EFFICIENCY LODGE INC, 8-K/A, 2000-02-14

EFFICIENCY LODGE INC
8-K/A, 2000-02-14
OPERATORS OF NONRESIDENTIAL BUILDINGS

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

----------------------
FORM 8-K/A
----------------------

Amendment No. 1 to

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): December 1, 1999
-----------------------

EFFICIENCY LODGE, INC.
------------------------------------------------------
(Exact name of Registrant as Specified in its Charter)

Georgia 000-02290 58-0898219
- ------------------------------------------------------------------------
(State or other Jurisdiction of (Commission File (IRS Employer
Incorporation or Organization) Number) Identification No.)

5342 Old Floyd Road
Mableton, Georgia 30126
---------------------------------------------------------
(Address of principal executive offices) (Zip code)

(770) 819-0039
-------------------------------------------------------------
(Registrant's telephone number, including area code)

N/A
-------------------------------------------------------------
(Former name or former address, if changed since last report)

The undersigned registrant (the "Company") hereby amends its Current Report on
Form 8-K filed on December 16, 1999 by amending Item 7 thereto as set forth
below. The Current Report relates to the acquisition by the Company of two
lodging facilities in metropolitan Pensacola, Escambia County, Florida, known
collectively as Home Stay Lodge I, Ltd. (the "Property").

<PAGE>

ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS

Statement Regarding Real Property Acquired
- ------------------------------------------

The real estate operations involved with the Property are similar to those
conducted by the Company with respect to its other extended-stay lodges.
Accordingly, the Company was able to assess the Property from an operational and
physical facilities point of view based on its own experience with properties in
the same industry. The Company is familiar with the architect that designed the
Property, as he has designed all of the properties owned by the Company. The
Company was initially asked to participate in the Property in 1998, but the
Company's management did not believe that the Property fit with its expansion
plans at that time. The Property was opened in April of 1999. Our management
believes that the persons operating the Property lacked the experience necessary
to profitably operate the Property. The Property was offered to the Company for
$8 million soon after it began operations. The President of the Company and the
President of the builder of all of the Company's properties physically inspected
the Property, and the Company agreed to purchase the Property for a price not to
exceed the cost of land, building, furniture and fixtures, which was $6,450,000.
The Company is not anticipating capital improvements of any significant amount
in the next twelve months with respect to the Property. After reasonable
inquiry, the Company is not aware of any material factors relating to the
Property that would cause the financial information reported herein not to be
necessarily indicative of future the minimal operating results with respect to
the Property.

The Company intends to operate the Property as part of its overall business of
owning and operating extended stay lodging facilities. The Company anticipates
some changes in the operating results of the Property resulting from the
conditions listed below, the effects of which are shown in the accompanying Pro
Forma Financial Information:

1. A Limited Partnership operated the Property, prior to its acquisition.
In a Limited Partnership, the members pay the income tax at the
individual member level and thus, in general, there is no income tax
at the partnership level. The Company is a "C" corporation and thus
incurs tax at the corporate level. The Pro Forma Financial Information
includes the income tax expense resulting from the projected
operations by the Company.

2. The Pro Forma Financial Information reflects the change in the
following expenses due to the purchase price of $6,450,000 paid by the
Company to acquire the assets:

(a) An increase in depreciation expense

-1-

<PAGE>

(b) An increase in interest expense due to the financing of
the purchase price

In preparing the Pro Forma information included below, the Company
made the following principal assumptions:

1. Other than the items noted above, the Company believes there will be
no material changes in the operating results of the Property.

2. The Company believes that the level of occupancy from the past seven
months will be maintained.

3. There will be no material capital improvements needed in the next
twelve months.

(a) Financial Statements of Businesses Acquired

Balance Sheet at September 30, 1999 F-1
Statement of Operations for the nine months ended
September 30, 1999 F-2
Statement of Partners' Capital for the nine months
ended September 30, 1999 F-3

(b) Pro Forma Financial Information

Unaudited and Pro Forma Consolidated Financial Statements
for the nine months Ended September 30, 1999
- Balance Sheet F-4

Footnotes to Pro Forma Financial Information
for the nine months ended September 30, 1999 F-5

2.1 Limited Partnership Interest Purchase Agreement, dated
December 1, 1999, between Crown Group, Inc. and Chadco,
Inc., and the Company

2.2 Stock Purchase Agreement, dated December 1, 1999, between
Crown Group, Inc. and the Company

10.1 Promissory Note in the amount of $5,420,000, dated May 21,
1998, to Bank of Pensacola

10.2 Unconditional and Irrevocable Guaranty of Payment to the
Bank of Pensacola, dated December 1, 1999, by Efficiency
Lodge, Inc.

10.3 Unconditional and Irrevocable Guaranty of Payment to the
Bank of Pensacola, dated December 1, 1999, by W. Ray Barnes

10.4 Promissory Note in the amount of $797,040.83, dated
December 1, 1999, to Crown Group, Inc. and Chadco, Inc.

10.5 Unconditional and Irrevocable Guaranty of Payment to Crown
Group, Inc., and Chadco, Inc., dated December 1, 1999, by
W. Ray Barnes.

-2-
<PAGE>
Home Stay Lodge I, Ltd.
BALANCE SHEET
September 30, 1999

ASSETS

Property and Equipment, net $6,163,114
Cash 60,849
Other Assets 123,324
----------

$6,347,287
==========

LIABILITIES AND PARTNERS' CAPITAL

Notes Payable $ 5,637,904
Other Liabilities 56,681
-----------

Total Liabilities 5,694,585

Partners' Capital
Additional Paid-In Capital 800,000
Retained Earnings (Deficit) (147,298)
-----------

Total Partner's Capital 652,702
-----------

$ 6,347,287
===========

F-1
<PAGE>

Home Stay Lodge I, Inc.
STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 1999

Revenues $ 488,044
Operating Expenses 409,662
---------

Operating Income 78,382

Other (Income) Expense, net (195,930)
---------

Earnings before Income Taxes (117,548)

Income Tax Benefit 39,962
---------

Net Earnings $ 77,586
=========
F-2
<PAGE>

Home Stay Lodge I, Ltd.
STATEMENT OF PARTNERS' CAPITAL
Nine Months Ended September 30, 1999

Additional Retained
Paid-In Earnings
Capital (Deficit) Total
------- --------- -----

<S> <C> <C> <C> <C>
Balance at January 1, 1999 $800,000 ($ 69,712) $ 730,288

Net Income (Loss) for the Nine Months -- (77,586) (77,586)
-------- --------- ---------
Balance at September 30, 1999 $800,000 ($147,298) $ 652,702
======== ========= =========
</TABLE>

F-3
<PAGE>
<TABLE>
<CAPTION>

EFFICIENCY LODGE, INC.
UNAUDITED & PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED 09/30/99

ELI HOME STAY LODGE, I LTD. ELI
HISTORICAL-UNAUDITED HISTORICAL-UNAUDITED REF PRO FORMA
9/30/99 9/30/99 FOOTNOTE ADJUSTMENTS 9/30/99
-------------------- ----------------------- -------- ----------- -------

BALANCE SHEET:
ASSETS:
CASH 993,608 60,849 (1) (376,223) 678,234
PROPERTY & EQUIPMENT 22,523,524 6,275,651 (2) 174,349 28,973,524
ACCUMULATED DEPRECIATION (4,014,280) (112,537) (3) (47,197) (4,174,014)
OTHER ASSETS 2,008,833 123,324 (4) (92,731) 2,039,426
--------- -------- --- ------ ----------

TOTAL ASSETS 21,511,685 6,347,287 27,517,170
========== ========= ==========

LIABILITIES & PARTNERS' CAPITAL
LIABILITIES:
MORTGAGE NOTE PAYABLE 20,384,367 5,637,904 (5) (507,274) 26,529,545
OTHER LIABILITIES 798,889 56,681 (6) 101,101 754,469
--------- -------- --- ------ ----------

TOTAL LIABILITIES 21,183,256 5,694,585 27,284,014

PARTNERS' CAPITAL:
TREASURY STOCK (1,671,796) 0 0 (1,671,796)
PAID IN CAPITAL 1,104,251 800,000 (7) (800,000) 1,104,251
RETAINED EARNINGS 179,206 (69,712) (8) 147,298 256,792
NET INCOME (LOSS) 716,768 (77,586) (9) 95,273 543,909
--------- -------- ----------

