion thereof as then remains to be completed and paid
for or Borrower provides evidence satisfactory to Lender that
Borrower has funds available to pay any shortfall, and, if
required by Lender, escrows such funds with Lender for
disbursement in accordance with the requirements of Section
6.1.F;
(2) The Management Agreement shall remain in full force and effect
and all material Leases, if any, shall remain in full force
and effect, and no tenant thereunder shall be entitled to
cancel or terminate its Lease as a consequence of such
casualty;
(3) Upon completion of the Work, the monthly revenues from the
Property shall, in Lender's reasonable judgment, be sufficient
to pay all interest and other sums due and payable under the
Note, this Agreement and the other Loan Documents;
(4) The Work will, in Lender's reasonable judgment, be completed
on or prior to May 31, 2000;
(5) There is in force and effect for the benefit of Borrower and
Lender rental or business interruption insurance sufficient to
provide coverage for one hundred percent (100%) of all income
lost as a consequence of such casualty for not less than the
projected period for the completion of the Work or Borrower
provides evidence satisfactory to Lender that Borrower has
funds available to pay all interest and other sums due and
payable under the Note, this Agreement and the other Loan
Documents, as well as all other expenses of the Property
during such period and, if required by Lender, escrows such
funds with Lender for application to the payment of such
obligations as they come due;
(6) The Work will be effected pursuant to plans and specifications
reasonably approved in writing by Lender, and by a general
contractor and major subcontractors, and pursuant to
contracts, reasonably approved in writing by Lender; and
(7) The Work can be effected in compliance with all applicable
laws and Borrower has obtained all licenses, permits, consents
and approvals from all applicable governmental authorities or
private parties required to permit Borrower to effect such
restoration and repair and to use, operate and occupy the
repaired and restored premises upon completion thereof (other
than those which will issue in the ordinary course upon
completion) and
<PAGE>
that the same are in full force and effect.
Lender shall have no obligation to make such insurance Proceeds available to pay
for the Work if (A) the Loan shall have been accelerated and the principal and
accrued interest owing on the Loan have become due and payable, or (B) there
shall exist an Event of Default or Incipient Default other than an Incipient
Default which is susceptible to cure and as to which Borrower is diligently
pursuing such cure.
6. Distribution of Proceeds. If any insurance Proceeds are used for the
Work, then such Proceeds shall be held by Lender and shall be paid out from time
to time to Borrower as the Work progresses (less any cost to Lender of
recovering and paying out such Proceeds, including reasonable attorneys' fees
and costs allocable to inspecting the Work and the plans and specifications
therefor), subject to each of the following conditions:
(1) If the Work is structural or if the cost of the Work is
reasonably estimated by Lender to exceed $250,000, the Work
shall be conducted under the supervision of a certified and
registered architect or engineer unless otherwise waived in
writing by the Lender. Before Borrower commences any Work,
other than temporary work to protect property or prevent
interference with business, Lender shall have approved in
writing the plans and specifications for the Work, which
approval shall not be unreasonably withheld or delayed, it
being nevertheless understood that such plans and
specifications shall provide for Work so that, upon completion
thereof, the Premises shall be at least equal in value and
general utility to the Premises prior to the damage or
destruction.
(2) Each request for payment shall be made on not less than ten
(10) Business Days prior notice to Lender and shall be
accompanied by a certificate of the architect or engineer in
(i) above (or a certificate given by Borrower if no architect
or engineer is so required) stating (A) that all of the Work
completed has been done in substantial compliance with the
approved plans and specifications, if required under (i)
above, (B) that the sum requested is justly required to
reimburse the Borrower for payments by Borrower, or is justly
due to the contractor, subcontractors, materialmen, laborers,
engineers, architects or other persons rendering services or
materials for the Work (giving a brief description of such
services and materials), and that when added to all sums
previously paid out by Lender does not exceed the value of the
Work done to the date of such certificate, (C) if the sum
requested is to cover payment relating to repair and
<PAGE>
restoration of personal property required or relating to the
Premises, that title to the personal property items covered by
the request for payment is vested in Borrower, and (D) that
the amount of such Proceeds remaining in the hands of Lender
will be sufficient on completion of the Work to pay for the
same in full (giving in such reasonable detail as Lender may
require an estimate of the cost of such completion).
Additionally, each request for payment shall contain a
statement signed by Borrower approving both the Work done to
date and the Work covered by the request for payment in
question. Each request for payment shall be accompanied by
waivers of lien satisfactory to Lender covering that part of
the Work for which payment or reimbursement is being requested
and, if required by Lender, a search prepared by a title
company or an attorney authorized to practice law in the
State, or by other evidence satisfactory to Lender that there
has not been filed with respect to the Premises any mechanics'
or other lien or instrument for the retention of title
relating to any part of the Work not discharged of record.
Additionally, as to any personal property covered by the
request for payment, Lender shall be furnished with evidence
of payment therefor and such further evidence satisfactory to
assure Lender of its valid first lien on the personal
property.
(3) Lender or its designee shall have the right to inspect the
Work at all reasonable times and may condition any
disbursement of Proceeds upon the satisfactory completion, as
determined in Lender's reasonable discretion, of any portion
of the Work for which payment or reimbursement is being
requested. The cost of any such inspection of the Work shall
be paid by Borrower prior to or simultaneously with the next
disbursement of any portion of the Proceeds. Neither the
approval by Lender of the plans and specifications for the
Work nor the inspection by Lender of the Work shall make
Lender responsible for the preparation of such plans and
specifications or the compliance of such plans and
specifications, or of the Work, with any applicable law,
regulation, ordinance, covenant or agreement.
(4) Proceeds shall not be disbursed more frequently than every 30
days.
(5) Any request for payment made after the Work has been completed
shall be accompanied by a copy or copies of any certificate or
certificates required by law to render occupancy and full
operation of the Premises legal.
(6) Upon completion of the Work and payment in full therefor, or
upon any failure on the part of Borrower to promptly commence
the Work, or upon the failure
<PAGE>
on the part of Borrower to proceed diligently and continuously
to completion of the Work (subject to allowance for reasonable
delays and interruptions in the supply of materials and labor
not caused by any act or omission of Borrower), Lender may
apply any such proceeds it then or thereafter holds to the
payment of the Indebtedness; provided, however, that Lender
shall be entitled to apply at any time all or any portion of
insurance Proceeds it then holds to the curing of any Event of
Default. Upon completion of the Work, so long as no Event of
Default exists, any remaining insurance Proceeds held by
Lender shall be paid to Borrower.
7. Miscellaneous Insurance Provisions.
(1) Notwithstanding any other provision of this Section 6.1, if in
Lender's reasonable judgment the cost of the Work is less than
$250,000 and such Work can be completed in less than 60 days
and provided no Event of Default has occurred and is
continuing, then Lender shall, upon request by Borrower,
permit Borrower to apply for and receive the insurance
Proceeds directly from the insurer (and Lender shall advise
the insurer to pay over such Proceeds directly to Borrower),
provided that Borrower shall apply such insurance Proceeds
solely to the prompt and diligent commencement and completion
of such Work.
(2) In the event of the foreclosure of the Mortgage or other
transfer of title to or assignment of the Property in
extinguishment of the Indebtedness in whole or in part, all
right, title and interest of Borrower in and to any insurance
Proceeds shall inure to the benefit of and pass to Lender or
any purchaser or transferee of the Property.
(3) Borrower hereby authorizes Lender, during all periods in which
an Event of Default has occurred and remains uncured, to
settle any insurance claims, to obtain insurance Proceeds, and
to endorse any checks, drafts or other instruments
representing any insurance Proceeds whether payable by reason
of loss thereunder or otherwise.
ARTICLE 6A
RENOVATION WORK
6A.1 Construction. During the pendency of the Renovation Work, Borrower
shall provide Lender with monthly reports which include, as applicable, (i)
evidence reasonably
<PAGE>
satisfactory to Lender that the Renovation Work complies with all building,
zoning and other laws and governmental codes, rules and regulations, (ii) copies
of all necessary licenses, permits, approvals and consents required for the use,
occupancy and operation of the Premises, as altered by the Renovation Work,
(iii) evidence satisfactory to Lender that all Renovation Work completed as of
the date of such report has been inspected and approved by each required
Governmental Authority and by each other person or entity (including any
tenants) having the right to inspect and approve the Renovation Work and (iv)
all contractors and subcontractors have been paid current. Borrower shall
provide Lender with such other information and material relating to the
Renovation Work as Lender reasonably requests.
6A.2 Completion. Borrower shall: (i) cause the Renovation Work to be
completed in a good and workmanlike manner in accordance with the reasonable
requirements of Lender's Consultant, and the requirements of this Agreement, the
Renovation Budget and the Renovation Plans; (ii) cause the Renovation Work to be
completed so that the Premises remain free and clear of all liens and
encumbrances other than Permitted Exceptions; (iii) cause Renovation Completion
to be achieved on or before the Renovation Completion Date; and (iv) commence
the Renovation Work within 90 days following the Closing and pursue the
Renovation Work diligently to completion.
6A.3. Compliance with Laws. Borrower shall cause the Renovation Work to be
constructed in accordance with all applicable requirements of any Governmental
Authority having jurisdiction with respect thereto including, without
limitation, obtaining all licenses, permits, approvals and consents for the use,
occupancy and operation of the Premises, as altered by the Renovation Work.
6A.4 Other Remedies of Lender. Upon the occurrence of an Event of Default,
in addition to any other remedies available to Lender by the terms of this
Agreement or any other Loan Document or by law, Lender may at its sole
discretion: (a) complete the Renovation Work (with such changes as Lender shall
deem appropriate), all at the risk, cost and expense of Borrower; (b)
discontinue at any time the Renovation Work; (c) engage builders, contractors,
engineers, architects and others for the purpose of furnishing labor, material
and equipment in connection with the Renovation Work, which personnel may, but
need not, be the same as those engaged by Borrower; (d) pay, compromise or
settle all bills or claims incurred in connection with the Renovation Work; and
(e) take or refrain from taking such action with respect to the Renovation Work
as Lender may from time to time reasonably determine. All such action shall be
at Borrower's sole cost and expense, such sums being secured by the Mortgage.
ARTICLE 7
BORROWER'S DEFAULT
<PAGE>
1.9 Events of Default. Each of the following shall constitute an "Event of
Default" under this Agreement:
1. Borrower fails (i) to pay any installment of interest on the Note when
due and continuing for more than five (5) days after written notice thereof from
Lender or (ii) to pay the Note in full on or before the Maturity Date;
2. Borrower or the Guarantor fails to pay within ten (10) days following
written notice from Lender any amounts due hereunder or under any of the other
Loan Documents, other than installments of interest on the Note; or
3. Any representation or warranty made by Borrower or any other Loan Party
in or pursuant to this Agreement or otherwise made in writing in connection with
or as contemplated by this Agreement shall be incorrect or false or misleading
in any material respect as to the period of time to which it relates; or
4. An Event of Default exists under any other Loan Document; or
5. Any representation to Lender by Borrower or any other Loan Party as to
the financial condition or credit standing of Borrower or any other Loan Party,
or any financial statement provided to Lender pursuant to any Loan Document, is
or proves to be false or misleading in any material respect; or
6. Except for Permitted Transfers, any interest in Borrower or the
Property (or any part thereof) is sold, conveyed, transferred, assigned,
disposed of or further encumbered, either directly or indirectly, or any
agreement for any of the foregoing is entered into; or
7. The Premises or any portion thereof is rezoned either voluntarily or
involuntarily, so as to no longer permit the Premises or any portion thereof to
be used as a hotel; or
8. Any order or decree is entered by any court of competent jurisdiction
directly or indirectly enjoining or prohibiting Lender or Borrower from
performing any of their obligations under this Agreement; or
9. Borrower or any other Loan Party makes an assignment for the benefit of
creditors; or petitions or applies to any court for the appointment of a trustee
or receiver for itself or for any part of its assets or for the Property or any
portion thereof, or commences any proceedings under any bankruptcy, insolvency,
readjustment of debt or reorganization statute or law of any jurisdiction,
whether now or hereafter in effect; or if any such petition or application is
filed or
<PAGE>
any such proceedings are commenced, and Borrower or any other Loan Party by any
act indicates any approval thereof, consent thereto, or acquiescence therein; or
an order is entered appointing any such trustee or receiver, or adjudicating
Borrower or any other Loan Party bankrupt or insolvent, or approving the
petition in any such proceeding; or if any petition or application for any such
proceeding or for the appointment of a trustee or receiver is filed by any third
party against Borrower or any other Loan Party or their respective assets or the
Property, or any portion thereof, and any of the aforesaid proceedings is not
dismissed within ninety (90) days of its filing; or
10. Any representation or warranty made by the Ground Lessor in the
Estoppel Agreement shall be incorrect or false or misleading in any material
respect; or
11. A default or event of default occurs under the Franchise Agreement and
Franchisor has taken affirmative action to enforce its rights under the
Franchise Agreement, or has affirmatively declared a default under the Franchise
Agreement, or has otherwise expressly indicated that it deems such default
material, or the Franchise Agreement or any related arrangement with Franchisor
is terminated without the prior written consent of Lender, in its sole
discretion; or
12. A final non-appealable judgment or judgments for the payment of money
in excess of an aggregate of $50,000 shall be rendered against Borrower and such
judgment or judgments shall remain undischarged or unbonded (to Lender's
satisfaction) for a period of 60 consecutive days during which the execution
shall not be effectively stayed; or
13. The Management Agreement is amended or terminated for any reason
without the prior written consent of Lender; or
14. Borrower or any other Loan Party fails to comply with, keep or perform
any of its other obligations, agreements, undertakings, covenants, conditions or
warranties under (i) this Agreement, (ii) any other Loan Document, or (iii) any
other document or instrument executed and delivered to Lender by Borrower or any
other Loan Party pursuant to this Agreement, and such failure continues for a
period of thirty (30) days after written notice thereof by Lender to Borrower,
provided, however, if such failure is susceptible to cure by Borrower but cannot
be cured within such thirty (30) day period, but Borrower commences to cure the
same within such thirty (30) day period and thereafter diligently proceeds to
cure the same, Borrower shall have an additional reasonable period of time in
which to cure such failure (but in no event longer than ninety (90) days after
the date of notice thereof); or
15. An event of default occurs under the Other Borrower Loan Documents and
is not cured by Borrower within any applicable grace or cure period; or
<PAGE>
16. An event of default occurs under the Related Party Loan Documents and
is not cured by the Related Party within any applicable grace or cure period.
1.10 Remedies. Upon the happening of an Event of Default, Lender shall
have the right, in addition to all the remedies conferred upon Lender by law or
equity or the terms of any Loan Document, to do any or all of the following,
concurrently or successively, without notice to Borrower:
1. Declare the Note to be, and such Note shall thereupon become,
immediately due and payable, together with the Prepayment Fees (as defined in
the Primary Note), if applicable, without presentment, demand, protest, notice
of intention to accelerate, notice of acceleration or notice of any kind, all of
which are hereby expressly waived, anything contained herein or in the Note to
the contrary notwithstanding, and exercise any one or more of its rights and
remedies under the Loan Documents.
2. Enter upon and take possession of the Property and all material,
equipment and supplies thereon and do anything necessary or desirable to fulfill
the obligations of Borrower hereunder and to sell, manage, maintain, repair and
protect the Property. Without limiting the generality of the foregoing and for
the purposes aforesaid, Borrower hereby appoints and constitutes Lender its
lawful attorney-in-fact with full power of substitution to (i) pay, settle or
compromise all existing bills and claims which may be liens upon or security
interests in the Property, or to avoid such bills and claims becoming liens or
security interests, against the Property or any fixtures or equipment thereon,
or as may be necessary or desirable for the clearance of title or otherwise,
(ii) use any funds of Borrower for purpose of completing the Renovation Work,
(iii) execute all applications and certificates in the name of Borrower which
may be required to carry out the intent and purpose hereof, (iv) employ such
contractors, subcontractors, architects and others as Lender may deem reasonably
appropriate, (v) do any and every act which Borrower might do on its own behalf,
including to enter into Leases of any portion of the Property, and (vi)
prosecute or defend any and all actions or proceedings involving the Property or
any fixtures, equipment or other installations thereon, it being understood and
agreed that this power of attorney shall be a power coupled with an interest and
cannot be revoked. Lender and its designees, representatives, agents, licensees
and contractors shall be entitled to the entry, possession and use contemplated
herein without the consent of any party and without any legal process or other
condition precedent whatsoever. Borrower acknowledges that any denial of such
entry, possession and use by Lender will cause irreparable injury and damage to
Lender and agrees that Lender may forthwith sue for any remedy to enforce the
immediate enjoyment of such right. Borrower hereby waives the posting of any
bond as a condition for exercising such remedy.
3. Apply the sum of any Reserved Funds and Capital Reserve payments then
being held by
<PAGE>
Lender to the repayment of the Loan in any order or priority.
4. Declare any or all of the Other Borrower Loans and the Related Party
Loans to be in default and to pursue all of its rights and remedies with respect
thereto.
Anything in this Agreement to the contrary notwithstanding, all funds
advanced or disbursed by Lender pursuant to the provisions of this Article 7
shall be deemed advanced by Lender under an obligation to do so regardless of
the identity of the person or persons to whom such funds are owed and shall bear
interest at the Default Rate. Funds advanced or disbursed by Lender in the
exercise of its judgment that the same are needed to protect its security or to
otherwise perform any obligations of Borrower hereunder are to be deemed
obligatory advances hereunder and are to be added to the total indebtedness
evidenced by the Note and secured by the Mortgage and the other Loan Documents
and said indebtedness shall, if necessary, be increased accordingly.
In case of any Event of Default hereunder, Borrower will pay Lender's
attorneys' fees and disbursements and court costs (including those relating to
appeals) and all related expenses in connection with the enforcement of this
Agreement or any of the other Loan Documents.
ARTICLE 8
MISCELLANEOUS
1.11 Indemnification. Except for Losses (as hereinafter defined) which are
finally adjudicated by a court of competent jurisdiction to have arisen directly
and proximately from the gross negligence or willful misconduct of Lender or
have arisen solely and exclusively from acts or events occurring after the
Borrower has relinquished all possession, direction or control over the
Property, Borrower shall protect, defend, indemnify and hold Lender, and its
officers, directors, employees and agents (each, an "Indemnified Party")
harmless from and against any and all harm, loss, liability, damage, suit,
claim, demand, expense, fees, costs, judgments and penalties (including
reasonable attorneys' fees but excluding consequential damages) (each a "Loss")
suffered or incurred by an Indemnified Party in connection with (i) any claim,
demand, suit or proceeding brought or asserted by any person against an
Indemnified Party arising out of or relating to Lender's entering into or
carrying out the terms of this Agreement or any of the other Loan Documents or
being the holder of the Note, (ii) any default by Borrower or any other Loan
Party hereunder or under any other Loan Document, (iii) any bodily injury,
death, other personal
<PAGE>
injury or property damage occurring in or upon the Property through any cause
whatsoever, and (iv) any transaction otherwise arising out of or in any way
connected with the Property, this Agreement, any other Loan Document or the
Indebtedness, excluding a Loss arising out of Lender's gross negligence or
willful misconduct.
1.12 Defense of Claims. Lender may, at Borrower's sole cost and expense,
retain separate counsel to defend Lender against any claim relating to any Loss
or potential Loss. If Lender retains separate counsel in such an action,
Borrower will cooperate with Lender and provide Lender with copies of all
existing pleadings, discovery materials and other materials relating to said
claim. In any event, Borrower shall defend any such claim and shall provide
Lender with copies of all pleadings, filings and correspondence relating
thereto.
1.13 Performance by Lender. In the event that Borrower shall at any time
fail to duly and punctually pay, perform, observe or comply with any of its
covenants and agreements hereunder or under the other Loan Documents, or if any
Event of Default hereunder shall exist, then Lender may (but shall in no event
be required to) make any such payment or perform any such term, provision,
condition, covenant or agreement or cure any such Event of Default. Lender shall
not take action under this Section 8.3 prior to the occurrence of an Event of
Default unless in Lender's reasonable judgment, such action is necessary or
appropriate in order to preserve the value of the collateral, to protect persons
or property, or Borrower has abandoned the Property or any portion thereof.
Lender shall not be obligated to continue any such action having commenced the
same and may cease the same without notice to Borrower. Any amounts expended by
Lender in connection with such action shall constitute additional advances
hereunder, the payment of which is additional indebtedness, secured by the Loan
Documents and shall become due and payable upon demand by Lender, with interest
at the Default Rate from the date of disbursement thereof until fully paid. No
further direction or authorization from Borrower shall be necessary for such
disbursements. The execution of this Agreement by Borrower shall and hereby does
constitute an irrevocable direction and authorization to Lender to so disburse
such funds.
1.14 Transfer or Assignment. Lender may assign, negotiate, pledge or
otherwise hypothecate all or any portion of the Loan or grant participation
therein, or in any of its rights and security hereunder and under the other Loan
Documents, and Borrower shall accord full recognition thereto provided that if
the Loan is assigned to any party other than Nationwide Life Insurance Company
or any other life insurance company, financial institution or other commercial
or institutional lender, or affiliate thereof, then Borrower must consent to
such assignment which consent shall not be unreasonably withheld or delayed.
Lender agrees to provide Borrower with written notice of any assignment of the
Loan other than to Nationwide Life Insurance Company. Lender may deliver copies
to any potential participant or assignee or transferee of financial statements
and other information from time to time furnished to Lender pursuant hereto or
in
<PAGE>
connection therewith provided that Lender shall take such steps as may be
reasonably necessary to assure that such information remains confidential.
Borrower shall not assign or attempt to assign its rights or obligations under
this Agreement or any other Loan Document other than Permitted Transfers.
1.15 Lender's Actions. The authority herein conferred upon Lender and any
action taken by Lender hereunder or in any other Loan Document will be taken by
Lender for its own protection only, and Lender does not and shall not be deemed
to have assumed any responsibility to Borrower or to any other person or persons
with respect to any such action herein authorized or taken by Lender. No person
shall be entitled to rely upon, or claim to have relied upon, any action taken
or failed to have been taken by Lender or any of its representatives.
1.16 Time is of the Essence. TIME IS OF THE ESSENCE OF THIS AGREEMENT.
1.17 Waivers. No waiver of any term, provision, condition, covenant or
agreement contained herein or in any other Loan Document shall be effective
unless set forth in a writing signed by Lender, and any such waiver shall be
effective only to the extent set forth in such writing. No failure by Lender to
exercise, or delay by Lender in exercising, any right, power or privilege
hereunder or in any other Loan Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof, or the exercise of any other
right or remedy provided by law. No notice to or demand on Borrower in any case
shall, in itself, entitle Borrower to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of Lender to
any other or further action in any circumstances without notice or demand.
1.18 Notices. Any notice which any party hereto may be required or may
desire to give hereunder shall be delivered personally, or by overnight express
courier, addressed in the case of Borrower to:
Lodgian AMI, Inc.
Two Live Oak Center
3445 Peachtree Road, NE
Suite 700
Atlanta, Georgia 30326
with a copy to:
Stearns, Weaver, Miller, Weissler,
Alhadeff & Sitterson, P.A.
Museum Tower
<PAGE>
150 West Flagler Street
Miami, Florida 33130
Attention: Robert Weissler, Esq.
in the case of Lender to:
Banc One Capital Funding Corporation
150 East Gay Street
Columbus, Ohio 43215
Attention: Loan Servicing
with a copy to:
Banc One Capital Markets, Inc.
150 East Gay Street, 24th Floor
Columbus, Ohio 43215
Attn: Legal Department and Real Estate Investment Group
or at such other addresses or to the attention of such other persons as may from
time to time be designated by the party to be addressed by written notice to the
other in the manner herein provided. Notices, demands and requests given in the
manner aforesaid shall be deemed sufficiently served or given for all purposes
hereunder when received or when delivery is refused or when the same are
returned to sender for failure to be called for.
1.19 Successors and Assigns. This Agreement shall inure to the benefit of
the parties and their respective successors and permitted assigns. No assignment
made by Borrower in violation of this Agreement shall confer any rights on any
assignee of Borrower.
1.20 No Partnership. Nothing contained herein, or in any other Loan
Document, and no action or inaction whatsoever on the part of Lender, shall be
deemed to make Lender a partner or joint venturer with Borrower.
1.1
1.21 Brokerage Claims. Borrower shall, and shall cause the Guarantor, to
protect, defend, indemnify and hold Lender harmless from and against all loss,
cost, liability and expense incurred as a result of any claim for a broker's or
finder's fee against Lender or any person or entity in connection with the
transaction herein contemplated, provided such claim is made by or arises
through or under Borrower or the Guarantor or is based in whole or in part upon
alleged acts or omissions of Borrower or the Guarantor. Lender shall protect,
defend, indemnify and hold Borrower harmless from and against all loss, cost,
liability and expense incurred as a result of any claim for a broker's or
finder's fee against Borrower provided such claim is based upon
<PAGE>
alleged acts or omissions of Lender.
1.22 Publicity. Lender and Borrower may each reasonably publicize the Loan
if it so elects. Borrower agrees to consult with Lender prior to any press
release concerning the Loan.
1.23 Documents Satisfactory to Lender. All documents and other matters
required by any of the provisions of this Agreement to be submitted or provided
to Lender shall be in form and substance reasonably satisfactory to Lender.
1.24 Additional Assurances. At any time or from time to time, upon the
written request of Lender, Borrower shall execute, and, if required, record,
file (and pay all fees, taxes or other expenses relating thereto) all such
further documents and do all such other acts and things as Lender may reasonably
request to effectuate the transaction contemplated herein in accordance with the
terms hereof.
1.25 Entire Agreement. This Agreement, the Exhibits hereto and the other
Loan Documents and other documents referred to herein constitute the entire
agreement between the Lender and Borrower with respect to the subject matter
hereof and may not be modified or amended in any manner other than by
supplemental written agreement executed by the parties hereto.
1.26 Severability. If any provision of this Agreement or any other Loan
Document or the application thereof to any person or situation shall, to any
extent, be held invalid or unenforceable, the remainder of this Agreement or any
other Loan Document, and the application of such provision to persons or
situations other than those to which it shall have been held invalid or
unenforceable, shall not be affected thereby, but shall continue valid and
enforceable to the fullest extent permitted by applicable law.
1.27 No Third Party Beneficiary. Except as hereinafter expressly provided,
this Agreement is made for the sole benefit of Borrower and Lender, and no other
person shall be deemed to have any privity of contract hereunder nor any right
to rely hereon to any extent or for any purpose whatsoever, nor shall any other
person have any right of action of any kind hereon or be deemed to be a third
party beneficiary hereunder. Notwithstanding the foregoing, Banc One Capital
Partners, VII, Ltd., its successors and assigns, shall be a third party
beneficiary of the representations, warranties, covenants and agreements of
Borrower and Guarantor under the Loan Documents for so long as it may own a
participation interest in the Loan.
1.28 CHOICE OF LAW. THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF OHIO,
ACCEPTED BY LENDER IN THE STATE OF OHIO, AND THE PROCEEDS OF THE LOAN EVIDENCED
HEREBY WERE OR ARE TO BE DISBURSED BY LENDER FROM THE STATE OF OHIO. BORROWER
AND LENDER AGREE THAT THE STATE OF
<PAGE>
OHIO HAS A SUBSTANTIAL RELATIONSHIP TO THE TRANSACTION EVIDENCED HEREBY AND
AGREE THAT THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF OHIO (WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW).
1.29 Limitation on Liability.
(1) Subject to the limitations and exceptions contained in
subsections (b), (c), (d) and (e) below and as otherwise provided in Section
8.21, Borrower shall not have any personal recourse liability for amounts owing
under the Note or any of the other Loan Documents and no deficiency judgment
therefor shall be enforced against Borrower. Lender's recourse for such amounts
shall, subject to the limitations and exceptions contained in subsections (b),
(c), (d) and (e) below, be limited to the collateral and security provided under
the Loan Documents and the Other Borrower Loan Documents. Anything herein to the
contrary notwithstanding, the Borrower acknowledges and agrees that the
collateral and security provided under the Loan Documents and the Other Borrower
Loan Documents are intended to cross-collateralize both the Loan and the Other
Borrower Loans as described in Section 8.21.
(2) A judgment may be sought, obtained, entered and enforced against
Borrower to the extent necessary to preserve or enforce the rights and remedies
of Lender in, to or against the collateral and security provided under the Loan
Documents and the Other Borrower Loan Documents, and nothing contained in this
Section 8.19 shall be construed to limit, prejudice or impair the rights of
Lender to enforce its rights and remedies against any real and personal property
mortgaged, pledged, encumbered, assigned or granted to secure payment or
performance under this Agreement, the Note, the other Loan Documents and the
Other Borrower Loan Documents. Notwithstanding anything to the contrary herein
or elsewhere Lender shall, to the fullest extent permitted by law, be entitled
to injunctive relief and to specific performance.
(3) Anything contained herein or elsewhere to the contrary
notwithstanding, Borrower and Guarantor shall be liable to Lender, without
limitation, for Lender's harm, loss (including lost interest and principal on
the Loan), damage, costs and expenses (including Lender's reasonable attorneys'
fees and court and collection costs) arising out of or in connection with any of
the following circumstances:
(1) any misapplication or misappropriation of any insurance or
condemnation proceeds;
(2) revenues collected after an Event of Default or Incipient
Default and not properly applied to the Loan or normal
operating expenses of the Premises;
<PAGE>
(3) any waste respecting all or any part of the Property or any
other collateral;
(4) real estate taxes, personal property taxes or Impositions, if
any, and insurance premiums with respect to the Property
(except to the extent resulting from the failure by Lender to
disburse any deposits received from Borrower with respect to
such real estate or personal property taxes in accordance with
the provisions of Section 4.1(B));
(5) fraud in connection with the Loan or any Loan Document;
(6) any material breach of any representation or warranty made in
connection with the Loan (expressly excluding any
representations or warranties made by the Ground Lessor) known
by Borrower or Guarantor to have been false when made, or
deemed made specifically including any material
misrepresentation or inaccuracy contained in any financial
statement or other document provided to Lender pursuant to
Section 4.1.K of this Agreement known by Borrower or Guarantor
to have been false or inaccurate when provided;
(7) any destruction of the Property or any part thereof in or from
an uninsured or underinsured casualty for which Borrower was
required to obtain insurance under this Agreement;
(8) any breach of any of the terms and provisions of Section 2.10
(Environmental Matters) of the Mortgage; or
(9) any lien arising from the failure of the Borrower to pay or
perform any obligation with respect to taxes or employee
benefits which lien is superior in priority to the lien
created by the Mortgage and the Security Agreement upon the
property encumbered thereby.
(4) In the event of any filing by Borrower of any voluntary petition
under the Bankruptcy Code, or the taking by Borrower of any comparable action
under any federal or state law; or the filing of any involuntary petition under
the Bankruptcy Code against Borrower or the taking of comparable action under
any federal or state law against Borrower by any Affiliate of any of them, the
Loan shall become fully recourse against Borrower.
(5) Nothing contained in this Section 8.19 shall be construed to
release Borrower or any Loan Party from liability under (i) the indemnifications
contained in Section 2.10
<PAGE>
(Environmental Matters) of the Mortgage, (ii) the Limited Guaranty, (iii) the
Environmental Indemnity, or (iv) the Other Borrower Loan Documents.
