EXHIBIT 10.33
[CONFORMED COPY]
FORBEARANCE AGREEMENT
FORBEARANCE AGREEMENT dated as of October 17, 2001 with respect to the
Credit Agreement dated July 23, 1999 (as heretofore amended, the "CREDIT
AGREEMENT") among Lodgian Financing Corp. (the "BORROWER"), Lodgian, Inc. (the
"PARENT"), Impac Hotel Group LLC, Servico, Inc., the affiliate Guarantors party
thereto, the Lenders party thereto (the "LENDERS"), Morgan Stanley Senior
Funding, Inc., as Administrative Agent (the "ADMINISTRATIVE AGENT"), Collateral
Agent, Co-Lead Arranger, Joint Book Manager and Syndication Agent, Lehman
Brothers Inc., as Co-Lead Arranger and Joint-Book Manager and Lehman Commercial
Paper Inc., as Documentation Agent (collectively with the Administrative Agent,
the "AGENTS").
W I T N E S S E T H :
WHEREAS, the Borrower has advised the Agents that it does not believe it
will be in compliance with Sections 5.04(b) and 5.04(c) of the Credit Agreement
for the period ended September 30, 2001, thereby resulting in an Event of
Default under Section 6.01(c) of the Credit Agreement (the "SPECIFIED
DEFAULTS"); and
WHEREAS, the Agents and the Lenders have agreed to forbear from exercising
certain default-related remedies against the Borrower under the Loan Documents
on account of the Specified Defaults for a limited period of time and upon the
terms and conditions set forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Defined Terms; References. Unless otherwise specifically
defined herein, each term used herein which is defined in the Credit Agreement
has the meaning assigned to such term in the Credit Agreement.
SECTION 2. Forbearance. (a) The Agents and the Lenders agree that until the
expiration of the Forbearance Period, the Agents and the Lenders will
temporarily forbear from the exercise of their default-related remedies against
the Borrower or any other Loan Party solely to the extent the availability of
such remedies arises exclusively from the Specified Defaults; provided that the
Borrower shall comply during the Forbearance Period with all provisions,
limitations, restrictions or prohibitions that would otherwise be effective or
applicable under any of the
Loan Documents during the continuance of any Default or Event of Default.
"FORBEARANCE PERIOD" means the period beginning on the Effective Date (as
defined in Section 10 below) and ending on the earliest to occur of (any such
occurrence being a "TERMINATION EVENT"): (i) November 30, 2001, (ii) the
occurrence of any Default other than a Specified Default, (iii) the commencement
by any holder of Debt of the Borrower or any of its Subsidiaries (or by any
indenture trustee or agent therefor), other than (x) Debt outstanding under the
Loan Documents and (y) Debt held by no more than two entities in an aggregate
principal amount not in excess of $500,000, of the exercise of any remedy or the
taking by any such party of any other action in furtherance of collection or
enforcement of any claim or Lien against the Borrower, any such Subsidiary or
any of their respective assets or (iv) failure by the Borrower to comply with
any of its obligations under this Agreement.(b) Upon a Termination Event, the
agreement of the Agents and the Lenders hereunder to forbear from exercising
their default-related remedies shall immediately terminate without the
requirement of any demand, presentment, protest or notice of any kind, all of
which the Borrower waives. The Borrower agrees that the Agents and the Lenders
may at any time thereafter proceed to exercise any and all of their respective
rights and remedies under any or all of the Loan Documents and/or applicable
law, including, without limitation, their respective rights and remedies in
connection with any or all of the Defaults, including, without limitation, the
Specified Defaults.
(c) Any agreement to extend the Forbearance Period must be set forth in
writing and signed by the Agents and the Required Lenders.