TOTAL PARTNERS' CAPITAL 328,429 652,702 233,156
--------- -------- ----------

TOTAL LIABILITIES AND PARTNERS'
CAPITAL 21,511,685 6,347,287 27,517,170
========== ========= ==========

CONSOLIDATED STATEMENT OF EARNINGS:
REVENUE 4,967,998 488,044 5,456,042

OPERATING COSTS 2,783,185 409,662 (10) 137,576 3,330,423
--------- -------- ----------

OPERATING INCOME 2,184,813 78,382 2,125,619

OTHER (INCOME) EXPENSE, NET 1,005,869 195,930 (10) 46,548 1,248,347
--------- -------- ---------

EARNINGS BEFORE INCOME TAXES 1,178,944 (117,548) 877,272

INCOME TAX EXPENSE 462,176 (39,962) (10) (88,851) 333,363
--------- -------- ----------

NET EARNINGS 716,768 (77,586) 543,909
========== ========= ==========
</TABLE>
F-4
<PAGE>
FOOTNOTES TO
EFFICIENCY LODGE, INC.
UNAUDITED & PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED 09/30/99

(1) Cash has been adjusted as follows -
increase in interest expense (46,548)
decrease in labor costs 24,210
cash paid at closing for lodge purchase (293,036)
deduction of Home Stay Lodge cash
not acquired in the purchase (60,849)
----------

(376,223)
===========

(2) Property and equipment of Home Stay Lodge has been adjusted to the total
cost of acquisition by Efficiency Lodge, Inc.

(3) Accumulated depreciation has been adjusted for the additional pro forma
depreciation taken after acquisition.

(4) Closing cost incurred on the Home Stay Lodge purchase less pro forma
amortization taken after acquisition and income tax benefit recorded as a
result of the increase in the taxable loss of Home Stay Lodge. Also the
Home Stay Lodge assets were deducted that were not acquired in the
purchase.

(5) The mortgage payable increase is the net of the debt incurred on the
purchase of the Home Stay Lodge assets and the removal of Home Stay Lodge
debt not acquired in the purchase.

(6) Accrued interest payable recorded as a result of the acquisition less the
removal of Home Stay Lodge liabilities not acquired in the purchase.

(7) These adjustments remove the historical stockholders' equity of Home Stay
Lodge.

(8) Retained earnings has been adjusted for the clearing of the remainder of
the historical balance sheet of Home Stay Lodge as follows:

Accumulated depreciation at 9/30/99 112,537
Cash prior to acquisition (60,849)
Property and equipment prior to acquisition (6,275,651)
Other assets prior to acquisition (123,324)
Other liabilities prior to acquisition 56,681
Mortgage note payable prior to acquisition 5,637,904
Paid in capital prior to acquisition 800,000
-----------
147,298
===========

(9) The net income changes are the product of the adjustments made to the
expenses below in order to provide comparable operating expenses. See the
explanations for these items separately below.

(10) The following expenses have been adjusted in order to be comparable with
the operating expenses of ELI as follows:

DEPRECIATION - An increase in depreciation expense has been made to
reflect the additional expense allowed due to the purchase price paid
for the assets purchased. $159,734

AMORTIZATION - An increase in amortization expense has been made to
reflect the additional expense allowed due to the closing cost paid.
$2,052.

INTEREST - An increase in the interest expense has been shown to
reflect the payments on the debt to acquire the Home Stay Lodge
assets. $46,548

LABOR COST - This has been adjusted to show the decrease in the labor
costs estimated after the acquisition of home Stay assets by ELI.
$(24,210)

INCOME TAX EXPENSE - The expense has been decreased to reflect the
income tax benefit recorded as a result of the increase in the taxable
loss of Home Stay Lodge after acquisition.

F-5
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.

EFFICIENCY LODGE, INC.

By: /s/ W. Ray Barnes
W. Ray Barnes
President

February 14, 2000
------------------
Date
<PAGE>
EXHIBIT INDEX

2.1 Limited Partnership Interest Purchase Agreement, dated December 1, 1999,
between Crown Group, Inc. and Chadco, Inc., and the Company

2.2 Stock Purchase Agreement, dated December 1, 1999, between Crown Group,
Inc. and the Company

10.1 Promissory Note in the amount of $5,420,000, dated May 21, 1998, to Bank
of Pensacola

10.2 Unconditional and Irrevocable Guaranty of Payment to the Bank of
Pensacola, dated December 1, 1999, by Efficiency Lodge, Inc.

10.3 Unconditional and Irrevocable Guaranty of Payment to the Bank of
Pensacola, dated December 1, 1999, by W. Ray Barnes

10.4 Promissory Note in the amount of $797,040.83, dated December 1, 1999, to
Crown Group, Inc. and Chadco, Inc.

10.5 Unconditional and Irrevocable Guaranty of Payment to Crown Group, Inc.
and Chadco, Inc., dated December 1, 1999, by W. Ray Barnes.

LIMITED PARTNERSHIP INTEREST PURCHASE AGREEMENT

1. PARTIES. This Agreement is made between Efficiency Lodge, Inc., a
Georgia Partnership, hereinafter referred to as Purchaser, Crown Group, Inc. and
Chadco, Inc., hereinafter referred to as Sellers, and W. Ray Barnes, hereinafter
referred to as Guarantor.

2. SELLERS' OWNERSHIP OF THE SHARES. Sellers own 99% of Home Stay Lodge I,
Ltd., a Florida limited partnership ("Home Stay" or "Partnership"). This 99%
interest represents 100% of the limited partnership interest of Home Stay. The
general partner of the Partnership is Home Stay Lodge, Inc. and it owns a 1%
interest.

3. PARTIES' INTENT TO BUY AND SELL. Sellers agree to sell, and Purchaser
agrees to buy, the entire limited partnership interest of Sellers in Home Stay.

4. PRICE. Purchaser agrees to purchase the shares for a price of
$6,442,500.00 less the outstanding mortgage balance due to Bank of Pensacola by
Home Stay on the date of closing. The Purchaser will also pay all closing costs,
including Sellers attorneys fees.

5. CLOSING. The parties agree to complete the sale and purchase provided
for in this Agreement at a closing to be held at location of Sellers choice on
December 1, 1999.

For purposes of this Agreement, the term "time of closing" will be
deemed to be the close of business on the day prior to the day of the closing.

6. DELIVERY OF THE SHARES AT CLOSING. Seller agrees to deliver to Purchaser
an assignment of limited partnership interest transferring all of their limited
partnership interest in Home Stay free and clear of any liens or encumbrances
and with warranties of title.

7. PAYMENT OF CONSIDERATION AT CLOSING. Purchaser agrees to deliver to
Seller at closing the purchase price as follows: the Purchase Price shall be
paid 25% by cashier's check at the closing and 75% by an unsecured promissory
note payable on the terms set forth hereafter. Interest shall accrue at
consensus New York Prime plus 1% adjusted quarterly. Payments will be made
monthly and the note and pledge agreement will be fully amortized over 5 years.
The terms and provisions of the promissory note will be those customarily used
by financial institutions in the Pensacola, Florida area. The Note will be
delivered outside the State of Florida and will be personally guaranteed by W.
Ray Barnes.

8. SELLERS' REPRESENTATION AND WARRANTIES. Seller represents and warrants:

a. Organization and Powers of the Partnership. The Partnership is, and will
------------------------------------------
be at the time of closing, legally organized and in good standing under the laws
of Florida.

The Partnership has, and will have at the time of closing, the power to own
its property and carry on its business as it is now being conducted.