1.30 WRITTEN AGREEMENT.WRITTEN AGREEMENT.
(a) THE RIGHTS AND OBLIGATIONS OF BORROWER AND LENDER SHALL BE
DETERMINED SOLELY FROM THIS WRITTEN LOAN AGREEMENT AND THE
OTHER LOAN DOCUMENTS, AND ANY PRIOR ORAL OR WRITTEN AGREEMENTS
BETWEEN LENDER AND BORROWER CONCERNING THE SUBJECT MATTER
HEREOF AND OF THE OTHER LOAN DOCUMENTS ARE SUPERSEDED BY AND
MERGED INTO THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS.
(b) THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY NOT BE
VARIED BY ANY ORAL AGREEMENTS OR DISCUSSIONS THAT OCCUR
BEFORE, CONTEMPORANEOUSLY WITH, OR SUBSEQUENT TO THE EXECUTION
OF THIS LOAN AGREEMENT OR THE LOAN DOCUMENTS.
(c) THIS WRITTEN LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENTS BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
1.31 Cross-Collateralizations. The Other Borrower Loans and the Related
Party Loans are cross-defaulted with the Loan and with each other. The Other
Borrower Loans are cross-collateralized with the Loan and each other.
Accordingly, the Other Borrower Loans are secured by the Property and the other
collateral contemplated by the Loan Documents (the "Loan Collateral"), and the
Loan is secured by the Other Hotel Properties and other collateral serving as
security for such Other Borrower Loans (the "Other Borrower Loan Collateral").
Without limitation to any other right or remedy provided to Lender in this
Agreement, or any of the other Loan Documents, Borrower acknowledges and agrees
that, to the full extent permitted under applicable law, upon the occurrence of
an Event of Default (i) Lender shall have the right to pursue all of its rights
and remedies in one proceeding, or separately and independently in separate
proceedings which it, as Lender, in its discretion, shall determine from time to
time, (ii) Lender is not required to either marshall assets, sell the Loan
Collateral or any Other Borrower Loan Collateral in any inverse order of
alienation, or be subjected to any "one action" or
<PAGE>
"election of remedies" law or rule, (iii) the exercise by Lender of any remedies
against any Loan Collateral or any Other Borrower Loan Collateral, will not
impede Lender from subsequently or simultaneously exercising remedies against
any other collateral, (iv) all liens and other rights, remedies and privileges
provided to Lender in this Agreement, and in the other Loan Documents (except to
the extent such documents have terminated or expired pursuant to their terms) or
otherwise shall remain in full force and effect until Lender has exhausted all
of its remedies against the Loan Collateral and all Other Borrower Loan
Collateral has been foreclosed, sold and/or otherwise realized upon and (v) the
Loan Collateral and all the Other Borrower Loan Collateral shall be security for
the performance of all of Borrower's obligations hereunder.
1.32 Intentionally Omitted.
1.33 Intentionally Omitted.
1.34 WAIVER OF JURY TRIAL. LENDER AND BORROWER HEREBY WAIVE THE RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT
MATTER OF THIS AGREEMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND
VOLUNTARILY MADE BY LENDER AND BORROWER, AND LENDER AND BORROWER ACKNOWLEDGE
THAT NO PERSON ACTING ON BEHALF OF ANOTHER PARTY TO THIS AGREEMENT HAS MADE ANY
REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO
MODIFY OR NULLIFY ITS EFFECT. LENDER AND BORROWER FURTHER ACKNOWLEDGE THAT THEY
HAVE BEEN REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE
SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL
COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND THAT THEY HAVE HAD THE OPPORTUNITY
TO DISCUSS THIS WAIVER WITH COUNSEL.
1.35 Consent to Jurisdiction. The parties hereto submit to personal
jurisdiction in the State of Ohio for the enforcement of the provisions of this
Agreement and the other Loan Documents and irrevocably waive any and all rights
to object to such jurisdiction for the purposes of litigation to enforce any
provision of this Agreement and the other Loan Documents. Lender and Borrower
hereby consent to the jurisdiction of and agree that any action, suit or
proceeding to enforce this Agreement may be brought in any state or federal
court in the State of Ohio. Lender and Borrower hereby irrevocably waive any
objection which they may have to the laying of the venue of any such action,
suit, or proceeding in any such court and hereby further irrevocably waive any
claim that any such action, suit or proceeding brought in such a court has been
brought in an inconvenient forum. Borrower and Lender hereby consent that
service of process in any action, suit or proceeding may be made by service upon
the Borrower's agent for service of process (in the case of service to be made
upon Borrower), by personal service upon the party being served, or by delivery
in accordance with the notice requirements of Section 8.8 of this
<PAGE>
Agreement.
IN WITNESS WHEREOF, Borrower and Lender have caused this Agreement to be
executed by their duly authorized representatives as of the day, month and year
first above written.
BORROWER:
LODGIAN AMI, INC., a
Maryland corporation
By: /s/ Toni Jones
-----------------------------
Name: Toni Jones
Title: Vice President
LENDER:
BANC ONE CAPITAL FUNDING
CORPORATION, an Ohio corporation
By:/s/ Ronald L. Callentine
-----------------------------
Name: Ronald L. Callentine
Title: Vice President
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
<PAGE>
EXHIBIT B-1
ADDITIONAL NOTE
<PAGE>
EXHIBIT B-2
PRIMARY NOTE
<PAGE>
EXHIBIT C
PERMITTED ENCUMBRANCES
<PAGE>
EXHIBIT D
INSURANCE REQUIREMENTS
(i) Insurance against loss to the Property on an "All Risk" policy form,
covering insurance risks no less broad than those covered under a Standard Multi
Peril (SMP) policy form, which contains a 1987 Commercial 150 "Causes of Loss
Special Format and such other risks as Lender may reasonably require, including
risk of hurricane, insurance covering the cost of demolition of undamaged
portions of any portion of the Property when required by code or ordinance and
the increased cost of reconstruction to conform with current code or ordinance
requirements, in amounts equal to the full replacement cost of the Property
(other than the Land), including fixtures and equipment, Borrower's interest in
leasehold improvements, and the cost of debris removal, with 1008 co-insurance
with an agreed amount endorsement and deductibles of not more than $10,000.00;
(ii) Business interruption/extra expense insurance in amounts sufficient
to pay during any period in which the Property may be damaged or destroyed, on a
gross income basis for a period of twelve (12) months (i) all business income
derived from the Property and (ii) all amounts (including all impositions,
utility charges and insurance premiums) required to be paid by Borrower;
(iii) During the performance of the Renovation Work and the making of any
other alterations or improvements to the Property insurance covering claims
based on the owner's or employer's contingent liability not covered by the
insurance provided in subsection (f) below.
(iv) Insurance against loss or damage by flood or mud slide in compliance
with the Flood Disaster Protection Act of 1973, as amended from time to time, if
the Property or any portion thereof is now, or at any time while the Loan
remains outstanding shall be, situated in any area which an appropriate
Governmental Authority designates as a special flood hazard area, Zone A or Zone
V, in amounts equal to the full replacement value of all above grade structures
on the Property;
(v) Insurance against loss or damage by earthquake, if the Premises are
now, or at any time while the Loan remains outstanding shall be, situated in any
area which is classified as a Major Damage Zone, Zones 3 and 4, by the
International Conference of Building Officials in an amount equal to the
probable maximum loss for the Premises, fixtures and equipment, plus the cost of
debris removal;
(vi) Commercial general public liability insurance, with the location of
the Property designated thereon, against death, bodily injury and property
damage arising in connection with the Property with Borrower listed as the named
insured with such limits as Lender may
<PAGE>
reasonably require, but in no event less than $1,000,000, and written on a 1986
Standard ISO occurrence basis form or equivalent form, and excess umbrella
liability insurance with such limits as Lender may reasonably require, but in no
event less than $10,000,000; and
(vii) Such other insurance relating to the Property and the use and
operation thereof, as Lender may, from time to time, reasonably require,
including dramshop, products liability and workers' compensation insurance.
All insurance shall: (i) be carried by companies qualified to do business
in the State with a Best's rating of A-6 or better; (ii) be in form and content
reasonably acceptable to Lender; (iii) provide thirty (30) days' advance written
notice to Lender before any cancellation, material modification or notice of
non-renewal.
All physical damage policies and renewals shall contain a standard
mortgagee clause naming Lender as mortgagee, which clause shall expressly state
that any breach of any condition or warranty by Borrower shall not prejudice the
rights of Lender under such insurance, and a loss payable clause in favor of
Lender for personal property, contents, inventory, equipment and business
interruption. All liability policies and renewals shall name Lender as an
additional insured with respect to policies in which Lender has an interest. No
additional parties shall appear in the mortgage or loss payable clause without
Lender's prior written consent. All deductibles shall be in amounts reasonably
acceptable to Lender. In the event of the foreclosure of the Mortgage or any
other transfer of title to the Property in full or partial satisfaction of the
Loan, all right, title and interest of Borrower in and to all insurance policies
and renewals thereof then in force shall pass to the purchaser or grantee.
During any period during which construction is conducted on the Premises
and during which period the construction and materials are not covered by the
existing policies, Borrower shall cause to be provided to Lender, premium
prepaid insurance policies covering the Property (which during construction
shall be on an "All-Risk" perils, including theft, "Builder's Risk", "Completed
Value" form) in companies and forms satisfactory to Lender, and in amounts equal
to the replacement costs of the Improvements (including construction materials
and personal property on or off site) covering insurance risks no less broad
than those covered under a Standard Multi Peril (SMP) policy form, which
contains a 1987 Commercial ISO "Causes of Loss Special Form", with coverage for
such other expenses as Lender may reasonably require, including: debris removal;
cost of demolition of the undamaged portion of a building when required by code
or ordinance; increased cost of reconstruction to conform with current code or
ordinance requirements; real estate property taxes; architect, engineering, and
consulting fees; legal and accounting fees, including the cost of in-house
attorneys and paralegals; advertising and promotional expenses; interest on
money borrowed; additional commissions incurred upon renegotiating leases and
any and all other expenses which may be incurred as a result of any
<PAGE>
property loss or destruction by an insured peril. Such insurance shall contain
an agreed amount endorsement (such amount to include foundation and underground
pipes) and bear a 100% co-insurance clause. The deductible shall be not more
than $10,000. Said policies shall contain a standard mortgagee clause naming
Lender as mortgagee, and a permission to occupy endorsement.
In addition, Borrower shall cause to be furnished to Lender certificates
from the insurance carrier for each general contractor evidencing workers'
compensation, employers' liability, commercial auto liability, and commercial
general liability insurance (including contractual liability and completed
operations coverage) written on a 1986 standard "ISO" occurrence basis form or
equivalent and excess umbrella coverage, carried during the course of
construction, with general liability insurance limits as Lender may reasonably
require, but in no event less than $1,000,000. Lender shall be named as an
additional insured under such liability policies. Borrower shall cause each
subcontractor to maintain commercial general liability, commercial automobile
liability, workers' compensation, employers' liability, and excess umbrella
liability coverage in form and amount reasonably satisfactory to Lender.
The additional insurance provisions for construction periods do not
obviate or otherwise affect requirements of the Loan Agreement or the previous
portions of this Exhibit, which requirements remain a part of this Agreement in
their entirety.
<PAGE>
EXHIBIT E
RENOVATION WORK
<PAGE>
Exhibit 10.13.2
GUARANTY AND INDEMNITY AGREEMENT
THIS GUARANTY AND INDEMNITY AGREEMENT (this "Agreement"), made effective
as of the 8th day of December 1998, by SERVICO CONCORD, INC., a California
corporation ("SCI"), PENMOCO, INC., a Michigan corporation ("PI"), and ISLAND
MOTEL ENTERPRISES, INC., a Georgia corporation ("IME"), each with a principal
place of business at Two Live Oak Center, 3445 Peachtree Road, NE, Suite 700,
Atlanta, Georgia 30326 (SCI, PI and IME are sometimes hereinafter collectively
referred to as "Guarantor"), to and for the benefit of BANC ONE CAPITAL FUNDING
CORPORATION, an Ohio corporation, having an office at 150 East Gay Street, 24th
Floor, Columbus, Ohio 43215 ("Lender").
RECITALS:
A. Lender and Lodgian AMI, Inc., a Maryland corporation ("Borrower"), have
entered into a Loan Agreement of even date herewith (as the same may be amended
from time to time, the "Loan Agreement") pursuant to which Lender has agreed to
make a loan to Borrower in the amount of up to $3,322,817 (the "Loan"), which
Loan is evidenced by that certain Promissory Note of even date herewith in the
principal amount of $2,924,079 (the "Primary Note") and that certain Promissory
Note of even date herewith in the principal amount of $398,738 (the "Additional
Note" and, together with the Primary Note, the "Note"). The Loan is secured by,
inter alia, that certain Leasehold Deed of Trust and Security Agreement of even
date herewith from Borrower to Lender encumbering Borrower's property commonly
known as Holiday Inn - Glen Burnie North, located at 6323 Governor Ritchie
Highway, Glen Burnie, Maryland 21061 (the "Mortgage") (the Note, the Loan
Agreement, the Mortgage and every other document, instrument and agreement
evidencing or securing the Loan are hereinafter sometimes collectively referred
to as the "Loan Documents");
B. Borrower is an affiliate of PI, SCI and IME;
C. Lender is extending financial accommodations to PI, SCI and IME
concurrently with the Loan and, in order to induce Lender to extend such
financial accommodations, PI, SCI and IME are willing to execute this Agreement;
D. Lender is unwilling to make the Loan without the execution and delivery
of this Agreement by PI, SCI and IME;
NOW, THEREFORE, to induce Lender to make the Loan and in consideration of
One Dollar ($1.00) and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Guarantor, intending to be legally
bound hereby, jointly and severally,
<PAGE>
agree as follows:
1. Liabilities.
(a) Notwithstanding any provision contained in the Note, the Loan
Agreement, the Mortgage or any other Loan Document to the contrary, Guarantor
hereby absolutely, primarily, unconditionally and irrevocably guarantees to
Lender, its successors and assigns, the full prompt and complete payment and
performance of all obligations and liabilities of Borrower arising under the
Loan Documents (all of which obligations and liabilities are collectively
hereinafter referred to as the "Liabilities"). All terms used and not otherwise
defined herein shall have the meanings ascribed to them in the Loan Agreement.
(b) The validity of this Agreement and the obligations of Guarantor
hereunder shall in no way be terminated, abated, affected or impaired by the
happening from time to time of any event or condition, including, without
limitation, any of the following: (i) the assertion or non-assertion by Lender
of any of the rights or remedies available to Lender pursuant to the provisions
of the Loan Documents or pursuant to any applicable statutes; (ii) the waiver by
Lender of, or the failure of Lender to enforce, or the lack of diligence by
Lender in connection with, the enforcement of any of its rights or remedies
under the Loan Documents; (iii) the granting by Lender of any indulgence or
extension of time; (iv) the exercise by Lender of any so-called self-help
remedies; (v) any other act, omission or conditions which might in any manner or
to any extent vary the risk to Guarantor or might otherwise operate as a
discharge or release of the Guarantor under applicable law; (vi) the invalidity
or unenforceability of all or any portion or provision of the Note; (vii) any
release or discharge of or accord and satisfaction with Borrower or any other
person or entity, by variation of the terms of the Note or otherwise; (viii) the
impairment, modification, change, release, discharge or limitation of the
liability of Borrower or the Guarantor or any of their estates in bankruptcy,
resulting from or pursuant to the application of the bankruptcy or insolvency
laws of or any decision of any court of the United States or any state thereof;
(ix) any present or future law or order of any government (de jure or de facto)
or of any agency thereof purporting to reduce, amend or otherwise affect the
Liabilities or to vary any terms of payment, satisfaction or discharge thereof;
(x) the waiver, compromise, settlement, release, extension, amendment, change,
modification or termination of the terms of the Liabilities or any or all of the
obligations, covenants or agreements of Borrower under the Loan Documents
(except by satisfaction in full of all Liabilities) or of the Guarantor under
this Agreement; (xi) the extension of the time for satisfaction, discharge or
payment of the Liabilities or any part thereof owing or payable by Borrower
under the Loan Documents or of the time for performance of any other
obligations, covenants or agreements under or arising out of this Agreement or
the extension or renewal of any thereof; (xii) the existence of any other
guaranty of the Liabilities in favor of Lender, or the enforcement or attempted
enforcement of such other guaranty; and (xiii) any event or action that would in
the absence of this paragraph result in the release or discharge of the
Guarantor from the performance or observance of any obligation, covenant or
agreement contained in this Agreement or any other agreement.
<PAGE>
2. Waivers. The Guarantor hereby waives all notice of any default in the
payment of or non-performance of any Liabilities, all protest, demands, notices
or presentments of any kind, notice of any acceptance of this Agreement and all
matters and rights which may be raised in avoidance of, or in defense against,
any action to enforce the obligations of the Guarantor hereunder; provided,
however, that nothing herein shall waive the Guarantor's right to assert payment
or performance of any Liabilities as a defense to a claim relating to such
Liabilities under this Agreement, to the extent of such payment or performance.
The Guarantor hereby waives any and all suretyship defenses or defenses in the
nature thereof without in any manner limiting any other provisions of this
Agreement. Notwithstanding anything to the contrary contained herein, the
Guarantor hereby irrevocably waives all rights the Guarantor may have at law or
in equity, including, without limitation, any law subrogating the Guarantor to
the rights of Lender, to seek contribution, indemnification or any other form of
reimbursement from Borrower and any other person now or hereafter primarily or
secondarily liable for any obligations of Borrower to Lender, including without
limitation, the Liabilities, for any payment or performance made by the
Guarantor under or in connection with this Agreement, unless and until
irrevocable payment in full of the Note has been received by Lender.
3. Primary Liability.
(a) The Guarantor's liability under this Agreement shall be primary,
and with respect to any right of action which shall accrue to Lender relating to
any Liabilities, Lender may at its sole option and without notice or demand,
proceed directly against the Guarantor without having proceeded against Borrower
or any other person or entity liable to any extent for any of the Liabilities or
against the collateral under the Loan Documents. The Guarantor's liability
hereunder shall continue without regard to whether or not Lender may have
instituted or prosecuted or obtained or realized any judgment in any suit,
action or proceeding or shall have exhausted any of its remedies or taken any
steps to enforce any of its rights under or pursuant to the Loan Documents or at
law or in equity, or otherwise, and without regard to any other condition or
contingency, so long as any of the Liabilities remains unsatisfied to any
extent. This Agreement is an agreement of payment and performance and not merely
of collection.
(b) Each default on any of the Liabilities shall give rise to a
separate cause of action and separate suits may be brought hereunder as each
cause of action arises or, at Lender's option, any or all causes of action which
arise prior to or after any suit is commenced hereunder may be included in such
suit.
4. Representations. The Guarantor further represents to Lender, as an
inducement to making the Loan, that there is not pending or threatened any
litigation, arbitration, administrative or governmental proceeding against the
Guarantor which would in any way prohibit or impede the adoption, execution, or
performance of this Agreement by the Guarantor or which would affect any of the
undertakings herein; that compliance by the Guarantor with the Guarantor's
<PAGE>
obligations under this Agreement has not resulted and will not result in the
violation of this Agreement or any agreement or other instrument to which the
Guarantor is a party or by which the Guarantor or any of the Guarantor's assets
are bound; that this Agreement and all actions contemplated to be taken by the
Guarantor hereunder have been duly authorized; and that this Agreement and such
actions and undertakings are valid and binding upon the Guarantor and
enforceable against the Guarantor in accordance with their terms.
5. Borrower's Actions. No encumbrance, assignment, leasing, subletting,
sale or other transfer by Borrower of any of Borrower's assets shall operate to
extinguish or diminish the liability of the Guarantor under this Agreement.
6. Bankruptcy. If Borrower files a petition for reorganization,
arrangement, composition or similar relief under any present or future provision
of the Federal Bankruptcy Code, or if such a petition is filed against Borrower
by any member or partner of Borrower, by Guarantor or by any person or entity
affiliated with, related to or in which a beneficial interest is owned by such
member or partner or Guarantor (each, a "Bankruptcy Event"), Guarantor shall,
from and after the date of such filing, absolutely, primarily, unconditionally
and irrevocably guarantee to Lender, its successors and assigns, the full,
prompt and absolute payment, performance, observance and discharge of all of
Borrower's obligations and liabilities arising under the Loan Documents,
including the repayment of all principal and interest under the Note and the
payment of all other sums payable by Borrower under the Loan Documents.
7. No Reliance. The Guarantor assumes the responsibility for being and
keeping itself informed of the financial condition of Borrower and of all other
circumstances bearing upon the risk of failure to pay, perform or discharge any
of the obligations and liabilities of Borrower which diligent inquiry would
reveal, and Lender shall have no duty to advise the Guarantor of information
known to Lender regarding such condition or any such circumstance.
8. Payment of Expenses. The Guarantor shall be responsible to Lender for
all expenses (including reasonable attorneys' fees), incurred by Lender in
enforcing any obligations of the Guarantor under this Agreement.
9. Successors and Assigns. All references to Lender and Guarantor shall be
deemed to include references to the successors and assigns of Lender and
Guarantor.
10. Governing Law. In all respects, including without limitation, matters
of construction and performance of this Agreement and the obligations arising
hereunder, this Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of Ohio applicable to contracts and
obligations made and performed in such state and any applicable laws of the
United States of America. Interpretation and construction of this Agreement
shall be according to the contents hereof and without presumption or standard of
construction in favor of or against Guarantor or Lender.
<PAGE>
11. Severability. If any term or provision of this Agreement or the
application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Agreement shall be valid and enforced to the fullest
extent permitted by law; provided, however, all rights, powers and remedies
provided herein may be exercised only to the extent that the exercise thereof
does not violate any applicable law, and are intended to be limited to the
extent necessary so that they will not render this Agreement invalid or
unenforceable under any applicable law.
12. No Waiver. The waiver of any provision of this Agreement by Lender
shall constitute a waiver of that provision on that occasion only, and shall not
constitute a waiver of any other provision of this Agreement, or that provision
with respect to any other occasion.
13. Commercial Transaction.
(a) TO INDUCE LENDER TO ENTER INTO THE COMMERCIAL LOAN TRANSACTION
EVIDENCED BY AND SECURED BY THE LOAN DOCUMENTS, GUARANTOR AGREES THAT THE SAID
TRANSACTION IS COMMERCIAL AND NOT A CONSUMER TRANSACTION.
(b) Each of the waivers set forth in this Agreement is made with
knowledge of its significance and consequences, and under the circumstances the
waivers are reasonable. If any of said waivers is determined to be contrary to
any applicable law or public policy, such waiver shall be effective only to the
maximum extent permitted by law.
14. Jury Trial. LENDER AND GUARANTOR HEREBY WAIVE THE RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER
OF THIS AGREEMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE
BY LENDER AND GUARANTOR, AND LENDER AND GUARANTOR ACKNOWLEDGE THAT NO PERSON
ACTING ON BEHALF OF ANOTHER PARTY TO THIS AGREEMENT HAS MADE ANY REPRESENTATIONS
OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR
NULLIFY ITS EFFECT. LENDER AND GUARANTOR FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN
REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF
THIS AGREEMENT AND IN THE MAKING OF ALL WAIVERS CONTAINED HEREIN BY INDEPENDENT
LEGAL COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND THAT LENDER AND GUARANTOR
HAVE HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.
<PAGE>
15. Consent to Jurisdiction. GUARANTOR HEREBY SUBMITS TO PERSONAL
JURISDICTION IN THE STATE OF OHIO FOR THE ENFORCEMENT OF THE PROVISIONS OF THIS
AGREEMENT AND IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO OBJECT TO SUCH
JURISDICTION FOR THE PURPOSES OF LITIGATION TO ENFORCE ANY PROVISION OF THIS
AGREEMENT. GUARANTOR HEREBY CONSENTS TO THE JURISDICTION OF AND AGREES THAT ANY
ACTION, SUIT OR PROCEEDING TO ENFORCE THIS AGREEMENT MAY BE BROUGHT IN ANY STATE
OR FEDERAL COURT IN THE STATE OF OHIO. GUARANTOR HEREBY IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY HAVE TO THE LAYING OF THE VENUE OF ANY SUCH ACTION, SUIT,
OR PROCEEDING IN ANY SUCH COURT AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM
THAT ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. EACH GUARANTOR HEREBY APPOINTS CT CORPORATION
AS THEIR AGENT FOR SERVICE OF PROCESS. GUARANTOR HEREBY CONSENTS THAT SERVICE OF
PROCESS IN ANY ACTION, SUIT OR PROCEEDING MAY BE MADE BY SERVICE UPON THE
AFORESAID AGENT FOR SERVICE OF PROCESS, BY PERSONAL SERVICE UPON THE PARTY BEING
SERVED, OR BY DELIVERY IN ACCORDANCE WITH THE NOTICE REQUIREMENTS OF SECTION 16
OF THIS AGREEMENT.
16. Notices. Any notice which any party hereto may be required or may
desire to give hereunder shall be delivered personally, or by overnight express
courier, addressed in the case of Guarantor to:
Penmoco, Inc., Servico Concord, Inc. and
Island Motel Enterprises, Inc.
Two Live Oak Center
3445 Peachtree Road, NE
Suite 700
Atlanta, Georgia 30326
with a copy to:
Stearns, Weaver, Miller, Weissler,
Alhadeff & Sitterson, P.A.
Museum Tower
150 West Flagler Street
Miami, Florida 33130
Attention: Robert Weissler, Esq.
in the case of Lender to:
<PAGE>
Banc One Capital Funding Corporation
150 East Gay Street, 24th Floor
Columbus, Ohio 43215
Attention: Loan Servicing
with a copy to:
Banc One Capital Markets, Inc.
150 East Gay Street, 24th Floor
Columbus, Ohio 43215
Attention: Legal Department and Real Estate Group
or at such other addresses or to the attention of such other persons as may from
time to time be designated by the party to be addressed by written notice to the
other in the manner herein provided. Notices, demands and requests given in the
manner aforesaid shall be deemed sufficiently served or given for all purposes
hereunder when received or when delivery is refused or when the same are
returned to sender for failure to be called for.
17. Miscellaneous.
(a) This Agreement may not be modified, altered or amended nor may
any provision hereof or rights hereunder be waived, except by an instrument in
writing signed by the person or entity against which such modification,
alteration, amendment or waiver is sought to be enforced.
(b) Except as provided in Section 6 above, this Agreement shall
terminate upon the irrevocable payment by Borrower to Lender of all amounts
evidenced by the Note and the other Loan Documents.
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this instrument to be duly
executed as of the date first written above.
GUARANTOR:
SERVICO CONCORD, INC.
a California corporation
By: /s/ Toni Jones
--------------
Name: Toni Jones
Title: Vice President
ISLAND MOTEL ENTERPRISES, INC.
a Georgia corporation
By: /s/ Toni Jones
--------------
Name: Toni Jones
Title: Vice President
PENMOCO, INC.
a Michigan corporation
By: /s/ Toni Jones
--------------
Name: Toni Jones
Title: Vice President
<PAGE>
Exhibit 10.13.3
LIMITED GUARANTY AND INDEMNITY AGREEMENT
THIS LIMITED GUARANTY AND INDEMNITY AGREEMENT (this "Agreement"), made
effective as of the 8th day of December 1998, by LODGIAN, INC., a Delaware
corporation, with a principal place of business at Two Live Oak Center, 3445
Peachtree Road, NE, Suite 700, Atlanta, Georgia 30326 ("Guarantor"), to and for
the benefit of BANC ONE CAPITAL FUNDING CORPORATION, an Ohio corporation, having
an office at 150 East Gay Street, 24th Floor, Columbus, Ohio 43215 ("Lender")
RECITALS:
A. Lender and Lodgian AMI, Inc., a Maryland corporation ("Borrower"), have
entered into a Loan Agreement of even date herewith (as the same may be amended
from time to time, the "Loan Agreement") pursuant to which Lender has agreed to
make a loan to Borrower in the amount of up to $3,322,817 (the "Loan"), which
Loan is evidenced by that certain Promissory Note of even date herewith in the
principal amount of $2,924,079 (the "Primary Note") and that certain Promissory
Note of even date herewith in the principal amount of $398,738 (the "Additional
Note," and together with the Primary Note, the "Note"). The Loan is secured by,
inter alia, that certain Purchase Money Leasehold Deed of Trust and Security
Agreement of even date herewith from Borrower to Lender encumbering Borrower's
property commonly known as Holiday Inn - Glen Burnie North, located at 6323
Governor Ritchie Highway, Glen Burnie, Maryland 21061 (the "Mortgage") (the
Note, the Loan Agreement, the Mortgage and every other document, instrument and
agreement evidencing or securing the Loan are hereinafter sometimes collectively
referred to as the "Loan Documents");
B. Borrower is a direct or indirect subsidiary of Guarantor;
C. Guarantor will directly benefit from the making of the Loan to
Borrower; and
D. Lender is unwilling to make the Loan without the execution and delivery
of this Agreement by Guarantor;
NOW, THEREFORE, to induce Lender to make the Loan and in consideration of
One Dollar ($1.00) and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Guarantor, intending to be legally
bound hereby, jointly and severally, agree as follows:
1. Liabilities.
<PAGE>
(a) Notwithstanding any provision contained in the Note, the Loan
Agreement, the Mortgage or any other Loan Document to the contrary, Guarantor
hereby absolutely, primarily, unconditionally and irrevocably guarantees to
Lender, its successors and assigns, (i) the full, prompt and complete payment
and performance of all principal, interest, charges, fees and other monetary
obligations of Borrower under the Primary Note, provided, however, that upon
Renovation Completion and so long as no Event of Default then exists, such
obligation shall terminate and become null and void, and (ii) the full, prompt
and complete payment and performance of all principal, interest, charges, fees
and other monetary obligations of Borrower under the Additional Note, and (iii)
the full, prompt and complete payment and performance of all obligations and
liabilities of Borrower arising under Section 8.19 (c) and (d) of the Loan
Agreement and Sections 2.10 and 4.13 of the Mortgage (all of which obligations
and liabilities are collectively hereinafter referred to as the "Liabilities").
All terms used and not otherwise defined herein shall have the meanings ascribed
to them in the Loan Agreement.
(b) The validity of this Agreement and the obligations of Guarantor
hereunder shall in no way be terminated, abated, affected or impaired by the
happening from time to time of any event or condition, including, without
limitation, any of the following: (i) the assertion or non-assertion by Lender
of any of the rights or remedies available to Lender pursuant to the provisions
of the Loan Documents or pursuant to any applicable statutes; (ii) the waiver by
Lender of, or the failure of Lender to enforce, or the lack of diligence by
Lender in connection with, the enforcement of any of its rights or remedies
under the Loan Documents; (iii) the granting by Lender of any indulgence or
extension of time; (iv) the exercise by Lender of any so-called self-help
remedies; (v) any other act, omission or conditions which might in any manner or
to any extent vary the risk to Guarantor or might otherwise operate as a
discharge or release of the Guarantor under applicable law; (vi) the invalidity
or unenforceability of all or any portion or provision of the Note; (vii) any
release or discharge of or accord and satisfaction with Borrower or any other
person or entity, by variation of the terms of the Note or otherwise; (viii) the
impairment, modification, change, release, discharge or limitation of the
liability of Borrower or the Guarantor or any of their estates in bankruptcy,
resulting from or pursuant to the application of the bankruptcy or insolvency
laws of or any decision of any court of the United States or any state thereof;
(ix) any present or future law or order of any government (de jure or de facto)
or of any agency thereof purporting to reduce, amend or otherwise affect the
Liabilities or to vary any terms of payment, satisfaction or discharge thereof;
(x) the waiver, compromise, settlement, release, extension, amendment, change,
modification or termination of the terms of the Liabilities or any or all of the
obligations, covenants or agreements of Borrower under the Loan Documents
(except by satisfaction in full of all Liabilities) or of the Guarantor under
this Agreement; (xi) the extension of the time for satisfaction, discharge or
payment of the Liabilities or any part thereof owing or payable by Borrower
under the Loan Documents or of the time for performance of any other
obligations, covenants or agreements under or arising out of this
<PAGE>
Agreement or the extension or renewal of any thereof; (xii) the existence of any
other guaranty of the Liabilities in favor of Lender, or the enforcement or
attempted enforcement of such other guaranty; and (xiii) any event or action
that would in the absence of this paragraph result in the release or discharge
of the Guarantor from the performance or observance of any obligation, covenant
or agreement contained in this Agreement or any other agreement.