(d) THE BORROWER ACKNOWLEDGES AND AGREES THAT THE AGREEMENT OF THE AGENTS
AND THE LENDERS HEREUNDER (I) TO FORBEAR FROM EXERCISING THEIR DEFAULT-RELATED
REMEDIES WITH RESPECT TO THE SPECIFIED DEFAULTS AND (II) TO PERMIT THE MAKING OF
THE PERMITTED BORROWING (AS DEFINED BELOW) AND THE ISSUANCE OF THE PERMITTED
LETTERS OF CREDIT (AS DEFINED BELOW), SHALL NOT CONSTITUTE A WAIVER OF SUCH
SPECIFIED DEFAULTS AND THAT THE AGENTS AND THE LENDERS EXPRESSLY RESERVE ALL
RIGHTS AND REMEDIES THAT THE AGENTS AND THE LENDERS NOW OR MAY IN THE FUTURE
HAVE UNDER ANY OR ALL OF THE LOAN DOCUMENTS AND/OR APPLICABLE LAW IN CONNECTION
WITH ALL DEFAULTS AND EVENTS OF DEFAULT (INCLUDING WITHOUT LIMITATION THE
SPECIFIED DEFAULTS).
SECTION 3. Permitted Single Working Capital Borrowing and L/C Rollovers.
Notwithstanding the occurrence and continuation of the Specified Defaults, the
Borrower shall be permitted, subject to the other terms and conditions of the
Credit Agreement and solely upon the effectiveness of this Agreement, (i) to
make one Working Capital Borrowing on the Effective Date in an aggregate
principal amount not to exceed $2,000,000 (the "PERMITTED
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BORROWING") and (ii) solely with respect to Letters of Credit that are
outstanding on the Effective Date, to renew such Letters of Credit on the same
terms (including without limitation amount but excluding expiration date) and to
replace any such Letters of Credit that by their current terms expire with new
Letters of Credit having the same terms (including without limitation amount but
excluding expiration date) and for the same purposes (such new Letters of
Credit, together with such renewed Letters of Credit, the "PERMITTED LETTERS OF
CREDIT"). Other than the making of the Permitted Borrowing and the issuance of
the Permitted Letters of Credit, the Borrower shall not have the right to obtain
and no Lender shall have any obligation to make, issue or renew, any Advance or
any Letter of Credit or any other extension of credit under the Credit Agreement
or any other Loan Document, without the prior written consent of the Required
Lenders.
SECTION 4. General Release. In consideration of, among other things, the
forbearance provided for herein and the receipt of the proceeds of the Permitted
Borrowing and the issuance of the Permitted Letters of Credit, the Parent and
the Borrower, on behalf of itself and their respective Subsidiaries and its and
their successors and assigns (collectively, "RELEASORS"), hereby forever waives,
releases and discharges to the fullest extent permitted by law any and all
claims (including, without limitation, crossclaims, counterclaims, rights of
set-off and recoupment), causes of action, demands, suits, costs, expenses and
damages (collectively, the "CLAIMS"), that any Releasor now has or hereafter may
have, of whatsoever nature and kind, whether known or unknown, whether now
existing or hereafter arising, whether arising at law or in equity, against any
or all of the Agents and any Lender and their respective affiliates,
shareholders and "controlling persons" (within the meaning of the federal
securities laws), and their respective successors and assigns and each and all
of the officers, directors, employees, agents, attorneys and other
representatives of each of the foregoing (collectively, the "RELEASEES"), based
in whole or in part on facts, whether or not now known, existing on or before
the execution of this Agreement, except for Claims solely arising out of the
gross negligence or wilful misconduct of any Releasees (the "EXCLUDED CLAIMS").
Acceptance by the Borrower of any Working Capital Advances or other financial
accommodations made by the Agents or any Lender after the date hereof
(including, without limitation, the accommodations contained in this Agreement)
shall constitute a ratification, adoption and confirmation by Releasors of the
foregoing general release of all Claims other than the Excluded Claims against
any Releasee which are based in whole or in part on facts, whether or not now
known or unknown, existing on or prior to the date of receipt of any such
Working Capital Advances or other financial accommodations. In entering into
this Agreement, the Borrower has consulted with and been represented by counsel
and expressly disclaims any reliance on any representations, acts or omissions
by any of the Releasees and
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hereby agrees and acknowledges that the validity and effectiveness of the
release set forth above do not depend in any way on any such representations,
acts and/or omissions or the accuracy, completeness or validity thereof. The
provisions of this Section shall survive the termination of the Credit Agreement
and the other Loan Documents and payment in full of all amounts owing
thereunder.