1<PAGE>

b. Capitalization. The initial capital of the Partnership was $10,000.00.
--------------
The Partnership does not have, nor will it have at the time of closing, any
obligations or commitments related to its partnership interests which may
require the Partnership to issue any additional partnership interests.

c. Liabilities. Seller warrants and represents that the Partnership will
-----------
have no liabilities or obligations as of the date of closing. Sellers will
indemnify Purchaser up to an amount not in excess of the purchase price for any
liabilities or obligations not disclosed in this Agreement that existed as of
the date of closing. Any liabilities or obligations overlapping the date of
closing will be prorated as of the date of closing. Sellers will give Purchaser
a credit at closing for any tenant deposits held by the Partnership and for
11/12's of the 1999 property taxes. The Partnership will maintain separate
accounts and credit card numbers for all transactions occurring after 12:01
A.M., December 1, 1999. The existing accounts and assets, other than the real
properties and furniture, fixtures and equipment, shall continue to be managed
by the Windham Company until liquidation. After the payment of all expenses
related to the period ending prior to December 1, 1999, the remaining balance of
such assets and accounts shall be distributed to the Sellers. The Sellers will
be responsible for the payment of the termination fee due to The Windham
Company.

d. Real Property. Attached to this Agreement is Exhibit A, containing a
--------------
description of all lands, buildings, and improvements owned by the Partnership.
Sellers represent that the Partnership has marketable title in fee simple to all
of such real property, and it is and will be as of the closing free and clear of
any interests, liens, encumbrances, mortgages, or charges of any kind other than
those enumerated on Exhibit B.

e. Contracts, Leases. Exhibit C contains a list of all contracts and leases
-----------------
to which the Partnership is a party.

f. Inventory. The inventories of the Partnership consist solely of items
---------
regularly and currently used in the Partnership's business.

g. Litigation. There are no actions or proceedings pending, or, as far as
----------
Sellers know, threatened, against the Partnership in any court, administrative,
or other body.

9. Purchaser's Representations and Warranties. Purchaser represents and
----------------------------
warrants that:

a. Organization. Purchaser is a Corporation validly organized, and in good
------------
standing, under the laws of Georgia.

b. Authorization. Purchaser has the full legal right and power and all
-------------
authority and approval required to enter into, execute, and deliver this
Agreement and to perform fully its obligations under this Agreement. This

2
<PAGE>

Agreement has been duly executed and is the valid and binding obligation of
Purchaser enforceable in accordance with its terms, except as may be limited by
bankruptcy, moratorium, reorganization, insolvency, or other similar law now or
hereafter in effect generally affecting the enforcement of creditors' rights. No
approval or consent of any foreign, federal, state, county, or other
governmental or regulatory body, and (except as may be otherwise specified in
this Agreement or any Exhibit thereto) no approval or consent of any other
person is required in connection with the execution and delivery of this
Agreement and the consummation and performance by Purchaser of the transactions
contemplated hereby.

C. Securities Law. Purchaser does not now intend, and will not intend
--------------
at the time of closing, to distribute the interest to be purchased under this
Agreement, or sell such interest, or otherwise be involved in a transaction
which would require registration of the interest under the Securities Act of
1933, as amended.

10. Conditions to Purchaser's Obligations. The purchase of the limited
----------------------------------------
partnership interest by Purchaser under this Agreement is subject to the
following conditions, which must be satisfied before or at the time of closing.

a. Delivery of Shares. Sellers must deliver to Purchaser assignments of
------------------
limited partnership interest with warranties of title, free and clear of any
liens or encumbrances.

b. Representations and Covenants. All representations and warranties made
-----------------------------
by Sellers in this Agreement are true now, and must be true at the time of
closing, and Sellers must have performed all covenants made under this
Agreement.

C. No Property Damage or Material Change. Until the closing, no fire,
----------------------------------------
flood, or other event will have destroyed or damaged a material part of the
assets or other property of the Partnership.

11. CONDITIONS TO SELLERS' OBLIGATION. The obligation of Sellers to sell to
Purchaser its interests in the Partnership as provided in this Agreement is
subject to the following conditions, to be satisfied at or before the closing:

a. Receipt of Payment. Purchaser will deliver to Sellers the cash and note
------------------
required under earlier provisions of this Agreement.

B. Representations and Covenants. The representations and warranties made
-----------------------------
by Purchaser in this Agreement must be true at the time of closing, the
Purchaser will have performed all the covenants contained in this Agreement at
or before the closing.

C. Release From Bank. Bank of Pensacola shall have approved this sale and
-----------------
shall have released all guarantors under the note and mortgage that it currently
holds.

3
<PAGE>

12. MISCELLANEOUS.

a. Notification and Claims. If Purchaser intends to made a claim for
--------------------------
indemnification, it will deliver to Sellers a certificate signed by an officer
of Purchaser. Such certificate must (1) state that a loss has occurred to which
Purchaser is entitled to indemnification under this Agreement, and (2) specify
each item of loss, or other claim, in detail, including the date of the loss,
the amount of the loss and the nature of the misrepresentation, breach of
warranty, or claim.

b. Binding Effect. This Agreement will be binding upon and enforceable by
--------------
the parties, and their personal representatives or successors.

C. Governing Law. This Agreement is to be construed and governed according
-------------
to the laws of Florida.

D. Counterparts. This Agreement will be executed simultaneously in one or
------------
more counterparts. Each counterpart will be considered an original and valid and
binding.

E. Simultaneous Closing. This Agreement must close simultaneous with the
---------------------
purchase of the stock in the partnership general partner by W. Ray Barnes from
the existing shareholders.

F. Termination of Partnership for Tax Purposes. Both Sellers and Buyer
----------------------------------------------
acknowledge that the sale of the limited partnership interest, which interest
exceed 50% of the Partnership, will cause a termination of the Partnership for
tax purposes. Both parties have made an independent investigation of the
ramifications of said termination. Sellers will have prepared and filed at their
expense the final tax return for the Partnership for the period ending
November 30, 1999.

The parties execute this Agreement on the ____ day of December, 1999.

SELLERS:

Crown Group, Inc.

By: /s/ T.J. Falgout
Its Vice President

Chadco, Inc.

By: /s/ [unreadable]
Its _____ President

PURCHASER:

Efficiency Lodge, Inc.

By: /s/ W. Ray Barnes
Its _____ President

GUARANTOR

/s/ W. Ray Barnes
W. Ray Barnes

STOCK PURCHASE AGREEMENT
------------------------

1. PARTIES. This Agreement is made between Crown Group, Inc., hereinafter
-------
referred to as "Seller," and Efficiency Lodge, Inc., hereinafter referred to as
"Purchaser."

2. SELLER'S OWNERSHIP OF THE SHARES. Seller owns 100 shares of Home Stay
---------------------------------
Lodge, Inc., a Florida corporation, being all the outstanding shares thereof
(the "Shares").

3. PARTIES' INTENT TO BUY AND SELL. Seller agrees to sell, and Purchaser
--------------------------------
agrees to buy, the Shares on the terms herein set forth.

4. PRICE. Purchaser agrees to purchase the Shares for a price of $7,500.00.
-----

5. CLOSING. The parties agree to complete the sale and purchase provided
-------
for in this Agreement at a closing to be held at location of Seller's choice on
December 1, 1999.

For purposes of this Agreement, the term "time of closing" will be deemed
to be the close of business on the day prior to the day of the closing.

6. DELIVERY OF THE SHARES AT CLOSING. Seller agrees to deliver to Purchaser
---------------------------------
at closing certificates representing the Shares of the Corporation owned by
Seller, free of any liens, properly endorsed

7. PAYMENT OF CONSIDERATION AT CLOSING. Purchaser agrees to deliver to
-------------------------------------
Seller at closing the purchase price in certified funds or wire transfer.

8. SELLERS' REPRESENTATIONS AND WARRANTIES. Seller represents and warrants:
---------------------------------------

a. ORGANIZATION AND POWERS OF THE CORPORATION. The Corporation is, and
will be at the time of closing, legally organized and in good standing under the
laws of Florida.

The Corporation has, and will have at the time of closing, the power
to own its property and carry on its business as it is now being conducted.

b. CAPITALIZATION. The authorized capital stock of the Corporation now,
and at the time of closing, is 1000 shares. One hundred (100) of these shares
are, and will be at the time of closing, validly issued, fully paid, and
nonassessable.

