Loan Modification Agreement (Floating Rate) between Merrill Lynch Mortgage Lending, Inc. and Borrowers, dated April 29, 2005
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This agreement modifies the original Loan and Security Agreement between Merrill Lynch Mortgage Lending, Inc. and the Borrowers. It updates several key terms, including the release of a property in St. Louis, the addition of new property definitions, changes to interest accrual and payment dates, adjustments to minimum debt yield requirements, and an extension of the loan maturity date by over six months. The agreement also amends payment schedules and other loan terms, reflecting the parties’ mutual consent to these changes.
EX-10.40 4 g95126exv10w40.txt EX-10.40 LOAN MODIFICATION AGREEMENT EXHIBIT 10.40 LOAN MODIFICATION AGREEMENT (FLOATING RATE) THIS LOAN MODIFICATION AGREEMENT (FLOATING RATE), dated as of April 29, 2005 (this "MODIFICATION AGREEMENT"), between the parties identified as "Borrowers" on the signature pages hereto (each a "BORROWER" and collectively, "BORROWERS") and MERRILL LYNCH MORTGAGE LENDING, INC., a Delaware corporation (together with its successors and assigns, "LENDER"). RECITALS: WHEREAS, pursuant to the terms and conditions of that certain Loan and Security Agreement (Floating Rate), dated as of June 25, 2004 (as amended or modified from time to time, the "LOAN AGREEMENT"; all capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Loan Agreement), Lender made a loan to Borrowers and certain other Affiliates of Borrowers in the original principal amount of $109,999,900 (the "LOAN"); and WHEREAS, Borrowers and Lender wish to: (a) provide for the Release of the Property located in St. Louis, Missouri (the "ST. LOUIS PROPERTY") and the prepayment of a portion of the Loan in connection therewith; (b) add new defined terms of "Additional Sale Property" and "Additional Sale Properties" under the Loan Agreement; (c) amend and modify the definitions of "Interest Accrual Period", "Minimum Debt Yield", "Net Sales Proceeds", "Payment Date" and "Release Price" under the Loan Agreement; (d) extend the Scheduled Maturity Date of the Loan for a period of six (6) months and eleven (11) days; (e) modify the Scheduled Mortgage Principal Payments; and (f) otherwise amend and modify the Loan Agreement and the other Loan Documents upon the terms and conditions set forth herein. NOW, THEREFORE, in consideration for the Loan, the covenants, agreements, representation and warranties contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree to modify and amend the Loan Agreement and other Loan Documents as follows: 1. The Loan Agreement and Loan Documents are hereby modified and amended as follows: (a) A new definition for "Additional Sale Property" and "Additional Sale Properties" is hereby added to Section 1.1 of the Loan Agreement as follows: "ADDITIONAL SALE PROPERTY" and "ADDITIONAL SALE PROPERTIES" means individually or collectively, the Properties identified in EXHIBIT A as "Additional Sale Properties", but only from and after the date of the sale of the Holiday Inn Select, Niagara Falls, New York Sale Property and the Release of such Sale Property from the Lien of the applicable Mortgage in accordance with the provisions of this Agreement. (b) The term "Interest Accrual Period" as defined in Section 1.1 of the Loan Agreement is hereby deleted in its entirety and superseded by the following: "INTEREST ACCRUAL PERIOD" means with respect to the calculation of interest accrued (and to accrue) with respect to any Payment Date, a period commencing on the fifteenth (15th) day of the prior calendar month and ending on the fourteenth (14th) day of the calendar month in which such Payment Date occurs. (c) The term "Minimum Debt Yield" as defined in Section 1.1 of the Loan Agreement is hereby deleted in its entirety and superseded by the following: "MINIMUM DEBT YIELD" means (i) prior to the first (1st) day of the first (1st) full month after the first (1st) anniversary of the Closing Date, 9%, (ii) from and after the first (1st) day of the first (1st) full month after the first (1st) anniversary