SECTION 5. Representations and Covenants of Borrower. (a) The Borrower
represents and warrants that (i) the representations and warranties of the Loan
Parties set forth in the Credit Agreement and the other Loan Documents will be
true on and as of the Effective Date (assuming for such purposes that this
Agreement constitutes a Loan Document) and (ii) no Default or Event of Default
will have occurred and be continuing on such date, other than the Specified
Defaults. The Borrower confirms that the Credit Agreement and the other Loan
Documents are in full force and effect.
(b) In addition to the restrictions set forth in the Credit Agreement with
respect to Capital Expenditures, the Borrower will not make, and will not permit
any of its Subsidiaries to make, any Capital Expenditures other than (i) Capital
Expenditures with respect to Hotel Collateral, (ii) Capital Expenditures that
have been commenced prior to the Effective Date, (iii) Capital Expenditures that
are financed solely with funds that have been segregated in an escrow account
for the sole purpose of financing such Capital Expenditures or with cash flow so
long as such cash flow will be reimbursed in full with funds on deposit in any
such escrow account; provided that no Capital Expenditures shall be permitted in
reliance on this clause (iii) to the extent financed with the proceeds of the
Permitted Borrowing and (iv) other Capital Expenditures made on an emergency
basis in an aggregate amount not in excess of $250,000. Failure to comply with
this Section shall constitute an "Event of Default" under the Credit Agreement.
(c) In addition to the information required to be furnished under the Loan
Documents to the Agent and the Lender Parties (including without limitation
pursuant to Section 5.03 of the Credit Agreement), the Parent will furnish to
the Agent and the Lender Parties, with respect to each real property of the
Parent and its Subsidiaries (whether or not such property is a Hotel Collateral
Property), any revisions to the negotiated PIPs effected after the Effective
Date.
(d) The covenants set forth in subsections (b) and (c) above will
terminate on November 30, 2001. Any agreement to waive compliance with such
covenants while such covenants are in effect must be set forth in writing and
signed by the Agents and the Required Lenders.
SECTION 6. Monthly Interest Payments. Notwithstanding anything to the
contrary in the Credit Agreement, beginning on November 30, 2001, the Borrower
shall pay accrued and unpaid interest on the unpaid principal amount of
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each Advance owing to any Lender monthly in arrears on the last Business Day of
each calendar month, and failure to comply with this Section shall constitute an
"Event of Default" under the Credit Agreement. Nothing in this Section 6 shall
limit the obligations of the Borrower prior to November 30, 2001 to pay interest
when due on Advances outstanding on the Effective Date in accordance with
Section 2.07 of the Credit Agreement.
SECTION 7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 8. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This Agreement
shall constitute a Loan Document.
SECTION 9. No Third Party Beneficiaries. This Agreement shall be binding
upon and inure to the benefit of the Borrower, the Agents and the Lenders and
their respective successors and assigns. No Person other than the parties hereto
and any other Lender, and, in the case of Section 4 hereof, the Releasees, shall
have any rights hereunder or be entitled to rely on this Agreement, and all
third-party beneficiary rights (other than the rights of the Releasees under
Section 4 hereof and any other Lender) are hereby expressly disclaimed.
SECTION 10. Effectiveness. This Agreement shall become effective on the
date when the following conditions are met (the "EFFECTIVE DATE"):
(a) the Administrative Agent shall have received from each of the
Borrower and the Required Lenders a counterpart hereof signed by such
party or facsimile or other written confirmation (in form satisfactory to
the Agent) that such party has signed a counterpart hereof;
(b) the Borrower shall have permanently reduced the Unused Working
Capital Commitments pursuant to Section 2.05 of the Credit Agreement and,
after giving effect to such reduction (but prior to giving effect to the
Permitted Borrowing), the Unused Working Capital Commitments shall not
exceed $5,000,000; and
(c) (i) the Borrower shall have consummated the sale of the Comfort
Inn located in Roseville for gross cash proceeds of at least $4,225,000,
substantially on the terms described by the Borrower to the Agents prior
to the date hereof and (ii) the Borrower shall have permanently prepaid
pursuant to Section 2.06(b) of the Credit Agreement
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Term Advances in an aggregate principal amount at least equal to
$4,000,000.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by its officer thereunder duly authorized, as of the
first written above.