The Corporation does not have, nor will it have at the time of
closing, any obligations or commitments related to its shares which may
require the Corporation to issue any of its authorized shares.

c. LIABILITIES. Seller warrants and represents that the Corporation
will have no liabilities or obligations as of the date of closing. Seller will
indemnify Purchaser up to an amount not in excess of the purchase price of
$7,500.00 for any liabilities or obligations not disclosed in this Agreement
that existed as of the date of closing.

1
<PAGE>

14. MISCELLANEOUS.
-------------

a. SURVIVAL. The parties agree that the representations, warranties and
indemnities contained in this Agreement will survive the closing.

b. BINDING EFFECT. This Agreement will be binding upon and enforceable
by the parties, and their personal representatives or successors.

c. GOVERNING LAW. This Agreement is to be construed and governed
according to the laws of Florida.

d. COUNTERPARTS. This Agreement will be executed simultaneously in one
or more counterparts. Each counterpart will be considered an original and valid
and binding.

e. SIMULTANEOUS CLOSING. This Agreement must close simultaneous with
the purchase of the limited partnership interest by Efficiency Lodge, Inc. from
Crown Group, Inc. and Chadco, Inc.

f. RECORDS. As a condition precedent to closing, Purchaser will execute
at closing the acceptance of records set forth on attached Exhibit "A."

g. AVAILABILITY OF RECORDS. Purchaser, as the sole shareholder of Home
Stay Lodge, Inc., the corporate general partner of Home Stay Lodge I, Ltd.
("Partnership"), hereby agrees on behalf of the Partnership to make available to
Crown Group, Inc. all of the records of the Partnership necessary for Crown
Group, Inc. to file tax returns for the Partnership for the period ending
November 30, 1999, and to comply with all other governmental regulations and
requirements.

h. INSURANCE. The Partnership will obtain new insurance coverage
effective as of December 1, 1999, and any refund of unused insurance premium
shall be distributed by the Partnership to Crown Group, Inc.

i. TRANSITION. Purchaser shall coordinate with the Windham Company to
effectuate a smooth transition of management to Purchaser. Purchaser shall be
responsible for insuring that the general partner of the Partnership promptly
files all documents necessary with the State of Florida to establish the limited
partnership status remains active for all periods commencing after November 30,
1999.

The parties have executed this Agreement on the _____ day of December,
1999.

CROWN GROUP, INC. EFFICIENCY LODGE, INC.

By: /s/ T. J. Falgout By: /s/ W. Ray Barnes
Its Vice President Its _________ President

PROMISSORY NOTE

$5,420,000.00 Pensacola, Florida
May 21, 1998

FOR VALUE RECEIVED, HOME STAY LODGE 1, LTD., a Florida limited partnership,
(hereinafter referred to as "Borrower") promises to pay to the order of BANK OF
PENSACOLA, its successors and assigns (referred to herein, together with any
other holder hereof, as the "Lender"), at 400 West Garden Street, Pensacola,
Florida 32501. or at such other place as the Lender may from time to time
designate, the principal sum of FIVE MILLION FOUR HUNDRED TWENTY AND 00/100
DOLLARS ($5,420,000.00) in lawful money of the United States of America. or so
much of that sum as may be advanced under this Note or pursuant to the Loan
Agreement (hereinafter defined), together with interest thereon from the date of
this Note until this Note is paid in full, said principal and interest being
calculated and payable in the amounts, at the times and upon the terms and
conditions provided in this Note.

1. DEFINITIONS. As used in this Note, the following terms shall have the
indicated meanings:

A. "Loan" shall mean that certain loan made by Lender to Borrower pursuant
to the Loan Agreement, as evidenced by this Note.

B. "Loan Agreement" shall mean that certain Construction and Term Loan
Agreement of even date herewith between Borrower and Lender concerning a loan
from Lender to Borrower in the original principal amount of $5,420,000.00.

C. "Loan Commitment" shall mean that certain loan commitment letter
concerning the Loan dated May 7,1998.

D. "Loan Documents" shall mean, collectively, this Note, the Mortgage, the
Loan Agreement, the Loan Commitment and all other assignments, guaranties and
instruments evidencing, securing or relating to the Loan.

E. "Maturity Date" shall mean February 14, 2004.

F. "Mortgage" shall mean that certain Mortgage and Security Agreement of
even date herewith from Borrower to Lender securing this Note.

G. "Premises" shall mean the real property in Escambia, Florida, described
in and subject to the Mortgage.

2. INTEREST RATE. For the first 270 days of the term of this Note, interest
shall accrue on the outstanding principal balance at the rate of Bank of
Pensacola Prime (as that rate may be adjusted from day to day) plus one-quarter
percent (.25%). For all days during the term of this Note after the first 270
days, interest shall accrue and be payable on the outstanding principal balance
of this Note at the rate of eight and one-half percent (8.5%) per annum.
Interest during the term of this Note shall be computed on the basis of a
360-day year for the actual number of days the principal is outstanding during
each month.

3. PAYMENT. For the first 270 days of this Note, payments of accrued
interest only on the outstanding principal balance of this Note shall be payable
every thirty (30) days, commencing on June 19, 1998, and continuing every thirty
(30) days thereafter. Payments of $47,472.21 (including principal and interest)

<PAGE>

shall be payable monthly commencing on March 14, 1999 and continuing on the
fourteenth day of each succeeding month until the maturity date. On the Maturity
Date, all principal, unpaid accrued interest and other charges hereunder shall
be due and payable in full. Each such payment will be applied first to accrued
but unpaid interest and then to unpaid principal.

4. AFTER-DEFAULT INTEREST. Notwithstanding the foregoing, from and after any
Event of Default under this Note, interest on the outstanding principal balance
shall accrue and be payable at the rate of thirteen and one-half percent
(13.5%).

5. INTEREST LIMITATION. Nothing contained in this Note, the Mortgage, the
Loan Agreement or in any of the Loan Documents shall be construed or shall
operate, either presently or prospectively, to require the Borrower to pay
interest in excess of the maximum interest rate allowable under any statute or
law applicable to this transaction or to make any payments or do any act
contrary to law, nor shall the Borrower be obligated or required to pay interest
on the outstanding principal balance at a rate which could subject Lender to
either civil or criminal liability as a result of being in excess of the maximum
rate which the Borrower is permitted by law to contract, agree to pay or pay.
Any interest paid in excess of the maximum rate allowed by law shall, at
Lender's option, be (i) refunded to the Borrower, (ii) applied to reduction of
the principal balance under this Note, or (iii) credited to amounts then due and
owing by the Borrower under this Note, the Mortgage, the Loan Agreement or any
of the Loan Documents; provided. however. that if the excessive amount of
interest paid by Borrower exceeds the sums outstanding hereunder, the portion
exceeding the sums outstanding hereunder shall be refunded in cash to the
Borrower. Any such crediting or refund shall not cure or waive any Event of
Default by Borrower hereunder or under any of the Loan Documents. Further, if
the terms of this Note would otherwise require or obligate Borrower to pay
interest on the principal balance hereunder at a rate in excess of the maximum
rate allowed by law, then the rate of interest under this Note shall IPSO FACTO
be deemed to be reduced to such maximum lawful rate, and interest payable
hereunder shall be computed at such maximum lawful rate and all payments
theretofore or thereafter accruing hereunder shall be likewise computed on the
basis of such maximum lawful rate. Borrower agrees, however, that in determining
whether or not any interest payable hereunder exceeds the maximum rate allowed
by law, any non-principal payment (except payments specifically stated herein to
be "interest"), including without limitation late charges, shall be deemed, to
the extent permitted by law, to be an expense, fee, premium or penalty rather
than interest.

6. PREPAYMENT.

A. VOLUNTARY PREPAYMENT. Principal outstanding under this Note may be
prepaid in full or in part at any time and from time to time without penalty or
premium. No such partial prepayment of principal will have the effect of
postponing, satisfying, reducing or otherwise affecting any scheduled
installment of interest or principal and interest before the principal of and
interest on this Note, together with all other charges due under the Loan
Documents, are paid in full.

7. LATE CHARGE. If any installment of interest or of any escrow or other
payment required to be made under this Note or any of the Loan Documents (except
for the principal payment due on the Maturity Date) is not received by Lender
within ten (10) days after the date on which the installment or payment became
due, then Borrower shall pay to Lender a late charge equal to five percent (5%)
of such installment or payment amount. Nothing contained herein shall be
construed as creating any grace period or additional grace period for the making
of any such installment or payment.