of the Closing Date and through and including the Scheduled Maturity Date, or, if the Loan is extended for the First Extension Term, through and including the last day of the month in which the Scheduled Maturity Date would have occurred but for such extension, 10%, (iii) if the Loan is extended for the First Extension Term, from and after the first (1st) day of the first (1st) full month of the First Extension Term and through and including the last day of the First Extension Term, or, if the Loan is further extended for the Second Extension Term, through and including the last day of the month in which the last day of the First Extension Term occurs, 11%, (iv) if the Loan is extended for the Second Extension Term, from and after the first (1st) day of the first (1st) full month of the Second Extension Term and through and including the last day of the Second Extension Term, or, if the Loan is further extended for the Third Extension Term, through and including the last day of the month in which the last day of the Second Extension Term occurs, 12%, and (v) if the Loan is extended for the Third Extension Term, from and after the first (1st) day of the first (1st) full month of the Third Extension Term and through and including the last day of the Third Extension Term, 13%. (d) The term "Net Sales Proceeds" as defined in Section 1.1 of the Loan Agreement is hereby modified by adding: "or an Additional Sale Property" immediately after "a Sale Property" in the second (2nd) line thereof, and by adding: "or Additional Sale Property" immediately after "applicable Sale Property" in the last line thereof. (e) The term "Payment Date" as defined in Section 1.1 of the Loan Agreement is hereby deleted in its entirety and superseded by the following: "PAYMENT DATE" means the eleventh (11th) day of each calendar month during the term of the Loan, or if such eleventh (11th) day is not a Business Day, then the immediately preceding Business Day. (f) The term "Release Price" as defined in Section 1.1 of the Loan Agreement is hereby deleted in its entirety and superseded by the following: 2 "RELEASE PRICE" means an amount equal to (x) with respect to a Sale Property or an Additional Sale Property, the greater of (i) one hundred percent (100%) of the Aggregate Allocated Loan Amount of the applicable Sale Property or Additional Sale Property, and (ii) one hundred percent (100%) of the Net Sales Proceeds with respect to the applicable Sale Property or Additional Sale Property; and (y) with respect to any Property that is not a Sale Property or an Additional Sale Property, one hundred twenty-five percent (125%) of the Aggregate Allocated Loan Amount of the applicable Property. (g) The term of the Loan is hereby extended for a period of six (6) months and eleven (11) days and the term "Scheduled Maturity Date" as defined in Section 1.1 of the Loan Agreement is hereby modified by deleting the words "June 2006" and substituting the words "January 2007" therefor. (h) Section 2.3(A) of the Loan Agreement is hereby amended by adding the following language at the end of said provision: "Notwithstanding the foregoing, the Borrowers shall not be required to maintain the Cap in effect during the period from July 1, 2006 to the Scheduled Maturity Date (the "INTERIM EXTENSION PERIOD") unless Lender, in its sole discretion, elects to pay for the cost of extending the Cap (or purchasing a replacement Cap) during such Interim Extension Period and the Cap Threshold Rate during the Interim Extension Period shall be six percent (6%) per annum; provided, however, if the Holiday Inn Select, Niagara Falls, New York Sale Property has been sold and Released from the Lien of the applicable Mortgage in accordance with the provisions of this Agreement prior to June 30, 2005, Lender shall be required to and shall promptly pay all such costs and expenses of so extending the Cap (or purchasing such a replacement Cap) during such Interim Extension Period." (i) Section 2.5(B)(vi) of the Loan Agreement is hereby amended by deleting the words "five percent (5%)" in the fifth (5th) line thereof and substituting the words "six