EXHIBIT 10.3.3
GUARANTY OF RECOURSE OBLIGATIONS
This GUARANTY OF RECOURSE OBLIGATIONS (this "GUARANTY"), dated
as of November 25, 2002, made by LODGIAN, INC., a Delaware corporation
("GUARANTOR"), having an address at 3445 Peachtree Road, NE, Suite 700, Atlanta,
Georgia 30326, in favor of MERRILL LYNCH MORTGAGE LENDING, INC., a Delaware
corporation, having an office at 4 World Financial Center, New York, New York
10080 (together with its successors, transferees and assigns, "MEZZANINE
LENDER").
RECITALS:
A. Pursuant to that certain Mezzanine Loan Agreement,
dated as of the date hereof (as the same may be amended, modified, supplemented
or restated from time to time, the "MEZZANINE LOAN AGREEMENT"), among the
Borrowers named therein (each, a "MEZZANINE BORROWER", and collectively, the
"MEZZANINE BORROWERS"), and Mezzanine Lender, Mezzanine Lender has agreed to
make a loan to the Mezzanine Borrowers in the aggregate original principal
amount of up to $78,671,201.00 (the "LOAN"), subject to the terms and conditions
of the Mezzanine Loan Agreement;
B. As a condition to Mezzanine Lender's making the Loan,
Mezzanine Lender is requiring that Guarantor execute and deliver to Mezzanine
Lender this Guaranty; and
C. Guarantor hereby acknowledges that Guarantor holds a
direct and/or indirect ownership interest in each Mezzanine Borrower and that
Guarantor will materially benefit from Mezzanine Lender's agreeing to make the
Loan.
NOW, THEREFORE, in consideration of the premises set forth
herein and as an inducement for and in consideration of the agreement of
Mezzanine Lender to make the Loan pursuant to the Mezzanine Loan Agreement and
the other Loan Documents, Guarantor hereby agrees, covenants, represents and
warrants to Mezzanine Lender as follows:
SECTION 1. DEFINITIONS. All capitalized terms used and not
defined herein shall have the respective meanings given such terms in the
Mezzanine Loan Agreement.
SECTION 2. GUARANTY.
(a) Guarantor (but not its members, partners, employees,
shareholders, agents, directors or officers) hereby irrevocably, absolutely and
unconditionally assumes liability for, guarantees payment to Mezzanine Lender
of, and agrees to pay, protect, defend, indemnify and save harmless Mezzanine
Lender from and against any and all Guaranteed Recourse Obligations of Mezzanine
Borrowers (as hereinafter defined).
The obligations which are the subject of the guaranty referred to in this
Section 2 are hereinafter collectively referred to as the "GUARANTEED
OBLIGATIONS".
(b) The term "GUARANTEED RECOURSE OBLIGATIONS OF
MEZZANINE BORROWERS" as used in this Guaranty shall mean all obligations and
liabilities for which Mezzanine Borrowers shall be personally liable under the
provisions of Section 12.2 of the Mezzanine Loan Agreement.
(c) All sums payable to Mezzanine Lender under this
Guaranty shall be payable on demand and without reduction for any offset, claim,
counterclaim or defense.
SECTION 3. REPRESENTATIONS AND WARRANTIES. Guarantor hereby
represents and warrants to Mezzanine Lender as follows (which representations
and warranties shall be given as of the date hereof and shall survive the
execution and delivery of this Guaranty):
(a) DUE EXECUTION. This Guaranty has been duly executed
and delivered by Guarantor.
(b) ENFORCEABILITY. This Guaranty constitutes a legal,
valid and binding obligation of Guarantor, enforceable against Guarantor in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally, or application of general principles
of equity in any legal proceeding.
(c) NO VIOLATION. The execution, delivery and performance
by Guarantor of its obligations under this Guaranty do not violate any law,
regulation, order, writ, injunction or decree of any court or governmental body,
agency or other instrumentality applicable to Guarantor, or result in a breach
of any of the terms, conditions or provisions of, or constitute a default under,
or result in the creation or imposition of any mortgage, lien, charge or
encumbrance of any nature whatsoever upon any of the assets of Guarantor
pursuant to the terms of any mortgage, indenture, agreement or instrument to
which Guarantor is a party or by which it or any of its properties is bound.
