EXHIBIT 30
[GRAPHIC OMITTED]
XXXXXX BROTHERS
ENGAGEMENT LETTER
October 13, 2000
Edgecliff Holdings LLC
000 Xxxxxxxxx Xxxxx
Xxxx Xxxxxxxx, Xxxxxxxx 00000-0000
Attention: Xx. Xxxxxx X. Xxxxxxx
Dear Xx. Xxxxxxx:
This engagement letter agreement (this "Agreement") will
confirm the understanding and agreement between Xxxxxx Brothers Inc. ("Xxxxxx
Brothers" or the "Manager") and Edgecliff Holdings LLC, a Kentucky limited
liability company (together with each of its subsidiaries, the "Company"), in
connection with the proposed financing in connection with the acquisition of all
of the issued and outstanding common stock and the refinancing of certain
indebtedness of Lodgian, Inc. (together with each of its subsidiaries, the
"Acquired Business"). We understand that the Company proposes to sign an
agreement (the "Acquisition Agreement") to acquire all of the issued and
outstanding common stock of the Acquired Business (the "Acquisition").
This Agreement will confirm our agreement with you concerning
certain terms and conditions related to the retention of the Manager as the lead
underwriter, lead initial purchaser and/or lead placement agent in connection
with the sale of high yield securities (the "High Yield Securities") and
mortgage notes (the "Mortgage Notes") (the High Yield Securities and Mortgage
Notes are collectively referred to as the "Permanent Securities"), as well as
our understanding concerning related fees and expenses, indemnification
obligations and other matters.
1. RETENTION.
(a) Subject to subparagraph (c) below, the Company hereby
confirms that it retains the Manager to act as the exclusive lead underwriter,
lead initial purchaser and/or lead placement agent for the Company and for its
affiliates in connection with any underwritten offering or private placement
(including, without limitation, the purchase and resale of securities pursuant
to Rule 144A (a "Rule 144A Transaction") under the Securities Act of 1933, as
amended (the "Act"), of the Permanent Securities issued by the Company or any of
its affiliates, the proceeds of which will be applied to finance (or refinance)
any portion of the purchase price to be paid in connection with the Acquisition
and to refinance certain indebtedness of the Acquired Business. The Manager's
assignment may also include the arranging of a working capital facility if so
requested by the company.
(b) The Company agrees that for the term of this
Agreement none of the Company or its affiliates, officers, directors or equity
holders will directly or indirectly offer any of the Permanent Securities for
sale to, or solicit any offer to purchase any of the same in connection with
financing the Acquisition and refinancing the Indebtedness of the Acquired
Business from, or otherwise contact, approach or negotiate with respect thereto
with, any person or persons (including any co-managers) other than through the
Manager (or through its affiliates).
(c) Notwithstanding anything to the contrary contained
herein or any oral representations or assurances previously or subsequently made
by the parties hereto, this Agreement does not constitute a commitment by or
legally binding obligation of the Manager or any of its affiliates to act as
exclusive underwriter, initial purchaser and/or placement agent in connection
with any offering of securities or to provide any financing. Such a commitment
on the part of the Manager or any of its affiliates will exist only upon the
execution of a final, written underwriting, purchase or placement agent
agreement, and then only in accordance with the terms and conditions thereof.
(d) The Manager also will provide financial advisory
services as requested by the Company. The Company agrees that the Manager has
the right to place advertisements in financial and other newspapers and journals
at its own expense describing its services to the Company, provided that the
Manager will submit a copy of any such advertisements to the Company prior to
their inclusion in any newspaper or journal for its approval, which approval
shall not be unreasonably withheld. Furthermore, the Company agrees to include a
reference to the Manager's role as financial advisor in any press release
announcing the transaction so long as such reference would not, in the opinion
of counsel to the Company, violate any federal or state securities laws.
(e) During the term of this Agreement, Xxxxxx Brothers
undertakes not to enter into any agreement with any third party (including any
potential buyer) the scope of which relates to the acquisition or sale of any
controlling interest in the Acquired Business without the prior consent of the
Company or until the Company ceases to pursue the Acquisition actively.