percent (6%)" in lieu thereof. (j) Clause (d) of Section 5.1(A)(v) of the Loan Agreement is hereby amended by adding: "(except for Required Immediate Repairs as set forth on Schedule 6.5)" immediately after the words "Capital Improvement Reserve" in the fourth (4th) line of such clause (d). (k) Section 11.4(C) of the Loan Agreement is hereby deleted in its entirety and superseded by the following: (C) Lender shall have received from the Borrowers on the date proposed for such Release, the Release Price (together with, except in connection with (i) a Release of a Sale Property [in which case no Prepayment Consideration will be due], or (ii) a Release of an Additional 3 Sale Property [in which case the Prepayment Consideration shall be an amount equal to one-half of one percent (0.5%) of the principal amount of the Loan being prepaid with respect to any prepayment made prior to the Payment Date in July 2006, and thereafter none], the applicable Prepayment Consideration and any prepayment consideration due pursuant to the terms of the Mezzanine Loan Documents) for deposit into the Lock Box Account and disbursement in accordance with the terms of the Cash Management Agreement, and following such disbursement, Lender shall have received Mortgage Lender's Percentage of the Release Price and Mezzanine Lender shall have received Mezzanine Lender's Percentage of the Release Price; (l) Section 11.4(E) of the Loan Agreement is hereby amended by replacing "(other than a Release of a Sale Property)" with "(other than a Release of a Sale Property or an Additional Sale Property)" in the first (1st) line thereof. (m) Section 11.4(F) of the Loan Agreement is hereby deleted in its entirety and superseded by the following: (F) Notwithstanding the foregoing, the Borrowers may not obtain the Release under this Section 11.4 of any Property or Properties (other than the Sale Properties) which individually, or in the aggregate (with all Releases of Properties other than the Sale Properties since the Closing Date), have an Aggregate Allocated Loan Amount of more than thirty percent (30%) of the Loan Amount (exclusive of the Allocated Loan Amount with respect to any Sale Property); (n) Schedule 2.4 to the Loan Agreement, setting forth the Scheduled Mortgage Principal Payments with respect to the Loan, is hereby deleted in its entirety and superceded by Schedule 2.4 attached hereto ("REPLACEMENT SCHEDULE 2.4") and all references in the Loan Agreement and the other Loan Documents to (i) "Schedule 2.4" are hereby deemed to refer to Replacement Schedule 2.4 and (ii) "Scheduled Mortgage Principal Payments" are hereby deemed to refer to the Scheduled Mortgage Principal Payments set forth on Replacement Schedule 2.4. (o) Schedule 6.5 to the Loan Agreement, setting forth the Required Capital Improvements to be performed with respect to the Properties, is hereby deleted in its entirety and superceded by Schedule 6.5 attached hereto ("REPLACEMENT SCHEDULE 6.5") and all references in the Loan Agreement and the other Loan Documents to (i) "Schedule 6.5" are hereby deemed to refer to Replacement Schedule 6.5 and (ii) "Required Capital Improvements" are hereby deemed to refer to the Required Capital Improvements set forth on Replacement Schedule 6.5. (p) Schedule 6.6 to the Loan Agreement, setting forth Environmental Work to be performed with respect to the Properties, is hereby deleted in its entirety and superceded by Schedule 6.6 attached hereto ("REPLACEMENT SCHEDULE 6.6") and all references in the Loan Agreement and the other Loan Documents to (i) "Schedule 6.6" are hereby deemed to refer to 4 Replacement Schedule 6.6 and (ii) "Environmental Work" are hereby deemed to refer to the Environmental Work set forth on Replacement Schedule 6.6. 