2. Waivers. The Guarantor hereby waives all notice of any default in the
payment of or non-performance of any Liabilities, all protest, demands, notices
or presentments of any kind, notice of any acceptance of this Agreement and all
matters and rights which may be raised in avoidance of, or in defense against,
any action to enforce the obligations of the Guarantor hereunder; provided,
however, that nothing herein shall waive the Guarantor's right to assert payment
or performance of any Liabilities as a defense to a claim relating to such
Liabilities under this Agreement, to the extent of such payment or performance.
The Guarantor hereby waives any and all suretyship defenses or defenses in the
nature thereof without in any manner limiting any other provisions of this
Agreement. Notwithstanding anything to the contrary contained herein, the
Guarantor hereby irrevocably waives all rights the Guarantor may have at law or
in equity, including, without limitation, any law subrogating the Guarantor to
the rights of Lender, to seek contribution, indemnification or any other form of
reimbursement from Borrower and any other person now or hereafter primarily or
secondarily liable for any obligations of Borrower to Lender, including without
limitation, the Liabilities, for any payment or performance made by the
Guarantor under or in connection with this Agreement, unless and until
irrevocable payment in full of the Note has been received by Lender.
3. Primary Liability.
(a) The Guarantor's liability under this Agreement shall be primary,
and with respect to any right of action which shall accrue to Lender relating to
any Liabilities, Lender may at its sole option and without notice or demand,
proceed directly against the Guarantor without having proceeded against Borrower
or any other person or entity liable to any extent for any of the Liabilities or
against the collateral under the Loan Documents. The Guarantor's liability
hereunder shall continue without regard to whether or not Lender may have
instituted or prosecuted or obtained or realized any judgment in any suit,
action or proceeding or shall have exhausted any of its remedies or taken any
steps to enforce any of its rights under or pursuant to the Loan Documents or at
law or in equity, or otherwise, and without regard to any other condition or
contingency, so long as any of the Liabilities remains unsatisfied to any
extent. This Agreement is an agreement of payment and performance and not merely
of collection.
(b) Each default on any of the Liabilities shall give rise to a
separate cause of action and separate suits may be brought hereunder as each
cause of action arises or, at Lender's option, any or all causes of action which
arise prior to or after any suit is commenced hereunder may be included in such
suit. <PAGE>
4. Representations. The Guarantor further represents to Lender, as an
inducement to making the Loan, that there is not pending or threatened any
litigation, arbitration, administrative or governmental proceeding against the
Guarantor which would in any way prohibit or impede the adoption, execution, or
performance of this Agreement by the Guarantor or which would affect any of the
undertakings herein; that compliance by the Guarantor with the Guarantor's
obligations under this Agreement has not resulted and will not result in the
violation of this Agreement or any agreement or other instrument to which the
Guarantor is a party or by which the Guarantor or any of the Guarantor's assets
are bound; that this Agreement and all actions contemplated to be taken by the
Guarantor hereunder have been duly authorized; and that this Agreement and such
actions and undertakings are valid and binding upon the Guarantor and
enforceable against the Guarantor in accordance with their terms.
5. Borrower's Actions. No encumbrance, assignment, leasing, subletting,
sale or other transfer by Borrower of any of Borrower's assets shall operate to
extinguish or diminish the liability of the Guarantor under this Agreement.
6. Bankruptcy. If Borrower files a petition for reorganization,
arrangement, composition or similar relief under any present or future provision
of the Federal Bankruptcy Code, or if such a petition is filed against Borrower
by any member or partner of Borrower, by Guarantor or by any person or entity
affiliated with, related to or in which a beneficial interest is owned by such
member or partner or Guarantor (each, a "Bankruptcy Event"), Guarantor shall,
from and after the date of such filing, absolutely, primarily, unconditionally
and irrevocably guarantee to Lender, its successors and assigns, the full,
prompt and absolute payment, performance, observance and discharge of all of
Borrower's obligations and liabilities arising under the Loan Documents,
including the repayment of all principal and interest under the Note and the
payment of all other sums payable by Borrower under the Loan Documents.
7. No Reliance. The Guarantor assumes the responsibility for being and
keeping itself informed of the financial condition of Borrower and of all other
circumstances bearing upon the risk of failure to pay, perform or discharge any
of the obligations and liabilities of Borrower which diligent inquiry would
reveal, and Lender shall have no duty to advise the Guarantor of information
known to Lender regarding such condition or any such circumstance.
8. Payment of Expenses. The Guarantor shall be responsible to Lender for
all expenses (including reasonable attorneys' fees), incurred by Lender in
enforcing any obligations of the Guarantor under this Agreement.
9. Successors and Assigns. All references to Lender and Guarantor shall be
deemed to include references to the successors and assigns of Lender and
Guarantor.
<PAGE>
10. Governing Law. In all respects, including without limitation, matters
of construction and performance of this Agreement and the obligations arising
hereunder, this Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of Ohio applicable to contracts and
obligations made and performed in such state and any applicable laws of the
United States of America. Interpretation and construction of this Agreement
shall be according to the contents hereof and without presumption or standard of
construction in favor of or against Guarantor or Lender.
11. Severability. If any term or provision of this Agreement or the
application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Agreement shall be valid and enforced to the fullest
extent permitted by law; provided, however, all rights, powers and remedies
provided herein may be exercised only to the extent that the exercise thereof
does not violate any applicable law, and are intended to be limited to the
extent necessary so that they will not render this Agreement invalid or
unenforceable under any applicable law.
12. No Waiver. The waiver of any provision of this Agreement by Lender
shall constitute a waiver of that provision on that occasion only, and shall not
constitute a waiver of any other provision of this Agreement, or that provision
with respect to any other occasion.
13. Commercial Transaction.
(a) TO INDUCE LENDER TO ENTER INTO THE COMMERCIAL LOAN TRANSACTION
EVIDENCED BY AND SECURED BY THE LOAN DOCUMENTS, GUARANTOR AGREES THAT THE SAID
TRANSACTION IS COMMERCIAL AND NOT A CONSUMER TRANSACTION.
(b) Each of the waivers set forth in this Agreement is made with
knowledge of its significance and consequences, and under the circumstances the
waivers are reasonable. If any of said waivers is determined to be contrary to
any applicable law or public policy, such waiver shall be effective only to the
maximum extent permitted by law.
14. Jury Trial. LENDER AND GUARANTOR HEREBY WAIVE THE RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER
OF THIS AGREEMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE
BY LENDER AND GUARANTOR, AND LENDER AND GUARANTOR ACKNOWLEDGE THAT NO PERSON
ACTING ON BEHALF OF ANOTHER PARTY TO THIS AGREEMENT HAS MADE ANY REPRESENTATIONS
OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN
<PAGE>
ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. LENDER AND GUARANTOR FURTHER
ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE
REPRESENTED) IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF ALL WAIVERS
CONTAINED HEREIN BY INDEPENDENT LEGAL COUNSEL, SELECTED OF THEIR OWN FREE WILL,
AND THAT LENDER AND GUARANTOR HAVE HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER
WITH COUNSEL.
15. Consent to Jurisdiction. GUARANTOR HEREBY SUBMITS TO PERSONAL
JURISDICTION IN THE STATE OF OHIO FOR THE ENFORCEMENT OF THE PROVISIONS OF THIS
AGREEMENT AND IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO OBJECT TO SUCH
JURISDICTION FOR THE PURPOSES OF LITIGATION TO ENFORCE ANY PROVISION OF THIS
AGREEMENT. GUARANTOR HEREBY CONSENTS TO THE JURISDICTION OF AND AGREES THAT ANY
ACTION, SUIT OR PROCEEDING TO ENFORCE THIS AGREEMENT MAY BE BROUGHT IN ANY STATE
OR FEDERAL COURT IN THE STATE OF OHIO. GUARANTOR HEREBY IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY HAVE TO THE LAYING OF THE VENUE OF ANY SUCH ACTION, SUIT,
OR PROCEEDING IN ANY SUCH COURT AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM
THAT ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. EACH GUARANTOR HEREBY APPOINTS CT CORPORATION
AS THEIR AGENT FOR SERVICE OF PROCESS. GUARANTOR HEREBY CONSENTS THAT SERVICE OF
PROCESS IN ANY ACTION, SUIT OR PROCEEDING MAY BE MADE BY SERVICE UPON THE
AFORESAID AGENT FOR SERVICE OF PROCESS, BY PERSONAL SERVICE UPON THE PARTY BEING
SERVED, OR BY DELIVERY IN ACCORDANCE WITH THE NOTICE REQUIREMENTS OF SECTION 16
OF THIS AGREEMENT.
16. Notices. Any notice which any party hereto may be required or may
desire to give hereunder shall be delivered personally, or by overnight express
courier, addressed in the case of Guarantor to:
Lodgian, Inc.
Two Live Oak Center
3445 Peachtree Road, NE
Suite 700
Atlanta, Georgia 30326
with a copy to:
Stearns, Weaver, Miller, Weissler,
<PAGE>
Alhadeff & Sitterson, P.A.
Museum Tower
150 West Flagler Street
Miami, Florida 33130
Attention: Robert Weissler, Esq.
in the case of Lender to:
Banc One Capital Funding Corporation
150 East Gay Street, 24th Floor
Columbus, Ohio 43215
Attention: Loan Servicing
<PAGE>
with a copy to:
Banc One Capital Markets, Inc.
150 East Gay Street, 24th Floor
Columbus, Ohio 43215
Attention: Legal Department and Real Estate Group
or at such other addresses or to the attention of such other persons as may from
time to time be designated by the party to be addressed by written notice to the
other in the manner herein provided. Notices, demands and requests given in the
manner aforesaid shall be deemed sufficiently served or given for all purposes
hereunder when received or when delivery is refused or when the same are
returned to sender for failure to be called for.
17. Miscellaneous.
(a) This Agreement may not be modified, altered or amended nor may
any provision hereof or rights hereunder be waived, except by an instrument in
writing signed by the person or entity against which such modification,
alteration, amendment or waiver is sought to be enforced.
(b) Except as provided in Section 6 above, this Agreement shall
terminate upon the irrevocable payment by Borrower to Lender of all amounts
evidenced by the Note and the other Loan Documents.
IN WITNESS WHEREOF, the undersigned has caused this instrument to be duly
executed as of the date first written above.
GUARANTOR:
LODGIAN, INC., a Delaware corporation
By: /s/ Toni Jones
--------------
Name: Toni Jones
Title: Vice President
<PAGE>
Exhibit 10.14.1
LOAN AGREEMENT
IN THE AMOUNT OF $35,073,117
Dated December 8, 1998
BETWEEN
LODGIAN AMI, INC.
BORROWER
AND
BANC ONE CAPITAL FUNDING CORPORATION
LENDER
<PAGE>
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS 1
Defined Terms 1
ARTICLE 2 BORROWER'S REPRESENTATIONS, WARRANTIES AND COVENANTS 8
Representations, Warranties and Covenants 8
Representations Remade 14
ARTICLE 3 GENERAL CONDITIONS OF LOAN 15
Loan Documents 15
Additional Requirements 15
ARTICLE 4 FURTHER COVENANTS OF BORROWER 17
Covenants 17
ARTICLE 5 AGREEMENT TO LEND 27
Agreement to Lend 27
ARTICLE 6 INSURANCE AND CASUALTY 27
Insurance Provisions 27
ARTICLE 6A RENOVATION WORK 33
6A 1 Construction 33
6A 2 Completion 33
6A 3 Compliance with Laws 33
Other Remedies of Lender 33
ARTICLE 7 BORROWER'S DEFAULT 34
Events of Default 34
Remedies 35
ARTICLE 8 MISCELLANEOUS 37
Indemnification 37
Defense of Claims 37
Performance by Lender 37
Transfer or Assignment 38
Lender's Actions 38
Time is of the Essence 38
Waivers 38
Notices 39
Successors and Assigns 39
No Partnership 40
Brokerage Claims 40
Publicity 40
Documents Satisfactory to Lender 40
Additional Assurances 40
Entire Agreement 40
Severability 40
<PAGE>
No Third Party Beneficiary 40
CHOICE OF LAW 41
Limitation on Liability 41
WRITTEN AGREEMENT 43
Cross-Collateralizations. The Other Borrower Loans and the Related
Party Loans are 43
Intentionally Omitted 44
Intentionally Omitted 44
WAIVER OF JURY TRIAL 44
Consent to Jurisdiction 44
<PAGE>
Exhibit A Legal Description
Exhibit B-1 Additional Note
Exhibit B-2 Primary Note
Exhibit C Permitted Encumbrances
Exhibit D Insurance Requirements
Exhibit E Renovation Work
Schedule 1 Description of Ground Lease
<PAGE>
THIS LOAN AGREEMENT (this "Agreement") is dated effective as of December
8, 1998 between LODGIAN AMI, INC., a Maryland corporation, with an office and
principal place of business at Two Live Oak Center, 3445 Peachtree Road, NE,
Suite 700, Atlanta, Georgia 30326 ("Borrower") and BANC ONE CAPITAL FUNDING
CORPORATION, an Ohio corporation having a principal place of business at 150
East Gay Street, 24th Floor, Columbus, Ohio 43215 ("Lender").
R E C I T A L S
The Borrower desires to borrow from Lender up to $35,073,117 for the
financing and renovation of that certain piece or parcel of real property
located at 301 W. Lombard St., Baltimore, Maryland 21201 (the "Land"), known as
the Holiday Inn - Inner Harbor (the "Hotel") consisting of a 375-room hotel and
all other improvements located thereon and together with all furniture,
equipment and other personal property now or hereafter used in the management
and operation of the Hotel (the "Personal Property"). The Land and the
Improvements (as defined below) are hereinafter collectively referred to as the
"Premises." The Premises and the Personal Property are hereinafter collectively
referred to as the "Property." Lender has agreed to make the loan to Borrower
pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the covenants,
conditions and agreements contained herein, Borrower and Lender agree as
follows:
ARTICLE 1
DEFINITIONS
1.1 Defined Terms. In this Agreement, the following terms shall have the
following meanings:
"Accounting Period" -- shall mean each of the four (4) week periods
designated by Borrower as a fiscal period of the Hotel, except that an
Accounting Period may occasionally contain five (5) weeks when necessary to
conform Borrower's accounting system to the calendar.
"Additional Note" -- the Promissory Note from Borrower of even date
herewith in the stated principal amount of Five Million Five Hundred Sixty Eight
Thousand Seven Hundred Seventy Four Dollars ($5,568,774). A copy of the
Additional Note is attached hereto as Exhibit B-1.
"Advance" -- an advance by Lender to Borrower in accordance with the Note
or this Agreement.
<PAGE>
"Affiliate" -- of any person or entity shall mean any other person or
entity directly or indirectly controlling, under common control with, or
controlled by such person or entity. For purposes of the definition of
Affiliate, "control" when used with respect to any person or entity means the
power to direct the management and policies of such person or entity, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
relative to the foregoing.
"Assignment of Accounts" -- the Assignment of Accounts and Security
Agreement of even date herewith from Borrower to Lender.
"Assignment of Permits and Contracts" -- the Assignment of Licenses,
Permits and Contracts, (specifically including the management agreement relating
to the Property) of even date herewith from Borrower to Lender.
"Assignment of Leases" -- the Assignment of Leases and Rents of even date
herewith from Borrower to Lender.
"Bankruptcy Code" -- the United States Bankruptcy Code and any similar
state or federal law now or hereafter in effect relating to bankruptcy,
reorganization or insolvency, or the arrangement or adjustment of debts.
"Business Day" -- any day other than a Saturday, Sunday or legal holiday
on which commercial banks are authorized or required to be closed in Columbus,
Ohio.
"Calculation Date" -- January 20, 2000, and the twentieth day of every
third Loan Month thereafter prior to the Maturity Date.
"Calculation Period" -- the period of twelve (12) full calendar months
immediately preceding the calendar month which includes the Calculation Date.
"Capital Reserve" -- the furniture, fixtures and equipment reserve to be
held by Lender pursuant to the terms and conditions of Section 4.1.T.
"Cash Management Agreement" -- that certain Cash Management Agreement
dated January 31, 1995 among Servico, Inc., Servico Management Corporation and
certain of their subsidiaries and affiliates, including Borrower, as amended
November 24, 1998.
"Closing" -- the closing of the Loan contemplated by this Agreement.
"Cross-Guaranty" -- the Guaranty Agreement of even date herewith from the
Related Parties to Lender in connection with the Loan.
"Code" -- the Internal Revenue Code of 1986, as amended, and the
Regulations
<PAGE>
promulgated thereunder.
"Costs" -- costs and expenses incurred directly relating to the
Renovation Work.
"Deferred Origination Fee" -- a deferred origination fee in the amount of
$590,086.86 payable to Lender in accordance with Section 4.Y.
"DSCR" -- the debt service coverage ratio as determined by Lender on each
Calculation Date by calculating the ratio of (x) the Net Operating Income from
the Property for the immediately preceding thirteen (13) Accounting Periods, to
(y) the sum of the payments of interest which are due and payable under the
Primary Note for the immediately following twelve (12) Loan Months.
"Default Rate" -- see Section 1 of the Primary Note.
"Environmental Indemnity" -- the Hazardous Substances Indemnity Agreement
of even date herewith from Borrower and Guarantors to Lender.
"Environmental Site Assessment Report" -- the Phase I Environmental Site
Assessment Report dated November 19, 1997 and updated September 25, 1998,
prepared by Building Evaluation Services and Technology, Inc.
"Estoppel Agreement" -- an Estoppel Agreement with respect to the Ground
Lease executed by the Ground Lessor and in form and substance acceptable to the
Lender.
"Event of Default" -- the occurrence of any one or more of the events
set forth in Section 7.1.
"Financing Statements" -- the UCC-1 Financing Statements naming Borrower
as debtor and Lender as secured party and filed with the offices of the Maryland
Department of Assessments and Taxation and the Baltimore City Clerk of Circuit
Court in connection with the Mortgage, the Security Agreement, the Assignment of
Leases, the Assignment of Permits and Contracts and the Assignment of Accounts.
"Franchise Agreement" -- that certain Franchise Agreement dated May 28,
1998, between Borrower and Franchisor relating to the Property.
"Franchisor" --Holiday Hospitality Franchising, Inc.
"Governmental Authority" -- the United States of America, the state in
which the Property is located, the state under the laws of which Borrower is
organized, any state in which (or to residents of which) Borrower offers to sell
or lease any portion of the Property or
<PAGE>
Improvements have been or will be made by or on behalf of Borrower, any
political subdivision of any of them, and any court, agency, department,
commission, board, bureau or instrumentality of any of them.
"Gross Revenues" -- for each Accounting Period shall mean all rents,
revenues and other payments earned by Borrower in cash or current funds or other
consideration from any source whatsoever in connection with its ownership,
operation and management of the Property, including all amounts earned by
Borrower from all tenants or other occupants of the Property. Gross Revenues
shall be determined on an accrual basis and in accordance with generally
accepted accounting principles consistently applied.
"Ground Lease" -- that certain lease more particularly described in
Schedule 1.
"Ground Lessor" -- Harry G. Pappas & Sons, L.L.C., a Maryland limited
liability company.
"Guarantor" -- Lodgian, Inc., a Delaware corporation.
"Impac Loan" -- collectively, all outstanding indebtedness owing to
Banc One Capital Partners III, Ltd. or its Affiliates by Impac Hotel Group,
L.L.C.
"Impositions" -- all taxes of every kind and nature, sewer rents, charges
for water, for setting or repairing meters and for all other utilities serving
the Premises, and assessments, levies, inspection and license fees and all other
charges imposed upon or assessed against the Premises or any portion thereof
(including the income derived from the Premises), and any stamp or other taxes
which might be required to be paid with respect to any of the Loan Documents,
any of which might, if unpaid, result in a lien on the Premises or any portion
thereof, regardless of to whom assessed.
"Improvements" -- the improvements existing upon the Land.
"Incipient Default" -- the existence of any condition or state of facts
which with the giving of notice by Lender or the passage of time, or both, would
constitute an Event of Default.
"Indebtedness" -- all indebtedness, obligations, liabilities, amounts,
sums and expenses payable by Borrower under the Note, this Agreement and every
other Loan Document, together with interest thereon in accordance with the terms
and conditions of the Loan Documents.
"Interest Rate" -- shall mean the Interest Rate as defined in the Primary
Note.
"Knowledge of Borrower" -- any matter actually known or, with the exercise
of reasonable care or diligence, should have been known, to the Borrower or the
Guarantor.
<PAGE>
"Lease" -- any lease (including any equipment lease) or other rental or
occupancy agreement, demising a portion of the Property, other than those with
hotel guests and the Ground Lease.
"Lender's Consultant" -- the architect or engineer retained by Lender to
inspect the Improvements or the Renovation Work on behalf of Lender; in the
event all or a portion of such functions are performed by Lender, references in
this Agreement to Lender's Consultant shall be deemed to such extent to be
references to Lender.
"Limited Guaranty" -- the Limited Guaranty and Indemnity Agreement of even
date herewith from Guarantor to Lender in connection with the Loan.
"Liquor License Agreement" -- the Liquor License Agreement of even date
herewith between Lender and Borrower.
"Loan" -- the loan evidenced by the Note and this Agreement.
"Loan Amount" -- Thirty Five Million Seventy Three Thousand One Hundred
and Seventeen Dollars ($35,073,117).
"Loan Documents" -- this Agreement, the Note, the Mortgage, the Security
Agreement, the Assignment of Leases, the Stock Pledge, the Limited Guaranty, the
Environmental Indemnity, the Assignment of Permits and Contracts, the Assignment
of Accounts, the Cross Guaranty, the Liquor License Agreement, the Financing
Statements and such other documents and agreements as Lender may require in
connection with the Loan.
"Loan Month" -- See Section 1 of the Primary Note.
"Loan Party" -- Borrower or the Guarantor.
"Management Agreement" -- the Consulting Agreement effective August 21,
1998 and amended November 24, 1998, by and between Borrower and Manager.
"Manager" -- Servico Management Corp., a Florida corporation.
"Maturity Date" -- See Section 1 of the Additional Note and the Primary
Note, as applicable.
"Mortgage" -- the Purchase Money Deed of Trust, Purchase Money Leasehold
Deed of Trust and Security Agreement of even date herewith from Borrower to
Lender on the Premises, securing the Note and Borrower's obligations under the
other Loan Documents.
<PAGE>
"Net Cash Flow" -- for each Accounting Period shall mean Net Operating
Income reduced by all monthly payments of interest under the Note and all other
payments under the Note and the other Loan Documents actually paid by Borrower
and received by Lender during such Accounting Period.
"Net Operating Income" -- for each Accounting Period shall be calculated
by Lender based upon Lender's review of Borrower's monthly financial statements
provided to Lender pursuant to Section 4.1.K, together with such other
information as Lender may reasonably request, and shall mean the difference
between:
(1) the Gross Revenues for said Accounting Period; and
(2) all the Operating Expenses for said Accounting Period.
"Note" -- collectively, the Primary Note and the Additional Note.
"Operating Expenses" -- the reasonably necessary and customary costs and
expenses incurred, whether or not actually paid, by Borrower in connection with
its ownership, operation and management of the Property, determined on an
accrual basis and in accordance with generally accepted accounting principles
consistently applied and specifically including in Operating Expenses all
required payments made by Borrower into the Capital Reserve pursuant to Section
4.l.T of this Agreement, any payments made pursuant to Section 4.l.B of the
Agreement and any other reserve established pursuant to this Agreement;
specifically excluding from Operating Expenses, however (w) all capital
expenditures incurred by Borrower (x) principal, interest and all other payments
made under the Loan Documents, and costs and expenses incurred by Borrower in
connection with the closing of the Loan, and (y) depreciation and all other
non-cash expenses of the Property. For purposes of calculating DSCR, Lender
shall include Operating Expenses which were budgeted for the applicable
Accounting Period(s) and were incurred but not paid. Operating Expenses which
are paid less frequently than each Accounting Period and which are allocable
evenly to each Accounting Period may be prorated to reflect such allocation.
"Organizational Documents" -- Borrower's articles of incorporation, bylaws
and other organizational documents and any amendments or modifications thereto.
"Other Borrower Loans" -- that (i) certain loan to Borrower of even date
herewith in the original aggregate principal amount of $15,740,722 and secured
by the Holiday Inn InternationalAirport, (ii) certain loan to Borrower of even
date herewith in the original aggregate principal amount of $3,322,817 and
secured by the Holiday Inn - Glen Burnie and (iii) certain loan to Borrower of
even date herewith in the original aggregate principal amount of $5,214,292 and
secured by the Holiday Inn - Lancaster. <PAGE>
"Other Borrower Loan Documents" -- all documents, instruments or
agreements securing or evidencing the Other Borrower Loans from the Lender to
Borrower.
"Other Hotel Properties" -- the Holiday Inn International Airport in
Linthicum Heights, Maryland, the Holiday Inn - Glen Burnie in Glen Burnie,
Maryland, and the Holiday Inn - Lancaster in Lancaster, Pennsylvania.
"Permitted Encumbrances" -- the liens, claims, assessments, encumbrances
and rights of others encumbering title to the Premises and the Personal Property
which are set forth on Exhibit C.
"Permitted Transfers" -- any transfer, sale or issuance of stock in
Lodgian, Inc., a Delaware corporation.
"Primary Note" -- the Promissory Note from Borrower of even date herewith
in the stated principal amount of Twenty Nine Million Five Hundred Four Thousand
Three Hundred and Forty Three Dollars ($29,504,343). A copy of the Primary Note
is attached hereto as Exhibit B-2.
"Principal Amortization Reserve" -- the reserve of funds which may be held
and disbursed by Lender pursuant to Section 4.l.R.
"Proceeds" -- all proceeds, judgments, claims, compensation, awards or
damages and settlements with respect to the Property as a result of or in lieu
of any condemnation or taking of the Property or any portion thereof by eminent
domain or any casualty loss or damage to any of the Property or any portion
thereof.
"Related Parties" -- Servico Concord, Inc., a California corporation,
Penmoco, Inc., a Michigan corporation, and Island Motel Enterprises, Inc., a
Georgia corporation.
"Related Party Loan Documents" -- all documents, instruments or agreements
securing or evidencing the Related Party Loans from the Lender to the Related
Parties.
"Related Party Loans" -- that certain loan to Servico Concord, Inc. of
even date herewith in the original aggregate principal amount of $8,449,183
and secured by the Sheraton Hotel - Concord and that certain loan to Penmoco,
Inc. and Island Motel Enterprises, Inc. of even date herewith in the original
aggregate principal amount of $4,199,869 and secured by the Holiday Inn
Jekyll Island.
"Related Party Properties" -- the Sheraton Hotel - Concord in Concord,
California and the Holiday Inn Jekyll Island in Jekyll Island, Georgia.
<PAGE>
"Renovation Budget" -- the budget for the Renovation Work to be prepared
by the Borrower and delivered to Lender for its review and approval prior to the
Closing.
"Renovation Completion" -- the completion of the Renovation Work in
accordance with the requirements of Article 6A.
"Renovation Completion Date" -- May 13, 1999, the date on which all of the
Renovation Work is required to be completed in accordance with Article 6A
hereof.
"Renovation Plans" -- the plans and specifications for the Renovation Work
to be prepared by the Borrower and delivered to the Lender for its review and
approval prior to the Closing.
"Renovation Work" -- the work and projects described in Exhibit E.
"Required Coverage Standard" shall mean 1.25:1 for all Calculation Dates
on or before January 20, 2000 and 1.40:1 for all Calculation Dates subsequent to
January 20, 2000.
"Reserved Funds" -- all Net Cash Flow held by Lender pursuant to the terms
and conditions of Section 4.1.R.
"Security Agreement" -- the Security Agreement of even date herewith from
Borrower, as debtor, to Lender, as secured party.
"Stock Pledge" -- the Pledge of Stock executed by Servico Operations
Corporation pursuant to which Servico Operations Corporation pledges the Stock
of the Borrower and each Related Party to secure the obligations of Borrower
with respect to the Loan, the Other Borrower Loans and the Related Party Loans.
"Title Company" -- Chicago Title Insurance Company.
"Title Policy" -- a mortgagee's policy of title insurance issued on the
1992 ALTA form by the Title Company in the aggregate face amount of $35,073,117,
guaranteeing as of the date of the Closing, the Mortgage to be a valid first and
prior lien on Borrower's leasehold interest in the Premises (including any
easements appurtenant thereto) subject only to the Permitted Encumbrances. The
Title Policy shall contain such endorsements as Lender may reasonably require.
In this Agreement, the word "including" shall mean "including without
limitation."
ARTICLE 2
<PAGE>
BORROWER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
1.2 Representations, Warranties and Covenants. Borrower hereby represents,
covenants and warrants as follows:
1. Accuracy of Recitals. Each of the recitals to this Agreement is true
and correct.
2. Organization of Borrower. Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the State of Maryland.
Borrower is and at all times prior to the repayment of the Loan shall remain a
single purpose entity, so called, whose sole assets are the Property and the
Other Hotel Properties and whose sole business interest is the ownership of a
leasehold interest in, and operation of, the Property and the Other Hotel
Properties. The Borrower has provided Lender with a true and accurate copy of
the Organizational Documents. The Borrower is duly registered as a foreign
corporation and currently in good standing under the laws of the State of
Pennsylvania. The status of Borrower as a duly organized and validly existing
corporation under Maryland law will not be terminated. The Borrower shall not
amend the Organizational Documents in any material respect, without the Lender's
prior written consent.
3. Authority and Enforceability. Borrower has full right, power and
authority to execute, deliver and carry out the terms and provisions of this
Agreement and the other Loan Documents and every other document and instrument
to be executed and delivered by Borrower pursuant to this Agreement. The person
executing and delivering this Agreement and the Loan Documents on behalf of
Borrower is duly authorized to so act on behalf of Borrower. This Agreement,
each other Loan Document and every other document and instrument to be executed
and delivered by any Loan Party, when executed and delivered shall constitute
the duly authorized, valid and legally binding obligation of the party or
parties executing the same, enforceable in accordance with their respective
terms, subject only to applicable bankruptcy, reorganization, moratorium and
similar laws affecting the enforceability of creditors' rights generally.
4. Maintenance of Existence. Borrower shall do all things necessary to
preserve and keep in full force and effect its existence and all franchises,
licenses, authorizations, registrations, permits and approvals under the laws of
the state of its incorporation and the State of Maryland, and shall comply with
all regulations, rules, ordinances, statutes, orders and decrees of any
governmental authority or court applicable to Borrower and to the Property or
any portion thereof.