8. DEFAULT. The occurrence of any of the following shall constitute an Event
of Default under this Note:

A. If Borrower fails to make any monetary payment required by this Note, as
and when due, and such failure continues for a period of five (5) days after
receipt by Borrower of written notice by Lender to Borrower: or

B. If there occurs any other Event of Default under or specified in any of
the Loan Documents.

9. ACCELERATION. Upon the occurrence of any Event of Default as hereinabove
defined, the entire principal balance of this Note, together with all accrued
interest and other sums due hereunder or under the Loan Documents, shall become
immediately due and payable without notice, demand or legal process, at the
option of Lender.

<PAGE>
10. LOAN DOCUMENTS. This Note is referred to in and arises out of the Loan
Agreement, and this Note is secured by, among other instruments, the Loan
Documents. Said Loan Documents contain additional provisions for the
acceleration of the maturity of this Note.

11. ADDITIONAL WAIVERS AND AGREEMENT. With respect to any and all
obligations under this Note or under any of the Loan Documents, Borrower and all
co-signers, sureties, endorsers and guarantors of this Note, hereby:

A. Waive demand, presentment, protest, notice of protest, notice of
dishonor, notice of acceleration of maturity, suit against any party and all
other notices and requirements necessary to charge or hold the Borrower or any
such co-signer, surety, endorser or guarantor on any such obligation;

B. Agree to continue and remain bound for the payment of principal, interest
and all other sums payable hereunder or under any of the Loan Documents,
notwithstanding any change or changes by way of addition, release, surrender,
exchange or substitution of any security for this Note or of any party or
parties liable hereunder or by way of any extension or extensions of time for
the payment of any sums due hereunder or under any of the Loan Documents or any
other changes or modifications to any of the Loan Documents agreed to by
Borrower, and waive all and every kind of notice of such change or changes and
all defenses on the ground of such change or changes and agree that the same may
be made without notice to or consent of any of them;

C. Waive the right to interpose any setoff or counterclaim of any nature or
description (except a setoff or counterclaim directly related to or arising from
the Loan or the Loan Documents) in any litigation in which the Lender and the
Borrower and/or such co-signers, sureties, endorsers and guarantors, or any of
them, shall be parties;

D. Agree that any obligations of Borrower or such co-signers, sureties,
endorsers or guarantors hereunder may, from time to time, in whole or in part,
be renewed, extended, modified, accelerated, compromised, discharged or released
by Lender, and any collateral, lien and right of setoff securing any such
obligations may, from time to time, in whole or in part, be exchanged, sold or
released, all without notice to or further reservations of rights against any of
said parties and all without in any way affecting or releasing the liability of
any of said parties;

E. Agree to pay all filing fees, taxes and all costs of collecting or
securing or attempting to collect or secure any obligations under the Note or
any of the Loan Documents (except for current interest billing), including
without limitation reasonable attorney's fees, whether or not any lawsuit is
filed; and

F. BORROWER AND ALL CO-SIGNERS, SURETIES, ENDORSERS AND GUARANTORS OF THIS
NOTE HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY AGREE THAT:

(1) THEY AND EACH OF THEM HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN
ANY LAWSUIT, PROCEEDING, COUNTERCLAIM, CROSS-CLAIM OR OTHER ACTION OR PROCEEDING
ARISING FROM OR BASED UPON THIS NOTE OR ANY OF THE LOAN DOCUMENTS, AND NEITHER
THE BORROWER, NOR BORROWERS HEIRS, LEGAL REPRESENTATIVES, SUCCESSORS OR ASSIGNS,
NOR ANY CO-SIGNER, SURETY, GUARANTOR, ENDORSER OR OTHER OBLIGOR OBLIGATED FOR
THE INDEBTEDNESS EVIDENCED BY THIS NOTE, OR SUCH PERSON'S OR ENTITY'S HEIRS,
LEGAL REPRESENTATIVES, SUCCESSORS OR ASSIGNS, SHALL SEEK A JURY TRIAL IN ANY
LAWSUIT, PROCEEDING, COUNTERCLAIM, CROSS-CLAIM OR OTHER ACTION OR PROCEEDING
ARISING FROM OR BASED UPON THIS NOTE OR ANY OF THE LOAN DOCUMENTS.

(2) NEITHER THE BORROWER, NOR BORROWERS HEIRS. LEGAL REPRESENTATIVES,
SUCCESSORS OR ASSIGNS, NOR ANY CO-SIGNER, SURETY, GUARANTOR, ENDORSER OR OTHER
OBLIGOR OBLIGATED FOR THE INDEBTEDNESS EVIDENCED BY THIS NOTE, NOR SUCH PERSON'S
OR ENTITY'S HEIRS, LEGAL REPRESENTATIVES, SUCCESSORS OR ASSIGNS, SHALL SEEK TO
CONSOLIDATE ANY CLAIM AS TO WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY CLAIM IN
WHICH A JURY TRIAL HAS NOT BEEN OR CANNOT BE WAIVED.

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<PAGE>

(3) THE PROVISIONS OF THIS SUBSECTION (F) HAVE BEEN FULLY NEGOTIATED BY
LENDER, BORROWER AND ANY AND ALL CO-SIGNERS, SURETIES, GUARANTORS, ENDORSERS AND
OTHER OBLIGORS OBLIGATED FOR THE INDEBTEDNESS EVIDENCED BY THIS NOTE, AND THESE
PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS.

(4) NEITHER LENDER NOR ANY OFFICER, EMPLOYEE, ATTORNEY, AGENT OR OTHER
REPRESENTATIVE OF LENDER HAS IN ANY WAY AGREED WITH OR REPRESENTED TO BORROWER,
OR ANY CO-SIGNER, SURETY, GUARANTOR, ENDORSER OR ANY OTHER PARTY OBLIGATED FOR
THE INDEBTEDNESS EVIDENCED BY THIS NOTE THAT THE PROVISIONS OF THIS SUBSECTION
(F) WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.

(5) THIS SUBSECTION (F) IS A MATERIAL INDUCEMENT FOR LENDER TO ENTER
INTO THE LOAN AND OTHER TRANSACTIONS EVIDENCED BY THIS NOTE AND THE LOAN
DOCUMENTS.

12. MISCELLANEOUS.

A. All amounts payable under this Note are payable in lawful money of the
United States at the main office of the Lender in Pensacola, Florida. A check
shall constitute payment when actually received by Lender, provided it is
subsequently honored and collected in the ordinary course of business without
having been returned to Lender for insufficient funds or other reasons. Any
payment received by Lender after 2:00 p.m., Pensacola, Florida, time on any day
shall be deemed to have been received by Lender on the next succeeding day which
is not a Saturday, Sunday or legal holiday under the laws of the State of
Florida or the United States of America.

B. Lender may, but shall not be required to, apply, on or after maturity,
to the payment of this debt, any funds or credit held by Lender on deposit, in
trust or otherwise, for the account of the Borrower or of any co-signer, surety,
endorser or guarantor hereof.

C. As used herein, the singular shall be deemed to include the plural and
vice versa, and each gender shall be deemed to include all other genders, unless
a contrary intention clearly appears. If the Borrower consists of more than one
person or entity, the obligations and liabilities of each such person or entity
hereunder shall be joint and several.

D. Lender shall not by any act, delay, omission or otherwise be deemed to
have waived any of its rights or remedies, and no waiver of any kind nor any
modification of this Note shall be valid unless in writing and signed by Lender.
All rights and remedies of Lender under the terms of this Note, the Loan
Documents and any statutes or rules of law shall be cumulative and may be
exercised successively or concurrently. Borrower agrees that Lender shall be
entitled to all the rights of a holder in due course of a negotiable instrument.

E. This Note has been executed and delivered in the State of Florida, is to
be performed in the State of Florida, and shall be governed by and construed in
accordance with the laws of the State of Florida.

F. If any provision of this Note shall be unenforceable or invalid under
applicable law, then the remaining provisions of this Note shall not be affected
thereby but shall remain in full force and effect.