Guarantor is not in default under any other guaranty which it has provided to
Mezzanine Lender.
(d) NO LITIGATION. Except as disclosed on Schedule 4.9 to
the Mezzanine Loan Agreement, there are no actions, suits or proceedings at law
or at equity, pending or, to Guarantor's knowledge, threatened against or
affecting Guarantor or which involve or could reasonably be expected to involve
the validity or enforceability of this Guaranty or which might materially
adversely affect the financial condition of Guarantor or the ability of
Guarantor to perform any of its obligations under this Guaranty. Guarantor is
not in default beyond any applicable grace or cure period with respect to any
order, writ, injunction, decree or demand of any Governmental Authority which
might materially adversely affect the financial condition of Guarantor or the
ability of Guarantor to perform any of its obligations under this Guaranty.
(e) CONSENTS. All consents, approvals, orders or
authorizations of, or registrations, declarations or filings with, all
Governmental Authorities (collectively, the "CONSENTS") that are required in
connection with the valid execution, delivery and performance by Guarantor of
this Guaranty have been obtained and Guarantor agrees that all Consents required
in connection with the carrying out or performance of any of Guarantor's
obligations under this Guaranty will be obtained when required.
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(f) FINANCIAL STATEMENTS AND OTHER INFORMATION. All
financial statements of Guarantor heretofore delivered to Mezzanine Lender
fairly present the financial condition of Guarantor as of the respective dates
thereof, and no materially adverse change has occurred in the financial
conditions reflected therein since the respective dates thereof. None of the
aforesaid financial statements or any certificate or statement furnished to
Mezzanine Lender by or on behalf of Guarantor in connection with the
transactions contemplated hereby, and none of the representations and warranties
in this Guaranty contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained
therein or herein not materially misleading. Guarantor is not insolvent within
the meaning of the Bankruptcy Code or any other applicable law, code or
regulation and the execution, delivery and performance of this Guaranty will not
render Guarantor insolvent.
SECTION 4. FINANCIAL STATEMENTS. Guarantor hereby agrees for
the benefit of Mezzanine Lender that Guarantor will deliver to Mezzanine Lender
each of the financial statements required to be delivered pursuant to Section
5.1 of the Mezzanine Loan Agreement.
SECTION 5. NET WORTH COVENANT. Guarantor hereby covenants to
maintain a Net Worth of at least $10,000,000 in the aggregate from the date
hereof until such time as all obligations of Mezzanine Borrowers under the Loan
Documents shall have been fully satisfied and all sums due and owing under the
Loan Documents and this Guaranty shall have been fully paid to Mezzanine Lender.
For purposes hereof, "NET WORTH" means (x) the assets of Guarantor minus (y) the
liabilities of Guarantor, all determined in accordance with GAAP; provided,
however, notwithstanding the foregoing, for so long as any preferred stock
outstanding as of the Closing Date remains outstanding, such preferred stock
shall be excluded from liabilities and shall be deemed to constitute equity for
the purpose of determining Guarantor's Net Worth. From time to time, at
Mezzanine Lender's request, Guarantor shall provide to Mezzanine Lender, within
twenty (20) days after written request by Mezzanine Lender, such evidence of
Guarantor's compliance with the terms of this Section 5 as Mezzanine Lender
shall reasonably require.
SECTION 6. UNCONDITIONAL CHARACTER OF OBLIGATIONS OF GUARANTOR.