2. The Borrowers wish to obtain the Release of the St. Louis Property from the Lien of the Mortgage thereon. Notwithstanding anything to the contrary contained in Section 11.4 of the Loan Agreement or otherwise in the Loan Agreement or the other Loan Documents, the parties agree that the Release of the St. Louis Property shall be upon the following terms and subject to satisfaction of the following conditions on or before the Release Date therefor: (a) Borrowers shall be required to pay to Lender a Release Price for the St. Louis Property in the amount of $4,800,000 (100% of the Allocated Loan Amount applicable thereto), receipt of which is hereby acknowledged by Lender. The amount payable to Lender for the Release Price for the St. Louis Property shall be offset by certain amounts more particularly set forth on the settlement statement with respect to the release of the St. Louis Property executed by Borrowers and Lender. (b) No Prepayment Consideration shall be payable by Borrowers in connection with the payment of the Release Price as provided in Section 2(a) above. (c) For all other purposes under the Loan Agreement, including, without limitation, Sections 11.4(E) and 11.4(F) thereof, the Release of the St. Louis Property shall be treated as if the St. Louis Property were a Sales Property. (d) Lender has executed and delivered to Borrowers, concurrently with the execution and delivery of this Modification Agreement, a release or releases or terminations, as applicable, of the Mortgage and the Assignment of Leases and the Financing Statements encumbering the St. Louis Property in recordable form, and Borrowers are hereby authorized to record the same in the applicable recording office in order to evidence of record the Release of the St. Louis Property from the Collateral for the Loan. 3. Prior to the date hereof, the Properties located in Florence, Kentucky, Niagara Falls, New York (Four Points Sheraton), Morgantown, West Virginia, Grand Island, New York, Memphis, Tennessee (Holiday Inn), and Pittsburgh, Pennsylvania (Holiday Inn Parkway East), as more particularly identified on Schedule A attached hereto (including the Release of the St. Louis Property, collectively, the "RELEASED PROPERTIES"), have been released from the Liens of the applicable Mortgages. Lender hereby confirms that each of Lodgian Florence LLC, Servico Niagara Falls, Inc., Lodgian Morgantown LLC, Servico Grand Island, Inc., Lodgian Memphis LLC, and APICO Hills, Inc., have been released from any all liabilities and obligations as Borrowers under the Loan Agreement and the other Loan Documents from and after the date of the respective Release of the applicable Property owned by such entity. After giving effect to the Release of the St. Louis Property, (a) the Properties remaining as Collateral for the Loan will be the Properties listed on Exhibit A attached hereto ("REPLACEMENT EXHIBIT A"); (b) Exhibit A to the Loan Agreement, setting forth the Properties encumbered by the Mortgages as Collateral for the Loan, is hereby deleted in its entirety and superceded by Replacement Exhibit A; (c) all references in the Loan Agreement and the other Loan Documents to (i) "Exhibit A" (to the Loan Agreement) are hereby deemed to refer to Replacement Exhibit A 5 and (ii) "Properties" are hereby deemed to refer to the Properties set forth on Replacement Exhibit A; (d) all references to each of the Released Properties in any of the Loan Documents and any of the exhibits and schedules attached thereto, are hereby deemed deleted and no longer applicable; and (e) the outstanding principal balance of the Loan will be $88,323,222.68. 4. From and after the date hereof, all references to the Loan Agreement and the Note in the Loan Documents shall mean the Loan Agreement and the Note, as modified and amended hereby. 5. Except as expressly amended hereby, all of the terms, covenants and conditions of the Loan Agreement, the Note and the other Loan Documents are hereby ratified and confirmed by Borrowers and remain unmodified and in full force and effect. In the event of any conflict or ambiguity between the provisions of this Modification Agreement and those of the Loan Agreement, the Note and the other Loan Documents, the terms of this Modification Agreement shall control. 