EXHIBIT 10.4.6
CONDITIONAL ASSIGNMENT OF HOTEL MANAGEMENT AGREEMENT
This CONDITIONAL ASSIGNMENT OF HOTEL MANAGEMENT AGREEMENT,
dated as of June 25, 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 Sixty Six Million Eight Hundred and
Eighteen Thousand Five Hundred and No/100 Dollars ($66,818,500.00) (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 a certain Promissory
Note, dated of even date herewith (as amended, modified or restated, and any
replacements or substitutes therefor (by means of multiple notes or otherwise),
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 AMI, INC.
LODGIAN HOTELS FIXED III, LLC
By:/s/ Daniel E. Ellis
-------------------------------------
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:/s/ Daniel E. Ellis
-------------------------------------
Name: Daniel E. Ellis
Title: Vice President and Secretary, or
EXHIBIT A
COPY OF FORM OF MANAGEMENT AGREEMENT