LODGIAN FINANCING CORP.
By: /s/ Karyn Gutierrez
-----------------------------------
Title: President
LODGIAN, INC.
By: /s/ Karyn Gutierrez
-----------------------------------
Title: Executive Vice President
MORGAN STANLEY SENIORFUNDING, INC.,
as Administrative Agent
By: /s/ Stephen Hannan
-----------------------------------
Title: Vice President
LEHMAN COMMERCIAL PAPER INC.,
as Documentation Agent
By: /s/ Francis X. Gilhool
-----------------------------------
Title: Authorized Signatory
AFFILIATE GUARANTORS ANDGRANTORS
SERVICO, INC.
By: /s/ Karyn Gutierrez
-----------------------------------
Title: President
IMPAC HOTEL GROUP, LLC
By: /s/ Karyn Gutierrez
-----------------------------------
Title: President
SHEFFIELD MOTEL ENTERPRISES, INC.
DOTHAN HOSPITALITY 3053, INC.
DOTHAN HOSPITALITY 3071, INC.
GADSDEN HOSPITALITY, INC.
LODGIAN ANAHEIM INC.
LODGIAN ONTARIO INC.
SERVICO PENSACOLA, INC.
SERVICO PENSACOLA 7200, INC.
SERVICO PENSACOLA 7330, INC.
SERVICO FT. PIERCE, INC.
SERVICO WEST PALM BEACH, INC.
SERVICO WINTER HAVEN, INC.
ALBANY HOTEL, INC.
SERVICO NORTHWOODS, INC.
BRUNSWICK MOTEL ENTERPRISES, 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.
By: /s/ Karyn Gutierrez
-----------------------------------
Title: President
AMI OPERATING PARTNERS, L.P.
By: AMIOP Acquisition Corp.,
it general partner
By: /s/ Karyn Gutierrez
-----------------------------------
Title:
SERVICO CENTRE ASSOCIATES, LTD.
By: Palm Beach Motel Enterprises,
its general partner
By: /s/ Karyn Gutierrez
-----------------------------------
Title:
LITTLE ROCK LODGING ASSOCIATES I,
LIMITED PARTNERSHIP
By: Lodgian Richmond SPE Inc.
By: /s/ Karyn Gutierrez
-----------------------------------
Title:
ATLANTA HILLSBORO LODGING, LLC
LODGIAN RICHMOND L.L.C.
By: /s/ Karyn Gutierrez
-----------------------------------
Title: Manager
LENDERS:
MORGAN STANLEY SENIOR FUNDING, INC.
By: /s/ Stephen Hannan
-----------------------------------
Title: Vice President
ARCHIMEDES FUNDING II, LTD.
By: ING Capital Advisors LLC, as
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Collateral Manager
By:
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Title:
ARCHIMEDES FUNDING LLC
By: ING Capital Advisors LLC,
as Collateral Manager
By:
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Title:
BLACK DIAMOND CLO 1998-1 LTD.
By: /s/ Alan Corkish
-----------------------------------
Title: Director
BLACK DIAMOND CLO 2000-1 LTD.
By: /s/ Alan Corkish
-----------------------------------
Title: Director
BLUE SQUARE FUNDING LIMITED SERIES 3
By: /s/ Jennifer Bohannon
-----------------------------------
Title: Associate
CHANG HWA COMMERCIAL BANK LTD.,NEW YORK BRANCH
By:
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Title:
CANADIAN IMPERIAL BANK OF COMMERCE
By: /s/ William M. Swenson
-----------------------------------
Title: Authorized Signatory
ELF FUNDING TRUST I
By: Highland Capital Management, L.P.
as Collateral Manager
By: /s/ Mark K. Okada
-----------------------------------
Title: Executive Vice President
EMERALD ORCHARD LIMITED
By:
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Title:
GLENEAGLES TRADING LLC
By: /s/ Ann E. Morris
-----------------------------------
Title: Asst. Vice President
HIGHLAND LEGACY LIMITED
By: Highland Capital Management, L.P.
as Collateral Manager
By: /s/ Mark K. Okada
-----------------------------------
Title: Executive Vice President
THE ING CAPITAL SENIOR SECURED
HIGH INCOME FUND, L.P.
