EXHIBIT 10.29
FORM OF
CONDITIONAL ASSIGNMENT OF HOTEL MANAGEMENT AGREEMENT
This CONDITIONAL ASSIGNMENT OF HOTEL MANAGEMENT AGREEMENT, dated as
of June __, 2004 (this "AGREEMENT"), made by LODGIAN MANAGEMENT CORP., a
Delaware corporation, having an address at 3445 Peachtree Road, NE, Suite 700,
Atlanta, Georgia 30826 ("HOTEL MANAGER"), and the undersigned, each having an
address at c/o Lodgian, Inc., 3445 Peachtree Road, NE, Suite 700, Atlanta,
Georgia 30826 (each a "BORROWER and collectively, "BORROWERS"), to and for the
benefit of MERRILL LYNCH MORTGAGE LENDING, INC., a Delaware corporation, having
an office at Four World Financial Center, New York, New York 10080, its
successors, transferees and assigns ("LENDER").
A. Hotel Manager has entered into a certain Management Agreement
(each a "CONTRACT" and collectively, the "CONTRACTS") with each Borrower, a
true, correct and complete copy of which has been delivered to Lender on or
prior to the date hereof and the form of which is attached hereto as EXHIBIT A,
providing for the performance by Hotel Manager of certain management obligations
more particularly described therein with respect to the management and operation
of the property as more particularly described therein (each, a "PROPERTY" and
collectively, the "PROPERTIES").
B. This Agreement is being executed in order to amend each Contract,
to conditionally assign each Borrower's interest therein to Lender, and to
subordinate Hotel Manager's rights to payment under the Contracts to Lender's
lien on the Properties in connection with Lender's making a loan to Borrowers
and certain other borrowers (collectively, the "MORTGAGE BORROWERS") in the
original principal amount of up to ________________________ (the "LOAN")
pursuant to that certain Loan and Security Agreement, dated as of even date
herewith (as amended, modified or restated, the "LOAN AGREEMENT"), among
Mortgage Borrowers and Lender. The Loan is evidenced by those certain Promissory
Notes, each of even date herewith (as amended, modified or restated, and any
replacements or substitutes therefor (by means of multiple notes or otherwise),
collectively, the "NOTE"), made by Mortgage Borrowers in favor of Lender and is
secured by, among other things, those certain Mortgages/Deeds of Trust/Deeds to
Secure Debt, Assignments of Leases and Rents and Security Agreements, dated as
of even date herewith (as amended, modified, restated, spread or consolidated,
collectively, the "SECURITY INSTRUMENT"), in favor of Lender (the Note, the
Security Instrument, the Loan Agreement, this Agreement and all other documents
executed in connection with the Loan are collectively referred to as the "LOAN
DOCUMENTS"). All capitalized terms used and not defined herein shall have the
respective meanings given to such terms in the Loan Agreement, a copy of which
Hotel Manager hereby acknowledges having received.
NOW, THEREFORE, in consideration of Ten and No/100 Dollars ($10.00)
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, Hotel Manager and Borrowers hereby represent, warrant
and covenant to Lender as follows:
1. As additional collateral security for the Loan, each Borrower
hereby conditionally transfers, sets over and assigns to Lender all of such
Borrower's right, title and interest in and to its Contract, said transfer and
assignment to automatically become a present, unconditional assignment, at
Lender's option, upon the occurrence and during the continuance of an Event of
Default by Borrowers under any of the Loan Documents.
2. Hotel Manager hereby agrees that each Contract, all rights,
interests and privileges of Hotel Manager thereunder, and all management fees
and other payment obligations of each Borrower to Hotel Manager for services
rendered by Hotel Manager for the management and operation of its Property, as
such services are more particularly described in such Contract, are hereby
subordinated to the Loan Documents and the liens in favor of Lender provided for
therein, and to all rights of Lender to receive payment from Borrowers under the
Note and all other amounts which may be due Lender under the Loan Documents.