5. No Default. Neither Borrower nor any other Loan Party is in default
under any material contract, agreement or commitment to which it is a party or
by which it is bound. The execution and delivery of this Agreement and the other
Loan Documents and any other documents or instruments to be executed and
delivered by Borrower or any other Loan Party pursuant hereto or thereto, the
consummation of the transactions herein or therein contemplated and compliance
<PAGE>
with the terms and provisions hereof or thereof, will not (i) violate any law or
any regulation, order, writ or injunction of any court or governmental or
administrative department, commission, board, bureau, agency or instrumentality,
or (ii) conflict or be inconsistent with, or result in a breach of any of the
provisions of, or constitute a default under, any instrument, document,
agreement, or contract of any kind to which Borrower or any other Loan Party is
a party or by which Borrower or any other Loan Party or any of their respective
property is bound.
6. No Litigation. There are no petitions, actions, suits, or proceedings
pending or, to the Knowledge of Borrower, threatened against or affecting
Borrower or any other Loan Party or the Property, by or before any court or any
governmental, administrative, regulatory, adjudicatory or arbitrational body or
agency (including any such petition, action, suit or proceeding to alter or
declare invalid any laws, regulations, permits, certificates, restrictions or
agreements relating to the Property) which, if determined against the Property,
the Borrower or the Loan Party, would reasonably likely have a material adverse
effect on the condition (financial or otherwise) or business of the Borrower or
the Loan Party or the condition or ownership of the Property.
7. Compliance with Laws. To the Knowledge of Borrower and except as may be
otherwise disclosed to the Lender in the Environmental Site Assessment Report,
the Title Policy, the survey or the zoning letter with respect to the Premises,
the use of the Property as a hotel with a restaurant and bar does not violate
(i) any applicable law, regulation, ordinance or order of any kind whatsoever
(including any such relating to zoning, building and environmental protection),
(ii) any permit or license issued with respect to the Property, or (iii) any
condition, easement, right-of-way, covenant or restriction affecting the
Property.
8. Permits. To the Knowledge of Borrower, all necessary material and
required franchises, licenses, authorizations, registrations, permits and
approvals for the use and occupancy of the Premises have been obtained from all
Governmental Authorities having jurisdiction over the Premises so as to permit
the operation of the Property as herein contemplated. Borrower has provided
Lender with true and correct copies of all of the certificates of occupancy (to
the extent available) and the hotel operating license and liquor license
respecting the Property.
9. Title. Effective as of the Closing, Borrower will have good and
indefeasible leasehold interest in the Premises and good and indefeasible title
to all existing Personal Property, free and clear of all liens, claims,
assessments, encumbrances and rights of others other than the Permitted
Encumbrances. Borrower shall preserve such title to the Premises and the
Personal Property and will forever warrant and defend the same and the validity
and priority of the Mortgage to Lender against all claims whatsoever other than
the Permitted Encumbrances.
10. Easements. In addition to the Permitted Encumbrances, all proposed
easements, permits, licenses, and other instruments which would or might affect
the title to the Property have been submitted to Lender for Lender's approval
together with a survey showing the exact or, if applicable, proposed location
thereof. Borrower shall not subject the Property or any part thereof
<PAGE>
to any restrictive covenant (including any restriction or exclusive use
provision in any lease or other occupancy agreement) without the prior written
consent of Lender.
11. Zoning. To the Knowledge of Borrower, and subject to any disclosures
in the zoning letters delivered to the Lender, (i) the Premises are zoned for
hotel use, which zoning is final, unconditional and in full force and effect,
(ii) the Premises are in compliance with all applicable zoning and land use
laws, regulations and ordinances, (iii) in the event that all or any part of the
Improvements are destroyed or damaged, said Improvements can be legally
reconstructed to their condition prior to such damage or destruction, and
thereafter exist for the same use without violating any zoning or other
ordinances applicable thereto and without the necessity of obtaining any
variances or special permits, (iv) the Property contains enough permanent
parking spaces to satisfy all requirements imposed by applicable laws with
respect to parking, (v) no legal proceedings are pending or threatened with
respect to the zoning of the Premises, and (vi) neither the zoning nor any other
right to construct, use or operate the Premises is in any way dependent upon or
related to any real estate other than the Premises. No tract map, parcel map,
condominium plan, condominium declaration, or plat of subdivision will be
recorded by Borrower with respect to the Premises without Lender's prior written
consent.
12. Complete Disclosure. Neither this Agreement nor any document,
financial statement, credit information, certificate or statement provided to
Lender by Borrower contains any untrue statement of material fact or omits to
state a fact necessary to make any statements made herein not misleading.
13. Agreements Affecting the Property. Borrower has provided Lender with
true and complete copies of all material contracts and agreements affecting the
Property, including, (i) the Management Agreement, (ii) all lease financings or
purchase money financings for equipment incurred as of the date hereof, and
(iii) all other contracts or agreements relating to the maintenance,
development, operation or management of the Property which either involve space
in excess of 1,000 square feet or payment obligations on the part of Borrower in
excess of $25,000 in any twelve (12) month period.
14. Brokerage Commissions. No brokerage fees or commissions are payable in
connection with the Loan.
15. Condemnation. Borrower has not received any notice from any
Governmental Authority or quasi-governmental body or agency or from any person
or entity with respect to (and Borrower does not know of) any actual or
threatened taking of the Premises, or any portion thereof, for any public or
quasi-public purpose or of any moratorium which may affect the use or operation
of the Property.
16. Year 2000 Compliance. All devices, systems, machinery, information
technology, computer software and hardware, and other date sensitive technology
(jointly and severally the
<PAGE>
"Systems") necessary for Borrower to carry on its business as presently
conducted and as contemplated to be conducted in the future are Year 2000
Compliant or will be Year 2000 Compliant within a period of time calculated to
result in no material disruption of any of Borrower's business operations. For
purposes of these provisions, "Year 2000 Compliant" means that such Systems are
designed to be used prior to, during and after the Gregorian calendar year 2000
A.D. and will operate during each such time period without error relating to
date data, specifically including any error relating to, or the product of, date
data which represents or references different centuries or more than one
century. Borrower: (1) has taken and continues to undertake a detailed
inventory, review, and assessment of all areas within its business and
operations that could be adversely affected by the failure of Borrower to be
Year 2000 Compliant on a timely basis; (2) is developing a detailed plan and
time line for becoming Year 2000 Compliant on a timely basis; and (3) to date,
has implemented that plan in accordance with timetable in all material respects.
The fair market value of all real and personal property, if any, pledged to
Lender as collateral to secure the Loan Agreement is not and shall not be less
than currently anticipated or subject to substantial deterioration in value
because of the failure of such collateral to be Year 2000 Compliant.
17. Access. Except as otherwise shown on the survey delivered to the
Lender, the Property has access to and full utilization of completed public
roads necessary for access to and full utilization of the Property for its
intended purposes.
18. Tax Division. A tax division has been effected with respect to the
Premises so that it is taxed for ad valorem taxation without regard to or
inclusion of any other property. No subdivision or other approval is necessary
with respect to the Premises in order for Borrower to mortgage, convey and
otherwise deal with the Premises as a separate lot or parcel.
19. Non-Foreign Status of Borrower. Borrower is not a non-resident alien
for purposes of U.S. income taxation and is not a foreign corporation,
partnership, foreign trust or foreign estate (as said terms are defined in the
Code).
20. ERISA. Neither Borrower nor any Loan Party is a party to any plan
defined and regulated under the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") or Section 4975 of the Code. None of the assets of Borrower
or any Loan Party are "plan assets"" as defined in 29 C.F.R. ss.2509.75-2 or
ss.2510.3-101.
21. Mortgage. The Mortgage constitutes a valid and enforceable first lien
on Borrower's leasehold interest in the Premises, subject only to the Permitted
Encumbrances.
22. Security Interest. The Security Agreement and the Mortgage, together
with the Financing Statements filed in connection therewith, create a valid,
enforceable and perfected first priority security interest in the Collateral (as
defined therein) including the Personal Property, subject to no other interests,
liens or encumbrances other than the Permitted Encumbrances.
<PAGE>
23. Intentionally Omitted.
24. Intentionally Omitted.
25. Bankruptcy. No petition in bankruptcy, whether voluntary or
involuntary, or assignment for the benefit of creditors, or any other action
involving debtors' and creditors' rights has been filed or threatened under the
laws of the United States of America or any state thereof, against the Borrower
or any other Loan Party or against any other entity in which the Borrower or any
other Loan Party is a shareholder, principal, managing member or general
partner.
26. Leases. Except for the Lease Agreement with the Mayor and City of
Baltimore dated November 1, 1988 pertaining to alternative parking with respect
to the property known as 321 West Lombard Street and 105 South Eutaw Street,
Baltimore, Maryland, there are no Leases affecting the Property. Borrower has
not executed any prior assignment of the Leases, nor has it performed any act or
executed any other instrument which might prevent Lender from operating under
any of the terms and conditions of the Assignment of Leases or which would limit
Lender in such operation; and Borrower further covenants and warrants to Lender
that Borrower has not executed or granted any modification whatsoever of the
Leases, except as herein indicated, and that the Leases are in full force and
effect, and that, except as otherwise disclosed to Lender in writing, there are
no defaults now existing under the Leases with respect to which Borrower has
notified the tenant under the Leases.
27. Physical Condition of Property. Subject to the Renovation Work, all of
the Improvements are in good condition and repair except as otherwise expressly
provided in the Property Condition Report dated as of January 16, 1998, prepared
by Building Evaluation Services & Technology, Inc. (the "Property Condition
Report"). Since the date of the Property Condition Report, there have been no
material adverse changes to the physical condition of the Improvements. Borrower
is aware of no latent or patent structural or other significant defect or
deficiency in such Improvements except as may be disclosed in the Property
Condition Report. Water supply, storm and sanitary sewers, and electrical, gas
and telephone facilities are available to the Property within the boundary lines
of the Property, are sufficient to meet the reasonable needs of the Property as
now used or contemplated to be used, no other utility facilities are necessary
to meet the reasonable needs of the Property as now used, and design and
as-built conditions of the Property are such that surface and storm water does
not accumulate on the Property and, except as otherwise disclosed in writing to
Lender, does not drain from the Property across land of adjacent property
owners. Except as otherwise disclosed in writing to Lender, no part of the
Property is within a flood plain and none of the Improvements create an
encroachment over, across or upon any of the Property's boundary lines, rights
of way or easements, and no building or other improvement on adjoining land
create such an encroachment.
<PAGE>
28. Mechanics' Liens. There are no mechanics' or materialmen's liens,
alienable bills or other claims constituting or that may constitute a lien on
the Property or any part thereof, and no work for which any such lien could be
asserted has been performed within the last 90 days, except as otherwise
disclosed in writing to Lender.
29. Payment of Liens. Borrower shall pay when due all payments and charges
due under or in connection with any liens and encumbrances on and security
interests in the Property or any portion thereof, all rents and charges under
any ground leases and other leases forming a part of the Property, and all
claims and demands of mechanics, materialmen, laborers and others which, if
unpaid, might result in or permit the creation of a lien on the Property or any
portion thereof, and shall cause the prompt (but in no event later than 30 days
after imposition), full and unconditional discharge of all liens imposed on or
against the Property or any portion thereof. Borrower shall do or cause to be
done, at the sole cost of Borrower, everything necessary to fully preserve the
initial priority of the Mortgage. If Borrower fails to make any such payment or
if a lien (other than a Permitted Encumbrance) attaches to the Property or any
portion thereof, Lender may (but shall not be obligated to) make such payment or
discharge such lien and Borrower shall reimburse Lender on demand for all such
Advances.
30. Commercial Purpose. Borrower holds its interests in the Property for
commercial or investment purposes.
31. Franchise Agreement. Borrower has provided Lender with a true and
complete copy of the Franchise Agreement and any other agreements with the
Franchisor related to the Property. The Franchise Agreement is in full force and
effect and free from default on the part of the Borrower. The Franchise
Agreement embodies the entire transaction between Borrower and the Franchisor
with respect to the operation of the Property. Borrower shall not modify, amend
or waive any provisions of the Franchise Agreement without Lender's prior
written consent. Borrower will promptly furnish Lender with copies of all
notices furnished to Borrower under the Franchise Agreement.
32. Management Agreement. Borrower has provided Lender with a true and
complete copy of the Management Agreement. The Management Agreement is in full
force and effect and free from default on the part of the Borrower and Manager.
The Management Agreement embodies the entire transaction between Borrower and
Manager with respect to the operation of the Property. Borrower shall not
terminate, modify, amend or waive any provisions of the Management Agreement
without Lender's prior written consent. Borrower will promptly furnish Lender
with copies of all notices furnished to Borrower under the Management Agreement.
33. Ground Lease. Borrower has provided Lender with a true and complete
copy of the Ground Lease, and there are no documents, agreements, or other
modifications to the Ground Lease other than those listed under the definition
of Ground Lease contained in this Agreement. The Ground Lease is in full force
and effect and free from default on the part of Borrower and
<PAGE>
the Ground Lessor, and, to the Knowledge of Borrower, no events have occurred
which, with the passage of time, would constitute a default under the Ground
Lease. The Borrower shall provide to the Lender copies of all notices
(including, without limitation, notices of defaults by Borrower) received with
respect to the Ground Lease within five (5) Business Days of Borrower's receipt
of the same. The Ground Lease embodies the entire transaction between Borrower
and the Ground Lessor with respect to the Property. The amount of rental payable
under the Ground Lease and the terms of the Ground Lease, are as set forth under
the definition of Ground Lease. Borrower shall not modify, amend or waive any
provisions of the Ground Lease without the Lender's prior written consent.
34. Liquor License. Borrower has provided Lender with a true and complete
copy of the liquor license with respect to the Property. Said liquor license is
in full force and effect and free of all liens and encumbrances. To the
Knowledge of Borrower, Borrower is in compliance with all terms and conditions
of said liquor license.
1.3 Representations Remade. Borrower warrants and covenants that the
foregoing representations and warranties will be true and shall be deemed remade
as of the date of the Closing. All representations, warranties and covenants
made herein or in any other Loan Document or in any certificate or other
document delivered to Lender by or on behalf of Borrower pursuant to or in
connection with this Agreement or any other Loan Document shall be deemed to
have been relied upon by Lender, notwithstanding any investigation heretofore or
hereafter made by or on behalf of Lender. All such representations, warranties
and covenants shall survive the making of the Loan and any or all of the
Advances contemplated hereby and shall continue in full force and effect until
such time as the Loan has been paid in full.
ARTICLE 3
GENERAL CONDITIONS OF LOAN
1.4 Loan Documents. It shall be a condition precedent to Lender's
obligation to make the Loan that at or before the Closing, Borrower shall
execute and deliver or cause to be duly executed and delivered to Lender all of
the Loan Documents and that all of the Loan Documents shall be in form and
substance satisfactory to Lender.
1.5 Additional Requirements. In addition to the Loan Documents, prior to
the Closing, Borrower shall deliver or cause to be delivered to Lender each of
the following, all of which shall be in form and substance satisfactory to
Lender:
1. Title Policy. The Title Policy or a pro-forma policy evidencing the
same and satisfactory to the Lender in its sole discretion.
2. Survey. A current, as built survey of the Premises, certified to Lender
and the Title
<PAGE>
Company by a surveyor reasonably satisfactory to Lender, which survey shall
contain the minimum detail for land surveys as most recently adopted by
ALTA/ASCM, and which survey shall comply with Lender's survey requirements and
shall contain Lender's standard form certification. Said survey shall show no
state of facts or conditions reasonably objectionable to Lender.
3. Opinion. An opinion of Borrower's and Guarantor's counsel dated the
date of the Closing and relating to such matters with respect to this Agreement
and the transaction contemplated hereby (including usury and choice of laws) as
Lender may reasonably require. By its execution and delivery of this Agreement,
Borrower authorizes and directs such counsel to render such opinion.
4. Insurance. The insurance policies described on Exhibit D or
certificates of insurance evidencing the same, including without limitation,
evidence of insurance protection against the risks of hurricanes, satisfactory
to Lender in its sole discretion.
5. UCC Searches. Uniform Commercial Code searches made in the State of
Maryland showing no filings relating to (i) the Personal Property, (ii) any
fixtures on the Premises, or (iii) the Collateral (as such term is defined in
the Security Agreement), other than those made pursuant to this Agreement or
otherwise approved by Lender in its sole discretion.
6. Organizational Documents. A certified copy of the Organizational
Documents, together with such other documents as Lender may require, including
evidence of the Borrower's good standing in the States of Maryland and
Pennsylvania, and resolutions authorizing the Loan transaction contemplated by
this Agreement.
7. Ground Lease. A copy of the Ground Lease certified by the Borrower to
be true, complete and accurate.
8. Appraisal and Engineer's Report. An independent appraisal of the
Property from a state certified appraiser engaged by Lender which indicates the
fair market value of the Property and is satisfactory to Lender in all respects,
and an engineer's report satisfactory to the Lender.
9. Environmental Assessment. The Environmental Site Assessment Report, a
letter from the consultant preparing the environmental site assessment stating
that Lender is authorized to rely on the information contained therein, and
evidence satisfactory to Lender of said environmental consultant's errors and
omissions insurance coverage.
10. Subordination of Management Agreement. A copy of the Management
Agreement (certified by the Borrower to be true, complete and accurate),
together with a subordination of the Management Agreement whereby the Management
Agreement is subordinated to the Mortgage and Lender is given the right to
terminate the Management Agreement or any replacement thereof upon the
occurrence of an Event of Default, without payment of any termination or other
<PAGE>
fee or other liability on the part of Lender.
11. Leases/Subordination Agreements and Estoppels. Copies of all Leases,
which shall be satisfactory to Lender and certified by Borrower to be true,
complete and accurate, together with (i) an estoppel certificate executed by the
tenant under each Lease in form and substance reasonably satisfactory to Lender,
and (ii) a subordination, nondisturbance and attornment agreement executed by
each such tenant in form and substance reasonably satisfactory to Lender.
12. Licenses, Permits and Approvals. A final, unconditional certificate of
occupancy (if available) issued with respect to the Premises, together with the
hotel operating license and liquor license respecting the Property.
13. Agreements. Copies of all agreements described in Section 2.1M
certified by the Borrower to be true, complete and accurate.
14. Zoning. Evidence reasonably satisfactory to Lender as to the zoning
compliance of the Premises.
15. Lender's Inspection. A satisfactory inspection report of the Premises
prepared by an architect/engineer or other consultant reasonably satisfactory to
Lender.
16. Equity Contribution. Evidence satisfactory to Lender that the Borrower
or its Affiliate originally acquired the Property for not less than $23,500,000.
17. Financial Statements. Current financial statements satisfactory to the
Lender for the Borrower, and the Guarantor.
18. Renovation Budget and Plans. A copy of the Renovation Budget and the
Renovation Plans satisfactory to the Lender.
19. Franchise Agreement. A copy of the Franchise Agreement certified by
the Borrower to be true, complete and accurate.
20. Compliance with Laws. Evidence that the Property is in compliance with
all applicable laws, zoning and land use requirements, regulations and
ordinances, including all applicable environmental protection laws and the
Americans with Disabilities Act of 1990 (except as stated in the Environmental
Site Assessment Report).
21. Flood Hazards. Evidence as to whether or not the Property is or is to
be located in an area having special flood hazards as such term is used in the
federal Flood Disaster Protection Act of 1973. If any part of the Property is or
is to be located in an area having "special flood hazards," a flood insurance
policy or certificate thereof naming the Lender as mortgagee must be
<PAGE>
submitted to the Lender.
22. Fees and Expenses. Payment by Borrower of all applicable mortgage and
recording taxes and all fees and charges in connection with the Loan, including
all fees and charges of Lender's legal counsel.
23. Ground Lease Estoppel. The originally executed Estoppel Agreement.
24. Application Fee. The application fee payable to Banc One Capital
Markets, Inc. in the amount of $25,000, which was earned upon Borrower's
acceptance of the term sheet, and which upon closing, shall be applied against
the fees and expenses referred to in Section 3.2(V), above.
25. Intentionally Omitted.
26. Payment of Impac Loan. Evidence of payment in full of the Impac Loan
and all fees associated therewith in accordance with the requirements of the
intercreditor agreement(s) executed in connection therewith.
27. Other Items. Such other documents and instruments as Lender may
reasonably require.
ARTICLE 4
FURTHER COVENANTS OF BORROWER
1.6 Covenants. Borrower hereby further covenants and agrees with Lender a
s follows:
1. Taxes and Impositions.
(1) Borrower shall pay and discharge all Impositions prior to
delinquency. Borrower shall provide to Lender validated receipts or other
evidence satisfactory to Lender showing the payment of all real estate and
personal property taxes within 15 days after the same would otherwise have
become delinquent. Borrower's obligation to pay Impositions pursuant to this
Agreement shall include, to the extent permitted by applicable law, taxes
resulting from future changes in law which impose upon Lender an obligation to
pay any property taxes or other Impositions. Should Borrower default in the
payment of any Impositions, Lender may (but shall not be obligated to) pay such
Impositions or any portion thereof and Borrower shall reimburse Lender on demand
for all such Advances.
(2) Borrower shall not be required to pay, discharge or remove any
Imposition so long as Borrower contests in good faith such Imposition or the
validity, applicability or amount thereof by an appropriate legal proceeding
which operates to prevent the collection of such
<PAGE>
amounts and the sale of the Property or any portion thereof; provided, however,
that prior to the date on which such Imposition would otherwise have become
delinquent Borrower shall have (i) given Lender prior written notice of such
contest, and (ii) provided reasonable evidence to Lender that Borrower has
available funds to pay the balance of such Imposition then remaining unpaid, and
all interest, penalties, costs and charges accrued or accumulated thereon. Any
such contest shall be prosecuted with due diligence, and Borrower shall promptly
pay the amount of such Imposition as finally determined, together with all
interest and penalties payable in connection therewith. Notwithstanding any
provision of this Section 4.1.A to the contrary, Borrower shall pay any
Imposition which it might otherwise be entitled to contest if, in the reasonable
discretion of Lender, the Property is in jeopardy or in danger of being
forfeited or foreclosed. If Borrower refuses to pay any such Imposition, Lender
may (but shall not be obligated to) make such payment and Borrower shall
reimburse Lender on demand for all such Advances.
2. Deposits.
(1) Borrower shall provide Lender with evidence of the timely
payment of all insurance premiums. For so long as Borrower's insurance coverages
are part of blanket coverages with other properties, Borrower shall not be
required to deposit in escrow any insurance premiums. Initially, so long as (i)
Borrower provides Lender with evidence of the timely payment of all real estate
and personal property taxes and (ii) Borrower is not required to make payments
of Reserve Funds pursuant to Section 4.1.R as of the most recent Calculation
Date, Borrower shall not be required to deposit in escrow any funds for real
estate and personal property taxes as hereinafter provided; provided, however,
Lender, in its sole discretion, may at any time require Borrower to do the
following:
(1) Deposit with Lender (or such agent of Lender as Lender may
designate in writing to Borrower from time to time), monthly,
on the due date of each monthly installment under the Note,
1/12th of the annual charges (as estimated by Lender) for all
real estate and personal property taxes; and
(2) Deposit with Lender, simultaneously with such above-referenced
monthly deposits, a sum of money which together with such
monthly deposits will be sufficient to make the payment of
each such charge at least 30 days prior to the date initially
due. Should such charges not be ascertainable at the time any
deposit is required to be made, the deposit shall be made on
the basis of the charges for the prior year or payment period,
as reasonably estimated by Lender. When the charges are fixed
for the then current year or period, Borrower shall deposit
any deficiency on demand.
(2) Any interest earned on the sums held by Lender pursuant to this
Section 4.1.B shall be added to said sums and shall be taxable to Borrower, and
shall, so long as no Event of Default shall have occurred, be disbursed by
Lender for the payment of the applicable real estate
<PAGE>
and personal property taxes. Should an Event of Default occur, the funds so
deposited may be applied in payment of the charges for which such funds shall
have been deposited or to the payment of the Indebtedness or any other charges
affecting the Property, as Lender in its sole and absolute discretion may
determine, but no such application shall be deemed to have been made by
operation of law or otherwise until actually made by Lender as herein provided.
Borrower shall provide Lender with bills and all other documents necessary for
the payment of the foregoing charges at least 30 days prior to the date on which
each payment thereof shall first become due or promptly upon receipt of such
bill.
3. Mortgage Taxes. Borrower shall pay any and all taxes, charges, filing,
registration and recording fees, excises and levies imposed upon Lender by
reason of their respective interests in, or measured by amounts payable under,
the Note, this Agreement, the Mortgage or any other Loan Document (other than
income, franchise and doing business taxes), and shall pay all stamp taxes and
other taxes required to be paid on the Note, this Agreement, the Mortgage or the
other Loan Documents. If Borrower fails to make such payment within five days
after notice thereof from Lender, Lender may (but shall not be obligated to) pay
the amount due, and Borrower shall reimburse Lender on demand for all such
Advances. If applicable law prohibits Borrower from paying such taxes, charges,
filing, registration and recording fees, excises, levies, stamp taxes or other
taxes, then Lender may declare the Indebtedness then unpaid to be due and
payable upon one hundred twenty (120) days prior written notice. In such event,
no prepayment fee shall be charged.
4. No Liens. Except for Permitted Encumbrances, and except as provided in
Section 4.1.F and Section 4.1.O, the Property shall be kept free and clear of
all liens, security interests and encumbrances of every nature or description
(whether for taxes or assessments, or charges for labor, materials, supplies or
services or any other thing). Other than the Permitted Encumbrances, Borrower
will not cause or permit any instrument or document affecting the Property to be
recorded without Lender's prior written consent thereto.
5. Condition of Premises. Consistent with current practice and industry
standards, Borrower shall keep and maintain the Property in good order,
condition and repair and shall make, as and when the same shall become
necessary, all structural and non-structural, exterior and interior, ordinary
and extraordinary, foreseen and unforeseen, repairs and maintenance necessary or
appropriate. Borrower shall suffer or commit no waste upon the Premises or any
portion thereof. Borrower shall, at its expense, promptly repair, restore,
replace or rebuild any part of the Property which may be damaged or destroyed by
any casualty (provided that, to the extent Borrower is entitled to receive
insurance Proceeds in accordance with the provisions of Article 6, such proceeds
are made available to Borrower) or as the result of any taking under the power
of eminent domain to the extent permitted given the size, scope and extent of
the taking. Borrower shall cause all repairs, maintenance, rebuilding,
replacement or restoration to be (in the reasonable opinion of Lender) of
substantially equivalent quality and to be performed in compliance with all
applicable requirements of any Governmental Authorities having
<PAGE>
jurisdiction, including without limitation all federal, state, and local
environmental laws. Borrower shall not cause, suffer or permit the construction
of any material buildings, structures, or improvements on the Premises without
the prior written consent of Lender to the proposed construction as well as the
plans and specifications relating thereto. None of the buildings, structures, or
improvements erected or located on the Premises shall be removed, demolished or
substantially or structurally altered in any material respect without the prior
written consent of Lender. Lender's consents hereunder shall not be unreasonably
withheld or delayed.
6. Personal Property. Effective as of the Closing, all of the Personal
Property will be owned by Borrower in Borrower's name except for those items
identified on Schedule 4.1.F attached hereto, which are leased by Borrower.
7. Compliance. Borrower shall comply with all (i) building, zoning, fire,
health, environmental, disability and use laws, and all other laws, codes,
ordinances, rules and regulations applicable to the Premises, the Improvements
or any part thereof or the construction of any improvements thereon, or the use
or enjoyment thereof, (ii) covenants and restrictions of record, and (iii)
easements which are in any way applicable to the Premises, the Improvements or
any part thereof or to the construction of any improvements thereon and the use
or enjoyment thereof. Without limiting the generality of the foregoing, any
asbestos or lead-based paint (or any other hazardous substance) located at the
Premises shall be handled and managed in compliance with all applicable federal,
state, and local laws and requirements.
8. Performance of Agreements. Borrower shall duly and punctually perform,
observe and comply with all of the terms, provisions, conditions, covenants and
agreements on its part to be performed, observed and complied with hereunder and
under (i) the other Loan Documents, (ii) the Permitted Encumbrances, (iii) the
Management Agreement, (iv) the Franchise Agreement, (v) the Ground Lease and
(vi) all agreements entered into or assumed by Borrower in connection with the
Property, and Borrower will not suffer or permit any default or Event of Default
(giving effect to any applicable notice requirements and cure periods) to exist
under any of the foregoing.
9. Lender's Expenses. Borrower shall, or shall cause the Guarantor to,
pay, on demand by Lender, all reasonable expenses, charges, costs and fees in
connection with the negotiation and documentation of the Loan, including all
registration and recording fees, insurance consultant fees, if any,
environmental consultant fees, costs of appraisals, costs or fees incurred in
connection with market studies, costs of engineering reports, cost of credit
reports, cost of audits, fees and disbursements of all counsel (both local and
special) for Lender, escrow fees, cost of surveys, fees and expenses of Lender's
Consultant or others employed by Lender to inspect the Premises from time to
time, and travel expenses incurred by Lender and Lender's agents and employees
in connection with the Loan. Notwithstanding the foregoing, so long as no Event
of Default exists, Borrower shall have no obligation to pay or reimburse Lender
for travel expenses in excess of $1,500 in any twelve month period. At Closing,
Lender may pay directly from the proceeds of the Loan each of the foregoing
expenses. <PAGE>
10. Intentionally Omitted.
11. Financial Statements.
(1) Borrower shall provide to Lender (i) annual financial statements
of Borrower and Guarantor and all such financial statements shall be prepared in
accordance with generally accepted accounting principles, consistently applied
and shall be prepared by a certified public accountant reasonably satisfactory
to Lender, (ii) Loan Month (or, if applicable, Accounting Period) and quarterly
cash flow and operating statements for the Property prepared by and certified by
Borrower (which quarterly statements shall include the calculation of DSCR),
(iii) such other financial information as Lender may from time to time
reasonably request, and (iv) copies of all Federal income tax returns for
Borrower and Guarantor certified by Borrower and Guarantor, respectively, to be
true and correct. All such financial statements, cash flow statements and
operating statements shall be delivered to Lender as soon as possible but not
later than thirty (30) days after the close of each Loan Month (or, if
applicable, Accounting Period), and in the case of annual financial statements,
not later than one hundred twenty (120) days after the close of each fiscal
year. Said copies of Borrower's and Guarantor's federal income tax returns shall
be provided to Lender within thirty (30) days following their filing with the
Internal Revenue Service.
(2) Lender may, at Borrower's sole cost and expense and following
written notice to Borrower, require that any or all of the foregoing annual
financial statements be prepared on an "audited" basis, so called.
12. Management and Cash Management. Borrower shall provide competent and
responsible management for the Property by a management company, and pursuant to
a written management agreement, reasonably satisfactory to Lender. The existing
Manager and Management Agreement are satisfactory to Lender. Borrower shall not
enter into any other management agreement or arrangement with any other party
with respect to the management of the Property without Lender's prior written
consent. Borrower shall not modify, amend or terminate the Management Agreement
without Lender's prior written consent. Borrower shall provide Lender with
written notice of the occurrence of any event of default or condition which with
the giving of notice or passage of time, or both, would constitute an event of
default under the Management Agreement or any subsequent management agreement
which Lender may have approved. The Management Fee(s) shall not exceed a base
fee(s) in an amount equal to 5% of Gross Revenues. The payment of any Management
Fees over and above an amount equal to 3% of Gross Revenues shall be subordinate
to all payments to be made to Lender as provided in the Management,
Subordination and Estoppel Agreement among Lender, Borrower and Manager of even
date herewith. Borrower shall not modify, amend or terminate the Cash Management
Agreement in any material respect without Lender's prior written consent.