(a) The obligations of Guarantor hereunder shall be
irrevocable, absolute and unconditional, irrespective of the validity,
regularity or enforceability, in whole or in part, of the Note, the Mezzanine
Loan Agreement, the Pledge Agreement or the other Loan Documents or any
provision thereof, or the absence of any action to enforce the same, any waiver
or consent with respect to any provision thereof, the recovery of any judgment
against any Mezzanine Borrower, Guarantor or any other Person or any action to
enforce the same, any failure or delay in the enforcement of the obligations of
Mezzanine Borrowers under the Note, the Mezzanine Loan Agreement, the Pledge
Agreement, the Jekyll Island Mortgage or any other Loan Documents or Guarantor
under this Guaranty, or any setoff, counterclaim, and irrespective of any other
circumstances which might otherwise limit recourse against Guarantor by
Mezzanine Lender or constitute a legal or equitable discharge or defense of a
guarantor or surety. Mezzanine Lender may enforce the obligations of Guarantor
under this Guaranty by a proceeding at law, in equity or otherwise, independent
of any loan foreclosure or similar proceeding or any deficiency action against
Mezzanine Borrowers or any other Person at any time, either before or after an
action against the Properties or any of them or any part thereof, Mezzanine
Borrowers or any other Person. THIS GUARANTY IS A GUARANTY OF PAYMENT AND
PERFORMANCE AND NOT MERELY A
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GUARANTY OF COLLECTION. Guarantor waives diligence, notice of acceptance of this
Guaranty, filing of claims with any court, any proceeding to enforce any
provision of the Note, the Mezzanine Loan Agreement, the Pledge Agreement, the
Jekyll Island Mortgage or any other Loan Documents, against Guarantor, Mezzanine
Borrowers or any other Person, any right to require a proceeding first against
Mezzanine Borrowers or any other Person, or to exhaust any security (including,
without limitation, the Collateral or Properties or any of them or any part
thereof) for the performance of the Guaranteed Obligations or any other
obligations of Mezzanine Borrowers or any other Person, or any protest,
presentment, notice of default (except as may be expressly required under the
Loan Documents) or other notice or demand whatsoever, and Guarantor hereby
covenants and agrees that Guarantor shall not be discharged of its obligations
hereunder.
(b) The obligations of Guarantor under this Guaranty, and
the rights of Mezzanine Lender to enforce the same by proceedings, whether by
action at law, suit in equity or otherwise, shall not be in any way affected by
any of the following:
(i) any insolvency, bankruptcy, liquidation,
reorganization, readjustment, composition, dissolution, receivership,
conservatorship, winding up or other similar proceeding involving or
affecting any Mezzanine Borrower, any Property or any part thereof,
Guarantor or any other Person;
(ii) any failure by Mezzanine Lender or any other
Person, whether or not without fault on its part, to perform or comply
with any of the terms of the Mezzanine Loan Agreement, or any other
Loan Documents, or any document or instrument relating thereto;
(iii) except (A) with respect to activities
occurring after the date of a Permitted Assumption or, (B) activities
relating to a Collateral Release after the date thereof, the sale,
transfer or conveyance of any Collateral or Property or any interest
therein to any Person, whether now or hereafter having or acquiring an
interest in any Collateral or Property or any interest therein and
whether or not pursuant to any foreclosure, trustee sale or similar
proceeding against any Mezzanine Borrower or any Collateral or Property
or any interest therein;
(iv) the conveyance to Mezzanine Lender, any
Affiliate of Mezzanine Lender or Mezzanine Lender's nominee of any
Property or any interest therein by a deed-in-lieu of foreclosure;
(v) the release of any Mezzanine Borrower or any
other Person from the performance or observance of any of the
agreements, covenants, terms or conditions contained in any of the Loan
Documents by operation of law or otherwise;
(vi) the release in whole or in part of any
collateral for any or all Guaranteed Obligations or for the Loan or any
portion thereof; or
(vii) the exercise by Mortgage Lender of any
remedies made available to Mortgage Lender pursuant to the terms of the
Mortgage Loan Documents, including, without limitation, foreclosure or
similar remedies under any Deeds of Trust encumbering Mortgage
Borrower's interest in any Property except with respect to actions
taken by the
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Mortgage Lender following the Mortgage Lender succeeding to the
interests of the Mortgage Borrowers in and to the Properties.