2. TERM OF THIS AGREEMENT. The term of this Agreement shall
extend until terminated in accordance with Section 8 hereof.
3. TERMS OF PERMANENT SECURITIES. The Manager will work with the
Company to determine the specific types, terms and conditions of the Permanent
Securities, to be mutually agreed upon by the parties hereto, based upon the
then prevailing market conditions and the business, operations, financial
condition, management, prospects, and value of the Company and the Acquired
Business. The Parties currently contemplate that the Permanent Securities will
take the form of high yield securities and mortgage backed bonds to be issued at
market rates. The collateral for such securities will in no event include a
pledge of Lodgian stock acquired by the Company.
4. FEES AND EXPENSES.
(a) PLACEMENT FEE. As compensation for placing the
Permanent Securities, the Company agrees to pay the Manager a fee equal to: (i)
3.00% of the aggregate principal amount of the High Yield Securities, and (ii)
1.75% of the aggregate principal amount of the Mortgage Notes, provided however,
that if the interest rate spread achieved over one-month LIBOR shall be less
than 2.00% (the "Spread") (based on monthly pay, in arrears, and calculated on
the basis of actual days elapsed in a 360-day year), the Loan Fee shall increase
in an amount equal to the amount by which the actual spread is less than the
Spread; provided further, however, in no event shall the Loan Fee exceed 2.25%.
For example, if the spread achieved shall equal 1.90%, the Loan Fee shall be
1.85%. In the event that the Permanent Securities are purchased by the Manager
from the Company on a backstopped or committed basis, the schedule of placement
fees will change and will be negotiated by the Manager and the Company at such
time as both the Manager and the Company elect to pursue the transaction on such
basis.
(b) EXPENSES. Whether or not the Acquisition is
consummated, the Company hereby agrees to reimburse the Manager, promptly upon
demand, for all reasonable out-of-pocket costs and expenses incurred by the
Manager in connection with the transactions contemplated by this Agreement,
whether incurred prior or subsequent to the date hereof, including, without
limitation, (i) travel expenses,
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professional fees or other expenses incurred in connection with our due
diligence investigation of the Company and the Acquired Business and the
reasonable fees and disbursements of Manager's legal counsel, in connection with
the transactions contemplated hereby; provided, however, that with respect to
any financing that is consummated by means of a public offering of the Permanent
Securities or a Rule 144A Transaction, the expenses of Manager's legal counsel
relating thereto will be borne by the Manager, other than customary Blue Sky
fees and expenses, which fees and expenses will be borne by the Company. Once
the transaction structure, proceeds amounts and types of securities to be
utilized has been established, the Manager will provide the Borrower with an
Expense Budget.
5. COOPERATION. The Company agrees that it and its affiliates
will cooperate with the Manager and provide information reasonably required by
the Manager in connection with the offer, sale and placement of, or obtaining
commitments for the purchase of, the Permanent Securities and any other
financing contemplated by this Agreement.
6. CONFIDENTIALITY. Except as required by applicable law, any
financial advice rendered by the Manager pursuant to this Agreement may not be
disclosed publicly in any manner without the Manager's prior written approval
and will be treated as confidential. The Company will provide the Manager with
all financial and other information requested by the Manager for the purpose of
rendering its services pursuant to this Agreement. Except as required by
applicable law, any reference to the Manager or any of its affiliates in this
Agreement may not be disclosed publicly in any manner without such party's prior
approval, and this Agreement and its contents will be treated by the Company as
confidential except that such references may be made in any tender offer or
other documents required to be filed with the Securities and Exchange Commission
or documents sent to the Company, Lodgian Inc.'s security holders or Lodgian
Inc., provided that such references are reviewed and approved by Xxxxxx
Brothers, which approval will not be unreasonably withheld.