<PAGE>
13. Due on Sale or Encumbrance. Except as otherwise expressly provided in
Section 8.4, Borrower shall not and shall not permit others to convey, assign,
sell, mortgage, encumber, pledge, hypothecate, grant a security interest in,
grant options with respect to, or otherwise dispose of (directly or indirectly,
voluntarily or involuntarily, by operation of law or otherwise, and whether or
not for consideration or of record) all or any portion of any legal or
beneficial interest in all or any portion of the Property or the Leases. Any
such transfer or encumbrance, as aforesaid, shall be deemed to be an Event of
Default hereunder, and shall entitle Lender to declare the Loan immediately due
and payable.
14. Estoppel Certificates. Within ten (10) Business Days following a
request by Lender, Borrower shall provide to Lender a duly acknowledged written
statement confirming the amount of the outstanding Indebtedness, the terms of
payment and maturity date of the Note, the date to which interest has been paid,
and whether any offsets or defenses exist against the Indebtedness. If any such
offsets or defenses are alleged to exist, the nature thereof shall be set forth
in detail. The Lender agrees to provide the Borrower, within ten (10) Business
Days following a request by Borrower, a payoff letter affirming the amount of
the Loan then outstanding.
15. Space Leases, Service Agreements and Equipment Leases. Borrower shall
not, without the prior written consent of Lender, enter into or modify, amend or
terminate (except upon a default by tenant) any lease of space (including
restaurants) with respect to the Premises or any portion thereof in excess of
1,000 square feet. Any lease of space entered into by Borrower with respect to
the Premises or any portion thereof shall (a) be subordinate to the lien of the
Mortgage, (b) be pursuant to an arms' length transaction and (c) not contain any
term which would materially affect Lender's rights under the Loan Documents.
Borrower shall not, without the prior written consent of Lender, enter into any
operating agreements or service contracts with respect to the Property ("Service
Agreements") other than (i) agreements or contracts to provide customary guest
services such as laundry, gift shop, or television cable services, or (ii) other
agreements the aggregate annual payments for which do not exceed $50,000. All
Service Agreements shall (a) be subordinate to the lien of the Mortgage and (b)
be pursuant to an arms' length transaction. Borrower shall not, without the
prior written consent of Lender, enter into any equipment lease which would
cause the aggregate annual payments by Borrower for all equipment leases to
exceed $25,000. All equipment leases shall be pursuant to an arms' length
transaction.
Within ten (10) days following the execution by Borrower of any new Lease,
Borrower shall deliver to Lender a Subordination, Non-Disturbance and Attornment
Agreement executed by the tenant under such Lease which is in form satisfactory
to Lender unless the Lease contains subordination, non-disturbance and
attornment provisions otherwise satisfactory to the Lender.
Borrower shall perform and comply with all of the landlord's obligations
under each Lease and shall not suffer or permit any breach or default on the
part of the landlord to occur thereunder.
<PAGE>
16. Condemnation. Borrower shall not enter into any agreement for the
taking of the Premises or any part thereof with anyone authorized to acquire the
same in or by condemnation proceedings, or by the exercise of any power of
eminent domain, unless and until Lender shall have consented thereto in writing.
17. Litigation. Borrower shall promptly provide Lender with written notice
of any material litigation in which Borrower, any other Loan Party or the
Property is named as defendant which is not fully covered by insurance for which
the insurer has assumed the defense and acknowledged coverage, and Borrower
shall provide Lender with copies of all pleadings or orders filed or entered
therein or with respect thereto.
18. Principal Amortization Reserve.
(1) The DSCR shall be calculated by Lender on each Calculation Date
for the most recent Calculation Period. At all times prior to the Maturity Date,
if the DSCR on the most recent Calculation Date is less than the Required
Coverage Standard, Borrower shall, in addition to the regularly scheduled
monthly payments of interest due under the Note, deposit with Lender on or
before the twenty-fifth (25th) day of each month 100% of the Net Cash Flow for
the immediately preceding Accounting Period.
(2) Borrower shall make and Lender shall hold all such payments of
Reserved Funds in accordance with the following terms and conditions:
(1) All Reserved Funds held by Lender upon the Maturity Date or
upon the occurrence of an Event of Default may be applied by
Lender to the repayment of the Loan in accordance with the
terms and conditions of the Note.
(2) Provided that no Event of Default or Incipient Default exists,
if, on the next Calculation Date, the DSCR is greater than or
equal to the Required Coverage Standard, Lender shall return
to Borrower the Reserved Funds then held by Lender, and
Borrower's obligation to deposit the Reserved Funds with
Lender shall be suspended until any subsequent Calculation
Date when the DSCR is less than the Required Coverage
Standard.
(3) If Borrower is required to make payments of Reserved Funds
pursuant to this Section 4.1.R for four (4) consecutive
Calculation Dates, so long as no Event of Default or Incipient
Default exists, Lender may, on such fourth consecutive
Calculation Date, apply all Reserved Funds to the repayment of
the Loan. No such repayment shall be subject to any prepayment
fee or premium. Thereafter, all Reserved Funds may be applied
by Lender, upon
<PAGE>
receipt, to the repayment of the Loan, as aforesaid; provided,
however, if on any subsequent Calculation Date the DSCR shall
be equal to or greater than the Required Coverage Standard,
Borrower's obligation to deposit the Reserved Funds with
Lender shall be suspended until any Calculation Date
thereafter when the DSCR is less than the Required Coverage
Standard.
(4) All interest accrued on the Reserved Funds shall be added to
the Reserved Funds and shall be disbursed in accordance with
the foregoing terms and conditions. All interest earned on the
Reserved Funds shall be taxable to Borrower.
19. Application of Gross Revenues; Distributions. Borrower shall promptly
apply all Gross Revenues to the payment of all current and past due Operating
Expenses and to the repayment of all sums currently due or past due under this
Loan, including all payments of Capital Reserve pursuant to Section 4.1T and
real estate tax escrow payments pursuant to Section 4.1.B of this Agreement, if
any. After the Renovation Completion and so long as no Event of Default or
Incipient Default exists, and subject to the provisions of Section 4.1.R,
Borrower may make dividends to its shareholders of Net Cash Flow after the
payment of all current and past due Operating Expenses, debt service on the
Loan, Capital Reserve payments, real estate tax escrow payments pursuant to
Section 4.1.B, if any, and all sums due and payable to Lender (for its own
account or to be held by it) at or prior to the time of said dividend.
20. Capital Reserve. Beginning on January 25, 1999, and continuing on the
twenty-fifth (25th) day of each Loan Month thereafter, Borrower shall deposit
with Lender on a monthly basis a reserve of not less than four percent (4%) of
Gross Revenues for the preceding Accounting Period. So long as no Event of
Default or Incipient Default (other than an Incipient Default which is
susceptible to cure and as to which Borrower is diligently pursuing such cure)
shall exist, Lender shall make said funds available to Borrower on the following
terms and conditions: (i) all Capital Reserve funds released by Lender to
Borrower shall be used to pay Borrower for the reasonable expenses actually
incurred by Borrower for the acquisition, repair, or replacement of furniture,
fixtures or equipment necessary for the management and operation of the Property
(based on invoices furnished by Borrower) under an annual budget approved by
Lender for said acquisitions, repairs and replacements; (ii) all requests by
Borrower for a disbursement of Capital Reserve funds shall be in writing and
shall not be made more frequently than once per Loan Month; (iii) each such
request for a disbursement shall be in an amount of not less than $10,000.00;
and (iv) Borrower shall provide Lender with invoices, contracts providing for
progress payments or paid receipts covering the expenses for which Borrower
seeks payment or reimbursement from the Capital Reserve funds. Prior to the
disbursement of any Capital Reserve funds, Borrower shall also provide Lender
with (i) evidence satisfactory to Lender that Borrower has accepted possession
of said items and commenced using the same in the management and operation of
the Property, or the applicable contract requires an advance
<PAGE>
payment prior to manufacture or delivery and (ii) paid receipts covering the
expenses for which Capital Reserve funds were previously disbursed.
21. Funds Deposited with Lender. All funds of Borrower which are deposited
with Lender pursuant to this Agreement or any other Loan Document shall be held
in a separate account and invested in an interest-bearing account (at not less
than money market rates). Any interest which accrues on said funds shall, at
Lender's sole option, be paid to Borrower or be held as part of the applicable
funds being held by Lender for the same purpose for which the principal sum of
said funds is being held by Lender. The Capital Reserve fund shall be reviewed
by the Lender annually on the anniversary of the Loan to determine if sufficient
sums are being funded for the expenses provided for herein. If the Lender
determines, in its reasonable discretion, that the Capital Reserve fund is
insufficient, Borrower shall pay all funding shortages within thirty (30) days
after notice by Lender. To secure all of Borrower's obligations to Lender under
the Loan Documents, Borrower hereby grants to Lender a security interest in all
funds now or hereafter deposited with Lender or otherwise in Lender's
possession, custody or control pursuant to the provisions of this Agreement or
any other Loan Document, including all funds deposited pursuant to Sections
4.1.B, 4.1.R, and 4.1.T of this Agreement. So long as any Event of Default
exists, Lender shall have such rights with respect to such funds and any
interest accrued thereon as are provided by applicable law and may apply such
funds towards the satisfaction of Borrower's obligations hereunder or under any
other Loan Documents. Without limiting any of the foregoing provisions, at the
request of Lender, Borrower shall execute and deliver from time to time such
documents as may be necessary or appropriate, in Lender's sole judgment, to
assure Lender that it has a first priority perfected security interest in and
lien on all funds deposited pursuant to Sections 4.1.B, 4.1.R, and 4.1.T of this
Agreement, including the creation of a deposit account in the name of Borrower
in a banking institution approved by Lender either within or outside of the
State of Ohio, as directed by Lender, into which any or all of such funds will
be deposited and maintained, subject to the rights of Lender with respect to
such funds as provided herein. Lender reserves the right to inspect such repairs
or replacements prior to the release of funds at Borrower's expense provided
that such inspection expenses shall not exceed $1,500 in any twelve (12) month
period.
22. Audit and Inspection by Lender. Lender shall have the right, upon
reasonable prior notice, and Borrower shall permit and shall cooperate with
Lender in arranging for, at any reasonable time and from time to time, Lender
and its representatives (i) to inspect the Property, and (ii) to review and
audit all books, records and financial statements of Borrower (including all
supporting data and any other records from which the Net Cash Flow may be
determined); and Borrower shall make all such books of account and records
available for such examination at the office where the same are regularly
maintained. Lender shall have the right to copy, duplicate and make abstracts
from such books and records as Lender may require. If any audit by Lender
discloses that payments of Net Cash Flow which should have been made by Borrower
exceeds the sums which were actually made by Borrower, then Borrower shall,
within ten (10) days following written notice from Lender, pay to Lender the
difference between said amounts,
<PAGE>
together with interest on such amount at the Default Rate from the date such
amounts should have been paid to the date of post-audit payment. Borrower shall
pay Lender's costs and expenses incurred in connection with no more than one (1)
such audit per year. Borrower acknowledges and agrees that (i) all of such
audits, inspections and reports shall be made for the sole benefit of Lender,
and not for the benefit of Borrower or any third party, and neither Lender nor
Lender's auditors or inspectors or any of Lender's representatives, agents or
contractors assumes any responsibility or liability (except to Lender) by reason
of such audits, inspections or reports, (ii) Borrower will not rely upon any of
such audits, inspections or reports for any purpose whatsoever, and (iii) the
performance of such audits, inspections and reports will not constitute a waiver
of any of the provisions of this Agreement or any other Loan Document or any of
the obligations of Borrower hereunder or thereunder. Borrower further
acknowledges and agrees that neither Lender nor Lender's inspectors,
representatives, agents or contractors shall be deemed to be in any way
responsible for any matters related to design or construction of the
Improvements.
23. Appraisal. At any time during the term of the Loan, Borrower shall
cooperate with Lender and use reasonable efforts to assist Lender in obtaining
an appraisal of the Property. Such cooperation and assistance from Borrower
shall include but not be limited to the obligation to provide Lender or Lender's
appraiser with the following: (i) reasonable access to the Property, (ii) a
current certified rent roll for the Property in form and substance satisfactory
to Lender, current asking rents and a history of change in asking rents and
historical vacancy for the past three years, (iii) current and budgeted income
and expense statements for the prior three years, (iv) a site plan and survey of
Property (to the extent available and at no cost to Borrower), (v) the building
plans and specifications, including typical elevation and floor plans (to the
extent available and at no cost to Borrower), (vi) a photocopy of the deed
conveying the Property to Borrower, together with the legal description of the
Property, (vii) the current and prior year real estate tax bills, (viii) a
detailed list of past and scheduled capital improvements made during Borrower's
period of ownership and the costs thereof, (ix) a summary of the then current
ownership entity, (x) all environmental reports and other applicable information
relating to the Property, and (xi) copies of all recent appraisals/property
description information or brochures, including descriptions of amenities and
services relating to the Property. The appraiser performing any such appraisal
shall be engaged by Lender, and Lender shall be responsible for any fees payable
to said appraiser in connection with an appraisal of the Property.
24. Accounts. Borrower agrees that, at any time requested by Lender in
writing after an Incipient Default or Event of Default has occurred, Borrower
will do all acts requested by Lender to perfect or confirm the continued
perfection of Lender's security interest in all of Borrower's bank accounts,
including, without limitation, appointing a collateral agent satisfactory to
Lender and segregating all of Borrower's funds from those of Manager or any
Affiliates.
25. Deferred Origination Fee. Borrower acknowledges that the Lender has
earned the Deferred Origination Fee as of the date hereof although the Lender
has agreed to defer its payment as hereinafter provided. Borrower agrees that it
shall pay the Deferred Origination Fee
<PAGE>
to the Lender when the Loan is paid or becomes payable in full whether at the
Maturity Date or upon earlier prepayment or acceleration.
26. Limitation on Indebtedness. Borrower shall not, without the prior
written consent of Lender, create, assume, incur or guaranty, directly or
indirectly, any indebtedness or obligation, except for (i) lease financing or
purchase money financing for equipment, incurred after the date hereof, which is
secured by the equipment so leased or purchased and which lease or purchase
money financings do not contain payment obligations, in the aggregate, in excess
of $25,000 per year, or (ii) the Other Borrower Loans.
ARTICLE 5
AGREEMENT TO LEND
1.7 Agreement to Lend. On the basis of the covenants, agreements and
representations of Borrower contained in, and subject to the terms and
conditions set forth in, this Agreement and the other Loan Documents, Lender
agrees to lend to Borrower the principal sum of up to $35,073,117. The entire
proceeds of the Loan shall be disbursed by Lender at Closing. Borrower shall use
the Loan proceeds for the purpose for which they were advanced and for no other
purpose.
ARTICLE 6
INSURANCE AND CASUALTY
1.8 Insurance Provisions.
1. Insurance. Borrower, at its sole cost and expense, shall insure and
keep insured the Property against such perils and hazards, and in such amounts
and with such limits, as Lender may from time to time reasonably require. At the
time of the Closing, Lender's requirements for said insurance are set forth in
Exhibit D, which requirements Borrower acknowledges are reasonable and
customary. Borrower shall also carry such other insurance, and in such amounts,
as Lender may from time to time reasonably require, against insurable risks
which at the time are commonly insured against in the case of premises similarly
situated, due regard being given to the availability of insurance and to the
type of construction, location, utilities, use and occupancy of the Premises or
any replacements or substitutions therefor ("Additional Insurance"). Such
Additional Insurance may include flood, hurricane, earthquake, war risk, nuclear
explosion, demolition and contingent liability from the operation of
"nonconforming improvements" on the Premises, and shall be obtained within 30
days after demand by Lender. Otherwise, Borrower shall not obtain any separate
or additional insurance which is contributing in the event of loss, unless it is
properly endorsed and otherwise reasonably satisfactory to Lender in all
respects. The Proceeds (as defined in the Mortgage) of insurance paid on account
of any damage to or
<PAGE>
destruction of the Premises or any portion thereof shall be paid over to Lender
to be applied as hereinafter provided.
2. Evidence of Coverage. The insurance shall be evidenced by the original
policy or a true and certified copy of the original policy, or by certificates
of insurance. Said certified copies, original policies or certificates shall be
delivered to Lender at or prior to Closing. On or before the Closing and each
stated due date thereafter, Borrower shall pay all premiums and fees for the
insurance policies required hereunder. Borrower shall deliver certified copies
of all policies and renewals (or certificates evidencing the same) to Lender at
least thirty (30) days before the expiration of existing policies. Each such
policy shall provide that such policy may not be canceled or materially changed
except upon 30 days prior written notice of intention of non-renewal,
cancellation or material change to Lender, and that no act or thing done by
Borrower shall invalidate the policy as against Lender. Notwithstanding anything
to the contrary contained herein or in any provision of law, the Proceeds of
insurance policies coming into the possession of Lender and which are not to be
used for the Work (as hereinafter defined) shall not be deemed trust funds and
Lender shall be entitled to dispose of such Proceeds as hereinafter provided. If
Lender has not received satisfactory evidence of such renewal or substitute
insurance in the time frame herein specified, Lender shall have the right, but
not the obligation, to purchase such insurance for Lender's interest only. Any
amounts so disbursed by Lender pursuant to this Section 6.1.B shall be deemed to
be a part of the Loan and shall bear interest at the Default Rate. Nothing
contained in this Article 6 shall require Lender to incur any expense or take
any action hereunder, and inaction by Lender shall never be deemed a waiver of
any rights accruing to Lender on account of this Article 6.
3. Separate Insurance. Borrower shall not carry any separate insurance on
the Property concurrent in kind or form with any insurance required hereunder or
contributing in the event of loss without Lender's prior written consent, and
any such policy shall have attached a standard non-contributing mortgagee
clause, with loss payable to Lender, and shall meet all other requirements set
forth herein.
4. Damage to or Destruction of Premises. In the event of any damage to or
destruction of the Premises, Borrower shall give prompt written notice to Lender
and, provided Lender makes the Proceeds available for the costs of repair,
restoration and rebuilding, Borrower shall promptly commence and diligently
continue to completion the repair, restoration and rebuilding of the Premises so
damaged or destroyed in full compliance with all legal requirements and with the
provisions of Section 6.1.F below, and free and clear from any and all liens and
claims. Such repair, restoration and rebuilding of the Premises are sometimes
hereinafter collectively referred to as the "Work." Borrower shall not adjust,
compromise or settle any claim(s) for insurance Proceeds without the prior
written consent of Lender unless such claim(s) does not exceed $100,000 in the
aggregate in which case no consent of Lender is required. Subject to Sections
6.1E and F, below, Lender shall have the option in its sole discretion to apply
any insurance Proceeds it may receive pursuant to the Mortgage (less any cost to
Lender of recovering and
<PAGE>
paying out such Proceeds, including reasonable attorneys' fees) to the payment
of the Indebtedness or to allow all or a portion of such Proceeds to be used for
the Work. If any insurance Proceeds are applied to reduce the Indebtedness,
Lender shall apply the same in the following order:
(1) first, to the payment of interest due on any Advances;
(2) next, to the principal amount of any Advances;
(3) next, to any Late Charges (as provided in the Note);
(4) next, to accrued interest then due under the Note; and
(5) finally, to the unpaid principal balance of the Note.
If Lender applies insurance Proceeds to reduce the Indebtedness, no
prepayment fee shall be due with respect to any prepayment effected thereby.
5. Restoration. Notwithstanding the provisions of Section 6.1.D above, if,
in Lender's reasonable judgment, the Work can be completed within 18 months of
the occurrence of said damage or destruction, then Lender shall, upon request by
Borrower, permit Borrower to use the insurance Proceeds for the Work (subject to
the provisions of, and less Lender's costs described in, Section 6.1.F below),
so long as Lender, in its reasonable judgment, is satisfied that as of each date
on which such insurance Proceeds are to be applied to payment thereof:
(1) The insurance Proceeds held by Lender in respect of the
applicable casualty equal or exceed such estimated cost of
effecting such repair and restoration, or such portion thereof
as then remains to be completed and paid for or Borrower
provides evidence satisfactory to Lender that Borrower has
funds available to pay any shortfall, and, if required by
Lender, escrows such funds with Lender for disbursement in
accordance with the requirements of Section 6.1.F;
(2) The Management Agreement shall remain in full force and effect
and all material Leases, if any, shall remain in full force
and effect, and no tenant thereunder shall be entitled to
cancel or terminate its Lease as a consequence of such
casualty;
(3) Upon completion of the Work, the monthly revenues from the
Property shall, in Lender's reasonable judgment, be sufficient
to pay all interest and other sums due and payable under the
Note, this Agreement and the other Loan Documents;
<PAGE>
(4) The Work will, in Lender's reasonable judgment, be completed
on or prior to May 31, 2000;
(5) There is in force and effect for the benefit of Borrower and
Lender rental or business interruption insurance sufficient to
provide coverage for one hundred percent (100%) of all income
lost as a consequence of such casualty for not less than the
projected period for the completion of the Work or Borrower
provides evidence satisfactory to Lender that Borrower has
funds available to pay all interest and other sums due and
payable under the Note, this Agreement and the other Loan
Documents, as well as all other expenses of the Property
during such period and, if required by Lender, escrows such
funds with Lender for application to the payment of such
obligations as they come due;
(6) The Work will be effected pursuant to plans and specifications
reasonably approved in writing by Lender, and by a general
contractor and major subcontractors, and pursuant to
contracts, reasonably approved in writing by Lender; and
(7) The Work can be effected in compliance with all applicable
laws and Borrower has obtained all licenses, permits, consents
and approvals from all applicable governmental authorities or
private parties required to permit Borrower to effect such
restoration and repair and to use, operate and occupy the
repaired and restored premises upon completion thereof (other
than those which will issue in the ordinary course upon
completion) and that the same are in full force and effect.
Lender shall have no obligation to make such insurance Proceeds available to pay
for the Work if (A) the Loan shall have been accelerated and the principal and
accrued interest owing on the Loan have become due and payable, or (B) there
shall exist an Event of Default or Incipient Default other than an Incipient
Default which is susceptible to cure and as to which Borrower is diligently
pursuing such cure.
6. Distribution of Proceeds. If any insurance Proceeds are used for the
Work, then such Proceeds shall be held by Lender and shall be paid out from time
to time to Borrower as the Work progresses (less any cost to Lender of
recovering and paying out such Proceeds, including reasonable attorneys' fees
and costs allocable to inspecting the Work and the plans and specifications
therefor), subject to each of the following conditions:
(1) If the Work is structural or if the cost of the Work is
reasonably estimated by Lender to exceed $250,000, the Work
shall be conducted under the
<PAGE>
supervision of a certified and registered architect or
engineer unless otherwise waived in writing by the Lender.
Before Borrower commences any Work, other than temporary work
to protect property or prevent interference with business,
Lender shall have approved in writing the plans and
specifications for the Work, which approval shall not be
unreasonably withheld or delayed, it being nevertheless
understood that such plans and specifications shall provide
for Work so that, upon completion thereof, the Premises shall
be at least equal in value and general utility to the Premises
prior to the damage or destruction.
(2) Each request for payment shall be made on not less than ten
(10) Business Days prior notice to Lender and shall be
accompanied by a certificate of the architect or engineer in
(i) above (or a certificate given by Borrower if no architect
or engineer is so required) stating (A) that all of the Work
completed has been done in substantial compliance with the
approved plans and specifications, if required under (i)
above, (B) that the sum requested is justly required to
reimburse the Borrower for payments by Borrower, or is justly
due to the contractor, subcontractors, materialmen, laborers,
engineers, architects or other persons rendering services or
materials for the Work (giving a brief description of such
services and materials), and that when added to all sums
previously paid out by Lender does not exceed the value of the
Work done to the date of such certificate, (C) if the sum
requested is to cover payment relating to repair and
restoration of personal property required or relating to the
Premises, that title to the personal property items covered by
the request for payment is vested in Borrower, and (D) that
the amount of such Proceeds remaining in the hands of Lender
will be sufficient on completion of the Work to pay for the
same in full (giving in such reasonable detail as Lender may
require an estimate of the cost of such completion).
Additionally, each request for payment shall contain a
statement signed by Borrower approving both the Work done to
date and the Work covered by the request for payment in
question. Each request for payment shall be accompanied by
waivers of lien satisfactory to Lender covering that part of
the Work for which payment or reimbursement is being requested
and, if required by Lender, a search prepared by a title
company or an attorney authorized to practice law in the
State, or by other evidence satisfactory to Lender that there
has not been filed with respect to the Premises any mechanics'
or other lien or instrument for the retention of title
relating to any part of the Work not discharged of record.
Additionally, as to any personal property covered by the
request for payment, Lender shall be furnished with evidence
of payment therefor and such further evidence satisfactory to
assure Lender of its valid first lien on the personal
property.
<PAGE>
(3) Lender or its designee shall have the right to inspect the
Work at all reasonable times and may condition any
disbursement of Proceeds upon the satisfactory completion, as
determined in Lender's reasonable discretion, of any portion
of the Work for which payment or reimbursement is being
requested. The cost of any such inspection of the Work shall
be paid by Borrower prior to or simultaneously with the next
disbursement of any portion of the Proceeds. Neither the
approval by Lender of the plans and specifications for the
Work nor the inspection by Lender of the Work shall make
Lender responsible for the preparation of such plans and
specifications or the compliance of such plans and
specifications, or of the Work, with any applicable law,
regulation, ordinance, covenant or agreement.
(4) Proceeds shall not be disbursed more frequently than every 30
days.
(5) Any request for payment made after the Work has been completed
shall be accompanied by a copy or copies of any certificate or
certificates required by law to render occupancy and full
operation of the Premises legal.
(6) Upon completion of the Work and payment in full therefor, or
upon any failure on the part of Borrower to promptly commence
the Work, or upon the failure on the part of Borrower to
proceed diligently and continuously to completion of the Work
(subject to allowance for reasonable delays and interruptions
in the supply of materials and labor not caused by any act or
omission of Borrower), Lender may apply any such proceeds it
then or thereafter holds to the payment of the Indebtedness;
provided, however, that Lender shall be entitled to apply at
any time all or any portion of insurance Proceeds it then
holds to the curing of any Event of Default. Upon completion
of the Work, so long as no Event of Default exists, any
remaining insurance Proceeds held by Lender shall be paid to
Borrower.
7. Miscellaneous Insurance Provisions.
(1) Notwithstanding any other provision of this Section 6.1, if in
Lender's reasonable judgment the cost of the Work is less than
$250,000 and such Work can be completed in less than 60 days
and provided no Event of Default has occurred and is
continuing, then Lender shall, upon request by Borrower,
permit Borrower to apply for and receive the insurance
Proceeds directly from the insurer (and Lender shall advise
the insurer to pay over such Proceeds directly to Borrower),
provided that Borrower shall apply such insurance Proceeds
solely to the prompt and diligent commencement and completion
of such Work.
<PAGE>
(2) In the event of the foreclosure of the Mortgage or other
transfer of title to or assignment of the Property in
extinguishment of the Indebtedness in whole or in part, all
right, title and interest of Borrower in and to any insurance
Proceeds shall inure to the benefit of and pass to Lender or
any purchaser or transferee of the Property.
(3) Borrower hereby authorizes Lender, during all periods in which
an Event of Default has occurred and remains uncured, to
settle any insurance claims, to obtain insurance Proceeds, and
to endorse any checks, drafts or other instruments
representing any insurance Proceeds whether payable by reason
of loss thereunder or otherwise.
ARTICLE 6A
RENOVATION WORK
6A.1 Construction. During the pendency of the Renovation Work, Borrower
shall provide Lender with monthly reports which include, as applicable, (i)
evidence reasonably satisfactory to Lender that the Renovation Work complies
with all building, zoning and other laws and governmental codes, rules and
regulations, (ii) copies of all necessary licenses, permits, approvals and
consents required for the use, occupancy and operation of the Premises, as
altered by the Renovation Work, (iii) evidence satisfactory to Lender that all
Renovation Work completed as of the date of such report has been inspected and
approved by each required Governmental Authority and by each other person or
entity (including any tenants) having the right to inspect and approve the
Renovation Work and (iv) all contractors and subcontractors have been paid
current. Borrower shall provide Lender with such other information and material
relating to the Renovation Work as Lender reasonably requests.
6A.2 Completion. Borrower shall: (i) cause the Renovation Work to be
completed in a good and workmanlike manner in accordance with the reasonable
requirements of Lender's Consultant, and the requirements of this Agreement, the
Renovation Budget and the Renovation Plans; (ii) cause the Renovation Work to be
completed so that the Premises remain free and clear of all liens and
encumbrances other than Permitted Exceptions; (iii) cause Renovation Completion
to be achieved on or before the Renovation Completion Date; and (iv) commence
the Renovation Work within 90 days following the Closing and pursue the
Renovation Work diligently to completion.
6A.3 Compliance with Laws. Borrower shall cause the Renovation Work to be
constructed in accordance with all applicable requirements of any Governmental
Authority having jurisdiction with respect thereto including, without
limitation, obtaining all licenses, permits, approvals and consents for the use,
occupancy and operation of the Premises, as altered
<PAGE>
by the Renovation Work.
6A.4 Other Remedies of Lender. Upon the occurrence of an Event of Default,
in addition to any other remedies available to Lender by the terms of this
Agreement or any other Loan Document or by law, Lender may at its sole
discretion: (a) complete the Renovation Work (with such changes as Lender shall
deem appropriate), all at the risk, cost and expense of Borrower; (b)
discontinue at any time the Renovation Work; (c) engage builders, contractors,
engineers, architects and others for the purpose of furnishing labor, material
and equipment in connection with the Renovation Work, which personnel may, but
need not, be the same as those engaged by Borrower; (d) pay, compromise or
settle all bills or claims incurred in connection with the Renovation Work; and
(e) take or refrain from taking such action with respect to the Renovation Work
as Lender may from time to time reasonably determine. All such action shall be
at Borrower's sole cost and expense, such sums being secured by the Mortgage.