G. The Borrower shall be liable for all indebtedness represented by this
Note and has subscribed its name hereto without condition that anyone else
should sign or become bound hereon and without any other condition whatever
being made. The provisions of this Note are binding on, and shall inure to the
benefit of, the Borrower and the. heirs, executors, administrators, assigns and
successors of the Borrower.

H. All notices and other communications required hereunder shall be in
writing and shall be delivered personally, or by registered or certified mail,
return receipt requested, postage prepaid, or by Federal Express, Express Mail
or Air Courier, fees prepaid. Such notices shall be deemed to have been received
(i) upon delivery, if personally delivered; (ii) upon the earlier of actual

4
<PAGE>

receipt or the fourth day after mailing, if mailed by registered or certified
mail, return receipt requested, postage prepaid; and (iii) on the next business
day if sent by Federal Express, Express Mail or Air Courier, fees prepaid. The
address for delivery of such notices shall be as follows:

(a) To Lender at: BANK OF PENSACOLA

400 West Garden Street
Pensacola, Florida 32501
Attn: Ashley H. Schubert, Jr.

with copy to: Charles L. Hoffman, Jr., of
Shell, Fleming, Davis & Menge
Post Office Box 1831
Pensacola, Florida 32598-1831

(b) To Borrower at: HOME STAY LODGE I, LTD.
4040 North McArthur Boulevard, Suite 100
Irving, Texas 75038
Attn: Edward R. McMurphy

with copy to: Tilman J. "Skip" Falgout, III
4040 North McArthur Boulevard, Suite 100
Irving, Texas 75038

In Witness Whereof, Borrower has caused this instrument to be executed in
its name by its duly authorized officer with an effective date as of the date
and year first above written.

HOME STAY LODGE I, LTD., a Florida
limited partnership

By: Home Stay Lodge, Inc.

By: /s/ Edward R. McMurphy
Its: President

Its Sole General Partner

STATE OF FLORIDA

COUNTY OF ESCAMBIA

The foregoing instrument was acknowledged before me this 21st day of May
1998, by Edward R. McMurphy the President of Home Stay Lodge, Inc., a Florida
corporation, the sole general partner of HOME STAY LODGE I, LTD., a Florida
limited partnership, on behalf of said partnership ( ) who is personally known
to me or (x) who produced Texas driver license as identification.

/s/ Charles L. Hoffman, Jr.
NOTARY PUBLIC - STATE OF FLORIDA
Typed Name: Charles L. Hoffman, Jr.
My Commission Expires: 02-28-01

UNCONDITIONAL AND IRREVOCABLE GUARANTY OF PAYMENT

DATE: DECEMBER 1, 1999

PRINCIPAL: HOME STAY LODGE I, LTD.

LENDER: BANK OF PENSACOLA

GUARANTOR: EFFICIENCY LODGE, INC., A GEORGIA CORPORATION

NOTE: THAT CERTAIN PROMISSORY NOTE DATED AS OF MAY 21, 1998 MADE BY
PRINCIPAL IN FAVOR OF LENDER IN THE TOTAL PRINCIPAL AMOUNT OF
$5,420,000.00 (THE "NOTE").

In consideration of the sum of Ten Dollars ($10.00) cash in hand paid and
other valuable considerations, as well as for the purpose of seeking to induce
Lender to release existing guarantors of the Note from Principal to Lender, the
undersigned (herein called the "undersigned" or "Guarantor") does hereby
irrevocably guarantee to Lender and to Lender's endorsees, transferees,
successors or assigns of either this Unconditional and Irrevocable Guaranty of
Payment ("Guaranty") or any of the obligations secured hereunder, or both, the
prompt payment of all amounts due under the Note given by Principal and payable
to Lender, including any renewals, modifications or extensions thereof; and the
prompt payment and performance of all sums and other obligations which may
hereafter become due from Principal to Lender under the terms of any other
instrument or document made on the date hereof between Lender and Principal with
respect to the Note or the loan evidenced by the Note or any documents security
the Note (including any modifications or amendments thereof, herein called the
"Security Documents"). The undersigned does further agree that if the Note is
not paid by Principal in accordance with its terms, or if all sums and other
obligations which may hereafter become due from Principal to Lender under the
Security Documents are not paid and performed by Principal in accordance with
the respective terms of each, the undersigned will immediately make the payments
required and perform the obligations of Principal thereunder.

The undersigned agrees to pay all costs of collection and reasonable
attorney's fees (including attorney's fees incurred in negotiations and trial
and appellate proceedings) incurred by Lender in enforcing or attempting to
enforce this Guaranty.

The obligations covered by this Guaranty include all obligations of
Principal under the Note and the Security Documents, either now existing or
hereafter coming into existence, and any renewals, modifications, amendments or
extensions, in whole or in part, together with all damages, losses, costs,
interest charges, expenses, including attorney's fees and liabilities of every
kind, nature and description, suffered or incurred by Lender arising in any
manner out of, or in any way connected with or growing out of the Note or the
Security Documents. This Guaranty shall cover all obligations to Lender
purporting to be made on behalf of Principal by any officer or agent of
Principal, without regard to the actual authority of such officer or agent.

The undersigned hereby consents and agrees that Lender may at any time,
either with or without consideration, surrender any property or other security
of any kind or nature whatsoever held by Lender or by any person, firm or

1
<PAGE>

corporation on Lender's behalf or for Lender's account securing any indebtedness
or liability covered by this Guaranty, or substitute for any collateral so held,
other collateral of like or of any kind, modify the terms of the Note or any of
the Security Documents, without notice to or further consent from the
undersigned, and such surrender, substitution or modification shall not in any
way affect the liability of the undersigned hereunder.

The undersigned hereby consents and agrees that Lender may at any time,
either with or without consideration, release any endorser of the Note or any
guarantor of the Note or any of the Security Documents, without notice to or
further consent from the undersigned, and such release shall not in any way
affect the liability of the undersigned hereunder. The undersigned agrees that
no act or omission on the part of Lender shall in any way affect or impair this
Guaranty. The undersigned further waives notice of the acceptance of this
Guaranty, or of any default by Principal.

At the option of Lender, this agreement may be treated as a guaranty or as a
suretyship. In any event, Lender shall have the right to proceed against the
undersigned without first proceeding against Principal or any property securing
payment of the Note, or any of the Security Documents, or any other guarantor or
endorser of the Note.

The undersigned acknowledges receipt of good, valuable and sufficient
consideration for his making of this Guaranty and subjects his property to this
Guaranty and hereby expressly agrees that recourse may be had against such
separate property for all his obligations hereunder.

The undersigned hereby waives and agrees not to assert or take advantage of
(a) any right to require Lender to proceed against Principal or any other person
or to exhaust any security held by Lender or to pursue any other remedy in
Lender's power before proceeding against the undersigned; (b) any defense
arising by virtue of (i) the lack of authority, death or disability of any other
party, or revocation hereof by any other party or (ii) the failure of Lender to
file or enforce a claim of any kind; (c) notice of the existence, creation or
incurring of any new or additional indebtedness, or obligation or any action or
non-action on the part of Principal, Lender, any endorser, any guarantor under
this or any other instrument, any creditor of Principal, or any other person
whomsoever, in connection with any obligation or evidence of indebtedness held
by Lender as collateral or in connection with any indebtedness or any obligation
hereby guaranteed; (d) any defense based upon an election of remedies by Lender,
including without limitation, an election to proceed by nonjudicial rather than
judicial foreclosure, which destroys or otherwise impairs the subrogation rights
of the undersigned or the right of the undersigned to proceed against Principal
for reimbursement, or both, and (e) any duty on the part of Lender to disclose
to the undersigned any facts which Lender may now or hereafter know about
Principal, regardless of whether Lender has reason to believe that any such
facts materially increase the risk beyond that, which the undersigned intends to
assume or has reason to believe that such facts are unknown to the undersigned
or has a reasonable opportunity to communicate such facts to the undersigned, it
being understood and agreed that the undersigned is fully responsible for being,
and keeping informed of the financial condition of Principal and of all
circumstances bearing on the risk or nonpayment of all obligations hereby
guaranteed.

The undersigned hereby waives any right or claim of right to cause a
marshalling of any of Principal's assets or the assets of any other party now or
hereinafter held as security for the Note.