(c) Except as otherwise specifically provided in this
Guaranty, Guarantor hereby expressly and irrevocably waives all defenses in an
action brought by Mezzanine Lender to enforce this Guaranty based on claims of
waiver, release, surrender, alteration or compromise and all setoffs,
reductions, or impairments, whether arising hereunder or otherwise.
(d) Mezzanine Lender may deal with Mezzanine Borrowers
and Affiliates of Mezzanine Borrowers in the same manner and as freely as if
this Guaranty did not exist and shall be entitled, among other things, to grant
Mezzanine Borrowers or any other Person such extension or extensions of time to
perform any act or acts as may be deemed advisable by Mezzanine Lender, at any
time and from time to time, without terminating, affecting or impairing the
validity of this Guaranty or the obligations of Guarantor hereunder.
(e) No compromise, alteration, amendment, modification,
extension, renewal, release or other change of, or waiver, consent, delay,
omission, failure to act or other action with respect to, any liability or
obligation under or with respect to, or of any of the terms, covenants or
conditions of, the Note, the Mezzanine Loan Agreement, the Pledge Agreement, the
Jekyll Island Mortgage or the other Loan Documents or any amendment,
modification or other change of any legal requirement shall in any way alter,
impair or affect any of the obligations of Guarantor hereunder, and Guarantor
agrees that if any Loan Documents are modified with Mezzanine Lender's consent,
the Guaranteed Obligations shall automatically be deemed modified to include
such modifications.
(f) Mezzanine Lender may proceed to protect and enforce
any or all of its rights under this Guaranty by suit in equity or action at law,
whether for the specific performance of any covenants or agreements contained in
this Guaranty or otherwise, or to take any action authorized or permitted under
applicable law, and shall be entitled to require and enforce the performance of
all acts and things required to be performed hereunder by Guarantor. Each and
every remedy of Mezzanine Lender shall, to the extent permitted by law, be
cumulative and shall be in addition to any other remedy given hereunder or now
or hereafter existing at law or in equity.
(g) No waiver shall be deemed to have been made by
Mezzanine Lender of any rights hereunder unless the same shall be in writing and
signed by Mezzanine Lender, and any such waiver shall be a waiver only with
respect to the specific matter involved and shall in no way impair the rights of
Mezzanine Lender or the obligations of Guarantor to Mezzanine Lender in any
other respect or at any other time.
(h) At the option of Mezzanine Lender, Guarantor may be
joined in any action or proceeding commenced by Mezzanine Lender against
Mezzanine Borrowers in connection with or based upon the Note, the Mezzanine
Loan Agreement, the Pledge Agreement, the Jekyll Island Mortgage or any other
Loan Documents and recovery may be had against Guarantor in such action or
proceeding or in any independent action or proceeding against Guarantor to the
extent of Guarantor's liability hereunder, without any requirement that
Mezzanine Lender first assert, prosecute or exhaust any remedy or claim against
Mezzanine Borrowers or any other Person, or any security for the obligations of
Mezzanine Borrowers or any other Person.
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(i) Guarantor agrees that this Guaranty shall continue to
be effective or shall be reinstated, as the case may be, if at any time any
payment is made by Mezzanine Borrowers or Guarantor to Mezzanine Lender and such
payment is rescinded or must otherwise be returned by Mezzanine Lender (as
determined by Mezzanine Lender in its sole and absolute discretion) upon
insolvency, bankruptcy, liquidation, reorganization, readjustment, composition,
dissolution, receivership, conservatorship, winding up or other similar
proceeding involving or affecting any Mezzanine Borrower or Guarantor, all as
though such payment had not been made.