ARTICLE 7
BORROWER'S DEFAULT
1.9 Events of Default. Each of the following shall constitute an "Event of
Default" under this Agreement:
1. Borrower fails (i) to pay any installment of interest on the Note when
due and continuing for more than five (5) days after written notice thereof from
Lender or (ii) to pay the Note in full on or before the Maturity Date;
2. Borrower or the Guarantor fails to pay within ten (10) days following
written notice from Lender any amounts due hereunder or under any of the other
Loan Documents, other than installments of interest on the Note; or
3. Any representation or warranty made by Borrower or any other Loan Party
in or pursuant to this Agreement or otherwise made in writing in connection with
or as contemplated by this Agreement shall be incorrect or false or misleading
in any material respect as to the period of time to which it relates; or
4. An Event of Default exists under any other Loan Document; or
5. Any representation to Lender by Borrower or any other Loan Party as to
the financial condition or credit standing of Borrower or any other Loan Party,
or any financial statement provided to Lender pursuant to any Loan Document, is
or proves to be false or misleading in any material respect; or
6. Except for Permitted Transfers, any interest in Borrower or the
Property (or any part
<PAGE>
thereof) is sold, conveyed, transferred, assigned, disposed of or further
encumbered, either directly or indirectly, or any agreement for any of the
foregoing is entered into; or
7. The Premises or any portion thereof is rezoned either voluntarily or
involuntarily, so as to no longer permit the Premises or any portion thereof to
be used as a hotel; or
8. Any order or decree is entered by any court of competent jurisdiction
directly or indirectly enjoining or prohibiting Lender or Borrower from
performing any of their obligations under this Agreement; or
9. Borrower or any other Loan Party makes an assignment for the benefit of
creditors; or petitions or applies to any court for the appointment of a trustee
or receiver for itself or for any part of its assets or for the Property or any
portion thereof, or commences any proceedings under any bankruptcy, insolvency,
readjustment of debt or reorganization statute or law of any jurisdiction,
whether now or hereafter in effect; or if any such petition or application is
filed or any such proceedings are commenced, and Borrower or any other Loan
Party by any act indicates any approval thereof, consent thereto, or
acquiescence therein; or an order is entered appointing any such trustee or
receiver, or adjudicating Borrower or any other Loan Party bankrupt or
insolvent, or approving the petition in any such proceeding; or if any petition
or application for any such proceeding or for the appointment of a trustee or
receiver is filed by any third party against Borrower or any other Loan Party or
their respective assets or the Property, or any portion thereof, and any of the
aforesaid proceedings is not dismissed within ninety (90) days of its filing; or
10. Any representation or warranty made by the Ground Lessor in the
Estoppel Agreement shall be incorrect or false or misleading in any material
respect; or
11. A default or event of default occurs under the Franchise Agreement and
Franchisor has taken affirmative action to enforce its rights under the
Franchise Agreement, or has affirmatively declared a default under the Franchise
Agreement, or has otherwise expressly indicated that it deems such default
material, or the Franchise Agreement or any related arrangement with Franchisor
is terminated without the prior written consent of Lender, in its sole
discretion; or
12. A final non-appealable judgment or judgments for the payment of money
in excess of an aggregate of $50,000 shall be rendered against Borrower and such
judgment or judgments shall remain undischarged or unbonded (to Lender's
satisfaction) for a period of 60 consecutive days during which the execution
shall not be effectively stayed; or
13. The Management Agreement is amended or terminated for any reason
without the prior written consent of Lender; or
14. Borrower or any other Loan Party fails to comply with, keep or perform
any of its other
<PAGE>
obligations, agreements, undertakings, covenants, conditions or warranties under
(i) this Agreement, (ii) any other Loan Document, or (iii) any other document or
instrument executed and delivered to Lender by Borrower or any other Loan Party
pursuant to this Agreement, and such failure continues for a period of thirty
(30) days after written notice thereof by Lender to Borrower, provided, however,
if such failure is susceptible to cure by Borrower but cannot be cured within
such thirty (30) day period, but Borrower commences to cure the same within such
thirty (30) day period and thereafter diligently proceeds to cure the same,
Borrower shall have an additional reasonable period of time in which to cure
such failure (but in no event longer than ninety (90) days after the date of
notice thereof); or
15. An event of default occurs under the Other Borrower Loan Documents and
is not cured by Borrower within any applicable grace or cure period; or
16. An event of default occurs under the Related Party Loan Documents and
is not cured by the Related Party within any applicable grace or cure period.
1.10 Remedies. Upon the happening of an Event of Default, Lender shall
have the right, in addition to all the remedies conferred upon Lender by law or
equity or the terms of any Loan Document, to do any or all of the following,
concurrently or successively, without notice to Borrower:
1. Declare the Note to be, and such Note shall thereupon become,
immediately due and payable, together with the Prepayment Fees (as defined in
the Primary Note), if applicable, without presentment, demand, protest, notice
of intention to accelerate, notice of acceleration or notice of any kind, all of
which are hereby expressly waived, anything contained herein or in the Note to
the contrary notwithstanding, and exercise any one or more of its rights and
remedies under the Loan Documents.
2. Enter upon and take possession of the Property and all material,
equipment and supplies thereon and do anything necessary or desirable to fulfill
the obligations of Borrower hereunder and to sell, manage, maintain, repair and
protect the Property. Without limiting the generality of the foregoing and for
the purposes aforesaid, Borrower hereby appoints and constitutes Lender its
lawful attorney-in-fact with full power of substitution to (i) pay, settle or
compromise all existing bills and claims which may be liens upon or security
interests in the Property, or to avoid such bills and claims becoming liens or
security interests, against the Property or any fixtures or equipment thereon,
or as may be necessary or desirable for the clearance of title or otherwise,
(ii) use any funds of Borrower for purpose of completing the Renovation Work,
(iii) execute all applications and certificates in the name of Borrower which
may be required to carry out the intent and purpose hereof, (iv) employ such
contractors, subcontractors, architects and others as Lender may deem reasonably
appropriate, (v) do any and every act which Borrower might do on its own behalf,
including to enter into Leases of any portion of the Property, and (vi)
prosecute or defend any and all actions or proceedings involving the Property or
any fixtures,
<PAGE>
equipment or other installations thereon, it being understood and agreed that
this power of attorney shall be a power coupled with an interest and cannot be
revoked. Lender and its designees, representatives, agents, licensees and
contractors shall be entitled to the entry, possession and use contemplated
herein without the consent of any party and without any legal process or other
condition precedent whatsoever. Borrower acknowledges that any denial of such
entry, possession and use by Lender will cause irreparable injury and damage to
Lender and agrees that Lender may forthwith sue for any remedy to enforce the
immediate enjoyment of such right. Borrower hereby waives the posting of any
bond as a condition for exercising such remedy.
3. Apply the sum of any Reserved Funds and Capital Reserve payments then
being held by Lender to the repayment of the Loan in any order or priority.
4. Declare any or all of the Other Borrower Loans and the Related Party
Loans to be in default and to pursue all of its rights and remedies with respect
thereto.
Anything in this Agreement to the contrary notwithstanding, all funds
advanced or disbursed by Lender pursuant to the provisions of this Article 7
shall be deemed advanced by Lender under an obligation to do so regardless of
the identity of the person or persons to whom such funds are owed and shall bear
interest at the Default Rate. Funds advanced or disbursed by Lender in the
exercise of its judgment that the same are needed to protect its security or to
otherwise perform any obligations of Borrower hereunder are to be deemed
obligatory advances hereunder and are to be added to the total indebtedness
evidenced by the Note and secured by the Mortgage and the other Loan Documents
and said indebtedness shall, if necessary, be increased accordingly.
In case of any Event of Default hereunder, Borrower will pay Lender's
attorneys' fees and disbursements and court costs (including those relating to
appeals) and all related expenses in connection with the enforcement of this
Agreement or any of the other Loan Documents.
ARTICLE 8
MISCELLANEOUS
1.11 Indemnification. Except for Losses (as hereinafter defined) which are
finally adjudicated by a court of competent jurisdiction to have arisen directly
and proximately from the gross negligence or willful misconduct of Lender or
have arisen solely and exclusively from acts or events occurring after the
Borrower has relinquished all possession, direction or control over the
Property, Borrower shall protect, defend, indemnify and hold Lender, and its
officers, directors, employees and agents (each, an "Indemnified Party")
harmless from and against any and all harm, loss, liability, damage, suit,
claim, demand, expense, fees, costs, judgments and penalties (including
reasonable attorneys' fees but excluding consequential damages) (each a "Loss")
<PAGE>
suffered or incurred by an Indemnified Party in connection with (i) any claim,
demand, suit or proceeding brought or asserted by any person against an
Indemnified Party arising out of or relating to Lender's entering into or
carrying out the terms of this Agreement or any of the other Loan Documents or
being the holder of the Note, (ii) any default by Borrower or any other Loan
Party hereunder or under any other Loan Document, (iii) any bodily injury,
death, other personal injury or property damage occurring in or upon the
Property through any cause whatsoever, and (iv) any transaction otherwise
arising out of or in any way connected with the Property, this Agreement, any
other Loan Document or the Indebtedness, excluding a Loss arising out of
Lender's gross negligence or willful misconduct.
1.12 Defense of Claims. Lender may, at Borrower's sole cost and expense,
retain separate counsel to defend Lender against any claim relating to any Loss
or potential Loss. If Lender retains separate counsel in such an action,
Borrower will cooperate with Lender and provide Lender with copies of all
existing pleadings, discovery materials and other materials relating to said
claim. In any event, Borrower shall defend any such claim and shall provide
Lender with copies of all pleadings, filings and correspondence relating
thereto.
1.13 Performance by Lender. In the event that Borrower shall at any time
fail to duly and punctually pay, perform, observe or comply with any of its
covenants and agreements hereunder or under the other Loan Documents, or if any
Event of Default hereunder shall exist, then Lender may (but shall in no event
be required to) make any such payment or perform any such term, provision,
condition, covenant or agreement or cure any such Event of Default. Lender shall
not take action under this Section 8.3 prior to the occurrence of an Event of
Default unless in Lender's reasonable judgment, such action is necessary or
appropriate in order to preserve the value of the collateral, to protect persons
or property, or Borrower has abandoned the Property or any portion thereof.
Lender shall not be obligated to continue any such action having commenced the
same and may cease the same without notice to Borrower. Any amounts expended by
Lender in connection with such action shall constitute additional advances
hereunder, the payment of which is additional indebtedness, secured by the Loan
Documents and shall become due and payable upon demand by Lender, with interest
at the Default Rate from the date of disbursement thereof until fully paid. No
further direction or authorization from Borrower shall be necessary for such
disbursements. The execution of this Agreement by Borrower shall and hereby does
constitute an irrevocable direction and authorization to Lender to so disburse
such funds.
1.14 Transfer or Assignment. Lender may assign, negotiate, pledge or
otherwise hypothecate all or any portion of the Loan or grant participation
therein, or in any of its rights and security hereunder and under the other Loan
Documents, and Borrower shall accord full recognition thereto provided that if
the Loan is assigned to any party other than Nationwide Life Insurance Company
or any other life insurance company, financial institution or other commercial
or institutional lender, or affiliate thereof, then Borrower must consent to
such assignment which consent shall not be unreasonably withheld or delayed.
Lender agrees to provide Borrower with
<PAGE>
written notice of any assignment of the Loan other than to Nationwide Life
Insurance Company. Lender may deliver copies to any potential participant or
assignee or transferee of financial statements and other information from time
to time furnished to Lender pursuant hereto or in connection therewith provided
that Lender shall take such steps as may be reasonably necessary to assure that
such information remains confidential. Borrower shall not assign or attempt to
assign its rights or obligations under this Agreement or any other Loan Document
other than Permitted Transfers.
1.15 Lender's Actions. The authority herein conferred upon Lender and any
action taken by Lender hereunder or in any other Loan Document will be taken by
Lender for its own protection only, and Lender does not and shall not be deemed
to have assumed any responsibility to Borrower or to any other person or persons
with respect to any such action herein authorized or taken by Lender. No person
shall be entitled to rely upon, or claim to have relied upon, any action taken
or failed to have been taken by Lender or any of its representatives.
1.16 Time is of the Essence. TIME IS OF THE ESSENCE OF THIS AGREEMENT.
1.17 Waivers. No waiver of any term, provision, condition, covenant or
agreement contained herein or in any other Loan Document shall be effective
unless set forth in a writing signed by Lender, and any such waiver shall be
effective only to the extent set forth in such writing. No failure by Lender to
exercise, or delay by Lender in exercising, any right, power or privilege
hereunder or in any other Loan Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof, or the exercise of any other
right or remedy provided by law. No notice to or demand on Borrower in any case
shall, in itself, entitle Borrower to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of Lender to
any other or further action in any circumstances without notice or demand.
1.18 Notices. Any notice which any party hereto may be required or may
desire to give hereunder shall be delivered personally, or by overnight express
courier, addressed in the case of Borrower to:
Lodgian AMI, Inc.
Two Live Oak Center
3445 Peachtree Road, NE
Suite 700
Atlanta, Georgia 30326
with a copy to:
Stearns, Weaver, Miller, Weissler,
Alhadeff & Sitterson, P.A.
<PAGE>
Museum Tower
150 West Flagler Street
Miami, Florida 33130
Attention: Robert Weissler, Esq.
in the case of Lender to:
Banc One Capital Funding Corporation
150 East Gay Street
Columbus, Ohio 43215
Attention: Loan Servicing
with a copy to:
Banc One Capital Markets, Inc.
150 East Gay Street, 24th Floor
Columbus, Ohio 43215
Attn: Legal Department and Real Estate Investment Group
or at such other addresses or to the attention of such other persons as may from
time to time be designated by the party to be addressed by written notice to the
other in the manner herein provided. Notices, demands and requests given in the
manner aforesaid shall be deemed sufficiently served or given for all purposes
hereunder when received or when delivery is refused or when the same are
returned to sender for failure to be called for.
1.19 Successors and Assigns. This Agreement shall inure to the benefit of
the parties and their respective successors and permitted assigns. No assignment
made by Borrower in violation of this Agreement shall confer any rights on any
assignee of Borrower.
1.20 No Partnership. Nothing contained herein, or in any other Loan
Document, and no action or inaction whatsoever on the part of Lender, shall be
deemed to make Lender a partner or joint venturer with Borrower.
1.21 Brokerage Claims. Borrower shall, and shall cause the Guarantor, to
protect, defend, indemnify and hold Lender harmless from and against all loss,
cost, liability and expense incurred as a result of any claim for a broker's or
finder's fee against Lender or any person or entity in connection with the
transaction herein contemplated, provided such claim is made by or arises
through or under Borrower or the Guarantor or is based in whole or in part upon
alleged acts or omissions of Borrower or the Guarantor. Lender shall protect,
defend, indemnify and hold Borrower harmless from and against all loss, cost,
liability and expense incurred as a result of any claim for a broker's or
finder's fee against Borrower provided such claim is based upon alleged acts or
omissions of Lender. <PAGE>
1.22 Publicity. Lender and Borrower may each reasonably publicize the Loan
if it so elects. Borrower agrees to consult with Lender prior to any press
release concerning the Loan.
1.23 Documents Satisfactory to Lender. All documents and other matters
required by any of the provisions of this Agreement to be submitted or provided
to Lender shall be in form and substance reasonably satisfactory to Lender.
1.24 Additional Assurances. At any time or from time to time, upon the
written request of Lender, Borrower shall execute, and, if required, record,
file (and pay all fees, taxes or other expenses relating thereto) all such
further documents and do all such other acts and things as Lender may reasonably
request to effectuate the transaction contemplated herein in accordance with the
terms hereof.
1.25 Entire Agreement. This Agreement, the Exhibits hereto and the other
Loan Documents and other documents referred to herein constitute the entire
agreement between the Lender and Borrower with respect to the subject matter
hereof and may not be modified or amended in any manner other than by
supplemental written agreement executed by the parties hereto.
1.26 Severability. If any provision of this Agreement or any other Loan
Document or the application thereof to any person or situation shall, to any
extent, be held invalid or unenforceable, the remainder of this Agreement or any
other Loan Document, and the application of such provision to persons or
situations other than those to which it shall have been held invalid or
unenforceable, shall not be affected thereby, but shall continue valid and
enforceable to the fullest extent permitted by applicable law.
1.27 No Third Party Beneficiary. Except as hereinafter expressly provided,
this Agreement is made for the sole benefit of Borrower and Lender, and no other
person shall be deemed to have any privity of contract hereunder nor any right
to rely hereon to any extent or for any purpose whatsoever, nor shall any other
person have any right of action of any kind hereon or be deemed to be a third
party beneficiary hereunder. Notwithstanding the foregoing, Banc One Capital
Partners, VII, Ltd., its successors and assigns, shall be a third party
beneficiary of the representations, warranties, covenants and agreements of
Borrower and Guarantor under the Loan Documents for so long as it may own a
participation interest in the Loan.
1.28 CHOICE OF LAW. THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF OHIO,
ACCEPTED BY LENDER IN THE STATE OF OHIO, AND THE PROCEEDS OF THE LOAN EVIDENCED
HEREBY WERE OR ARE TO BE DISBURSED BY LENDER FROM THE STATE OF OHIO. BORROWER
AND LENDER AGREE THAT THE STATE OF OHIO HAS A SUBSTANTIAL RELATIONSHIP TO THE
TRANSACTION EVIDENCED HEREBY AND AGREE THAT THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND
<PAGE>
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF OHIO (WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAW).
1.29 Limitation on Liability.
(1) Subject to the limitations and exceptions contained in
subsections (b), (c), (d) and (e) below and as otherwise provided in Section
8.21, Borrower shall not have any personal recourse liability for amounts owing
under the Note or any of the other Loan Documents and no deficiency judgment
therefor shall be enforced against Borrower. Lender's recourse for such amounts
shall, subject to the limitations and exceptions contained in subsections (b),
(c), (d) and (e) below, be limited to the collateral and security provided under
the Loan Documents and the Other Borrower Loan Documents. Anything herein to the
contrary notwithstanding, the Borrower acknowledges and agrees that the
collateral and security provided under the Loan Documents and the Other Borrower
Loan Documents are intended to cross-collateralize both the Loan and the Other
Borrower Loans as described in Section 8.21.
(2) A judgment may be sought, obtained, entered and enforced against
Borrower to the extent necessary to preserve or enforce the rights and remedies
of Lender in, to or against the collateral and security provided under the Loan
Documents and the Other Borrower Loan Documents, and nothing contained in this
Section 8.19 shall be construed to limit, prejudice or impair the rights of
Lender to enforce its rights and remedies against any real and personal property
mortgaged, pledged, encumbered, assigned or granted to secure payment or
performance under this Agreement, the Note, the other Loan Documents and the
Other Borrower Loan Documents. Notwithstanding anything to the contrary herein
or elsewhere Lender shall, to the fullest extent permitted by law, be entitled
to injunctive relief and to specific performance.
(3) Anything contained herein or elsewhere to the contrary
notwithstanding, Borrower and Guarantor shall be liable to Lender, without
limitation, for Lender's harm, loss (including lost interest and principal on
the Loan), damage, costs and expenses (including Lender's reasonable attorneys'
fees and court and collection costs) arising out of or in connection with any of
the following circumstances:
(1) any misapplication or misappropriation of any insurance or
condemnation proceeds;
(2) revenues collected after an Event of Default or Incipient
Default and not properly applied to the Loan or normal
operating expenses of the Premises;
(3) any waste respecting all or any part of the Property or any
other collateral;
(4) real estate taxes, personal property taxes or Impositions, if
any, and insurance premiums with respect to the Property
(except to the extent resulting from
<PAGE>
the failure by Lender to disburse any deposits received from
Borrower with respect to such real estate or personal property
taxes in accordance with the provisions of Section 4.1(B));
(5) fraud in connection with the Loan or any Loan Document;
(6) any material breach of any representation or warranty made in
connection with the Loan (expressly excluding any
representations or warranties made by the Ground Lessor) known
by Borrower or Guarantor to have been false when made, or
deemed made specifically including any material
misrepresentation or inaccuracy contained in any financial
statement or other document provided to Lender pursuant to
Section 4.1.K of this Agreement known by Borrower or Guarantor
to have been false or inaccurate when provided;
(7) any destruction of the Property or any part thereof in or from
an uninsured or underinsured casualty for which Borrower was
required to obtain insurance under this Agreement;
(8) any breach of any of the terms and provisions of Section 2.10
(Environmental Matters) of the Mortgage; or
(9) any lien arising from the failure of the Borrower to pay or
perform any obligation with respect to taxes or employee
benefits which lien is superior in priority to the lien
created by the Mortgage and the Security Agreement upon the
property encumbered thereby.
(4) In the event of any filing by Borrower of any voluntary petition
under the Bankruptcy Code, or the taking by Borrower of any comparable action
under any federal or state law; or the filing of any involuntary petition under
the Bankruptcy Code against Borrower or the taking of comparable action under
any federal or state law against Borrower by any Affiliate of any of them, the
Loan shall become fully recourse against Borrower.
(5) Nothing contained in this Section 8.19 shall be construed to
release Borrower or any Loan Party from liability under (i) the indemnifications
contained in Section 2.10 (Environmental Matters) of the Mortgage, (ii) the
Limited Guaranty, (iii) the Environmental Indemnity, or (iv) the Other Borrower
Loan Documents.
1.30 WRITTEN AGREEMENT.
(a) THE RIGHTS AND OBLIGATIONS OF BORROWER AND LENDER SHALL BE
DETERMINED SOLELY FROM THIS WRITTEN LOAN
<PAGE>
AGREEMENT AND THE OTHER LOAN DOCUMENTS, AND ANY PRIOR ORAL OR
WRITTEN AGREEMENTS BETWEEN LENDER AND BORROWER CONCERNING THE
SUBJECT MATTER HEREOF AND OF THE OTHER LOAN DOCUMENTS ARE
SUPERSEDED BY AND MERGED INTO THIS LOAN AGREEMENT AND THE
OTHER LOAN DOCUMENTS.
(b) THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY NOT BE
VARIED BY ANY ORAL AGREEMENTS OR DISCUSSIONS THAT OCCUR
BEFORE, CONTEMPORANEOUSLY WITH, OR SUBSEQUENT TO THE EXECUTION
OF THIS LOAN AGREEMENT OR THE LOAN DOCUMENTS.
(c) THIS WRITTEN LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENTS BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
1.31 Cross-Collateralizations. The Other Borrower Loans and the Related
Party cross-defaulted with the Loan and with each other. The Other Borrower
Loans are cross-collateralized with the Loan and each other. Accordingly, the
Other Borrower Loans are secured by the Property and the other collateral
contemplated by the Loan Documents (the "Loan Collateral"), and the Loan is
secured by the Other Hotel Properties and other collateral serving as security
for such Other Borrower Loans (the "Other Borrower Loan Collateral"). Without
limitation to any other right or remedy provided to Lender in this Agreement, or
any of the other Loan Documents, Borrower acknowledges and agrees that, to the
full extent permitted under applicable law, upon the occurrence of an Event of
Default (i) Lender shall have the right to pursue all of its rights and remedies
in one proceeding, or separately and independently in separate proceedings which
it, as Lender, in its discretion, shall determine from time to time, (ii) Lender
is not required to either marshall assets, sell the Loan Collateral or any Other
Borrower Loan Collateral in any inverse order of alienation, or be subjected to
any "one action" or "election of remedies" law or rule, (iii) the exercise by
Lender of any remedies against any Loan Collateral or any Other Borrower Loan
Collateral, will not impede Lender from subsequently or simultaneously
exercising remedies against any other collateral, (iv) all liens and other
rights, remedies and privileges provided to Lender in this Agreement, and in the
other Loan Documents (except to the extent such documents have terminated or
expired pursuant to their terms) or otherwise shall remain in full force and
effect until Lender has exhausted all of its remedies against the Loan
Collateral and all Other Borrower Loan Collateral has been foreclosed, sold
and/or otherwise realized upon and (v) the Loan Collateral and all the Other
Borrower Loan Collateral shall be security for the performance of all of
Borrower's obligations hereunder. <PAGE>
1.32 Intentionally Omitted.
1.33 Intentionally Omitted
1.34 WAIVER OF JURY TRIAL LENDER AND BORROWER HEREBY WAIVE THE RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT
MATTER OF THIS AGREEMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND
VOLUNTARILY MADE BY LENDER AND BORROWER, AND LENDER AND BORROWER ACKNOWLEDGE
THAT NO PERSON ACTING ON BEHALF OF ANOTHER PARTY TO THIS AGREEMENT HAS MADE ANY
REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO
MODIFY OR NULLIFY ITS EFFECT. LENDER AND BORROWER FURTHER ACKNOWLEDGE THAT THEY
HAVE BEEN REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE
SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL
COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND THAT THEY HAVE HAD THE OPPORTUNITY
TO DISCUSS THIS WAIVER WITH COUNSEL.
1.35 Consent to Jurisdiction. The parties hereto submit to personal
jurisdiction in the State of Ohio for the enforcement of the provisions of this
Agreement and the other Loan Documents and irrevocably waive any and all rights
to object to such jurisdiction for the purposes of litigation to enforce any
provision of this Agreement and the other Loan Documents. Lender and Borrower
hereby consent to the jurisdiction of and agree that any action, suit or
proceeding to enforce this Agreement may be brought in any state or federal
court in the State of Ohio. Lender and Borrower hereby irrevocably waive any
objection which they may have to the laying of the venue of any such action,
suit, or proceeding in any such court and hereby further irrevocably waive any
claim that any such action, suit or proceeding brought in such a court has been
brought in an inconvenient forum. Borrower and Lender hereby consent that
service of process in any action, suit or proceeding may be made by service upon
the Borrower's agent for service of process (in the case of service to be made
upon Borrower), by personal service upon the party being served, or by delivery
in accordance with the notice requirements of Section 8.8 of this Agreement.
<PAGE>
IN WITNESS WHEREOF, Borrower and Lender have caused this Agreement to be
executed by their duly authorized representatives as of the day, month and year
first above written.
BORROWER:
LODGIAN AMI, INC., a
Maryland corporation
By: /s/ Toni Jones
--------------
Name: Toni Jones
Title: Vice President
LENDER:
BANC ONE CAPITAL FUNDING
CORPORATION, an Ohio corporation
By:/s/ Ronald L. Callentine
------------------------
Name: Ronald L. Callentine
Title: Vice President
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
<PAGE>
EXHIBIT B-1
ADDITIONAL NOTE
<PAGE>
EXHIBIT B-2
PRIMARY NOTE
<PAGE>
EXHIBIT C
PERMITTED ENCUMBRANCES
<PAGE>
EXHIBIT D
INSURANCE REQUIREMENTS
(i) Insurance against loss to the Property on an "All Risk" policy form,
covering insurance risks no less broad than those covered under a Standard Multi
Peril (SMP) policy form, which contains a 1987 Commercial 150 "Causes of Loss
Special Format and such other risks as Lender may reasonably require, including
risk of hurricane, insurance covering the cost of demolition of undamaged
portions of any portion of the Property when required by code or ordinance and
the increased cost of reconstruction to conform with current code or ordinance
requirements, in amounts equal to the full replacement cost of the Property
(other than the Land), including fixtures and equipment, Borrower's interest in
leasehold improvements, and the cost of debris removal, with 1008 co-insurance
with an agreed amount endorsement and deductibles of not more than $10,000.00;
(ii) Business interruption/extra expense insurance in amounts sufficient
to pay during any period in which the Property may be damaged or destroyed, on a
gross income basis for a period of twelve (12) months (i) all business income
derived from the Property and (ii) all amounts (including all impositions,
utility charges and insurance premiums) required to be paid by Borrower;
(iii) During the performance of the Renovation Work and the making of any
other alterations or improvements to the Property insurance covering claims
based on the owner's or employer's contingent liability not covered by the
insurance provided in subsection (f) below.
(iv) Insurance against loss or damage by flood or mud slide in compliance
with the Flood Disaster Protection Act of 1973, as amended from time to time, if
the Property or any portion thereof is now, or at any time while the Loan
remains outstanding shall be, situated in any area which an appropriate
Governmental Authority designates as a special flood hazard area, Zone A or Zone
V, in amounts equal to the full replacement value of all above grade structures
on the Property;
(v) Insurance against loss or damage by earthquake, if the Premises are
now, or at any time while the Loan remains outstanding shall be, situated in any
area which is classified as a Major Damage Zone, Zones 3 and 4, by the
International Conference of Building Officials in an amount equal to the
probable maximum loss for the Premises, fixtures and equipment, plus the cost of
debris removal;
(vi) Commercial general public liability insurance, with the location of
the Property designated thereon, against death, bodily injury and property
damage arising in connection with the Property with Borrower listed as the named
insured with such limits as Lender may reasonably require, but in no event less
than $1,000,000, and written on a 1986 Standard ISO
<PAGE>
occurrence basis form or equivalent form, and excess umbrella liability
insurance with such limits as Lender may reasonably require, but in no event
less than $10,000,000; and
(vii) Such other insurance relating to the Property and the use and
operation thereof, as Lender may, from time to time, reasonably require,
including dramshop, products liability and workers' compensation insurance.
All insurance shall: (i) be carried by companies qualified to do business
in the State with a Best's rating of A-6 or better; (ii) be in form and content
reasonably acceptable to Lender; (iii) provide thirty (30) days' advance written
notice to Lender before any cancellation, material modification or notice of
non-renewal.
All physical damage policies and renewals shall contain a standard
mortgagee clause naming Lender as mortgagee, which clause shall expressly state
that any breach of any condition or warranty by Borrower shall not prejudice the
rights of Lender under such insurance, and a loss payable clause in favor of
Lender for personal property, contents, inventory, equipment and business
interruption. All liability policies and renewals shall name Lender as an
additional insured with respect to policies in which Lender has an interest. No
additional parties shall appear in the mortgage or loss payable clause without
Lender's prior written consent. All deductibles shall be in amounts reasonably
acceptable to Lender. In the event of the foreclosure of the Mortgage or any
other transfer of title to the Property in full or partial satisfaction of the
Loan, all right, title and interest of Borrower in and to all insurance policies
and renewals thereof then in force shall pass to the purchaser or grantee.
During any period during which construction is conducted on the Premises
and during which period the construction and materials are not covered by the
existing policies, Borrower shall cause to be provided to Lender, premium
prepaid insurance policies covering the Property (which during construction
shall be on an "All-Risk" perils, including theft, "Builder's Risk", "Completed
Value" form) in companies and forms satisfactory to Lender, and in amounts equal
to the replacement costs of the Improvements (including construction materials
and personal property on or off site) covering insurance risks no less broad
than those covered under a Standard Multi Peril (SMP) policy form, which
contains a 1987 Commercial ISO "Causes of Loss Special Form", with coverage for
such other expenses as Lender may reasonably require, including: debris removal;
cost of demolition of the undamaged portion of a building when required by code
or ordinance; increased cost of reconstruction to conform with current code or
ordinance requirements; real estate property taxes; architect, engineering, and
consulting fees; legal and accounting fees, including the cost of in-house
attorneys and paralegals; advertising and promotional expenses; interest on
money borrowed; additional commissions incurred upon renegotiating leases and
any and all other expenses which may be incurred as a result of any property
loss or destruction by an insured peril. Such insurance shall contain an agreed
amount endorsement (such amount to include foundation and underground pipes) and
bear a 100% co-insurance clause. The deductible shall be not more than $10,000.
Said policies shall contain a
<PAGE>
standard mortgagee clause naming Lender as mortgagee, and a permission to occupy
endorsement.
In addition, Borrower shall cause to be furnished to Lender certificates
from the insurance carrier for each general contractor evidencing workers'
compensation, employers' liability, commercial auto liability, and commercial
general liability insurance (including contractual liability and completed
operations coverage) written on a 1986 standard "ISO" occurrence basis form or
equivalent and excess umbrella coverage, carried during the course of
construction, with general liability insurance limits as Lender may reasonably
require, but in no event less than $1,000,000. Lender shall be named as an
additional insured under such liability policies. Borrower shall cause each
subcontractor to maintain commercial general liability, commercial automobile
liability, workers' compensation, employers' liability, and excess umbrella
liability coverage in form and amount reasonably satisfactory to Lender.
The additional insurance provisions for construction periods do not
obviate or otherwise affect requirements of the Loan Agreement or the previous
portions of this Exhibit, which requirements remain a part of this Agreement in
their entirety.