7. INDEMNIFICATION.
(a) The Company hereby agrees to indemnify and hold
harmless the Manager and each of its officers, directors, partners, trustees,
employees, advisors and agents (each, an "indemnified person") from and against
any and all losses, claims, damages and liabilities to which any indemnified
person may become subject (i) arising out of or based upon any untrue statement
or alleged untrue statement of a material fact contained in any preliminary
offering memorandum, offering memorandum or any other similar disclosure
document or in any amendment or supplement thereto, any omission or alleged
omission to state in any preliminary offering memorandum, offering memorandum or
any other similar disclosure document or in any amendment or supplement thereto
any material fact required to be stated therein or necessary to make the
statements therein not misleading, or (ii) arising in any manner out of or in
connection with the transactions contemplated by this Agreement and shall
reimburse each indemnified person promptly for any reasonable legal or other
expenses reasonably incurred by it in connection with investigating, preparing
to defend or defending, or providing evidence in or preparing to serve or
serving as a witness with respect to, any lawsuits, investigations, claims or
other proceedings arising in any manner out of or in connection with the
transactions contemplated by this Agreement (including, without limitation, in
connection with the enforcement of the indemnification obligations set forth
herein); provided, however, that no indemnified person shall be entitled to
indemnity (A) under clause (i) above in respect of any loss, claim, damage,
liability or expense resulting from any information concerning the Manager
furnished to the Company by the Manager specifically for inclusion in the
above-described documents or (B) under clause (ii) above in respect of any loss,
claim, damage, liability or expense to the extent that it is finally judicially
determined that such loss, claim, damage, liability or expense resulted directly
from the gross negligence or willful misconduct of such indemnified person.
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(b) The Company further agrees that without the Manager's
prior written consent, which consent will not be unreasonably withheld, it will
not enter into any settlement of a lawsuit, claim or other proceeding arising
out of the transactions contemplated by this Agreement unless such settlement
includes an explicit and unconditional release from the party bringing such
lawsuit, claim or other proceeding of all indemnified persons.
(c) In case any action or proceeding shall be instituted
involving any indemnified person for which indemnification is to be sought
hereunder by such indemnified person, then such indemnified person shall
promptly notify the Company of the commencement of any action or proceeding;
provided, however, that the failure so to notify the Company shall not relieve
the Company from any liability that it may have to such indemnified person
pursuant to this Section 7 or from any liability that they may have to such
indemnified person other than pursuant to this Section 7 except to the extent
the Company was unaware of such action or proceeding and has been prejudiced in
any material respect by such failure. Notwithstanding the above, following such
notification, the Company may elect in writing to assume the defense of such
action or proceeding, and, upon such election, it shall not be liable for any
legal costs subsequently incurred by such indemnified person (other than
reasonable costs of investigation and providing evidence) in connection
therewith, unless (i) they have failed to provide counsel reasonably
satisfactory to such indemnified person in a timely manner, (ii) counsel
provided by the Company reasonably determines that its representation of such
indemnified person would present it with a conflict of interest or (iii) the
indemnified person reasonably determines that there may be legal defenses
available to it which are different from or in addition to those available to
the Company. In connection with any one action or proceeding, the Company shall
not be responsible for the fees and expenses of more than one separate law firm
(in addition to local counsel) for all indemnified persons.
(d) The Company and the Manager agree that if any
indemnification or reimbursement sought pursuant to this Section 7 is judicially
determined to be unavailable for a reason other than as set forth in the proviso
at the end of the first paragraph of this Section 7, then, whether or not the
Manager is the indemnified person, the Company, on the one hand, and the
Manager, on the other hand, shall contribute to the losses, claims, damages,
liabilities and expenses for which such indemnification or reimbursement is held
unavailable (i) in such proportion as is appropriate to reflect the relative
benefits to the Company, on the one hand, and the Manager, on the other hand, in
connection with the transactions to which such indemnification or reimbursement
relates, or (ii) if the allocation provided by clause (i) above is judicially
determined not to be permitted, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) but also the relative
faults of the Company, on the one hand, and the Manager, on the other hand, as
well as any other equitable considerations; provided, however, that in no event
shall the amount to be contributed by the Manager pursuant to this paragraph
exceed the amount of the fees actually received by the Manager in connection
with the transactions contemplated by this Agreement.