(j) In the event that Guarantor shall advance or become
obligated to pay any sums under this Guaranty or in connection with the
Guaranteed Obligations or in the event that for any reason whatsoever any
Mezzanine Borrower or any subsequent owner of any Property or Collateral or any
part thereof is now, or shall hereafter become, indebted to Guarantor, Guarantor
agrees that (i) the amount of such sums and of such indebtedness and all
interest thereon shall at all times be subordinate as to the lien, the time of
payment and in all other respects to all sums, including principal and interest
and other amounts, at any time owed to Mezzanine Lender under the Loan
Documents, and (ii) Guarantor shall not be entitled to enforce or receive
payment thereof until all principal, interest and other sums due pursuant to the
Loan Documents have been paid in full. Nothing herein contained is intended or
shall be construed to give Guarantor any right of subrogation in or under the
Loan Documents or any right to participate in any way therein, or in the right,
title or interest of Mezzanine Lender in or to any collateral for the Loan,
notwithstanding any payments made by Guarantor under this Guaranty, until the
actual and irrevocable receipt by Mezzanine Lender of payment in full of all
principal, interest and other sums due with respect to the Loan or otherwise
payable under the Loan Documents. If any amount shall be paid to Guarantor on
account of such subrogation rights at any time when any such sums due and owing
to Mezzanine Lender shall not have been fully paid, such amount shall be paid by
Guarantor to Mezzanine Lender for credit and application against such sums due
and owing to Mezzanine Lender. The foregoing shall not prohibit Mezzanine
Borrowers from using the proceeds of the Loan for any permitted use under the
Mezzanine Loan Agreement, including, without limitation, the making of
distributions to Guarantor.
(k) Guarantor's obligations hereunder shall survive a
foreclosure, delivery of a deed-in-lieu of foreclosure, the exercise of any
power of sale or similar proceeding involving any Collateral or any part thereof
and the exercise by Mezzanine Lender of any or all of its remedies pursuant to
the Loan Documents. Notwithstanding the foregoing to the contrary, the
obligations and liabilities of Guarantor under this Guaranty shall survive for a
period of two (2) years following payment in full of the Obligations in
accordance with the terms of the Loan Documents, provided, however, in the event
that any Guaranteed Obligations or liabilities of the Guarantor under this
Guaranty shall have arisen prior to the expiration of such period, then in any
such event the foregoing survival period shall not apply and the obligations and
liabilities of Guarantor hereunder shall survive.
SECTION 7. ENTIRE AGREEMENT/AMENDMENTS. THIS INSTRUMENT
REPRESENTS THE ENTIRE AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT
MATTER HEREOF. THE TERMS OF THIS GUARANTY SHALL NOT BE WAIVED, ALTERED,
MODIFIED, AMENDED, SUPPLEMENTED OR
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TERMINATED IN ANY MANNER WHATSOEVER EXCEPT BY WRITTEN INSTRUMENT SIGNED BY
MEZZANINE LENDER AND GUARANTOR.
SECTION 8. SUCCESSORS AND ASSIGNS. This Guaranty shall be
binding upon Guarantor, and its successors and assigns, may not be assigned or
delegated by Guarantor and shall inure to the benefit of Mezzanine Lender and
its successors and assigns. Mezzanine Lender shall have the right to assign this
Guaranty and the obligations hereunder in connection with any assignment or
transfer of all or any portion of the Loan or any interest therein. All
references to "Mezzanine Lender" hereunder shall be deemed to include the
successors and assigns of Mezzanine Lender and the parties hereto acknowledge
that actions taken by Mezzanine Lender hereunder may be taken by Mezzanine
Lender's agents and by the agents of the successors and assigns of Mezzanine
Lender.
SECTION 9. APPLICABLE LAW AND CONSENT TO JURISDICTION. This
Guaranty shall be governed by, and construed in accordance with, the substantive
laws of the State of New York. Guarantor irrevocably (a) agrees that any suit,
action or other legal proceeding arising out of or relating to this Guaranty may
be brought in a court of record in the City and County of New York or in the
Courts of the United States of America located in the Southern District of New
York, (b) consents to the jurisdiction of each such court in any such suit,
action or proceeding and (c) waives any objection which it may have to the
laying of venue of any such suit, action or proceeding in any of such courts and
any claim that any such suit, action or proceeding has been brought in an
inconvenient forum. Guarantor irrevocably consents to the service of any and all
process in any such suit, action or proceeding by service of copies of such
process to Guarantor at its address set forth on the first page hereof. Nothing
in this Section 9, however, shall affect the right of Mezzanine Lender to serve
legal process in any other manner permitted by law or affect the right of
Mezzanine Lender to bring any suit, action or proceeding against Guarantor or
its property in the courts of any other jurisdictions.