Hotel Manager recognizes and agrees that so long as the Note is being paid in
strict accordance with its terms and no Event of Default has occurred and is
continuing or will by virtue of payments to Hotel Manager occur, Hotel Manager
shall, subject to the requirements of the Loan Documents, including any such
requirements governing management and application of the Properties and Borrower
revenues and cash flow, be entitled to receive payments provided for under such
Contract in accordance with the terms thereof. Hotel Manager hereby releases,
discharges and waives any and all liens, claims, demands of any kind or nature,
against each Property, either now or in the future, arising from the services
provided by Hotel Manager for the management and operation of such Property.
3. In the event that such Borrower defaults under the terms of its
Contract, Hotel Manager agrees that before exercising any rights or remedies
with respect thereto, it will notify Lender of such default. Upon Lender's
request, Hotel Manager will continue to perform under such Contract until such
time as Lender may elect to terminate such Contract, provided that Hotel Manager
shall continue to receive all fees payable to it under such Contract. Subject to
the foregoing, Hotel Manager agrees that it shall not be entitled to receive any
management fee or other fee, commission or other amount payable under the
Contract or otherwise for and during any period of time that any Event of
Default has occurred and is continuing, provided that Hotel Manager shall not be
obligated to return or refund to Lender any management fee or other fee,
commission or other amount already received by Hotel Manager prior to the
occurrence of the Event of Default, and to which Hotel Manager was entitled
under paragraph 2 above. In all events, Hotel Manager recognizes that the
maximum amount that shall be due and payable under each Contract is the amount
stated therein (such amount being adequate to complete the services called for
in such Contract), and that Hotel Manager will not claim any incidental,
consequential, or exemplary damages of any nature as a condition to completing
its performance under the Contract.
4. In the event that (a) Hotel Manager becomes insolvent, or (b) an
Event of Default occurs and is continuing, or (c) any default occurs by Hotel
Manager under the Management Agreement beyond the expiration of any notice and
cure periods, or (d) any other event occurs which, under the terms of the Loan
Documents, entitles Lender to direct Borrower to replace Hotel Manager, Lender
may exercise its rights under the Loan Documents and direct any Borrower to
terminate its Contract and/or to replace Hotel Manager with a management
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company chosen by such Borrower and reasonably acceptable to Lender. Upon
receiving notice of any such election, Hotel Manager shall abide by such
direction to terminate and cooperate with any replacement manager approved or
designated by Lender. No termination fee or other compensation shall be due or
owing under such Contract as a result of any such termination other than accrued
unpaid fees.
5. Without limiting the foregoing, subject to the second sentence of
paragraph 3 hereof, in the event Lender forecloses or otherwise succeeds to the
rights of any Borrower with respect to any Property, Lender shall have the
option upon written notice to Hotel Manager delivered within thirty (30) days
following foreclosure by Lender or other acquisition of such Property by Lender,
either to (a) terminate the applicable Contract without any obligation or
liability of Lender to pay the termination fees, if any; or (b) continue such
Contract in effect upon all of the terms and provisions provided in such
Contract, except that Lender shall have no obligation to pay any sums due and
owing under the Contract as of the date of foreclosure or other acquisition of
such Property, and Lender shall have the right after it elects to continue such
Contract under subparagraph (b) hereof to terminate such Contract without cause
upon thirty (30) days written notice to Hotel Manager without any obligation or
liability of Lender to pay the termination fees, if any other than accrued
unpaid fees. Hotel Manager acknowledges and agrees with Lender that Lender has
not assumed any obligations or liabilities of such Borrower to Hotel Manager
under such Contract. If Lender chooses not to continue any Contract following a
foreclosure or other acquisition of any Property, the only compensation from
Lender for which Hotel Manager shall be entitled under such Contract shall be
for the period commencing with the date of such foreclosure or other acquisition
and ending upon the subsequent termination by Lender of such Contract.