In case of the death, incompetence, disability, dissolution, liquidation or
insolvency of the Principal, or in case of any bankruptcy, reorganization,
arrangement, adjustment, composition or other proceeding under any bankruptcy or

2
<PAGE>

insolvency laws instituted by or against Principal or in the event any
receivership proceeding is instituted by or against Principal, the obligations
covered by this Guaranty shall immediately become due and payable by the
undersigned without notice to or further consent from the undersigned.

The undersigned will not assert any right to which it may be or become
entitled, whether by subrogation, contribution or otherwise, against the
Principal or any of the other guarantors, or against any of their respective
properties, by reason of the performance by the undersigned of his obligations
under this agreement, except after payment in full of all amounts (including
costs and expenses) which may be or become payable in respect of or under the
Note and the Security Documents.

The undersigned hereby subordinates any and all indebtedness of Principal
now or hereafter owed to the undersigned, to all indebtedness of Principal to
Lender and agrees with Lender that the undersigned shall not demand or accept
any payment of principal or interest from Principal; shall not claim any offset
or other reduction of the undersigned's obligations hereunder because of such
indebtedness and shall not take any action to obtain any of the security
described in and encumbered by the Security Documents.

The undersigned represents and warrants to Lender that the financial
statements furnished to Lender are true and correct in all material aspects;
have been prepared in accordance with generally accepted accounting practices;
fairly present the financial condition of the subjects thereof as of the
respective dates thereof; and no material adverse changes have occurred in the
financial conditions reflected therein since the respective dates thereof. The
undersigned further represents and warrants that the undersigned is not
insolvent and will not be rendered insolvent by the execution and delivery of
this Guaranty.

THE UNDERSIGNED HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY, WITH RESPECT TO ANY LITIGATION OR LEGAL
PROCEEDINGS BASED ON, OR ARISING OUT OF THE NOTE, MORTGAGE, GUARANTY OR OTHER
LOAN DOCUMENTS, INCLUDING ANY COURSE OF CONDUCT, COURSE OF DEALINGS, VERBAL OR
WRITTEN STATEMENTS, OR ACTIONS OR OMISSIONS OF ANY PARTY WHICH IN ANY WAY
RELATES TO THE LOAN. THE PARTIES HERETO HAVE SPECIFICALLY DISCUSSED AND
NEGOTIATED THIS WAIVER AND UNDERSTAND THE LEGAL CONSEQUENCES OF THIS PARAGRAPH.

This Guaranty is irrevocable. This Guaranty and all obligations of the
undersigned hereunder shall terminate and cease only at the time Lender receives
payment in full of all sums payable to it by Principal under the Note and the
Security Documents.

The undersigned agrees that this Guaranty shall inure to the benefit of and
may be enforced by Lender or Lender's endorsees, transferees, successors and
assigns, and shall be binding upon and enforceable against the undersigned and
its legal representatives, heirs, successors and/or assigns.

This Guaranty shall be governed by the laws of the State of Florida and the
undersigned hereby consents to the jurisdiction of the courts of such
jurisdiction and to being sued therein. The venue of any action brought
hereunder shall be, at the election of Lender, in Escambia County, Florida, and
the undersigned hereby specifically submits to said venue and to the
jurisdiction of the courts of such jurisdiction, expressly waiving the right to
seek jurisdiction or venue in any other county or state.

3
<PAGE>

Notwithstanding anything to the contrary contained in this Guaranty or in
the Note or the Security Documents, it is the intent of the parties that any
interest for which the undersigned is obligated hereunder shall not exceed the
maximum amount of interest permitted to be enforced against the undersigned
under the governing law specified above.

This Guaranty may be executed in one or more counterparts, each of which
shall be deemed an original. Each counterpart shall constitute but one and the
same instrument and shall be binding upon each of the undersigned individually
and as fully and completely as if all had signed but one instrument so that the
joint and several liability of each of the undersigned hereunder shall be
unaffected by the failure of any of the other guarantors to execute any
counterparts of this Guaranty.

IN WITNESS WHEREOF, the undersigned has executed and delivered this
instrument under seal effective as of the date first above written.

Witnesses EFFICIENCY LODGE, INC.

Stephen B. Shell By /s/ W. Ray Barnes_
W. Ray Barnes, President

/s/ Pamela J. Henry

STATE OF FLORIDA

COUNTY OF ESCAMBIA

The foregoing instrument was acknowledged before me this 1st day of
December, 1999, by W. Ray Barnes, President of Efficiency Lodge, Inc., on behalf
of said corporation, who is personally known to me or who produced a
Georgia drivers license.

/s/ Stephen B. Shell
Stephen B. Shell
NOTARY PUBLIC-STATE OF FLORIDA
My Commission Expires: 1/27/01

UNCONDITIONAL AND IRREVOCABLE GUARANTY OF PAYMENT

DATE: DECEMBER 1, 1999

PRINCIPAL: HOME STAY LODGE I, LTD.

LENDER: BANK OF PENSACOLA

GUARANTOR: W. RAY BARNES

NOTE: THAT CERTAIN PROMISSORY NOTE DATED AS OF MAY 21, 1998 MADE BY
PRINCIPAL IN FAVOR OF LENDER IN THE TOTAL PRINCIPAL AMOUNT OF
$5,420,000.00 (THE "NOTE").

In consideration of the sum of Ten Dollars ($10.00) cash in hand paid and
other valuable considerations, as well as for the purpose of seeking to induce
Lender to release existing guarantors of the Note from Principal, the
undersigned (herein called the "undersigned" or "Guarantor") does hereby
irrevocably guarantee to Lender and to Lender's endorsees, transferees,
successors or assigns of either this Unconditional and Irrevocable Guaranty of
Payment ("Guaranty") or any of the obligations secured hereunder, or both, the
prompt payment of all amounts due under the Note given by Principal and payable
to Lender, including any renewals, modifications or extensions thereof; and the
prompt payment and performance of all sums and other obligations which may
hereafter become due from Principal to Lender under the terms of any other
instrument or document made on the date hereof between Lender and Principal with
respect to the Note or the loan evidenced by the Note or any documents security
the Note (including any modifications or amendments thereof, herein called the
"Security Documents"). The undersigned does further agree that if the Note is
not paid by Principal in accordance with its terms, or if all sums and other
obligations which may hereafter become due from Principal to Lender under the
Security Documents are not paid and performed by Principal in accordance with
the respective terms of each, the undersigned will immediately make the payments
required and perform the obligations of Principal thereunder.

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<PAGE>

The undersigned hereby waives any right or claim of right to cause a
marshalling of any of Principal's assets or the assets of any other party now or
hereinafter held as security for the Note.

2
<PAGE>

3
<PAGE>

IN WITNESS WHEREOF, the undersigned has executed and delivered this
instrument under seal effective as of the date first above written.

EFFICIENCY LODGE, INC.
Witnesses

/s/ Stephen B. Shell By: /s/ W. Ray Barnes
W. Ray Barnes, President

/s/ Pamela J. Henry

STATE OF FLORIDA

COUNTY OF ESCAMBIA

The foregoing instrument was acknowledged before me this 1st day of
December, 1999, by W. Ray Barnes, who is personally known to me or who produced
a Georgia drivers license.

/s/ Stephen B. Shell
Stephen B. Shell
NOTARY PUBLIC-STATE OF FLORIDA
My Commission Expires: 1/27/01

PROMISSORY NOTE
Crown Group, Inc. and Chadco, Inc.
(Hereinafter called "Lender")

Dallas County, Texas December 1, 1999
$797,040.83

FOR VALUE RECEIVED, the undersigned promises to pay to Crown Group, Inc. and
Chadco, Inc., or order, the principal sum of Seven Hundred and Ninety Seven
Thousand Forty and 83/100 Dollars ($791,040.83) with interest from date at the
rate set forth below on the balance from time to time remaining unpaid. The said
principal and interest shall be payable in lawful money of the United States of
America at 4040 North McArthur Boulevard, Suite 100, Irving, Texas 75038, or at
such place as may hereafter be designated by written notice from the holder to
the maker hereof. The undersigned also agrees to comply with all of the
following provisions of this Note.