SECTION 10. SECTION HEADINGS. The headings of the sections and
paragraphs of this Guaranty have been inserted for convenience of reference only
and shall in no way define, modify, limit or amplify any of the terms or
provisions hereof.
SECTION 11. SEVERABILITY. Any provision of this Guaranty which
may be determined by any competent authority to be prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable law, Guarantor hereby
waives any provision of law which renders any provision hereof prohibited or
unenforceable in any respect.
SECTION 12. WAIVER OF TRIAL BY JURY. EACH OF GUARANTOR AND
MEZZANINE LENDER HEREBY WAIVES THE RIGHT OF TRIAL BY JURY IN ANY LITIGATION,
ACTION OR PROCEEDING ARISING HEREUNDER OR IN CONNECTION THEREWITH.
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SECTION 13. OTHER GUARANTIES; SINGULAR AND PLURAL; JOINT AND
SEVERAL LIABILITY.
(a) The obligations of Guarantor hereunder are separate
and distinct from, and in addition to, the obligations of Guarantor now or
hereafter arising under the other guaranties pursuant to which Guarantor has
guaranteed the payment and performance of certain other obligations of Mezzanine
Borrowers described therein.
(b) If there is more than one entity comprising
Guarantor, all references to Guarantor herein shall be to Guarantor (but not its
members, partners, employees, shareholders, agents, directors or officers) or
any one or more of them. All obligations and liabilities of Guarantor hereunder
are in addition to, not in lieu of and are independent of: (i) all obligations
of Mezzanine Borrowers under any other Loan Document, including the Note and the
Mezzanine Loan Agreement; and (ii) any obligation of Guarantor under any other
Loan Document to which Guarantor is a party.
(c) If there is more than one entity comprising
Guarantor, all obligations of Guarantor hereunder shall be joint and several.
SECTION 14. NOTICES. All notices, demands, requests, consents,
approvals or other communications required or permitted to be given hereunder to
Mezzanine Lender or Guarantor or which are given to Mezzanine Lender or
Guarantor with respect to this Guaranty shall be in writing and shall be
delivered to Mezzanine Lender at the address set forth in Section 14.5 of the
Mezzanine Loan Agreement and to Guarantor at the address set forth on the first
page hereof, each in the manner provided in Section 14.5 of the Mezzanine Loan
Agreement. Guarantor agrees to give Mezzanine Lender not less than ten (10)
days' prior written notice of any change in the location of Guarantor's
principal place of business.
SECTION 15. GUARANTOR'S RECEIPT OF LOAN DOCUMENTS. Guarantor
by its execution hereof acknowledges receipt of true copies of all of the Loan
Documents, the terms and conditions of which are hereby incorporated herein by
reference.
SECTION 16. INTEREST; EXPENSES.
(a) If Guarantor fails to pay all or any sums due
hereunder within ten (10) days of demand by Mezzanine Lender, the amount of such
sums payable by Guarantor to Mezzanine Lender shall bear interest from the date
of demand until paid at the Default Rate in effect from time to time.
(b) Guarantor hereby agrees to pay all reasonable out of
pocket costs, charges and expenses, including, without limitation, reasonable
attorneys' fees and disbursements, that may be incurred by Mezzanine Lender in
enforcing the covenants, agreements, obligations and liabilities of Guarantor
under this Guaranty.
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IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of
the date first above written.
GUARANTOR:
LODGIAN, INC., a Delaware
corporation
By: /s/ Daniel E. Ellis
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Name: Daniel E. Ellis
Title: Vice President and Secretary