6. Borrowers hereby represent and warrant that, as of the date hereof, (a) the execution, delivery and performance by each Borrower of the Modification Agreement and the other agreements to be delivered in connection herewith and consummation of the transactions contemplated hereby have been duly authorized by all necessary limited liability company, partnership, trustee, corporate or other action, as the case may be, (b) no Default or Event of Default has occurred and is continuing under the Loan Agreement or any of the Loan Documents and (c) no Material Adverse Effect has occurred with respect to any Borrower Party or any Property. 7. This Modification Agreement supercedes any prior agreement, oral or written, between the parties hereto, and contains the entire agreement between Borrowers and Lender with respect to the subject matter hereof. 8. THIS MODIFICATION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES. 9. This Modification Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, and all of which counterparts together shall constitute but one and the same instrument. 6 IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Modification Agreement as of the date first written above. BORROWERS: BRUNSWICK MOTEL ENTERPRISES, INC. DOTHAN HOSPITALITY 3053, INC. DOTHAN HOSPITALITY 3071, INC. GADSDEN HOSPITALITY, INC. LODGIAN BRIDGEPORT LLC LODGIAN COLCHESTER LLC LODGIAN HAMBURG LLC LODGIAN HOTELS FLOATING, LLC LODGIAN JACKSON LLC LODGIAN MEMPHIS PROPERTY OWNER, LLC SERVICO AUSTIN, INC. SERVICO CEDAR RAPIDS, INC. SERVICO JAMESTOWN, INC. SERVICO LANSING, INC. SERVICO MARYLAND, INC. SERVICO NEW YORK, INC. SERVICO PENSACOLA 7200, INC. SERVICO PENSACOLA 7330, INC. SERVICO WINTER HAVEN, INC. SHEFFIELD MOTEL ENTERPRISES, INC. By: s/ Daniel E. Ellis ---------------------------------------- Name: Daniel E. Ellis Title: Vice President and Secretary, or Authorized Signatory for each of the entities listed above LENDER: MERRILL LYNCH MORTGAGE LENDING, INC. By: s/ Robert Spinna Name: obert Spinna Title: Vice President REPLACEMENT EXHIBIT A REMAINING FLOATING RATE POOL PROPERTIES
- ------------ (1) From and after Release of Holiday Inn Select, Niagara Falls, New York Sale Property Replacement Exhibit A SCHEDULE A RELEASED PROPERTIES
Schedule A REPLACEMENT SCHEDULE 2.4 SCHEDULED MORTGAGE PAYMENTS *Note: The Payment Date is the 11th day of each calendar month. If the 11th day is not a Business Day, then the Payment Date is the preceding Business Day.
Replacement Schedule 2.4 Replacement Schedule 2.4 REPLACEMENT SCHEDULE 6.5 REQUIRED CAPITAL IMPROVEMENTS
Replacement Schedule 6.5
Replacement Schedule 6.5
Replacement Schedule 6.5
Replacement Schedule 6.5
Replacement Schedule 6.5
Replacement Schedule 6.5
Replacement Schedule 6.5
Replacement Schedule 6.5
Replacement Schedule 6.5 Footnotes: (1) This amount shall be held by Lender during the Term of the Loan as security for the Obligations and not disbursed to or on behalf of the Borrowers unless and until the Borrowers perform the related items of Work to which such amount relates and satisfy the terms and conditions for disbursement of such amount as set forth in Section 6.7. The Borrowers shall not be required to perform the related items of Work unless and until (i) any Borrower Party receives written demand from the applicable Franchisor for performance of such Work or a notice of default from such Franchisor as a result of the failure to perform such Work (and, in either case, the Borrowers shall be required deliver a copy of any such Franchisor demand or notice of default to Lender promptly after receipt thereof), (ii) Lender reasonably determines that failure to perform such Work will result in a default under the applicable Franchise Agreement or (iii) an Event of Default has occurred and is continuing. (2) If Borrowers obtain and deliver to Lender a written waiver or release of the Borrowers from the requirements to perform any of such Work from Intercontinental Hotels Group, which waiver or release is in form and substance reasonably acceptable to Lender, Borrowers shall Iave no further obligation hereunder with respect to such portion of the Work, and the amounts specified herein for such portion of the Work shall be promptly released to Borrowers. Replacement Schedule 6.5 REPLACEMENT SCHEDULE 6.6 ENVIRONMENTAL WORK
Schedule 6.6
Schedule 6.6
Schedule 6.6