Notwithstanding the foregoing to the contrary, in the event Lender forecloses or
otherwise succeeds to the rights of any Borrower with respect to its Property,
upon Lender's request, Hotel Manager agrees to transfer and assign to Lender, or
its designee, to the extent possible, all applicable licenses (including,
without limitation, each liquor license and beer permit), permits and approvals
required for the use, occupancy, operation and maintenance of each of the
Property and held by or in the name of Hotel Manager, and, if requested by
Lender and permitted by applicable law, enter into such reasonable concession or
use agreements with Lender or its designee (subject to appropriate
indemnification) as are reasonably necessary to allow Lender or its designee to
offer, or cause to be offered, liquor and beer for sale at such Property. For
this purpose, Hotel Manager constitutes and appoints Lender its true and lawful
attorney-in-fact with full power of substitution to complete or undertake the
assignment of each of the items referenced in the preceding sentence in the name
of Hotel Manager pursuant to this paragraph 5. Such power of attorney shall be
deemed to be a power coupled with an interest and cannot be revoked.
6. Hotel Manager agrees (a) not to resign as Hotel Manager without
ninety (90) days prior written notice to Lender, and (b) not to amend any
Contract in any material respect without Lender's prior written approval, which
approval shall not be unreasonably withheld or delayed.
7. Hotel Manager acknowledges and agrees that any and all rents,
room rents, credit card receipts, other receipts, profits or other sums,
including any management fees in excess of the management fees to which Hotel
Manager is entitled pursuant to paragraph 2
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hereof, and receipts derived from the sale of alcoholic beverages, to the extent
permitted by law (collectively herein called "PROPERTY PROCEEDS"), collected or
received by Hotel Manager from the Properties are subject to a security interest
of Lender pursuant to the Loan Documents, and shall be collected and held by
Hotel Manager in trust for the benefit of the applicable Borrower and Lender.
Any such Property Proceeds shall be deposited by Hotel Manager within two (2)
Business Days of receipt into a deposit account (the "DEPOSIT ACCOUNT") in the
name of the Lender and identified in that certain Deposit Account Agreement or
other similar agreement dated as of the date hereof (as amended, restated,
modified, replaced or supplemented from time to time, each, a "DEPOSIT ACCOUNT
AGREEMENT") among the applicable Borrower, Lender, Hotel Manager and the bank
named therein. Upon transfer of any such Property Proceeds to Hotel Manager from
the Lock Box Account (as defined in that certain Cash Management Agreement dated
as of even date herewith (as amended, restated, modified, replaced or
supplemented from time to time, the "CASH MANAGEMENT AGREEMENT"), among Mortgage
Borrowers, Lender, Hotel Manager and Wachovia Bank, National Association) as
directed by the applicable Borrower pursuant to Section 3.3 of the Cash
Management Agreement, such Property Proceeds shall be used by Hotel Manager for
proper expenses and costs of managing and operating the applicable Property as
permitted under the applicable Contract, subject, in all instances, to
compliance with the Operating Budget and FF&E Budget then in effect and
limitations on distributions to Borrowers, each as more fully described in the
Loan Agreement. Hotel Manager hereby disclaims any and all interests in the
Deposit Account, the Lock Box Account (and any Sub-Accounts thereof), the
Property Operating Account and in any of the Property Proceeds. Upon written
notice from Lender that an Event of Default has occurred under the Loan
Agreement and/or other Loan Documents, Hotel Manager agrees to apply Property
Proceeds as instructed by Lender.
8. Hotel Manager represents and warrants that (a) a true, correct
and complete copy of each Contract has been delivered to Lender on or prior to
the date hereof, the form of which is attached hereto as EXHIBIT A, (b) each
Contract is in full force and effect and has not been modified, amended or
assigned, except in favor of Lender or its predecessor-in-interest (c) neither
Hotel Manager nor, to Hotel Manager's knowledge, any Borrower is in default
under any of the terms, covenants or provisions of its Contract, and Hotel
Manager knows of no event which, with the giving of notice or the passage of
time, or both, would constitute a default under any Contract, (d) Hotel Manager
has no knowledge of and has not commenced any action or given or received any
notice for the purpose of terminating any Contract, and (e) all management fees,
commissions and other sums due and payable to the Hotel Manager under each
Contract as of the date hereof have been paid in full.
9. This Agreement shall be deemed to be a contract entered into
pursuant to the laws of the State of New York and shall in all respects be
governed, construed, applied and enforced in accordance with the laws of the
State of New York.