By: ING Capital Advisors LLC,
as Investment Advisor
By:
-----------------------------------
Title:
KZH HIGHLAND-2 LLC
By: /s/ Susan Lee
-----------------------------------
Title: Authorized Agent
KZH STERLING LLC
By: /s/ Susan Lee
-----------------------------------
Title: Authorized Agent
LEHMAN BROTHERS
By: /s/ Francis X. Gilhool
-----------------------------------
Title: Authorized Signatory
LONG LANE MASTER TRUST IV
By: Fleet National Bank
as Trust Administrator
By: /s/ Kevin Kerns
-----------------------------------
Title: Managing Director
ML CBO IV (CAYMAN) LTD.
By: Highland Capital Management, L.P.
as Collateral Manager
By: /s/ Mark K. Okada
-----------------------------------
Title: Executive Vice President
MERRILL LYNCH MASTER SENIOR FLOATING
RATE FUND, INC.
By:
-----------------------------------
Title:
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC.
By:
-----------------------------------
Title:
NEMEAN CLO, LTD.
By: ING Capital Advisors LLC,
as Collateral Manager
By:
-----------------------------------
Title:
PILGRIM CLO
By:
-----------------------------------
Title:
PILGRIM PRIME RATE TRUST
By:
-----------------------------------
Title:
PROVIDENT
By:
-----------------------------------
Title:
SEQUILS-ING I (HBDGM), LTD.
By: ING Capital Advisors LLC,
as Collateral Manager
By:
-----------------------------------
Title:
SRV-HIGHLAND, INC.
By: /s/ Ann E. Morris
-----------------------------------
Title: Assistant Vice President
SUTTER CBO 1998-1
By:
-----------------------------------
Title:
SUTTER CBO 1999-1
By:
-----------------------------------
Title:
TRANSAMERICA EQUIPMENT FINANCIAL
SERVICES CORPORATION
By: /s/ Ron Linn
---------------------------------------
Title: Vice President Region Credit Manager
WELLS FARGO BANK
By:
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Title:
CONSENT
Dated as of October 17, 2001
Each of the undersigned as a Loan Party under the Credit Agreement
referred to in the foregoing Forbearance Agreement, hereby consents to such
Forbearance Agreement and hereby confirms and agrees that (a) notwithstanding
the effectiveness of such Forbearance Agreement, each Loan Document to which
such Loan Party is a party is, and shall continue to be, in full force and
effect and is hereby ratified and confirmed in all respects, and (b) the
Collateral Documents to which such Loan Party is a party and all of the
Collateral described therein do, and shall continue to, secure the payment of
all of the Secured Obligations (in each case, as defined therein).
SERVICO, INC.
By:
Title:
IMPAC HOTEL GROUP, LLC
By:
Title:
SHEFFIELD MOTEL ENTERPRISES, INC.
DOTHAN HOSPITALITY 3053, INC.
DOTHAN HOSPITALITY 3071, INC.
GADSDEN HOSPITALITY, INC.
LODGIAN ANAHEIM INC.
LODGIAN ONTARIO INC.
SERVICO PENSACOLA, INC.
SERVICO PENSACOLA 7200, INC.
SERVICO PENSACOLA 7330, INC.
SERVICO FT. PIERCE, INC.
SERVICO WEST PALM BEACH, INC.
SERVICO WINTER HAVEN, INC.
ALBANY HOTEL, INC.
SERVICO NORTHWOODS, INC.
BRUNSWICK MOTEL ENTERPRISES, 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.
By:
Title: President
AMI OPERATING PARTNERS, L.P.
By: AMIOP Acquisition Corp., it general partner
By:
Title:
SERVICO CENTRE ASSOCIATES, LTD.
By: Palm Beach Motel Enterprises, its general
partner
By:
Title:
LITTLE ROCK LODGING ASSOCIATES I,
LIMITED PARTNERSHIP
By: Lodgian Richmond SPE Inc.
By:
Title:
ATLANTA HILLSBORO LODGING, LLC
LODGIAN RICHMOND L.L.C.
By:
Title: Manager