8. TERMINATION. This Agreement may be terminated without
liability or continuing obligations (except as provided below) by the Company or
the Manager at any time upon 15 days' written notice, and, in any event, shall
expire on the first anniversary of the date hereof, provided, however, that (A)
the Company's obligations and liabilities to pay fees and expenses accrued
hereunder to the date of termination or expiration, as the case may be, and any
obligations and liabilities for indemnification, reimbursement and contribution
and the agreements relating to confidentiality contained in Section 6 hereof
will, in each case, continue in the event of any such termination or expiration
in accordance with their terms and (B) if this Agreement expires or is
terminated by the Company and, within 12 months of such expiration or
termination of this Agreement, the Company (or any affiliate or subsidiary
thereof) issues any Permanent Securities or enters into any financing
transaction involving similar securities (whether debt, mezzanine or any other
related securities) in connection with financing the Acquisition and refinancing
the indebtedness of the Acquired Business in which the Manager did not act as
the exclusive
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lead underwriter, lead initial purchaser and/or lead placement agent, the
Company hereby agrees to pay a fee on the date and in an amount equal to the fee
that would have been payable to the Manager if the Manager did act as the lead
underwriter, lead initial purchaser and/or lead placement agent or financial
advisor in connection with such transaction pursuant to the terms hereof;
provided, however, that clause (B) shall not apply in respect of any placement
of securities with DLJ Real Estate Capital Partners or any placement of
securities substantially similar to the securities contemplated to be issued to
DLJ Real Estate Capital Partners with a third-party other than DLJ Real Estate
Capital Partners (together, the "DLJ Securities"). DLJ Securities specifically
exclude all types of straight debt such as high yield debt, investment grade
debt, bank debt (other than a working capital facility) or mortgage backed
security debt, among others.
9. SURVIVAL; ASSIGNMENT. The provisions of this Agreement
relating to the payment of fees and expenses, indemnification and contribution
and the agreements relating to confidentiality and the provisions of Section 10
below will survive the expiration or termination of this Agreement (including
any extensions hereof).
10. CHOICE OF LAW; JURISDICTION; WAIVERS. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
To the fullest extent permitted by applicable law, each party hereto hereby
irrevocably submits to the non-exclusive jurisdiction of any New York State
court or Federal court sitting in the County of New York in respect of any suit,
action or proceeding arising out of or relating to the provisions of this
Agreement and irrevocably agrees that all claims in respect of any such suit,
action or proceeding may be heard and determined in any such court. The parties
hereto hereby waive, to the fullest extent permitted by applicable law, any
objection that they may now or hereafter have to the laying of venue of any such
suit, action or proceeding brought in any such court, and any claim that any
such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum. Each party hereto hereby waives, to the fullest extent
permitted by applicable law, any right to trial by jury with respect to any
action or proceeding arising out of or relating to this Agreement.
11. MISCELLANEOUS.
(a) This Agreement may be executed in one or more
counterparts, each of which will be deemed an original, but all of which taken
together will constitute one and the same instrument.
(b) This Agreement sets forth the entire understanding of
the parties hereto as to the scope of the engagement and the Manager's
obligations thereunder. This Agreement shall supersede all prior understandings
and proposals, whether written or oral, between the Manager and you relating to
the transactions contemplated hereby.
(c) This Agreement has been and is made solely for the
benefit of the parties hereto, the indemnified persons, and their respective
successors and assigns, and nothing in this Agreement, expressed or implied, is
intended to confer or does confer on any other person or entity any rights or
remedies under or by reason of this Agreement or the covenants of the parties
contained herein.
(d) The Manager and its affiliates are a full service
financial firm and as such from time to time may effect transactions for its own
accounts or the account of customers, and hold long or short positions in debt
or equity securities or loans of companies that may be the subject of the
transactions contemplated by this Agreement.
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Please confirm that the foregoing is in accordance with your
understanding by signing and returning to the Manager the enclosed duplicate of
this Agreement.
Sincerely yours,
XXXXXX BROTHERS INC.
By: /s/ Xxx Xxxx
-----------------------------
Name: Xxx Xxxx
Title: Senior Vice President
Accepted and agreed to as
of the date first above written:
EDGECLIFF HOLDINGS LLC
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President of Finance
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