<PAGE>
EXHIBIT E
RENOVATION WORK
<PAGE>
Exhibit 10.14.2
GUARANTY AND INDEMNITY AGREEMENT
THIS GUARANTY AND INDEMNITY AGREEMENT (this "Agreement"), made effective
as of the 8th day of December, 1998, by SERVICO CONCORD, INC., a California
corporation ("SCI"), PENMOCO, INC., a Michigan corporation ("PI"), and ISLAND
MOTEL ENTERPRISES, INC., a Georgia corporation ("IME"), each with a principal
place of business at Two Live Oak Center, 3445 Peachtree Road, NE, Suite 700,
Atlanta, Georgia 30326 (SCI, PI and IME are sometimes hereinafter collectively
referred to as "Guarantor"), to and for the benefit of BANC ONE CAPITAL FUNDING
CORPORATION, an Ohio corporation, having an office at 150 East Gay Street, 24th
Floor, Columbus, Ohio 43215 ("Lender").
RECITALS:
A. Lender and Lodgian AMI, Inc., a Maryland corporation ("Borrower"), have
entered into a Loan Agreement of even date herewith (as the same may be amended
from time to time, the "Loan Agreement") pursuant to which Lender has agreed to
make a loan to Borrower in the amount of up to $35,073,117 (the "Loan"), which
Loan is evidenced by that certain Promissory Note of even date herewith in the
principal amount of $29,504,343 (the "Primary Note") and that certain Promissory
Note of even date herewith in the principal amount of $5,568,774 (the
"Additional Note" and, together with the Primary Note, the "Note"). The Loan is
secured by, inter alia, that certain Purchase Money Deed of Trust, Purchase
Money Leasehold Deed of Trust and Security Agreement of even date herewith from
Borrower to Lender encumbering Borrower's property commonly known as Holiday Inn
- - Inner Harbor, located at 301 W. Lombard St., Baltimore, Maryland 21201 (the
"Mortgage") (the Note, the Loan Agreement, the Mortgage and every other
document, instrument and agreement evidencing or securing the Loan are
hereinafter sometimes collectively referred to as the "Loan Documents");
B. Borrower is an affiliate of PI, SCI and IME;
C. Lender is extending financial accommodations to PI, SCI and IME
concurrently with the Loan and, in order to induce Lender to extend such
financial accommodations, PI, SCI and IME are willing to execute this Agreement;
D. Lender is unwilling to make the Loan without the execution and delivery
of this Agreement by PI, SCI and IME;
NOW, THEREFORE, to induce Lender to make the Loan and in consideration of
One Dollar ($1.00) and other good and valuable consideration, the receipt and
sufficiency of which
<PAGE>
are hereby acknowledged, Guarantor, intending to be legally bound hereby,
jointly and severally, agree as follows:
1. Liabilities.
(a) Notwithstanding any provision contained in the Note, the Loan
Agreement, the Mortgage or any other Loan Document to the contrary, Guarantor
hereby absolutely, primarily, unconditionally and irrevocably guarantees to
Lender, its successors and assigns, the full prompt and complete payment and
performance of all obligations and liabilities of Borrower arising under the
Loan Documents (all of which obligations and liabilities are collectively
hereinafter referred to as the "Liabilities"). All terms used and not otherwise
defined herein shall have the meanings ascribed to them in the Loan Agreement.
(b) The validity of this Agreement and the obligations of Guarantor
hereunder shall in no way be terminated, abated, affected or impaired by the
happening from time to time of any event or condition, including, without
limitation, any of the following: (i) the assertion or non-assertion by Lender
of any of the rights or remedies available to Lender pursuant to the provisions
of the Loan Documents or pursuant to any applicable statutes; (ii) the waiver by
Lender of, or the failure of Lender to enforce, or the lack of diligence by
Lender in connection with, the enforcement of any of its rights or remedies
under the Loan Documents; (iii) the granting by Lender of any indulgence or
extension of time; (iv) the exercise by Lender of any so-called self-help
remedies; (v) any other act, omission or conditions which might in any manner or
to any extent vary the risk to Guarantor or might otherwise operate as a
discharge or release of the Guarantor under applicable law; (vi) the invalidity
or unenforceability of all or any portion or provision of the Note; (vii) any
release or discharge of or accord and satisfaction with Borrower or any other
person or entity, by variation of the terms of the Note or otherwise; (viii) the
impairment, modification, change, release, discharge or limitation of the
liability of Borrower or the Guarantor or any of their estates in bankruptcy,
resulting from or pursuant to the application of the bankruptcy or insolvency
laws of or any decision of any court of the United States or any state thereof;
(ix) any present or future law or order of any government (de jure or de facto)
or of any agency thereof purporting to reduce, amend or otherwise affect the
Liabilities or to vary any terms of payment, satisfaction or discharge thereof;
(x) the waiver, compromise, settlement, release, extension, amendment, change,
modification or termination of the terms of the Liabilities or any or all of the
obligations, covenants or agreements of Borrower under the Loan Documents
(except by satisfaction in full of all Liabilities) or of the Guarantor under
this Agreement; (xi) the extension of the time for satisfaction, discharge or
payment of the Liabilities or any part thereof owing or payable by Borrower
under the Loan Documents or of the time for performance of any other
obligations, covenants or agreements under or arising out of this Agreement or
the extension or renewal of any thereof; (xii) the existence of any other
guaranty of the Liabilities in favor of Lender, or the enforcement or attempted
enforcement of such other guaranty; and (xiii) any event or action that would in
the absence of this paragraph result in the
<PAGE>
release or discharge of the Guarantor from the performance or observance of any
obligation, covenant or agreement contained in this Agreement or any other
agreement.
2. Waivers. The Guarantor hereby waives all notice of any default in the
payment of or non-performance of any Liabilities, all protest, demands, notices
or presentments of any kind, notice of any acceptance of this Agreement and all
matters and rights which may be raised in avoidance of, or in defense against,
any action to enforce the obligations of the Guarantor hereunder; provided,
however, that nothing herein shall waive the Guarantor's right to assert payment
or performance of any Liabilities as a defense to a claim relating to such
Liabilities under this Agreement, to the extent of such payment or performance.
The Guarantor hereby waives any and all suretyship defenses or defenses in the
nature thereof without in any manner limiting any other provisions of this
Agreement. Notwithstanding anything to the contrary contained herein, the
Guarantor hereby irrevocably waives all rights the Guarantor may have at law or
in equity, including, without limitation, any law subrogating the Guarantor to
the rights of Lender, to seek contribution, indemnification or any other form of
reimbursement from Borrower and any other person now or hereafter primarily or
secondarily liable for any obligations of Borrower to Lender, including without
limitation, the Liabilities, for any payment or performance made by the
Guarantor under or in connection with this Agreement, unless and until
irrevocable payment in full of the Note has been received by Lender.
3. Primary Liability.
(a) The Guarantor's liability under this Agreement shall be primary,
and with respect to any right of action which shall accrue to Lender relating to
any Liabilities, Lender may at its sole option and without notice or demand,
proceed directly against the Guarantor without having proceeded against Borrower
or any other person or entity liable to any extent for any of the Liabilities or
against the collateral under the Loan Documents. The Guarantor's liability
hereunder shall continue without regard to whether or not Lender may have
instituted or prosecuted or obtained or realized any judgment in any suit,
action or proceeding or shall have exhausted any of its remedies or taken any
steps to enforce any of its rights under or pursuant to the Loan Documents or at
law or in equity, or otherwise, and without regard to any other condition or
contingency, so long as any of the Liabilities remains unsatisfied to any
extent. This Agreement is an agreement of payment and performance and not merely
of collection.
(b) Each default on any of the Liabilities shall give rise to a
separate cause of action and separate suits may be brought hereunder as each
cause of action arises or, at Lender's option, any or all causes of action which
arise prior to or after any suit is commenced hereunder may be included in such
suit.
4. Representations. The Guarantor further represents to Lender, as an
inducement to
<PAGE>
making the Loan, that there is not pending or threatened any litigation,
arbitration, administrative or governmental proceeding against the Guarantor
which would in any way prohibit or impede the adoption, execution, or
performance of this Agreement by the Guarantor or which would affect any of the
undertakings herein; that compliance by the Guarantor with the Guarantor's
obligations under this Agreement has not resulted and will not result in the
violation of this Agreement or any agreement or other instrument to which the
Guarantor is a party or by which the Guarantor or any of the Guarantor's assets
are bound; that this Agreement and all actions contemplated to be taken by the
Guarantor hereunder have been duly authorized; and that this Agreement and such
actions and undertakings are valid and binding upon the Guarantor and
enforceable against the Guarantor in accordance with their terms.
5. Borrower's Actions. No encumbrance, assignment, leasing, subletting,
sale or other transfer by Borrower of any of Borrower's assets shall operate to
extinguish or diminish the liability of the Guarantor under this Agreement.
6. Bankruptcy. If Borrower files a petition for reorganization,
arrangement, composition or similar relief under any present or future provision
of the Federal Bankruptcy Code, or if such a petition is filed against Borrower
by any member or partner of Borrower, by Guarantor or by any person or entity
affiliated with, related to or in which a beneficial interest is owned by such
member or partner or Guarantor (each, a "Bankruptcy Event"), Guarantor shall,
from and after the date of such filing, absolutely, primarily, unconditionally
and irrevocably guarantee to Lender, its successors and assigns, the full,
prompt and absolute payment, performance, observance and discharge of all of
Borrower's obligations and liabilities arising under the Loan Documents,
including the repayment of all principal and interest under the Note and the
payment of all other sums payable by Borrower under the Loan Documents.
7. No Reliance. The Guarantor assumes the responsibility for being and
keeping itself informed of the financial condition of Borrower and of all other
circumstances bearing upon the risk of failure to pay, perform or discharge any
of the obligations and liabilities of Borrower which diligent inquiry would
reveal, and Lender shall have no duty to advise the Guarantor of information
known to Lender regarding such condition or any such circumstance.
8. Payment of Expenses. The Guarantor shall be responsible to Lender for
all expenses (including reasonable attorneys' fees), incurred by Lender in
enforcing any obligations of the Guarantor under this Agreement.
9. Successors and Assigns. All references to Lender and Guarantor shall be
deemed to include references to the successors and assigns of Lender and
Guarantor.
10. Governing Law. In all respects, including without limitation, matters
of construction and performance of this Agreement and the obligations arising
hereunder, this
<PAGE>
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of Ohio applicable to contracts and obligations made and
performed in such state and any applicable laws of the United States of America.
Interpretation and construction of this Agreement shall be according to the
contents hereof and without presumption or standard of construction in favor of
or against Guarantor or Lender.
11. Severability. If any term or provision of this Agreement or the
application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Agreement shall be valid and enforced to the fullest
extent permitted by law; provided, however, all rights, powers and remedies
provided herein may be exercised only to the extent that the exercise thereof
does not violate any applicable law, and are intended to be limited to the
extent necessary so that they will not render this Agreement invalid or
unenforceable under any applicable law.
12. No Waiver. The waiver of any provision of this Agreement by Lender
shall constitute a waiver of that provision on that occasion only, and shall not
constitute a waiver of any other provision of this Agreement, or that provision
with respect to any other occasion.
13. Commercial Transaction.
(a) TO INDUCE LENDER TO ENTER INTO THE COMMERCIAL LOAN TRANSACTION
EVIDENCED BY AND SECURED BY THE LOAN DOCUMENTS, GUARANTOR AGREES THAT THE SAID
TRANSACTION IS COMMERCIAL AND NOT A CONSUMER TRANSACTION.
(b) Each of the waivers set forth in this Agreement is made with
knowledge of its significance and consequences, and under the circumstances the
waivers are reasonable. If any of said waivers is determined to be contrary to
any applicable law or public policy, such waiver shall be effective only to the
maximum extent permitted by law.
14. Jury Trial. LENDER AND GUARANTOR HEREBY WAIVE THE RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER
OF THIS AGREEMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE
BY LENDER AND GUARANTOR, AND LENDER AND GUARANTOR ACKNOWLEDGE THAT NO PERSON
ACTING ON BEHALF OF ANOTHER PARTY TO THIS AGREEMENT HAS MADE ANY REPRESENTATIONS
OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR
NULLIFY ITS EFFECT. LENDER AND GUARANTOR FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN
REPRESENTED (OR HAVE HAD
<PAGE>
THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS AGREEMENT AND IN THE
MAKING OF ALL WAIVERS CONTAINED HEREIN BY INDEPENDENT LEGAL COUNSEL, SELECTED OF
THEIR OWN FREE WILL, AND THAT LENDER AND GUARANTOR HAVE HAD THE OPPORTUNITY TO
DISCUSS THIS WAIVER WITH COUNSEL.
15. Consent to Jurisdiction. GUARANTOR HEREBY SUBMITS TO PERSONAL
JURISDICTION IN THE STATE OF OHIO FOR THE ENFORCEMENT OF THE PROVISIONS OF THIS
AGREEMENT AND IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO OBJECT TO SUCH
JURISDICTION FOR THE PURPOSES OF LITIGATION TO ENFORCE ANY PROVISION OF THIS
AGREEMENT. GUARANTOR HEREBY CONSENTS TO THE JURISDICTION OF AND AGREES THAT ANY
ACTION, SUIT OR PROCEEDING TO ENFORCE THIS AGREEMENT MAY BE BROUGHT IN ANY STATE
OR FEDERAL COURT IN THE STATE OF OHIO. GUARANTOR HEREBY IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY HAVE TO THE LAYING OF THE VENUE OF ANY SUCH ACTION, SUIT,
OR PROCEEDING IN ANY SUCH COURT AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM
THAT ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. EACH GUARANTOR HEREBY APPOINTS CT CORPORATION
AS THEIR AGENT FOR SERVICE OF PROCESS. GUARANTOR HEREBY CONSENTS THAT SERVICE OF
PROCESS IN ANY ACTION, SUIT OR PROCEEDING MAY BE MADE BY SERVICE UPON THE
AFORESAID AGENT FOR SERVICE OF PROCESS, BY PERSONAL SERVICE UPON THE PARTY BEING
SERVED, OR BY DELIVERY IN ACCORDANCE WITH THE NOTICE REQUIREMENTS OF SECTION 16
OF THIS AGREEMENT.
16. Notices. Any notice which any party hereto may be required or may
desire to give hereunder shall be delivered personally, or by overnight express
courier, addressed in the case of Guarantor to:
Penmoco, Inc., Servico Concord, Inc. and
Island Motel Enterprises, Inc.
Two Live Oak Center
3445 Peachtree Road, NE
Suite 700
Atlanta, Georgia 30326
with a copy to:
Stearns, Weaver, Miller, Weissler,
Alhadeff & Sitterson, P.A.
<PAGE>
Museum Tower
150 West Flagler Street
Miami, Florida 33130
Attention: Robert Weissler, Esq.
in the case of Lender to:
Banc One Capital Funding Corporation
150 East Gay Street, 24th Floor
Columbus, Ohio 43215
Attention: Loan Servicing
<PAGE>
with a copy to:
Banc One Capital Markets, Inc.
150 East Gay Street, 24th Floor
Columbus, Ohio 43215
Attention: Legal Department and Real Estate Group
or at such other addresses or to the attention of such other persons as may from
time to time be designated by the party to be addressed by written notice to the
other in the manner herein provided. Notices, demands and requests given in the
manner aforesaid shall be deemed sufficiently served or given for all purposes
hereunder when received or when delivery is refused or when the same are
returned to sender for failure to be called for.
17. Miscellaneous.
(a) This Agreement may not be modified, altered or amended nor may
any provision hereof or rights hereunder be waived, except by an instrument in
writing signed by the person or entity against which such modification,
alteration, amendment or waiver is sought to be enforced.
(b) Except as provided in Section 6 above, this Agreement shall
terminate upon the irrevocable payment by Borrower to Lender of all amounts
evidenced by the Note and the other Loan Documents.
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this instrument to be duly
executed as of the date first written above.
GUARANTOR:
SERVICO CONCORD, INC.
a California corporation
By: /s/ Toni Jones
--------------
Name: Toni Jones
Title: Vice President
ISLAND MOTEL ENTERPRISES, INC.
a Georgia corporation
By: /s/ Toni Jones
--------------
Name: Toni Jones
Title: Vice President
PENMOCO, INC.
a Michigan corporation
By: /s/ Toni Jones
--------------
Name: Toni Jones
Title: Vice President
<PAGE>
Exhibit 10.14.3
LIMITED GUARANTY AND INDEMNITY AGREEMENT
THIS LIMITED GUARANTY AND INDEMNITY AGREEMENT (this "Agreement"), made
effective as of the 8th day of December 1998, by LODGIAN, INC., a Delaware
corporation, with a principal place of business at Two Live Oak Center, 3445
Peachtree Road, NE, Suite 700, Atlanta, Georgia 30326 ("Guarantor"), to and for
the benefit of BANC ONE CAPITAL FUNDING CORPORATION, an Ohio corporation, having
an office at 150 East Gay Street, 24th Floor, Columbus, Ohio 43215 ("Lender")
RECITALS:
A. Lender and Lodgian AMI, Inc., a Maryland corporation ("Borrower"), have
entered into a Loan Agreement of even date herewith (as the same may be amended
from time to time, the "Loan Agreement") pursuant to which Lender has agreed to
make a loan to Borrower in the amount of up to $35,073,117 (the "Loan"), which
Loan is evidenced by that certain Promissory Note of even date herewith in the
principal amount of $29,504,343 (the "Primary Note") and that certain Promissory
Note of even date herewith in the principal amount of $5,568,774 (the
"Additional Note," and together with the Primary Note, the "Note"). The Loan is
secured by, inter alia, that certain Purchase Money Deed of Trust, Purchase
Money Leasehold Deed of Trust and Security Agreement of even date herewith from
Borrower to Lender encumbering Borrower's property commonly known as Holiday Inn
- - Inner Harbor, located at 301 W. Lombard St., Baltimore, Maryland 21201 (the
"Mortgage") (the Note, the Loan Agreement, the Mortgage and every other
document, instrument and agreement evidencing or securing the Loan are
hereinafter sometimes collectively referred to as the "Loan Documents");
B. Borrower is a direct or indirect subsidiary of Guarantor;
C. Guarantor will directly benefit from the making of the Loan to
Borrower; and
D. Lender is unwilling to make the Loan without the execution and delivery
of this Agreement by Guarantor;
NOW, THEREFORE, to induce Lender to make the Loan and in consideration of
One Dollar ($1.00) and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Guarantor, intending to be legally
bound hereby, jointly and severally, agree as follows:
1. Liabilities.
<PAGE>
(a) Notwithstanding any provision contained in the Note, the Loan
Agreement, the Mortgage or any other Loan Document to the contrary, Guarantor
hereby absolutely, primarily, unconditionally and irrevocably guarantees to
Lender, its successors and assigns, (i) the full, prompt and complete payment
and performance of all principal, interest, charges, fees and other monetary
obligations of Borrower under the Primary Note, provided, however, that upon
Renovation Completion and so long as no Event of Default then exists, such
obligation shall terminate and become null and void, (ii) the full, prompt and
complete payment and performance of the Guaranteed Principal Amount (as
hereinafter defined) together with all interest, charges, fees and other
monetary obligations of Borrower under the Additional Note, and (iii) the full,
prompt and complete payment and performance of all obligations and liabilities
of Borrower arising under Section 8.19 (c) and (d) of the Loan Agreement and
Sections 2.10 and 4.13 of the Mortgage (all of which obligations and liabilities
are collectively hereinafter referred to as the "Liabilities"). The Guaranteed
Principal Amount shall mean the outstanding principal amount of the Primary Note
up to a maximum principal amount of Twenty Nine Million Four Thousand Three
Hundred Forty Three Dollars ($29,004,343). All terms used and not otherwise
defined herein shall have the meanings ascribed to them in the Loan Agreement.
(b) The validity of this Agreement and the obligations of Guarantor
hereunder shall in no way be terminated, abated, affected or impaired by the
happening from time to time of any event or condition, including, without
limitation, any of the following: (i) the assertion or non-assertion by Lender
of any of the rights or remedies available to Lender pursuant to the provisions
of the Loan Documents or pursuant to any applicable statutes; (ii) the waiver by
Lender of, or the failure of Lender to enforce, or the lack of diligence by
Lender in connection with, the enforcement of any of its rights or remedies
under the Loan Documents; (iii) the granting by Lender of any indulgence or
extension of time; (iv) the exercise by Lender of any so-called self-help
remedies; (v) any other act, omission or conditions which might in any manner or
to any extent vary the risk to Guarantor or might otherwise operate as a
discharge or release of the Guarantor under applicable law; (vi) the invalidity
or unenforceability of all or any portion or provision of the Note; (vii) any
release or discharge of or accord and satisfaction with Borrower or any other
person or entity, by variation of the terms of the Note or otherwise; (viii) the
impairment, modification, change, release, discharge or limitation of the
liability of Borrower or the Guarantor or any of their estates in bankruptcy,
resulting from or pursuant to the application of the bankruptcy or insolvency
laws of or any decision of any court of the United States or any state thereof;
(ix) any present or future law or order of any government (de jure or de facto)
or of any agency thereof purporting to reduce, amend or otherwise affect the
Liabilities or to vary any terms of payment, satisfaction or discharge thereof;
(x) the waiver, compromise, settlement, release, extension, amendment, change,
modification or termination of the terms of the Liabilities or any or all of the
obligations, covenants or agreements of Borrower under the Loan Documents
(except by satisfaction in full of all Liabilities) or of the Guarantor under
this
<PAGE>
Agreement; (xi) the extension of the time for satisfaction, discharge or payment
of the Liabilities or any part thereof owing or payable by Borrower under the
Loan Documents or of the time for performance of any other obligations,
covenants or agreements under or arising out of this Agreement or the extension
or renewal of any thereof; (xii) the existence of any other guaranty of the
Liabilities in favor of Lender, or the enforcement or attempted enforcement of
such other guaranty; and (xiii) any event or action that would in the absence of
this paragraph result in the release or discharge of the Guarantor from the
performance or observance of any obligation, covenant or agreement contained in
this Agreement or any other agreement.
2. Waivers. The Guarantor hereby waives all notice of any default in the
payment of or non-performance of any Liabilities, all protest, demands, notices
or presentments of any kind, notice of any acceptance of this Agreement and all
matters and rights which may be raised in avoidance of, or in defense against,
any action to enforce the obligations of the Guarantor hereunder; provided,
however, that nothing herein shall waive the Guarantor's right to assert payment
or performance of any Liabilities as a defense to a claim relating to such
Liabilities under this Agreement, to the extent of such payment or performance.
The Guarantor hereby waives any and all suretyship defenses or defenses in the
nature thereof without in any manner limiting any other provisions of this
Agreement. Notwithstanding anything to the contrary contained herein, the
Guarantor hereby irrevocably waives all rights the Guarantor may have at law or
in equity, including, without limitation, any law subrogating the Guarantor to
the rights of Lender, to seek contribution, indemnification or any other form of
reimbursement from Borrower and any other person now or hereafter primarily or
secondarily liable for any obligations of Borrower to Lender, including without
limitation, the Liabilities, for any payment or performance made by the
Guarantor under or in connection with this Agreement, unless and until
irrevocable payment in full of the Note has been received by Lender.
3. Primary Liability.
(a) The Guarantor's liability under this Agreement shall be primary,
and with respect to any right of action which shall accrue to Lender relating to
any Liabilities, Lender may at its sole option and without notice or demand,
proceed directly against the Guarantor without having proceeded against Borrower
or any other person or entity liable to any extent for any of the Liabilities or
against the collateral under the Loan Documents. The Guarantor's liability
hereunder shall continue without regard to whether or not Lender may have
instituted or prosecuted or obtained or realized any judgment in any suit,
action or proceeding or shall have exhausted any of its remedies or taken any
steps to enforce any of its rights under or pursuant to the Loan Documents or at
law or in equity, or otherwise, and without regard to any other condition or
contingency, so long as any of the Liabilities remains unsatisfied to any
extent. This Agreement is an agreement of payment and performance and not merely
of collection.
(b) Each default on any of the Liabilities shall give rise to a
separate cause of
<PAGE>
action and separate suits may be brought hereunder as each cause of action
arises or, at Lender's option, any or all causes of action which arise prior to
or after any suit is commenced hereunder may be included in such suit.
4. Representations. The Guarantor further represents to Lender, as an
inducement to making the Loan, that there is not pending or threatened any
litigation, arbitration, administrative or governmental proceeding against the
Guarantor which would in any way prohibit or impede the adoption, execution, or
performance of this Agreement by the Guarantor or which would affect any of the
undertakings herein; that compliance by the Guarantor with the Guarantor's
obligations under this Agreement has not resulted and will not result in the
violation of this Agreement or any agreement or other instrument to which the
Guarantor is a party or by which the Guarantor or any of the Guarantor's assets
are bound; that this Agreement and all actions contemplated to be taken by the
Guarantor hereunder have been duly authorized; and that this Agreement and such
actions and undertakings are valid and binding upon the Guarantor and
enforceable against the Guarantor in accordance with their terms.
5. Borrower's Actions. No encumbrance, assignment, leasing, subletting,
sale or other transfer by Borrower of any of Borrower's assets shall operate to
extinguish or diminish the liability of the Guarantor under this Agreement.
6. Bankruptcy. If Borrower files a petition for reorganization,
arrangement, composition or similar relief under any present or future provision
of the Federal Bankruptcy Code, or if such a petition is filed against Borrower
by any member or partner of Borrower, by Guarantor or by any person or entity
affiliated with, related to or in which a beneficial interest is owned by such
member or partner or Guarantor (each, a "Bankruptcy Event"), Guarantor shall,
from and after the date of such filing, absolutely, primarily, unconditionally
and irrevocably guarantee to Lender, its successors and assigns, the full,
prompt and absolute payment, performance, observance and discharge of all of
Borrower's obligations and liabilities arising under the Loan Documents,
including the repayment of all principal and interest under the Note and the
payment of all other sums payable by Borrower under the Loan Documents.
7. No Reliance. The Guarantor assumes the responsibility for being and
keeping itself informed of the financial condition of Borrower and of all other
circumstances bearing upon the risk of failure to pay, perform or discharge any
of the obligations and liabilities of Borrower which diligent inquiry would
reveal, and Lender shall have no duty to advise the Guarantor of information
known to Lender regarding such condition or any such circumstance.
8. Payment of Expenses. The Guarantor shall be responsible to Lender for
all expenses (including reasonable attorneys' fees), incurred by Lender in
enforcing any obligations of the Guarantor under this Agreement.
<PAGE>
9. Successors and Assigns. All references to Lender and Guarantor shall be
deemed to include references to the successors and assigns of Lender and
Guarantor.
10. Governing Law. In all respects, including without limitation, matters
of construction and performance of this Agreement and the obligations arising
hereunder, this Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of Ohio applicable to contracts and
obligations made and performed in such state and any applicable laws of the
United States of America. Interpretation and construction of this Agreement
shall be according to the contents hereof and without presumption or standard of
construction in favor of or against Guarantor or Lender.
11. Severability. If any term or provision of this Agreement or the
application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Agreement shall be valid and enforced to the fullest
extent permitted by law; provided, however, all rights, powers and remedies
provided herein may be exercised only to the extent that the exercise thereof
does not violate any applicable law, and are intended to be limited to the
extent necessary so that they will not render this Agreement invalid or
unenforceable under any applicable law.
12. No Waiver. The waiver of any provision of this Agreement by Lender
shall constitute a waiver of that provision on that occasion only, and shall not
constitute a waiver of any other provision of this Agreement, or that provision
with respect to any other occasion.
13. Commercial Transaction.
(a) TO INDUCE LENDER TO ENTER INTO THE COMMERCIAL LOAN TRANSACTION
EVIDENCED BY AND SECURED BY THE LOAN DOCUMENTS, GUARANTOR AGREES THAT THE SAID
TRANSACTION IS COMMERCIAL AND NOT A CONSUMER TRANSACTION.
(b) Each of the waivers set forth in this Agreement is made with
knowledge of its significance and consequences, and under the circumstances the
waivers are reasonable. If any of said waivers is determined to be contrary to
any applicable law or public policy, such waiver shall be effective only to the
maximum extent permitted by law.
14. Jury Trial. LENDER AND GUARANTOR HEREBY WAIVE THE RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER
OF THIS AGREEMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE
BY LENDER AND GUARANTOR, AND
<PAGE>
LENDER AND GUARANTOR ACKNOWLEDGE THAT NO PERSON ACTING ON BEHALF OF ANOTHER
PARTY TO THIS AGREEMENT HAS MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS
WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. LENDER
AND GUARANTOR FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED (OR HAVE HAD
THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS AGREEMENT AND IN THE
MAKING OF ALL WAIVERS CONTAINED HEREIN BY INDEPENDENT LEGAL COUNSEL, SELECTED OF
THEIR OWN FREE WILL, AND THAT LENDER AND GUARANTOR HAVE HAD THE OPPORTUNITY TO
DISCUSS THIS WAIVER WITH COUNSEL.
15. Consent to Jurisdiction. GUARANTOR HEREBY SUBMITS TO PERSONAL
JURISDICTION IN THE STATE OF OHIO FOR THE ENFORCEMENT OF THE PROVISIONS OF THIS
AGREEMENT AND IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO OBJECT TO SUCH
JURISDICTION FOR THE PURPOSES OF LITIGATION TO ENFORCE ANY PROVISION OF THIS
AGREEMENT. GUARANTOR HEREBY CONSENTS TO THE JURISDICTION OF AND AGREES THAT ANY
ACTION, SUIT OR PROCEEDING TO ENFORCE THIS AGREEMENT MAY BE BROUGHT IN ANY STATE
OR FEDERAL COURT IN THE STATE OF OHIO. GUARANTOR HEREBY IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY HAVE TO THE LAYING OF THE VENUE OF ANY SUCH ACTION, SUIT,
OR PROCEEDING IN ANY SUCH COURT AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM
THAT ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. EACH GUARANTOR HEREBY APPOINTS CT CORPORATION
AS THEIR AGENT FOR SERVICE OF PROCESS. GUARANTOR HEREBY CONSENTS THAT SERVICE OF
PROCESS IN ANY ACTION, SUIT OR PROCEEDING MAY BE MADE BY SERVICE UPON THE
AFORESAID AGENT FOR SERVICE OF PROCESS, BY PERSONAL SERVICE UPON THE PARTY BEING
SERVED, OR BY DELIVERY IN ACCORDANCE WITH THE NOTICE REQUIREMENTS OF SECTION 16
OF THIS AGREEMENT.
16. Notices. Any notice which any party hereto may be required or may
desire to give hereunder shall be delivered personally, or by overnight express
courier, addressed in the case of Guarantor to:
Lodgian, Inc.
Two Live Oak Center
3445 Peachtree Road, NE
Suite 700
Atlanta, Georgia 30326
<PAGE>
with a copy to:
Stearns, Weaver, Miller, Weissler,
Alhadeff & Sitterson, P.A.
Museum Tower
150 West Flagler Street
Miami, Florida 33130
Attention: Robert Weissler, Esq.
in the case of Lender to:
Banc One Capital Funding Corporation
150 East Gay Street, 24th Floor
Columbus, Ohio 43215
Attention: Loan Servicing
with a copy to:
Banc One Capital Markets, Inc.
150 East Gay Street, 24th Floor
Columbus, Ohio 43215
Attention: Legal Department and Real Estate Group
or at such other addresses or to the attention of such other persons as may from
time to time be designated by the party to be addressed by written notice to the
other in the manner herein provided. Notices, demands and requests given in the
manner aforesaid shall be deemed sufficiently served or given for all purposes
hereunder when received or when delivery is refused or when the same are
returned to sender for failure to be called for.
17. Miscellaneous.
(a) This Agreement may not be modified, altered or amended nor may
any provision hereof or rights hereunder be waived, except by an instrument in
writing signed by the person or entity against which such modification,
alteration, amendment or waiver is sought to be enforced.