10. All notices, demands, requests, consents, approvals or other
communications required or permitted to be given hereunder shall be in writing
and shall be delivered to Lender and Borrowers at the addresses set forth in
Section 14.5 of the Loan Agreement and to Hotel Manager at the address set forth
on the first page hereof, with a copy to
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Morris Manning & Martin LLP, Attention: Tom Gryboski, Esq., Fax: (404) 365-9532,
each in the manner provided in Section 14.5 of the Loan Agreement.
11. This Agreement, and any provisions hereof, may not be modified,
amended, waived, extended, changed, discharged or terminated orally or by any
act or failure to act on the part of Lender or any other party, but only by an
agreement in writing signed by the party against whom enforcement of any
modification, amendment, waiver, extension, change, discharge or termination is
sought.
12. If any term, covenant or condition of this Agreement is held to
be invalid, illegal or unenforceable in any respect, this Agreement shall be
construed without such provision. If any conflict exists between the terms of
this Agreement and the terms of the Loan Agreement, the terms of the Loan
Agreement shall prevail.
13. This Agreement may be executed in any number of duplicate
originals and each duplicate original shall be deemed to be an original. This
Agreement may be executed in several counterparts, each of which counterparts
shall be deemed an original and all of which together shall constitute a single
agreement. The failure of any party hereto to execute this Agreement, or any
counterpart hereof, shall not relieve the other signatories from their
obligations hereunder.
14. Whenever the context may require, any pronouns used herein shall
include the corresponding masculine, feminine or neuter forms, and the singular
form of nouns and pronouns shall include the plural and vice versa.
15. This Agreement shall be binding upon Hotel Manager and its
heirs, devisees, representatives, successors and assigns, and shall inure to the
benefit of and may be enforced by and binding upon Lender and its heirs,
successors, legal representatives, substitutes and assigns. Except as permitted
under the Loan Agreement, Hotel Manager shall not assign any of its rights or
obligations under this Agreement. Subject to the terms of the Loan Agreement,
Lender shall have the right to assign this Agreement and the obligations
hereunder in connection with any assignment or transfer of all or any portion of
the Loan or any interest therein. The parties hereto acknowledge that following
the execution and delivery of this Agreement, Lender may sell, transfer and
assign this Agreement and certain other Loan Documents. All references to
"Lender" hereunder shall be deemed to include the successors and assigns of
Lender and the parties hereto acknowledge that actions taken by Lender hereunder
may be taken by Lender's agents and by the agents of the successors and assigns
of Lender.
16. This Agreement is intended solely for the benefit of Lender and
its heirs, successors, legal representatives, substitutes and assigns, and no
third party shall have any right or interest in this Agreement, nor any right to
enforce this Agreement against any party hereto.
17. Hotel Manager acknowledges and agrees that pursuant to the Loan
Agreement, each Deposit Account Agreement and the Cash Management Agreement (for
purposes of this paragraph 17, collectively, the "AGREEMENTS") (the terms,
conditions and agreements of the Agreements being hereby incorporated herein
with the same force as is fully set forth herein), certain requirements are
specified with respect to the Property Proceeds and
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other payments due under any Lease (as defined in the Security Instrument) or
otherwise with respect to the Properties, and Hotel Manager covenants and agrees
to observe and, as and to the extent applicable to Hotel Manager, perform all
such requirements, including, without limitation, ensuring that all Property
Proceeds received by Hotel Manager are properly deposited into the applicable
Deposit Account.
18. The obligations of Borrowers and Hotel Manager hereunder are
subject to limitations on recourse as provided in Article XII of the Loan
Agreement.
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EXECUTED as of the day and year first above written.
BORROWERS:
[LODGIAN ENTITIES]
By:____________________________________
Name: Daniel E. Ellis
Title: Vice President and Secretary,
or Authorized Signatory for
each of the entities listed
above
HOTEL MANAGER:
LODGIAN MANAGEMENT CORP.,
a Delaware corporation
By:______________________________
Name:
Title:
EXHIBIT A
COPY OF FORM OF MANAGEMENT AGREEMENT