(1) Principal and interest payments of Sixteen Thousand Seven Hundred Thirty
Eight And 51/100 Dollars ($16,738.51) shall be paid monthly, commencing on
January 1, 2000, and continuing on the first day of each consecutive month
thereafter. The entire principal balance plus accrued interest will become due
and payable in full on December 1, 2004.

(2) Interest shall accrue at the rate of consensus New York Prime plus 1%
adjusted on March 1, June 1, September 1 and December 1 during each year for the
term of this Note. Interest shall be calculated on the basis of a 365 day year
for the entire term of this Note.

(3) If any installment of principal, interest, or any portion thereof is not
paid within fifteen (15) days from the date said installment shall be due, a
late payment charge of five cents (.05) per dollar on any amount so overdue may
be charged by Lender for the purpose of defraying the expense of handling such
delinquent payments. The collection of such late charges shall in no way limit
the right of Lender to exercise its right to indicate a default hereunder in
accordance with the terms and conditions set forth herein.

(4) This Note with interest is not secured.

(5) If default be made in the payment of any of the sums or interest
mentioned herein, or if of all or any portion of the two parcels of real
property owned by Home Stay Lodge I, Ltd. are sold or conveyed by Home Stay
Lodge I, Ltd. to an entity that is not affiliated with or related to Home Stay
Lodge I, Ltd., then the entire principal sum and accrued interest shall at the
option of the holder hereof become at once due and collectible without notice,
time being of the essence. Failure to exercise this option shall not constitute
a waiver of the right to exercise the same in the event of any subsequent
default. Lender shall provide at least 15 days' written notice to maker of any
default hereunder prior to proceeding with any legal action hereunder.

(6) No waiver by Lender or other holder of this note of any default shall
operate as a waiver of any other default or the same default on a future
occasion. No modification that may be granted or consented to by the Lender with
regard to the time of payment or with respect to any other provisions of this
Note or any delay or omission on the part of Lender in enforcing the terms
hereof shall operate as a waiver, or otherwise affect, its right to enforce the
terms hereof or to avail itself of any remedy with respect hereto.

(7) This Note may not be changed, modified or discharged, in whole or in
part, and no right or remedy of the Lender hereunder or under any other
agreement may be waived except by written agreement signed by the Lender
effective only in the specific instance for which given. The terms and
provisions of this Note shall survive the payment, renewal, extension,
cancellation or surrender of this Note.
<PAGE>

(8) Each person liable hereon whether maker or endorser, hereby waives
presentment, protest, notice (except as aforesaid), notice of protest and notice
of dishonor and agrees to pay all costs, including reasonable attorneys fees,
whether suit be brought or not, if, after maturity of this Note or default
hereunder, counsel shall be employed to collect this Note.

(9) This Note has been delivered in the State of Texas, but shall be
construed in accordance with the laws of the State of Florida. 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 remaining provisions of this Note. Venue for any legal
proceeding related to the enforcement of this Note or otherwise shall be in
state court in Escambia County, Florida.

(10) In no event shall interest hereon ever be charged, paid, collected or
received at a rate in excess of the maximum non-usurious rate from time to time
permitted by applicable Federal or Florida law, whichever shall permit the
higher lawful rate (the "Highest Lawful Rate"). If the interest rate provided
for elsewhere herein (the "Stated Rate") at any time would exceed the Highest
Lawful Rate but for the limitation contained herein, the actual rate of interest
to accrue on the unpaid amount of this Note shall be limited to the Highest
Lawful Rate.

If for any reason whatsoever, the interest paid on this Note shall exceed
the Highest Lawful Rate, the owner or holder of this Note shall refund to the
Maker or, at the option of such holder, credit on the principal hereof such
portion of said interest as may be necessary to cause the interest paid on this
Note to equal the Highest Lawful Rate. All sums paid or agreed to be paid to the
holder or holders hereof for the use, forbearance or detention of the
indebtedness evidenced hereby shall, to the extent permitted by applicable law
be amortized, prorated, allocated and spread throughout the full term of this
Note.

(11) Whenever used herein the terms "holder," "maker and "payee" shall be
construed in the singular or plural as the context may require or admit.

SIGNED, SEALED, and DELIVERED by the undersigned on the date first above
written, who also acknowledge that the loan evidenced herewith is for commercial
purposes only and not for personal, family or household purposes.

THIS NOTE MAYBE PREPAID IN FULL,
OR IN PART, WITHOUT PENALTY.

EFFICIENCY LODGE, INC.

By /s/ W. Ray Barnes
Its ________ President

UNCONDITIONAL AND IRREVOCABLE GUARANTY OF PAYMENT
-------------------------------------------------

DATE: DECEMBER 1, 1999

PRINCIPAL: EFFICIENCY LODGE, INC.

LENDER: CROWN GROUP, INC. AND CHADCO, INC.

GUARANTOR: W. RAY BARNES

NOTE: THAT CERTAIN PROMISSORY NOTE DATED AS OF DECEMBER 1, 1999, MADE
BY PRINCIPAL IN FAVOR OF LENDER IN THE TOTAL PRINCIPAL AMOUNT OF
$797,040.83 (THE "NOTE").

In consideration of the sum of Ten Dollars ($10.00) cash in hand paid and
other valuable considerations, as well as for the purpose of seeking to induce
Lender to extend or renew credit to Principal, the undersigned (herein called
the "undersigned" or "Guarantor") does hereby irrevocably guarantee to Lender
and to Lender's endorsees, transferees, successors or assigns of either this
Unconditional and Irrevocable Guaranty of Payment ("Guaranty") or any of the
obligations secured hereunder, or both, the prompt payment of all amounts due
under the Note given by Principal and payable to Lender, including any renewals,
modifications or extensions thereof. The undersigned does further agree that if
the Note is not paid by Principal in accordance with its terms, the undersigned
will immediately make the payments required and perform the obligations of
Principal thereunder.

The undersigned further waives notice of the acceptance of this Guaranty, or
of any default by Principal, except that Principal shall give 15 days written
notice to Guarantor prior to initiating legal action hereunder.

Lender shall have the right to proceed against the undersigned without first
proceeding against Principal or any property securing payment of the Note.

The undersigned acknowledges receipt of good, valuable and sufficient
consideration for his making of this Guaranty.

The undersigned hereby waives any right or claim of right to cause a
marshalling of any of Principal's assets or the assets of any other party now or
hereinafter held as security for the Note.

In case of the dissolution, liquidation or insolvency of the Principal, or
in case of any bankruptcy, reorganization, arrangement, adjustment, composition
or other proceeding under any bankruptcy or insolvency laws instituted by or
against Principal or in the event any receivership proceeding is instituted by
or against Principal, the obligations covered by this Guaranty
shall immediately become due and payable by the undersigned without notice to or
further consent from the undersigned.

<PAGE>
The undersigned will not assert any right to which it may be or become
entitled, whether by subrogation, contribution or otherwise, against the
Principal, except after payment in full of all amounts (including costs and
expenses) which may be or become payable in respect of or under the Note.

This Guaranty shall be governed by the laws of the State of Florida and the
undersigned hereby consents to the jurisdiction of the courts of such
jurisdiction and to being sued therein. The venue of any action brought
hereunder shall be, at the election of Lender, in state court in Escambia
County, Florida, and the undersigned hereby specifically submits to said venue
and to the jurisdiction of the courts of such jurisdiction, expressly waiving
the right to seek jurisdiction or venue in any other county or state.

Notwithstanding anything to the contrary contained in this Guaranty or in
the Note, it is the intent of the parties that any interest for which the
undersigned is obligated hereunder shall not exceed the maximum amount of
interest permitted to be enforced against the undersigned under the governing
law specified above.

IN WITNESS WHEREOF, the undersigned has executed and delivered this
instrument under seal effective as of the date first above written.

/s/ W. Ray Barnes
W. Ray Barnes

STATE OF GEORGIA

COUNTY OF COBB

The foregoing instrument was acknowledged before me this 1st day of
December, 1999, by W. Ray Barnes, who is personally known to me.

/s/ Leo W. Clifton, Jr.
(SEAL) NOTARY PUBLIC

My Commission Expires: December 28, 2000