(b) Except as provided in Section 6 above, this Agreement shall
terminate upon the irrevocable payment by Borrower to Lender of all amounts
evidenced by the Note and the other Loan Documents.
IN WITNESS WHEREOF, the undersigned has caused this instrument to be duly
executed as of the date first written above.
<PAGE>
GUARANTOR:
LODGIAN, INC., a Delaware corporation
By: /s/ Toni Jones
--------------
Name: Toni Jones
Title: Vice President
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and in the
Selected Historical Financial Information of Lodgian, Inc. and to the use of our
report dated March 31, 1999, except for Note 15, as to which the date is June
24, 1999, in the Registration Statement (Form S-4) and related Prospectus of
Lodgian Financing Corp. and Lodgian, Inc. for the registration of $200,000,000
of 12 1/4% Senior Subordinated Notes due 2009.
/s/ Ernst & Young LLP
Atlanta, Georgia
August 9, 1999
<PAGE>
Exhibit 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form S-4 of
our reports dated April 10, 1998, except for Note 9 as to which the date is
December 11, 1998 related to the financial statements of Impac Hotel Group,
L.L.C. which appear in such Registration Statement. We also consent to the
reference to us under the heading "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
Atlanta, Georgia
August 13, 1999
<PAGE>
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF
1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A
TRUSTEE PURSUANT TO SECTION 305(b)(2) ___________
---------------------
BANKERS TRUST COMPANY
(Exact name of trustee as specified in its charter)
NEW YORK 13-4941247
(Jurisdiction of Incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification no.)
FOUR ALBANY STREET
NEW YORK, NEW YORK 10006
(Address of principal (Zip Code)
executive offices)
Bankers Trust Company
Legal Department
130 Liberty Street, 31st Floor
New York, NY 10006
(212) 250-2201
(Name, address and telephone number of agent for service)
---------------------------------
Lodgian Financing Corp.
Lodgian Inc.
(Exact name of Registrant as specified in its charter)
DELAWARE 58-2480614
(State or other jurisdiction of (I.R.S. employer identification no.)
Incorporation or organization)
3445 Peachtree Road, NE Suite 700
Atlanta, GA 30326
(404) 364-9400
(Address, including zip code, and telephone
number of principal executive offices)
12 1/4% Senior Subordinated Notes due 2009
(Title of the indenture securities)
<PAGE>
Item 1. General Information.
Furnish the following information as to the trustee.
(a) Name and address of each examining or supervising authority to which
it is subject.
Name Address
---- -------
Federal Reserve Bank (2nd District) New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
New York State Banking Department Albany, NY
(b) Whether it is authorized to exercise corporate trust powers. Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the Trustee, describe each such
affiliation.
None.
Item 3.-15. Not Applicable
Item 16. List of Exhibits.
Exhibit 1 - Restated Organization Certificate of Bankers Trust Company
dated August 7, 1990, Certificate of Amendment of the
Organization Certificate of Bankers Trust Company dated June
21, 1995 - Incorporated herein by reference to Exhibit 1 filed
with Form T-1 Statement, Registration No. 33-65171,
Certificate of Amendment of the Organization Certificate of
Bankers Trust Company dated March 20, 1996, incorporate by
referenced to Exhibit 1 filed with Form T-1 Statement,
Registration No. 333-25843 and Certificate of Amendment of the
Organization Certificate of Bankers Trust Company dated June
19, 1997, copy attached.
Exhibit 2 - Certificate of Authority to commence business -
Incorporated herein by reference to Exhibit 2 filed with Form
T-1 Statement, Registration No. 33-21047.
Exhibit 3 - Authorization of the Trustee to exercise corporate trust
powers - Incorporated herein by reference to Exhibit 2 filed
with Form T-1 Statement, Registration No. 33-21047.
Exhibit 4 - Existing By-Laws of Bankers Trust Company, as amended on
November 18, 1997. Copy attached.
-2-
<PAGE>
Exhibit 5 - Not applicable.
Exhibit 6 - Consent of Bankers Trust Company required by Section
321(b) of the Act. - Incorporated herein by reference to
Exhibit 4 filed with Form T-1 Statement, Registration No.
22-18864.
Exhibit 7 - The latest report of condition of Bankers Trust Company
dated as of March 31, 1999. Copy attached.
Exhibit 8 - Not Applicable.
Exhibit 9 - Not Applicable.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York, and State of New York, on the 16th day
of July, 1999.
BANKERS TRUST COMPANY
By: _______________________________
Susan Johnson
Assistant Vice President
-4-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York, and State of New York, on the 16th day
of July, 1999.
BANKERS TRUST COMPANY
/s/ Susan Johnson
-----------------
By: Susan Johnson
Assistant Vice President
-5-
<PAGE>
State of New York,
Banking Department
I, MANUEL KURSKY, Deputy Superintendent of Banks of the State of New York,
DO HEREBY APPROVE the annexed Certificate entitled "CERTIFICATE OF AMENDMENT OF
THE ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY Under Section 8005 of the
Banking Law," dated June 19, 1997, providing for an increase in authorized
capital stock from $1,601,666,670 consisting of 100,166,667 shares with a par
value of $10 each designated as Common Stock and 600 shares with a par value of
$1,000,000 each designated as Series Preferred Stock to $2,001,666,670
consisting of 100,166,667 shares with a par value of $10 each designated as
Common Stock and 1,000 shares with a par value of $1,000,000 each designated as
Series Preferred Stock.
Witness, my hand and official seal of the Banking Department at the City of New
York, this 27th day of June in the Year of our Lord one thousand nine hundred
and ninety-seven.
/s/ Manuel Kursky
-----------------
Deputy Superintendent of Banks
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
ORGANIZATION CERTIFICATE
OF BANKERS TRUST
Under Section 8005 of the Banking Law
-----------------------------
We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a Managing
Director and an Assistant Secretary of Bankers Trust Company, do hereby
certify:
1. The name of the corporation is Bankers Trust Company.
2. The organization certificate of said corporation was filed by the
Superintendent of Banks on the 5th of march, 1903.
3. The organization certificate as heretofore amended is hereby amended to
increase the aggregate number of shares which the corporation shall have
authority to issue and to increase the amount of its authorized capital stock in
conformity therewith.
4. Article III of the organization certificate with reference to the
authorized capital stock, the number of shares into which the capital stock
shall be divided, the par value of the shares and the capital stock outstanding,
which reads as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is One Billion, Six Hundred and One Million, Six Hundred Sixty-Six
Thousand, Six Hundred Seventy Dollars ($1,601,666,670), divided into One
Hundred Million, One Hundred Sixty-Six Thousand, Six Hundred Sixty-Seven
(100,166,667) shares with a par value of $10 each designated as Common
Stock and 600 shares with a par value of One Million Dollars ($1,000,000)
each designated as Series Preferred Stock."
is hereby amended to read as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is Two Billion One Million, Six Hundred Sixty-Six Thousand, Six
Hundred Seventy Dollars ($2,001,666,670), divided into One Hundred
Million, One Hundred Sixty-Six Thousand, Six Hundred Sixty-Seven
(100,166,667) shares with a par value of $10 each designated as Common
Stock and 1000 shares with a par value of One Million Dollars ($1,000,000)
each designated as Series Preferred Stock."
<PAGE>
5. The foregoing amendment of the organization certificate was authorized
by unanimous written consent signed by the holder of all outstanding shares
entitled to vote thereon.
IN WITNESS WHEREOF, we have made and subscribed this certificate this 19th
day of June, 1997.
/s/ James T. Byrne, Jr.
-----------------------
James T. Byrne, Jr.
Managing Director
/s/ Lea Lahtinen
----------------
Lea Lahtinen
Assistant Secretary
State of New York )
) ss:
County of New York )
Lea Lahtinen, being fully sworn, deposes and says that she is an Assistant
Secretary of Bankers Trust Company, the corporation described in the foregoing
certificate; that she has read the foregoing certificate and knows the contents
thereof, and that the statements herein contained are true.
/s/ Lea Lahtinen
----------------
Lea Lahtinen
Sworn to before me this 19th day of June, 1997.
/s/ Sandra L. West
------------------
Notary Public
SANDRA L. WEST
Notary Public State of New York
No. 31-4942101
Qualified in New York County
Commission Expires September 19, 1998
<PAGE>
BY-LAWS
NOVEMBER 18, 1997
Bankers Trust Company
New York
<PAGE>
BY-LAWS
of
Bankers Trust Company
ARTICLE I
MEETINGS OF STOCKHOLDERS
SECTION 1. The annual meeting of the stockholders of this Company shall be held
at the office of the Company in the Borough of Manhattan, City of New York, on
the third Tuesday in January of each year, for the election of directors and
such other business as may properly come before said meeting.
SECTION 2. Special meetings of stockholders other than those regulated by
statute may be called at any time by a majority of the directors. It shall be
the duty of the Chairman of the Board, the Chief Executive Officer or the
President to call such meetings whenever requested in writing to do so by
stockholders owning a majority of the capital stock.
SECTION 3. At all meetings of stockholders, there shall be present, either in
person or by proxy, stockholders owning a majority of the capital stock of the
Company, in order to constitute a quorum, except at special elections of
directors, as provided by law, but less than a quorum shall have power to
adjourn any meeting.
SECTION 4. The Chairman of the Board or, in his absence, the Chief Executive
Officer or, in his absence, the President or, in their absence, the senior
officer present, shall preside at meetings of the stockholders and shall direct
the proceedings and the order of business. The Secretary shall act as secretary
of such meetings and record the proceedings.
ARTICLE II
DIRECTORS
SECTION 1. The affairs of the Company shall be managed and its corporate powers
exercised by a Board of Directors consisting of such number of directors, but
not less than ten nor more than twenty-five, as may from time to time be fixed
by resolution adopted by a majority of the directors then in office, or by the
stockholders. In the event of any increase in the number of directors,
additional directors may be elected within the limitations so fixed, either by
the stockholders or within the limitations imposed by law, by a majority of
directors then in office. One-third of the number of directors, as fixed from
time to time, shall constitute a quorum. Any one or more members of the Board of
Directors or any Committee thereof may participate in a meeting of the Board of
Directors or Committee thereof by means of a conference telephone or similar
communications equipment which allows all persons participating in the meeting
to hear each other at the same time. Participation by such means shall
constitute presence in person at such a meeting. <PAGE>
All directors hereafter elected shall hold office until the next annual meeting
of the stockholders and until their successors are elected and have qualified.
No person who shall have attained age 72 shall be eligible to be elected or
re-elected a director. Such director may, however, remain a director of the
Company until the next annual meeting of the stockholders of Bankers Trust New
York Corporation (the Company's parent) so that such director's retirement will
coincide with the retirement date from Bankers Trust New York Corporation.
No Officer-Director who shall have attained age 65, or earlier relinquishes his
responsibilities and title, shall be eligible to serve as a director.
SECTION 2. Vacancies not exceeding one-third of the whole number of the Board of
Directors may be filled by the affirmative vote of a majority of the directors
then in office, and the directors so elected shall hold office for the balance
of the unexpired term.
SECTION 3. The Chairman of the Board shall preside at meetings of the Board of
Directors. In his absence, the Chief Executive Officer or, in his absence, such
other director as the Board of Directors from time to time may designate shall
preside at such meetings.
SECTION 4. The Board of Directors may adopt such Rules and Regulations for the
conduct of its meetings and the management of the affairs of the Company as it
may deem proper, not inconsistent with the laws of the State of New York, or
these By-Laws, and all officers and employees shall strictly adhere to, and be
bound by, such Rules and Regulations.
SECTION 5. Regular meetings of the Board of Directors shall be held from time to
time on the third Tuesday of the month. If the day appointed for holding such
regular meetings shall be a legal holiday, the regular meeting to be held on
such day shall be held on the next business day thereafter. Special meetings of
the Board of Directors may be called upon at least two day's notice whenever it
may be deemed proper by the Chairman of the Board or, the Chief Executive
Officer or, in their absence, by such other director as the Board of Directors
may have designated pursuant to Section 3 of this Article, and shall be called
upon like notice whenever any three of the directors so request in writing.
SECTION 6. The compensation of directors as such or as members of committees
shall be fixed from time to time by resolution of the Board of Directors.
<PAGE>
ARTICLE III
COMMITTEES
SECTION 1. There shall be an Executive Committee of the Board consisting of not
less than five directors who shall be appointed annually by the Board of
Directors. The Chairman of the Board shall preside at meetings of the Executive
Committee. In his absence, the Chief Executive Officer or, in his absence, such
other member of the Committee as the Committee from time to time may designate
shall preside at such meetings.
The Executive Committee shall possess and exercise to the extent permitted by
law all of the powers of the Board of Directors, except when the latter is in
session, and shall keep minutes of its proceedings, which shall be presented to
the Board of Directors at its next subsequent meeting. All acts done and powers
and authority conferred by the Executive Committee from time to time shall be
and be deemed to be, and may be certified as being, the act and under the
authority of the Board of Directors.
A majority of the Committee shall constitute a quorum, but the Committee may act
only by the concurrent vote of not less than one-third of its members, at least
one of whom must be a director other than an officer. Any one or more directors,
even though not members of the Executive Committee, may attend any meeting of
the Committee, and the member or members of the Committee present, even though
less than a quorum, may designate any one or more of such directors as a
substitute or substitutes for any absent member or members of the Committee, and
each such substitute or substitutes shall be counted for quorum, voting, and all
other purposes as a member or members of the Committee.
SECTION 2. There shall be an Audit Committee appointed annually by resolution
adopted by a majority of the entire Board of Directors which shall consist of
such number of directors, who are not also officers of the Company, as may from
time to time be fixed by resolution adopted by the Board of Directors. The
Chairman shall be designated by the Board of Directors, who shall also from time
to time fix a quorum for meetings of the Committee. Such Committee shall conduct
the annual directors' examinations of the Company as required by the New York
State Banking Law; shall review the reports of all examinations made of the
Company by public authorities and report thereon to the Board of Directors; and
shall report to the Board of Directors such other matters as it deems advisable
with respect to the Company, its various departments and the conduct of its
operations.
In the performance of its duties, the Audit Committee may employ or retain, from
time to time, expert assistants, independent of the officers or personnel of the
Company, to make studies of the Company's assets and liabilities as the
Committee may request and to make an examination of the accounting and auditing
methods of the Company and its system of internal protective controls to the
extent considered necessary or advisable in order to determine that the
operations of the Company, including its fiduciary departments, are being
audited by the General Auditor in such a manner as to provide prudent and
adequate protection. The Committee
<PAGE>
also may direct the General Auditor to make such investigation as it deems
necessary or advisable with respect to the Company, its various departments and
the conduct of its operations. The Committee shall hold regular quarterly
meetings and during the intervals thereof shall meet at other times on call of
the Chairman.
SECTION 3. The Board of Directors shall have the power to appoint any other
Committees as may seem necessary, and from time to time to suspend or continue
the powers and duties of such Committees. Each Committee appointed pursuant to
this Article shall serve at the pleasure of the Board of Directors.
ARTICLE IV
OFFICERS
SECTION 1. The Board of Directors shall elect from among their number a Chairman
of the Board and a Chief Executive Officer; and shall also elect a President,
and may also elect a Senior Vice Chairman, one or more Vice Chairmen, one or
more Executive Vice Presidents, one or more Senior Managing Directors, one or
more Managing Directors, one or more Senior Vice Presidents, one or more
Principals, one or more Vice Presidents, one or more General Managers, a
Secretary, a Controller, a Treasurer, a General Counsel, one or more Associate
General Counsels, a General Auditor, a General Credit Auditor, and one or more
Deputy Auditors, who need not be directors. The officers of the corporation may
also include such other officers or assistant officers as shall from time to
time be elected or appointed by the Board. The Chairman of the Board or the
Chief Executive Officer or, in their absence, the President, the Senior Vice
Chairman or any Vice Chairman, may from time to time appoint assistant officers.
All officers elected or appointed by the Board of Directors shall hold their
respective offices during the pleasure of the Board of Directors, and all
assistant officers shall hold office at the pleasure of the Board or the
Chairman of the Board or the Chief Executive Officer or, in their absence, the
President, the Senior Vice Chairman or any Vice Chairman. The Board of Directors
may require any and all officers and employees to give security for the faithful
performance of their duties.
SECTION 2. The Board of Directors shall designate the Chief Executive Officer of
the Company who may also hold the additional title of Chairman of the Board,
President, Senior Vice Chairman or Vice Chairman and such person shall have,
subject to the supervision and direction of the Board of Directors or the
Executive Committee, all of the powers vested in such Chief Executive Officer by
law or by these By-Laws, or which usually attach or pertain to such office. The
other officers shall have, subject to the supervision and direction of the Board
of Directors or the Executive Committee or the Chairman of the Board or, the
Chief Executive Officer, the powers vested by law or by these By-Laws in them as
holders of their respective offices and, in addition, shall perform such other
duties as shall be assigned to them by the Board of Directors or the Executive
Committee or the Chairman of the Board or the Chief Executive Officer.
The General Auditor shall be responsible, through the Audit Committee, to the
Board of Directors for the determination of the program of the internal audit
function and the evaluation of the adequacy of the system of internal controls.
Subject to the Board of Directors, the General Auditor shall have and may
exercise all the powers and shall perform all the duties usual to such office
and shall have such other powers as may be prescribed or assigned to him from
time to time by the Board of Directors or vested in him by law or by these
By-Laws. He shall perform such other duties and shall make such investigations,
examinations and reports as may be prescribed or required by the
<PAGE>
Audit Committee. The General Auditor shall have unrestricted access to all
records and premises of the Company and shall delegate such authority to his
subordinates. He shall have the duty to report to the Audit Committee on all
matters concerning the internal audit program and the adequacy of the system of
internal controls of the Company which he deems advisable or which the Audit
Committee may request. Additionally, the General Auditor shall have the duty of
reporting independently of all officers of the Company to the Audit Committee at
least quarterly on any matters concerning the internal audit program and the
adequacy of the system of internal controls of the Company that should be
brought to the attention of the directors except those matters responsibility
for which has been vested in the General Credit Auditor. Should the General
Auditor deem any matter to be of special immediate importance, he shall report
thereon forthwith to the Audit Committee. The General Auditor shall report to
the Chief Financial Officer only for administrative purposes.
The General Credit Auditor shall be responsible to the Chief Executive Officer
and, through the Audit Committee, to the Board of Directors for the systems of
internal credit audit, shall perform such other duties as the Chief Executive
Officer may prescribe, and shall make such examinations and reports as may be
required by the Audit Committee. The General Credit Auditor shall have
unrestricted access to all records and may delegate such authority to
subordinates.
SECTION 3. The compensation of all officers shall be fixed under such plan or
plans of position evaluation and salary administration as shall be approved from
time to time by resolution of the Board of Directors.
SECTION 4. The Board of Directors, the Executive Committee, the Chairman of the
Board, the Chief Executive Officer or any person authorized for this purpose by
the Chief Executive Officer, shall appoint or engage all other employees and
agents and fix their compensation. The employment of all such employees and
agents shall continue during the pleasure of the Board of Directors or the
Executive Committee or the Chairman of the Board or the Chief Executive Officer
or any such authorized person; and the Board of Directors, the Executive
Committee, the Chairman of the Board, the Chief Executive Officer or any such
authorized person may discharge any such employees and agents at will.
<PAGE>
ARTICLE V
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS
SECTION 1. The Company shall, to the fullest extent permitted by Section 7018 of
the New York Banking Law, indemnify any person who is or was made, or threatened
to be made, a party to an action or proceeding, whether civil or criminal,
whether involving any actual or alleged breach of duty, neglect or error, any
accountability, or any actual or alleged misstatement, misleading statement or
other act or omission and whether brought or threatened in any court or
administrative or legislative body or agency, including an action by or in the
right of the Company to procure a judgment in its favor and an action by or in
the right of any other corporation of any type or kind, domestic or foreign, or
any partnership, joint venture, trust, employee benefit plan or other
enterprise, which any director or officer of the Company is servicing or served
in any capacity at the request of the Company by reason of the fact that he, his
testator or intestate, is or was a director or officer of the Company, or is
serving or served such other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise in any capacity, against judgments,
fines, amounts paid in settlement, and costs, charges and expenses, including
attorneys' fees, or any appeal therein; provided, however, that no
indemnification shall be provided to any such person if a judgment or other
final adjudication adverse to the director or officer establishes that (i) his
acts were committed in bad faith or were the result of active and deliberate
dishonesty and, in either case, were material to the cause of action so
adjudicated, or (ii) he personally gained in fact a financial profit or other
advantage to which he was not legally entitled.
SECTION 2. The Company may indemnify any other person to whom the Company is
permitted to provide indemnification or the advancement of expenses by
applicable law, whether pursuant to rights granted pursuant to, or provided by,
the New York Banking Law or other rights created by (i) a resolution of
stockholders, (ii) a resolution of directors, or (iii) an agreement providing
for such indemnification, it being expressly intended that these By-Laws
authorize the creation of other rights in any such manner.
SECTION 3. The Company shall, from time to time, reimburse or advance to any
person referred to in Section 1 the funds necessary for payment of expenses,
including attorneys' fees, incurred in connection with any action or proceeding
referred to in Section 1, upon receipt of a written undertaking by or on behalf
of such person to repay such amount(s) if a judgment or other final adjudication
adverse to the director or officer establishes that (i) his acts were committed
in bad faith or were the result of active and deliberate dishonesty and, in
either case, were material to the cause of action so adjudicated, or (ii) he
personally gained in fact a financial profit or other advantage to which he was
not legally entitled.
SECTION 4. Any director or officer of the Company serving (i) another
corporation, of which a majority of the shares entitled to vote in the election
of its directors is held by the Company, or (ii) any employee benefit plan of
the Company or any corporation referred to in clause (i) in any capacity shall
be deemed to be doing so at the request of the Company. In all other cases, the
provisions of this Article V will apply (i) only if the person serving another
corporation or any partnership, joint venture, trust, employee benefit plan or
other enterprise so served at the specific request of the Company,
<PAGE>
evidenced by a written communication signed by the Chairman of the Board, the
Chief Executive Officer or the President, and (ii) only if and to the extent
that, after making such efforts as the Chairman of the Board, the Chief
Executive Officer or the President shall deem adequate in the circumstances,
such person shall be unable to obtain indemnification from such other enterprise
or its insurer.
SECTION 5. Any person entitled to be indemnified or to the reimbursement or
advancement of expenses as a matter of right pursuant to this Article V may
elect to have the right to indemnification (or advancement of expenses)
interpreted on the basis of the applicable law in effect at the time of
occurrence of the event or events giving rise to the action or proceeding, to
the extent permitted by law, or on the basis of the applicable law in effect at
the time indemnification is sought.
SECTION 6. The right to be indemnified or to the reimbursement or advancement of
expense pursuant to this Article V (i) is a contract right pursuant to which the
person entitled thereto may bring suit as if the provisions hereof were set
forth in a separate written contract between the Company and the director or
officer, (ii) is intended to be retroactive and shall be available with respect
to events occurring prior to the adoption hereof, and (iii) shall continue to
exist after the rescission or restrictive modification hereof with respect to
events occurring prior thereto.
SECTION 7. If a request to be indemnified or for the reimbursement or
advancement of expenses pursuant hereto is not paid in full by the Company
within thirty days after a written claim has been received by the Company, the
claimant may at any time thereafter bring suit against the Company to recover
the unpaid amount of the claim and, if successful in whole or in part, the
claimant shall be entitled also to be paid the expenses of prosecuting such
claim. Neither the failure of the Company (including its Board of Directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of or
reimbursement or advancement of expenses to the claimant is proper in the
circumstance, nor an actual determination by the Company (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant is
not entitled to indemnification or to the reimbursement or advancement of
expenses, shall be a defense to the action or create a presumption that the
claimant is not so entitled.
SECTION 8. A person who has been successful, on the merits or otherwise, in the
defense of a civil or criminal action or proceeding of the character described
in Section 1 shall be entitled to indemnification only as provided in Sections 1
and 3, notwithstanding any provision of the New York Banking Law to the
contrary.
ARTICLE VI
SEAL
SECTION 1. The Board of Directors shall provide a seal for the Company, the
counterpart dies of which shall be in the charge of the Secretary of the Company
and such officers as the Chairman of the Board, the Chief Executive Officer or
the Secretary may from time to time direct in writing, to be affixed to
certificates of stock and other
<PAGE>
documents in accordance with the directions of the Board of Directors or the
Executive Committee.
SECTION 2. The Board of Directors may provide, in proper cases on a specified
occasion and for a specified transaction or transactions, for the use of a
printed or engraved facsimile seal of the Company.
ARTICLE VII
CAPITAL STOCK
SECTION 1. Registration of transfer of shares shall only be made upon the books
of the Company by the registered holder in person, or by power of attorney, duly
executed, witnessed and filed with the Secretary or other proper officer of the
Company, on the surrender of the certificate or certificates of such shares
properly assigned for transfer.
ARTICLE VIII
CONSTRUCTION
SECTION 1. The masculine gender, when appearing in these By-Laws, shall be
deemed to include the feminine gender.
ARTICLE IX
AMENDMENTS
SECTION 1. These By-Laws may be altered, amended or added to by the Board of
Directors at any meeting, or by the stockholders at any annual or special
meeting, provided notice thereof has been given.
I, _____________________________________, Assistant Secretary of Bankers Trust
Company, New York, New York, hereby certify that the foregoing is a complete,
true and correct copy of the By-Laws of Bankers Trust Company, and that the same
are in full force and effect at this date.
-----------------------------
ASSISTANT SECRETARY
DATED: ____________________________________
<PAGE>
<TABLE>
<S> <C> <C> <C>
Legal Title of Bank: Bankers Trust Company Call Date: 03/31/99 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-1
City, State ZIP: New York, NY 10006 11
FDIC Certificate No.: 0 0 6 2 3
</TABLE>
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for March 31, 1999
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, reported the amount outstanding as of the last business day of the
quarter.
Schedule RC--Balance Sheet
<TABLE>
<CAPTION>
------------------
C400
------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
--------------------------- ------------------
<S> <C> <C> <C>
ASSETS //////////////////
1. Cash and balances due from depository institutions (from Schedule RC-A): //////////////////
a. Noninterest-bearing balances and currency and coin (1) ................. 0081 1,695,000 1.a.
b. Interest-bearing balances (2) .......................................... 0071 1,308,000 1.b.
2. Securities: //////////////////
a. Held-to-maturity securities (from Schedule RC-B, column A) ............. 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)............ 1773 6,150,000 2.b.
3. Federal funds sold and securities purchased under agreements to resell..... 1350 29,512,000 3.
4. Loans and lease financing receivables: //////////////////
a. Loans and leases, net of unearned income (from Schedule RC-C) RCFD 2122 18,869,000 ////////////////// 4.a.
b. LESS: Allowance for loan and lease losses.....................RCFD 3123 571,000 ////////////////// 4.b.
c. LESS: Allocated transfer risk reserve ........................RCFD 3128 0 ////////////////// 4.c.
d. Loans and leases, net of unearned income, //////////////////
allowance, and reserve (item 4.a minus 4.b and 4.c) .................... 2125 18,298,000 4.d.
5. Trading Assets (from schedule RC-D) ...................................... 3545 34,815,000 5.
6. Premises and fixed assets (including capitalized leases) .................. 2145 916,000 6.
7. Other real estate owned (from Schedule RC-M) .............................. 2150 88,000 7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) 2130 883,000 8.
9. Customers' liability to this bank on acceptances outstanding .............. 2155 307,000 9.
10. Intangible assets (from Schedule RC-M) .................................... 2143 302,000 10.
11. Other assets (from Schedule RC-F) ......................................... 2160 4,645,000 11.
12. Total assets (sum of items 1 through 11) .................................. 2170 98,919,000 12.
------------------------
</TABLE>
- --------------------------
(1) Includes cash items in process of collection and unposted debits. (2)
Includes time certificates of deposit not held for trading.
<PAGE>
<TABLE>
<S> <C> <C> <C>
Legal Title of Bank: Bankers Trust Company Call Date: 03/31/99 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-2
City, State ZIP: New York, NY 10006 12
FDIC Certificate No.: 0 0 6 2 3
</TABLE>
Schedule RC--Continued
<TABLE>
<CAPTION>
-------------------------
Dollar Amounts in Thousands //////// Bil Mil Thou
--------------------------- -------- ------------
<S> <C> <C>
LIABILITIES ////////////////////////
13. Deposits: ///////////////////////
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part I) RCON 2200 17,829,000 13.a.
(1) Noninterest-bearing(1) ....................RCON 6631 2,939,000......... /////////////////////// 13.a.(1)
(2) Interest-bearing ..........................RCON 6636 14,890,000......... /////////////////////// 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E ///////////////////////
part II) RCFN 2200 20,634,000 13.b.
(1) Noninterest-bearing .......................RCFN 6631 1,878,000 /////////////////////// 13.b.(1)
(2) Interest-bearing ..........................RCFN 6636 18,756,000 /////////////////////// 13.b.(2)
14. Federal funds purchased and securities sold under agreements to repurchase RCFD 2800 13,513,000 14.
15. a. Demand notes issued to the U.S. Treasury ........................................ RCON 2840 0 15.a.
b. Trading liabilities (from Schedule RC-D)......................................... RCFD 3548 22,010,000 15.b.
16. Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases): ///////////////////////
a. With a remaining maturity of one year or less ................................... RCFD 2332 6,400,000 16.a.
b. With a remaining maturity of more than one year through three years............. A547 2,347,000 16.b.
c. With a remaining maturity of more than three years............................... A548 2,321,000 16.c
17. Not Applicable. /////////////////////////17.
18. Bank's liability on acceptances executed and outstanding ........................... RCFD 2920 307,000 18.
19. Subordinated notes and debentures (2)............................................... RCFD 3200 438,000 19.
20. Other liabilities (from Schedule RC-G) ............................................. RCFD 2930 6,129,000 20.
21. Total liabilities (sum of items 13 through 20) ..................................... RCFD 2948 91,928,000 21.
22. Not Applicable ///////////////////////
/////////////////////////22.
EQUITY CAPITAL ///////////////////////
23. Perpetual preferred stock and related surplus ...................................... RCFD 383 1,500,000 23.
24. Common stock ....................................................................... RCFD 3230 2,127,000 24.
25. Surplus (exclude all surplus related to preferred stock) ........................... RCFD 3839 541,000 25.
26. a. Undivided profits and capital reserves .......................................... RCFD 3632 3,291,000 26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities .......... RCFD 8434 (59,000) 26.b.
c. Accumulated net gains (losses) on cash flow hedges............................... RCFD 4336 0 26.c.
27. Cumulative foreign currency translation adjustments ................................ RCFD 3284 (409,000) 27.
28. Total equity capital (sum of items 23 through 27) .................................. RCFD 3210 6,991,000 28.
29. Total liabilities and equity capital (sum of items 21 and 28)....................... RCFD 3300 98,919,000 29
</TABLE>
Memorandum
To be reported only with the March Report of Condition.
<TABLE>
<S> <C> <C>
1. Indicate in the box at the right the number of the statement below that best describes the Number
most comprehensive level of auditing work performed for the bank by independent external ----------
auditors as of any date during 1998 ................................................ RCFD 6724 1 M.1
----------------------------
</TABLE>
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified
public accounting firm which submits a report on the consolidated holding
company (but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with
generally accepted auditing standards by a certified public accounting
firm (may be required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors
(may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
- ----------
(1) Including total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
